Property

FOUR

Owners as Gatekeepers

ONCE AN OWNER HAS ACQUIRED PROPERTY, either by original acquisition or by transfer from a previous owner, the question becomes what exactly does such an owner have? We can frame the question in terms of the competing visions of property we touched on in Chapter 1. The everyday notion of property, reflected especially in the law of trespass, starts with the right to exclude. This suggests we should think of the owner as a kind of gatekeeper of the thing over which the owner has property. The owner, as gatekeeper, has broad discretion to decide who has access to the property and on what terms, how it will be used, and whether to deputize someone else as a gatekeeper on either a temporary or permanent basis. In this chapter we examine the extent to which the law in fact conforms to this model of owner as gatekeeper.

We find that the law does provide impressive support for the right to exclude, not only through the action for trespass, but also through various criminal and civil laws and the privilege of selfhelp. As we will see, this right to exclude is subject to many exceptions, such as for necessity, custom, public accommodations law, and antidiscrimination law. In addition, owners are subject to governance rules of proper use, to which we return in Chapter 8. Owners also enjoy a variety of powers ancillary to their basic right to exclude, including the power to include (licenses), to transfer temporary custody of property for limited purposes (bailments), to get rid of property (abandonment and destruction), and to transfer property in a variety of ways (sales, gifts, inheritance). Owners get not only to keep people out, but also to determine the use or nonuse of resources in a variety of ways.

After considering all these various rights or powers and their many exceptions, one might ask whether there is a theme to this pudding. The bundle of rights metaphor—another basic vision of the nature of property—has been deployed to call into question whether there really is any core content to property. Do we have a single rule or principle with exceptions, or just a collection of disparate and shifting rights and privileges? This is a very basic question with respect to all of law, indeed with respect to all sorts of rulegoverned phenomena. This may sound like a purely theoretical question, with one characterization of the issue or another largely a matter of taste. But the answer we choose has real consequences. With respect to property, the critical question is what presumptive force the core right to exclude should be given when there is some rationale for relaxing or overriding it. When in doubt do we balance considerations of social policy to forge an ad hoc solution, or do we defer to the owner-gatekeeper?

Laws for Owner Protection

Both real and personal property are protected under both civil and criminal law. This gives us four combinations: criminal laws protecting real property, personal property theft offenses, civil law protections for real property, and the civil law of personal property. Although all four modes of protection backstop the owner’s right to exclude, the specific degree of protection and its rationale differ within each area.

One might think that because land has traditionally been treated as important and special, the criminal law protection of real property would be robust. The law has always had very strong criminal prohibitions of burglary and arson, but these offenses are more about protection of persons than of property. More purely a matter of property is criminal trespass, but, as it turns out, criminal trespass statutes were introduced only in the nineteenth century and generally carry only modest penalties. Prior to that, it was expected that landowners would avail themselves of self-help, including the use of deadly force, to vindicate their right to exclude. We return to selfhelp and its limits below. Although many of the uses of criminal trespass are uncontroversial, there has always been some tension between the use of the criminal law to protect real property and other areas of law such as labor law or civil rights law.

The conflict between owner sovereignty and other values in the law of criminal trespass is well illustrated by State v. Shack.¹ A farmer invoked the law of criminal trespass to exclude two aid workers who wanted to consult unsupervised with migrant farm workers temporarily living on the farmer’s land. The New Jersey Supreme Court, noting that property serves human values, held that the owner’s right to exclude did not go this far—an owner could not use the law of trespass to isolate the workers. The court came down for balancing the right to exclude against the interests of migrant workers in maintaining contact with the outside world. The court also declined to resolve the dispute in terms of existing legal categories. Presumably, the court, if it had so chosen, could have held that the workers were tenants in a landlord-tenant relationship with the farmer and as such had a (perhaps nonwaivable) right to receive guests. Or the court could have read a strong implied term into the employment contract, prohibiting this type of isolation. In other words, State v. Shack raises two issues. One, are the values and interests of others enough to override the basic right to exclude of the owner? And, two, if so, how should this overriding be accomplished? The New Jersey Supreme Court is something of an outlier in this and other cases in that it is inclined to override the right to exclude using a balancing test, and a fairly case-by-case one at that. Most courts tend to stick with traditional categories to a greater degree, for example by looking to landlord-tenant first before tinkering with the basic machinery of criminal trespass.

The criminal law has long protected personal property. Broadly speaking, the offense of larceny originally emphasized the wrongful taking of goods from the owner’s possession (asportation). This was plausibly regarded as reflecting a concern with preventing violence—taking personal property directly from the owner’s possession is very provoking and has a high potential for triggering resistance. As time went on, the offense was gradually expanded to include situations where an owner has been intentionally deprived of property without the owner’s consent, but it is difficult to identify any wrenching-from-possession, as for example when an employee embezzles employer funds. Gradually, asportation has been deemphasized in favor of a focus on intent to convert the good to the wrongdoer’s use.² In effect, the criminal law of theft offenses has shifted at least partly from an emphasis on preventing violence to protecting the owner’s more general interest in the security of property rights.

