First Possession Case Analysis

ELEMENTS OUTLINE
Pierson v. Post (NY 1805) FIRST POSSESSION CASE

Facts: Post was hunting a fox on a deserted beach when Pierson intercepted the fox and killed it.
Issue: Did Post state a cause of action sufficient to prove that he had initial possession of the fox he
was chasing? Was pursuit enough to grant property rights in Post?
Holding: No, mere pursuit is insufficient to claim possession of fox. To gain property rights in a wild
animal one must occupy it, which requires more than pursuit.
Rationale:
Pursuit alone is NOT enough (experts, Justinian, etc.)
Occupancy can be defined as mortal wounding, by one not abandoning his pursuit, with an
intent to keep the animal for his own use
Must deprive animal of its natural liberty and bring the animal under control
In this case Post was merely pursuing, so the fox became the property of Pierson when he killed
the animal
Policy: the court must define limits on huntsmen to keep peace and order in society and limit
the amount of needless litigation.
Dissent (Livingston): It is NOT fair to allow another person to intercept and kill an animal that
another person has put the labor into pursuing. The pursuer should be allowed to have a
property interest in a wild animal if the pursuit puts them within reach of the animal, or if their
pursuit had a reasonable prospect of taking the animal.
Other Factors: Major case. Guns, dogs, horses in pursuit. No precedent uses, just persuasive
authority. Both parties agree that first to occupy gets possession argument about what extent is
required for occupying.
FACTORS DISCUSSED IN ANALYSIS

Precedent: Use of prior court decisions, expert opinions, treatises, statutes, Constitution,
regulations. Precedent is needed to maintain order in society and to maintain consistency
Significance of Facts
Ratione Soli: animal that is on land is the property of the land owner until the animal is no
longer on that land.
Custom: should we adopt customs as law? Dissent thinks that we should look to the hunters
customs to decide the case.
Certainty: is the rule easily applied at the time? Easy to sort out in court? Everybody knows
the rule? Accuracy v. Precision. Need flexibility in rules.
Labor: Labor-Desert Theory if you work hard you should get something for it. Provide an
incentive for those who labor. Problems: some people have different abilities which produce
different labor, should we reward that? Ineffective labor.
Economic Benefits: Substitution Effect: if you arent getting enough reward from something
you change to something else that is more rewarding. Income Effect: if you arent getting
enough reward from something then you work harder to gain reward. Does the majority rule
encourage killing foxes?
Intangible Interests: Interference with the hunt. Bad Intent.
First In Time: Both sides agree it was first-in-time but first to do what?

1
Liesner v. Wanie (Wisc. 1914) FIRST POSSESSION CASE
Facts: Liesner boys shot a wolf and claimed they mortally wounded it. They pursued the animal,
making its escape improbable, if not impossible at this point. Wanie (D) arrived at the wood pile and
interfered by delivering the final shot that killed the wolf. D then took the body of the wolf as his
property.
Issue: Did Wanie offer sufficient evidence to show that there was reasonable doubt that Liesners shot
was the fatal shot, thus gaining ownership of the wolf?
Holding: Liesners shot sufficiently wounded the wolf and Wanie did not present sufficient evidence to
create a reasonable doubt that Liesners shot was not a mortal wound.
Rationale:
If the Liesners had deprived wolf of its liberty and made escape highly improbable, if not
impossible, then it became the property of the Liesners, regardless of Ds actions in killing the
wolf.
RULE: The instant a wild animal is brought under the control of a person so that actual
possession is practically inevitable, a vested property interest in it accrues which cannot be
divested by anothers intervening and killing it.
Substantially permanently deprive the wolf of its liberty and had him so in their power that
escape was highly improbable
Wolf couldnt move, substantially deprived of its liberty
Policy: The court deferred to the trial courts fact decisions because of their superior
advantages. The trial court has the advantage of listening to witnesses directly in order to
assess their credibility.
Other Factors: Liesner = 2 boys, Wanie = 1 man. The test used was substantial, permanent,
deprivation of liberty. The Liesners successfully argued that they had possession of the wolf by
mortally wounding it without abandoning chase.