The center of attention in a property course is on the civil side. For real property, the most robust protection is afforded by the law of trespass, under which intentional gross invasions (by objects large enough to displace possession) are subject to strict liability. No injury need be shown, and harm is presumed. In another case that sometimes begins the property course, Jacque v. Steenberg Homes, Inc.,³ a company delivered a mobile home to the plaintiffs’ neighbor across the plaintiffs’ snowy field, over their explicit and vociferous objection, instead of using a private road with a dangerous snow-clogged hairpin turn. The trespass could not have been more deliberate, and there was evidence of scoffing at the Jacques on the part of the company foreman. The jury found one dollar in nominal damages and $100,000 in punitive damages. This is a dramatic result, and the court (like the trial jury presumably) was outraged by the company’s lack of respect for the Jacques’ rights, and believed that the $30 fine for criminal trespass would not deter the defendant from engaging in similar conduct in the future. Like an injunction but more so, the punitive damages send a message to get the attention of the defendant (and those in a similar position). The court saw the right to exclude, backed up by trespass, as important and worthy of protection—enough so that it held that the usual rule that nominal damages will not support an award of punitive damages does not apply to trespass to land.

But why? The Jacques may have been a little eccentric and, evidently smarting from being on the losing end of adverse possession in the past, were very insistent on their rights. But as we saw in Chapter 2, adverse possession (or, as we will see in Chapter 8, prescription) would require nonpermissive use over a twenty-year period (in Wisconsin). Simple permission from the owner would defeat any such claim. But most observers feel there is more to the story than the stated objections of the Jacques. Certainly their autonomy was violated. But would it have been if they had known beforehand that their bundle of rights did not include the right to prohibit dragging a mobile home across the snowy field? (Query: Where would such specific determinations come from—courts or legislatures?) Or maybe the problem is that the whole point of private property is to delegate to the owner, here the Jacques, decisionmaking authority (the gatekeeper right) without the need to justify their decisions, and Steenberg Homes had simply offered no good reason to revisit that determination, instead bypassing the system altogether in bad faith. Whether $100,000 is the right amount of punitive damages is another question, upon which the U.S. Supreme Court has made periodic pronouncements,⁴ but the availability of a deterrent even where a plaintiff cannot prove harm protects the basic delegation of gatekeeping authority to the owners.

Injunctions traditionally were not available in trespass actions, but the exceptions to this rule, for repeated and threatened trespass for example, eventually wound up almost swallowing the rule. Otherwise damages are the remedy in trespass. Other actions for the protection of real property tend to trace back historically to the trespass family. Ejectment is the action to remove another who is in wrongful possession; as we saw in Chapter 2, the statute of limitations for ejectment is generally the measure of adverse possession. Nuisance, to which we return in Chapter 8, protects against more ethereal invasions.

Owners of personal property who have lost possession can sue in replevin to get the thing back or can sue in conversion (sometimes called trover) to get damages. In the latter situation the owner is in effect forcing a sale on the converter. There is also an action in trespass—trespass to chattels—that protects personal property against damage. Unlike trespass to real property, harm must be proven, and this requirement (for jurisdictions in which it is a requirement) has given rise to controversies in the context of computer systems. The most high-profile case to date enforced a harm requirement in the context of an invasion of an intranet system by unwanted e-mails.⁵ Although spammers and senders of unwanted e-mails may be liable for trespass to chattels if the volume of e-mail harms or slows down the plaintiff’s system, the California Supreme Court held that other harms such as disruption to the workplace do not give rise to trespass liability. Cyberscholars generally applaud this result because in their view it promotes the openness of the Internet, whereas some others have advocated a more robust right to exclude along the lines of trespass to land. One interesting twist is that courts and most commentators seem to agree that owners of computer systems can engage in self-help: Intruders cannot complain if the owner takes defensive measures such as installing filters to keep the e-mails out. This means that the owner has a legally recognized right to exclude but no legal remedy to enforce that right. This is anomalous, given the usual assumption that every legal right has some legal remedy. Perhaps in the case of ordinary chattels such as bowling balls the law should not waste its time with providing legal redress for unwanted touchings. But whether self-help is always more efficacious than legal intervention with respect to unwanted invasions of electrons remains to be seen.

Self-Help

Self-help is not just a feature of the Internet; it is everywhere. Locking your apartment or car is self-help, as is putting a fence around your yard. Many of these measures are uncontroversial.

Some types of self-help are normally covered in criminal law. People have a limited right to defend themselves and their dwellings. The force used must be reasonable. Methods once used to protect property such a spring guns are generally not allowed any more. Again, the criminal law is a blend of protection of persons and property, and life and limb take priority over defense of property. The right in some jurisdictions to shoot intruders in an occupied dwelling does not extend to the right to use deadly force to protect unoccupied buildings (hence no spring guns even in those jurisdictions).

Property law focuses on less dramatic self-help measures that owners can take to enforce their property rights. Owners can use reasonable force (not deadly force) to eject trespassers. Closer cases involve landlord-tenant relations. In the 1970s a trend developed in which courts disallowed landlords from physically evicting tenants or locking them out. Under this approach the rule is mandatory in the sense that landlords and tenants cannot contract into a regime under which landlords would have a right to do a self-help eviction. As we will see later (see Chapter 6), the move away from self-help here can be seen as part of the wave of tenant-friendly decisions and legislation in the 1960s. Whether such mandatory rules protect tenants who are at an informational or economic disadvantage, or whether such rules hurt tenants in the long run by raising rents and making landlords choosier about tenants is a complex question, which turns in part on how competitive rental housing markets are.

In part, courts justified the move away from self-help as being compensated, in that landlords have been given expedited actions—often termed a “forcible entry and detainer” (FED)—to regain the premises. In practice, these procedures have typically not been as quick or efficient as originally envisioned. (Partly, this has been caused by the recognition of new tenant defenses to eviction, based on the condition of the premises.) Perhaps for that reason the trend toward disallowing any self-help in residential landlord-tenant law has run out of steam, leaving a mixed landscape.

Similar issues arise with personal property. Under the criminal law, one is not allowed to use deadly force to protect personal property (but one would under certain circumstances be allowed to use deadly force to prevent a physical attack on one’s person, which might also involve property). A person is allowed to use reasonable force to protect personal property, so it is all right to snatch a purse back from a purse snatcher. As with real property, self-help in the law of personal property tends to come up in specialized contexts.

One such area is repossession of personal property subject to security interests. In contrast to mortgages of real estate, which have elaborate procedures for foreclosure, the holder of a security interest in personal property can use self-help to take possession of the property in question if the debt is in default. This is most familiar (in life as in the movies) in the context of auto repossession, because cars, unlike other consumer goods, are often left out in the open. Jurisdictions differ on how much self-help can be used, but where it is allowed, the “repo man” (even if thriving on confrontation ⁶) must not do anything that tends to a breach of the peace. This usually means that if the owner objects strenuously enough, the repossession must stop. As in the case of landlord-tenant, the question involves balancing the possibility of overbearing behavior against the lower interest rates made possible by quick and cheap repossession. Nevertheless the current state of the law abounds in ironies. For one thing, in those jurisdictions where self-help repos are all right unless the owner firmly objects, people who are less physically threatening to the repo man are at a disadvantage.⁷ Moreover, the process for gaining possession from a wrongful possessor in contexts other than security interests is much more elaborate and, being state action, subject to dueprocess constraints.⁸ (Likewise, because of the high stakes, and in the case of homes because of their often personal nature, foreclosing on a mortgage on real property is a long and difficult road for the mortgage holder.)

At the beginning of this section we mentioned the uncontroversial nature of using locks as a measure of self-help. Other measures generate more controversy. Fences and walls have aesthetic implications, and in the case of gated communities, some find them troubling because they look too exclusionary. In the context of intellectual property (IP) and digital files, open access advocates often decry the exclusion of others through digital rights management (DRM). Some such situations shade off into contracts, but the question then becomes what one should think about an effort to contract for limited access with all possible users. Related to this is the fact that we do not usually hold owners responsible for failing to take cost-effective self-help measures to protect their property–there is no defense of contributory negligence analogous to what we find in the law of tort with respect to personal injuries. If you leave your front door or your car unlocked, you can still sue a trespasser or thief. Part of the delegation to the owner is not second-guessing the adequacy of the owner’s self-protective measures. An exception to this is trade secret law, which partakes more of torts than other property; the owner of a trade secret must show reasonable efforts to maintain the secret in order to hold another liable. This sometimes involves lock and key, but these efforts are often contractual, in the form of confidentiality agreements.

Finally, self-help can be used in an even more limited way to enforce other rights of the owner. Notably, an owner can use self-help to abate a nuisance. So, for example, an owner can go onto the land of another to remove fire hazards such as a stack of hay next to a sparking piece of machinery. But for self-help to be available, the victim of the nuisance should give a reasonable opportunity to the other owner to abate (this usually involves some notification and request for action), and self-help may be used only where there is some urgency. Over the last one hundred years the tendency is to expect owners to resort to the legal process more and engage in self-help less. (In the old days, self-help actions to destroy a dam on a common stream were not uncommon.) In this, the self-help privilege is a little like the doctrine of necessity, our next topic.

Exceptions to the Right to Exclude

Trespass law may be very stringent, but the owner’s right to exclude is neither absolute nor unchanging. On the bundle of rights theory, it is unsurprising that the bundle might take any number of forms and that these might change. On an approach that takes the right to exclude as central, the question is how easy it should be to make exceptions and modifications to the basic exclusion regime. Only by considering the range of situations in which owners’ exclusion rights give way can we begin to get a sense of the overall shape of property. Here our focus is on the limits to private ownership. Some of the limits, such as necessity and custom, may officially or unofficially apply to public property as well; others, such as public accommodations and antidiscrimination, limit private owners’ sovereignty in the name of public values.

Necessity

In some situations the right to exclude gives way to one facing necessity. The classic example is a person lost on a snowy mountain who breaks into an unoccupied cabin to eat the food inside. In such emergency situations, we do not expect people to respect boundaries, although the law still holds people using property out of necessity responsible for the harm they cause. Another situation would be a ship in peril that has the right to dock against the dock-owner’s will but the ship owner must pay damages for harm caused to the dock.⁹ One way to view this compromise is that the remedy for the property rights violation is reduced from property rule protection (injunction, punitive damages) to liability rule protection (compensatory damages). (See Chapter 8.) As a legal doctrine, necessity is, as in criminal law, very narrow: Someone who is hungry cannot break into a supermarket and eat the food. Although contestable, the idea is that a hungry person in an urban area has more alternatives, and a generalized defense of necessity would lead to too much bypassing of consensual transactions.

Another issue with necessity is whether the range of situations it covers hangs together. Necessity applies to natural disasters and fleeing from assailants, but it also covers less dire situations such as the minor damage that wandering animals may do by munching some grass along their path, or a person might cause in rescuing property that has found its way onto someone else’s land. Thus, retrieving Fluffy from the neighbor’s yard is necessity too. What all these situations have in common is that explicit consensual negotiations do not seem to be worthwhile. In the high-stakes examples, the emergency precludes such a transaction. In the low-stakes situations, the idea is that there is not much to be gained by requiring consent—such mundane invasions are widespread—and generally people benefit, up to a point, from a live-and-let-live approach. We hope for common sense and cooperation and try to reserve the law for situations where these don’t suffice.

Custom

Custom can limit an owner’s property rights. (In other situations custom might add to an owner’s rights, as where the law allows an owner to claim wild animals ratione loci, see Chapter 2.) Much current scholarship has explored how social norms can operate outside—or even in contradiction to the law. To take but one of myriad examples, in some cities, notably Chicago, there is a norm that people have a right to keep a parking place they have shoveled out after a snow storm for a certain time (varying by neighborhood). This custom is robust but also illegal. Similarly, groups of lobstermen have demarcated and enforced—sometimes violently in “lobster wars”—exclusive territories, which seem until recently to have prevented some overexploitation.¹⁰ Historically some areas of law have emerged wholesale out of customary regimes, as in mining and whaling. As we saw in our tour of first possession, customs such as those governing acquisition of whales may maximize value to insiders (net of the cost of enforcement) but may pose externalities on outsiders.

Here we are concerned with the way in which custom is incorporated into property law. Custom clearly featured more heavily in earlier law, and there was a time when all of the common law was considered general custom. The traditional theory was that custom is legally binding of its own force even without recognition by a court, as long as the custom is of the right sort. Courts’ long experience with custom was captured by William Blackstone in an oftcited set of requirements for enforceable customary rights: antiquity, continuity, peaceable use, certainty, reasonableness, compulsoriness (not by license), and consistency.¹¹ In England, the antiquity requirement for custom outside of mercantile law—sometimes called “time out of mind” or “so long that the memory of man runneth not to the contrary”—often was identified with the beginning of the reign of Richard I in 1189. For custom to have much force in the United States this requirement has been reinterpreted to mean longstanding use, without great clarity on how long is long enough. Especially the requirement of reasonableness gives judges discretion to determine the substantive merits of a custom if they so choose. By requiring certainty, judges can prevent customs that require a lot of expertise from binding those outside the community of origin. For example, some customs such as the duty to report a beached, marked fin-back whale would bind outsiders, but other customs would not.¹²

Custom can be mandatory or default. In reaction against landowner power in England, early American courts were inclined to enforce a custom of access for hunters over unenclosed land. Some early versions of this custom were not avoidable by notifying a hunter that he was unwelcome (orally or by a sign).¹³ Later in parts of the country where this custom is important it tends to be a default, which can be overcome by posting the land.¹⁴ The custom now is governed by statute in many places.

Perhaps the most high-profile use of custom in property law these days centers on the question of beach access. Beaches are generally divided into three zones: from the low-water mark to the high-water mark (the wet sand or foreshore), from the high-water mark to the vegetation line (the dry sand), and inland from the vegetation line. States vary, but private owners of land verging on major bodies of water usually own at least to the vegetation line. The submerged land and the wet sand area is generally public, and often subject to the public trust (see Chapter 3). Owners often want to exclude the public from the dry sand area in between the high-water mark and the vegetation line as well, and much litigation has ensued. Most states allow private ownership of the dry sand areas, but some have held that the public has a right to use the dry sand area in conjunction with recreation on the wet sand area. Some courts have held that this follows from their version of the public trust doctrine.¹⁵ Others see an implied dedication if the public has been using a particular stretch of beach. (Adverse possession is related, but often it is hard for the general public to count as an adverse possessor, in part because it is hard to sue “the public” as a defendant.) Other courts, such as those in Florida, Hawaii, Oregon, and Texas, have held that the public has rights in dry sand areas of beaches by reason of custom.¹⁶ Courts have been ambivalent on how individualized determinations of public access to beaches should be. In the variety of assets and the owners it affects, custom is a broad brush limit on the right to exclude.

Public Accommodation Laws

The enactment of civil rights statutes has recently led to a further expansion of the notion of public accommodation. The historical connection between public accommodations and race discrimination is a contested topic: Some see the common-law definition of public accommodation as having narrowed during the era of Jim Crow, in order to give business owners more of an opportunity to exclude African Americans, whereas others see the scope of public accommodation remaining unchanged and fixed on travel-related businesses.¹⁸ Title II of the Civil Rights Act of 1964 contains a very broad definition of “public accommodation.” Included are (1) inns, hotels, and motels, unless there are five or fewer rooms and the owner lives on the premises; (2) any restaurant, cafeteria, or lunch counter; (3) “any motion picture house, theater, concert hall, sports arena, stadium or other place of exhibition or entertainment.”¹⁹ Private clubs or other establishments “not open to the public” are excluded.²⁰ The provision regarding entertainment venues in particular goes beyond the common-law definition. It appears that the expansive definition of public accommodation in the 1964 Act has had some gravitational effect on the common-law definition, with the New Jersey Supreme Court finding, for example, that casinos, a heavily regulated business, had lost their common-law right to exclude for any or no reason, in this case card counters.²¹ Other courts have stuck with the narrower common-law approach: As long as the facility is not discriminating based on a protected status (like race), it can revoke a license to enter a facility such as a casino or racetrack for any or no reason at all as these are not public accommodations.

We will return to the issue of takings in Chapter 9, but might the owner claim that a governmental expansion of duties not to exclude constitutes a taking? Civil rights statutes are not vulnerable on this ground, because the harm-prevention rationale is clear. But what about the inability to exclude card counters? Or what if a state prohibits a shopping mall from excluding political pamphleteers? This was the question in PruneYard Shopping Center v. Robins.²² The U.S. Supreme Court held that because the owners had already invited the public in generally, they did not lose much when prohibited from excluding political pamphleteers. At the state level, the New Jersey Supreme Court, again the outlier, held that Princeton University’s custom of openness prevented it from excluding a person peacefully distributing political literature.²³ What all these statutes and opinions have in common is a partial withdrawal of the delegation of gatekeeping authority to owners. In the interest of openness and free speech (and card counting?), the owner’s freedom to control the business atmosphere is sacrificed. In the case of race discrimination, our next topic, society has given a clear answer. In some of these other contexts the question is far closer, especially where the original antimonopoly rationale for public accommodations does not hold. Some might see a shopping mall as a local monopolistic substitute for the town square (others might not), but it is harder to see casinos in this light.

Antidiscrimination Laws

As just noted, antidiscrimination laws have expanded public accommodation law and forbidden discrimination on the grounds of protected classes like race, sex, religion, and national origin. But antidiscrimination law has far-reaching impacts on owners’ exclusion rights outside the context of public accommodations as well.

Some antidiscrimination law flows directly from the U.S. Constitution, and the Fourteenth Amendment in particular. In the famous case of Shelley v. Kraemer,²⁴ African Americans were sold property, but neighboring landowners sued to enforce a covenant attached to the property prohibiting the property from being occupied by “any person not of the Caucasian race.” Overruling the Missouri Supreme Court, the U.S. Supreme Court held that judicial enforcement of the covenant was state action and would violate the Fourteenth Amendment.

What gave courts and commentators difficulty (and still does) is delineating when public enforcement of private property rights is state action (and when it is not) for purposes of the Fourteenth Amendment. Generally it is assumed that owners can invoke the law of trespass to exclude unwanted guests even if the owner is discriminating on a basis that would be unconstitutional if it were accompanied by state action. Thus, mere court involvement is not the test. The enforcement of racially discriminatory wills is a closer question. In Shelley, one of the factors, hearkening back to public accommodations law, was that the interlocking covenants attempted in some sense to monopolize a whole area. They were the functional equivalent of zoning, which would clearly be state action. To this one might add that covenants are contracts, and one might expect that racially discriminatory covenants would be unenforceable on grounds of public policy. Perhaps the state courts’ withholding of a public policy exception, in an area where such exceptions are routinely made, itself constitutes state action.

Among the statutes that cover antidiscrimination are some that focus specifically on housing. In the federal Fair Housing Act (FHA) of 1968,²⁵ Congress prohibited discrimination on the basis of race, color, religion, sex, familial status, or national origin, and more recently disability, with respect to availability of housing (section 3604(a)), terms and conditions (section 3604(b)), advertising (section 3604(c)), lying about availability (section 3604(d)), and blockbusting (section 3604(d)). There are very narrow exceptions, for buildings with four or fewer apartments one of which the owner occupies (the so-called “Mrs. Murphy” exception, the name itself an example of stereotyping) and for sporadic nonprofessional sales of houses. Religious institutions and senior communities receive limited exceptions as well. The vision behind the FHA was an integrationist one, but the rights conferred are individual.

As in the rest of antidiscrimination law, the harm is in part economic, in part individual dignitary injury, and in part a matter of suppressing messages of subordination. In this regard it is important that neither the Mrs. Murphy exception nor the small-time seller exception applies to advertising. Thus the small live-in landlord cannot be sued for refusing to rent to a member of a protected class, which is a concession to the associational interests of what is thought to be a close-knit living arrangement. But an advertisement for “whites only” or even “persons speaking Polish, German, or Swedish” would give rise to liability.²⁶ As this last example shows, proof issues are important in this area, with courts using the familiar mechanism of a prima facie case to shift the burden to the defendant to demonstrate a proper justification once disparate treatment or effect is shown. Despite its origins in an integrationist vision, the FHA has been held to ban discrimination in order to maintain integration (for example, where a complex is oversubscribed by minorities and undersubscribed by whites in comparison to their proportions of the population).²⁷

It is also worth remembering that other antidiscrimination laws can come to bear on a problem and they are cumulative. The Civil Rights Act of 1866 provides that “[a]ll citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property.”²⁸ This statute has been held to incorporate an expansive nineteenth-century notion of “race” so that ethnic and national groups, such as Arabs, Chinese, Jews, Germans, and even Anglo-Saxons are covered.²⁹ Other relevant federal statutes include the Americans with Disabilities Act,³⁰ which mandates various accommodations for persons with disabilities. In the landlord-tenant context this Act has generated a stream of litigation over whether pets must be allowed despite a no-pets policy on the ground that they are service animals and so protected under the reasonable accommodation mandate of the statute. State and local law can also go beyond federal law. This is particularly important in areas, such as sexual orientation, in which federal law has not yet afforded protection. State courts have struggled with the issue of whether landlords with religious objections, for example, have a state constitutional right to refuse to rent to cohabiting couples who claim protection under state laws against discrimination on the basis of martial status.³¹ Often state legislatures have not spoken with one voice over time about their policy toward cohabitation. States and localities are free to experiment with protecting additional classes, but at the risk of encouraging separatism of various groups. Again, there is a tradeoff between integrationism and other rationales for protection.

Owner Powers

Owners have more than the right to invoke trespass law subject to the qualifications just discussed. They also have a number of ancillary powers that fit into the “gatekeeper” family. These include the ability to grant and revoke licenses, confer temporary possession on a baliee, abandon or destroy property, and transfer property by gift, sale or to a successor upon death.

Licenses

The power to license is basically the ability of the owner to waive the owner’s right to exclude. A licensee is not a trespasser, but someone who exceeds the scope of the license does trespass. A dinner guest who rifles through the host’s bedroom would be an example.

License law is very confused in part because older law required that robust property rights be in writing (under the Statute of Frauds), and licenses are generally oral. Nevertheless some owners desired to make licenses irrevocable. A license coupled with a grant was presumed to be irrevocable; if a person had a right to take timber from another’s land (sometimes called a “profit”), the license needed by the right-holder in order to exercise that right could not be revoked. Also, the equitable device of estoppel would apply where a licensee invested reasonably in the license (e.g., by paving a road), and it would be unjust for the landowner to revoke the license. In such situations we can even speak of an easement by estoppel. Irrevocable licenses are much like easements (rights to use), which we take up in Chapter 8, except that an easement is enforceable against third parties (in rem), and it is not clear that a license that has become irrevocable by estoppel is in rem. In any event, most disputes are between the licensee and the licensing landowner.

Although licenses are ubiquitous in everyday life, there has not been a lot of litigation over them, leaving the law in a somewhat uncertain state. What cases there are tend to be from entertainment venues such as theaters and racetracks attempting to exclude patrons. Entertainment venues are generally not considered to be public accommodations (see above), so the question arises whether a paying customer may be ejected and what remedy if any the licensee customer should have. The analysis here is clouded by uncertainty about the relationship between a license and a contract. Not all licenses are contracts: a gratuitous license, for example, would not be supported by consideration and hence would not qualify as a contract. But suppose one pays for a ticket to see a show or attend a sporting event and is then refused admission. Does one have a contract for a license, a contract and a license, or just a license that should be treated like a contract? Surprisingly, the answers to these questions are not clear. Some courts assume that licenses are always revocable, and the only remedy for the purchaser of a ticket is an action for breach of contract, which would ordinarily be damages.³² Other courts have suggested that the ticket creates a license coupled with a grant to see the spectacle, which is not revocable absent good cause. Still others seem to think that the contract remedy matters here—that the theoretical availability of specific performance makes the license irrevocable.³³ Finally, there is the question of whether the owner commits an assault if he or she tries to remove a patron unwilling to leave. Does a contract right (or a right to specific performance) turn the effort to eject a patron into an assault?

The case law on these questions is in an unsatisfactory state, but the tendency is increasingly to treat a license given for consideration like a contract and to determine and enforce the terms of the contract in resolving the dispute. Because the issues here mostly affect the contracting parties, businesses that want to retain the right to exclude can make their licenses more clearly revocable. The contractual approach may also do best in meeting people’s expectations. Most of the time, market pressures and concerns of reputation constrain the owners of businesses such as theaters not to eject patrons arbitrarily. This is probably the main reason these questions come up so infrequently in litigation. Nonetheless thinking about these issues is relevant for figuring out the nature of an owner’s property rights, and their extent.

In intellectual property, licensing is commercially important, and an IP license works differently from the traditional real property license. Like traditional licenses, an IP license is a waiver of exclusion rights. But unlike licenses generally, IP licenses are presumed to be irrevocable. In a sense IP licenses work more like easements. Restrictions in the nature of easements and covenants (servitudes) have always been regarded with suspicion when they attach to personal property and are intended to follow the property into remote hands. Similarly, under the doctrines of first sale in copyright and patent exhaustion in patent law, the owner of an IP right is not allowed to condition the sale or licensing of embodiments of the right (a book, a computer chip) upon further restrictions in the hands of remote parties. Much of the wisdom of these rules turns on whether such restrictions make the world more complicated (creating an informational externality). If so, some of the restrictions on freedom of contract from the first sale and exhaustion doctrines would be warranted.

Bailments

Owners sometimes want to give custody temporarily to another while retaining ownership. In such a relationship we call the owner giving up custody the bailor and the person who takes custody for the time being the bailee. Entrusting one’s clothes to a dry cleaner, one’s coat to a coat-check clerk, one’s car to a valet parker, or one’s lawn mower to a neighbor all are bailments. Unlike in a lease, the owner-bailor is free to resume possession at any time, and the bailment tends to give the bailee more limited rights to use than a lessee has under a lease. Because bailments serve a wide variety of purposes, the rules for finding them and the duties they imply vary by context. Many bailment cases have resulted from cars stolen from parking garages. Valet parking is clearly a bailment, but parking garages are borderline cases. The degree of control of the garage owner, expectations of security to be provided by the garage, whether the garage is enclosed, whether the owner keeps the car key, and potentially other factors relevant to whether there has been a transfer of possession and party expectations can come into play.³⁴ Giving a ticket or a receipt can be important in finding there is a bailment. If the bailor gets a ticket when surrendering custody, and the ticket is supposed to be matched to the item at retrieval time, this both points to there being a bailment and also absolves the bailee of misdelivery if the bailee delivers the item to someone presenting the ticket. What does not seem to do much work is the printing on the back of a ticket disclaiming a bailment. This is interesting because bailments are in personam relationships, as between the bailor and bailee, and often arise by contract.

Traditionally when it comes to liability for lost, stolen, or destroyed property, bailees have been held to a standard of care varying according to who benefits from the bailment. If the bailment is for the benefit of the bailee, the bailee is held to a strict standard of care; an example would be the neighbor borrowing the lawn mower. If the bailment is for the benefit of the bailor, the bailee is held to a standard of slight care; an example would be leaving a laptop with a friend while going to the bathroom. If the bailment is for the benefit of both parties, reasonable care is called for; many commercial bailments, such as watch repair, would be of this type. Other sources simply replace this three-tiered system with a general standard of reasonableness that will vary in part according to who benefits from the bailment.

Duties also vary by context. As noted, the reasonable care standard applies to the injury to the chattel, its loss, and its theft by a third party. However, misdelivery falls under strict liability. This could be for historical reasons based on the cause of action (conversion rather than negligence), or perhaps collusion is a particular danger in the case of apparent misdelivery.

As for third parties, another set of problems in bailments concerns their in rem aspect: From the point of view of the outside world, the bailee may appear to be the owner because the bailee is in possession and possession is often (but not always) associated with ownership.³⁵ If the bailee is of a mind to be deceptive, then innocent third parties might mistakenly purchase the item from the bailee. In general, U.S. law is less protective of good faith purchasers from bailees than many other legal systems, but if the owner has entrusted the good to a merchant who deals in that type of good, a good faith purchaser for value will have better title than the bailor.³⁶ The idea is that at least in these situations the bailor has more control over creating the appearance of ownership. In other situations some kind of estoppel might apply if the bailor has done something out of the ordinary to clothe a nonmerchant bailee with the trappings of apparent ownership.

Abandonment and Destruction

Owners might want to dispose of an asset but not to anyone in particular—just eliminate their own ownership. In the case of personal property this is usually unproblematic. People throw away personal property all the time, subject to laws against littering and polluting. To count as abandonment, a person needs to have an intent to disclaim possession (and ownership) with no intent of resuming it, and perform some act manifesting that intent.

For interests that are less than full ownership of land, the rules for abandonment are similar to those in personal property. Many cases involving disused railroad rights of way raise this question. Something more than discontinuing train service is usually required. Taking up the tracks would be one act that would indicate an intent to abandon.³⁷ For full ownership of land, abandonment is usually not an option.³⁸ The law seeks to prevent land in private ownership from failing to have an owner. Otherwise all sorts of nasty environmental problems and other nuisances might be left for society to clean up. (These are more likely to be covered by statute these days, but the concern retains some validity.) It is true that an owner may lose the land if taxes are not paid, but the government need not accept ownership of the land. No one is ever forced to accept ownership of any asset.

The right to destroy mainly comes up in the case of personal property but can also apply to structures attached to land. (Land itself is harder to destroy.) Generally unless a person can be found incompetent and a guardian appointed, a person is free to destroy his or her own property. You can destroy your own watch, even if it is a Rolex. Courts occasionally intervene to prevent destruction directed in a will,³⁹ but even here one can question the wisdom of strong constraints on owners’ freedom. Although it might appear that a dead person does not experience the harm or the satisfaction from the destruction, people generally might experience happiness knowing that their instructions will be carried out after their deaths. Also, in many situations a person making the decision to direct destruction in a will could sell or devise the object (or a future interest in the object to take effect on their death; see Chapter 5), implying that the owner does take into account the opportunity cost of the destruction. (Recall Demsetz’s theory that an owner acts as a broker between the future and the present; see Chapter 3.) Nevertheless, the apparent waste of an asset that has positive value to society is painful to observe, and in certain high-profile contexts, laws prevent destruction directly. Notably, Italy has strong laws preventing destruction of works of cultural significance, in an example of private rights being subject to overriding rights in the public, here against destruction. Historic preservation laws in the United States similarly remove an owner’s right to destroy buildings that have been determined to have architectural or historic significance.

Transfer by Sale, Gift, and Inheritance

Much of the time an owner wishes to eliminate his or her ownership while creating ownership rights in another—to designate a new gatekeeper. This can be done for consideration (sale), gratuitously (gift), or by succession on death (will or intestacy).

Sales of goods are usually covered in contracts and commercial law courses. Property issues arise where the question is whether the seller really has the rights to transfer. We return to this issue, for both personal and real property, in Chapter 7. For real property, sales are quite complex and take place over an extended period of time. After the sale, the contract “merges” with the deed so that the buyer may only sue on the deed, which often includes warranties (such as of title).

Except for assets that are inalienable (which they might be for personhood reasons, for example), the policy of the law is to promote alienability. Courts distinguish between total and partial restraints on alienation. Total restraints on alienation, such as a gift of a painting to a friend on the condition that it may never be sold, are always struck down as violating this policy. Partial restraints are subject to a more nuanced treatment. Generally speaking, partial restraints are invalid only if they are unreasonable. For example, condominium units in a retirement community may be subject to a restriction that they may only be sold to someone over a certain age. This is likely to be regarded as reasonable, given that it does not unduly circumscribe the universe of potential buyers and furthers a reasonable purpose in maintaining the identity of the community. In some cases a partial restraint on alienation may even promote alienation: The original owner would not be comfortable alienating the asset without the restraint. The retirement condominium might be an example of both beneficial effects of such restraints. Nevertheless, much in this area (as in so many others) rests on empirical guesswork. If owners face the future benefits and costs of the restraints they place on their property (through the price it fetches today—recall the discussion of Demsetz in Chapter 3 and of the right to destroy in this chapter), then we might ask why a doctrine is needed to invalidate any restraints (other than ones that violate some independent public policy such as antidiscrimination). Perhaps some restraints make the alienation process in general too cumbersome by giving buyers more to be on the look out for. Or perhaps the law is a little paternalistic in this regard.

Alienation need not mean sale. Assets can be given away. Gifts are often embedded in a social context where reciprocity is expected, and there are traditional societies in which gift-giving is a major component of the economy. Neverthless, American law treats gifts as distinct from contracts and sales. For a valid gift there must be a donative intent, delivery, and acceptance. The delivery requirement can sometimes be fairly formalistic—as where A wants to give something to B but remain as bailee for B. To do this A may have to hand the thing over to B and then take it back.

Some gifts are conditional on an event happening. Defeasible fees, which we consider in Chapter 5, are commonly used to make conditional gifts. Another important and special type is a gift causa mortis. Here the owner designates someone else to receive the object on the condition that the owner dies; otherwise the owner will keep it. Think of a car owner planning to climb Mount Everest, who tells a friend that the friend is to have the car if the owner doesn’t make it back.

Gifts causa mortis are a substitute for wills. Wills and intestate succession are the subject of a special course, Trusts and Estates, and we offer only the briefest sketch here. Basically, the ability to transfer on death is an important and well-recognized power of ownership under American law. Compared to the typical civil-law system, testators under American law have much freedom to designate who takes. One of the few exceptions is the spousal elective forced share, which allows spouses cut out of a will (or otherwise unhappy with a decedent’s disposition) to take a legislatively prescribed portion of the estate, often one-third. Otherwise testators are free to designate the objects of their bounty.

Wills are subject to a variety of formalities such as attestation by two witnesses. Will formalities have been somewhat relaxed of late. But they are hard to eliminate altogether, because when a will becomes relevant the testator is no longer around to ask what he or she meant. And once the testator is dead, interested parties are only too willing to offer self-serving versions of the decedent’s intent (not to mention the possibility of coercion or undue influence to write a will in the run up to the death). The reason gifts causa mortis and other will substitutes are sometimes regarded with suspicion is that they can wind up allowing an end run around these formalities.

If a person dies without a will (as most do), or a will is found totally or partially invalid, intestacy statutes will kick in to designate the decedent’s heirs, usually the decedent’s spouse and any children, and then relatives. If there are no heirs and no will, the property escheats to the state. Even in intestacy an owner can be thought of as exercising a power, in that intestacy is like a default will, and there is an attempt to mimic what the average decedent would put in a simple will if there were one. People have a natural desire to help their children and immediate relatives, but as the debates over inheritance taxes attest, there is disagreement about how much weight to give this desire as against other things society might do with resources that owners leave at death. Intestacy and even wills involve the probate process, and to avoid this, well-advised people often use trusts, a highly flexible device to which we return in Chapter 6.