Mortal Wounding: Liesner boys shot the wolf
Pursuit: continued pursuit without abandoning chase
Taken away natural liberty and rendered escape impossible: wolf was injured
Labor: effective vs. ineffective labor
Power vs. Control
Use of evidence: bullets, bullet hole, expert testimony, pelt, dogs
2
State v. Shaw (Ohio 1902) FIRST POSSESSION CASE
Facts: Private fishermen were trapping fish in a net that they owned. Some fish could get out of the net
when they came in over the top, but under ordinary circumstances, few did. Thomas and others
removed fish from the net.
Issue: Did the trial court err in directing a verdict for the defendant on the ground that the defendant
did not commit grand larceny because owners of nets cannot have property rights in fish found in their
nets where the fish can escape from the nets?
Holding: The fish were adequately secured in the nets to be the property of the net owners.
Rationale:
Fish contained in a tank or net are sufficiently secured
RULE: To acquire a property right in a wild animal, the pursuer must bring them into his
power and control, and so maintain his control as to show that he does not intend to abandon
them again to the world at large.
Must maintain reasonable precautions to prevent escape
The law does not require absolute security against the possibility of escape
In this case, the fish were confined in the nets, from which it was practically impossible to
escape
The fish that were taken had not escaped, they were not in the wild, and it does not appear that
they would have escaped
The possession of the net owners was so complete and certain that the defendants went to the
nets knowing that they would get fish from them
Prevailing Rule: animal brought under control such that escape is practically impossible =
possession
Policy: Requiring that the nets be escape-proof would be too great a burden to prove and the
proof would use up too much court time. Also, fisherman should be rewarded for making or
using nets that work reasonably well for their purposes. (Labor theory)

Certainty: different from certainty in Pierson where the certainty was against stealing from
others. Here, it is the certainty that the net will result in property rights in the fish
Perfect Net Rule: unnecessarily technical
Labor: want to reward fisherman who are using nets, even if the net is not perfect
Control and Intent to Maintain Control
Notice to finders: using an old boat as a net is not sufficient notice to others
Rule Across Cases: Animal under a hunters controlhave to take reasonable precautions to
prevent escape.
Who is Affected by the Rule?
3
DEMSETZ : THEORY OF PROPERTY RIGHTS (1967)
Hypothesis I: The emergence of new property rights takes place in response to the desires of the
interacting persons for adjustment to new benefit-cost possibilities.
DecisionOld RuleExternalitiesChangeIncrease in ExternalitiesNew Rule
Example:
Old Rule: No rule
Externalities (low): Harms to the fish industry
Change: New technology
Increase in Externalities: Change in the perception of the problem
New Rule: Response to public reaction No taking fish
Example:
Old Rule: Only possession represented property rights
Externalities: no worries about killing beavers
Change: Fur industry fur became valuable
Increase in Externalities: over-hunting occurred because of valuable pelt
New Rule: Private property is allocated can kill the beavers only on your property
Hypothesis II: The tendency to internalize externalities will tend over time to result in property rights
being held by individual private owners.
Examples of Communal Ownership:

Condo Association Gym everyone has a right to use equipment
Common areas in community living situations
Examples of State Ownership:
Military bases
Post Office
Airwaves
*Private property has fewer externalities

*Communal ownership has higher externalities
*Over time, systems will tend to drift toward private property rights
- usually starts as communal and gradually shifts towards private ownership property rights
4
Manning v. Mitcherson (Ga. 1882) ESCAPE CASE
Facts: Canary was in original owner, Mitchersons, house for 2 years prior to its escape. The canary
responded to its name Sweet. The owner had combed the crest feathers into a part. This canary had
escaped once before and returned. The finder of the bird found it 4 days after it had escaped and gave it
to the Mannings.
Issue: Did the lower court err in granting possession to the original owner?
Holding: No, the lower court did not err in granting possession to the original owner because the
owner did retain property rights in the escaped canary that she had owned for two years prior to
escape, trained to recognize its name and combed its crest in a distinctive manner, that had escaped
once before and returned in a day or two, that was found five days after escape, and whose
whereabouts she discovered a day after it was found.
(you can include as many facts as needed to make the holding more narrow or broad)
Rationale:
Reasonable certainty that there was a prior owner
Distinctive mark (crest) shows prior ownership
Animus revertendi (animals escaped and returned before)
Animal responds to its name
The bird was only gone 4 days before it was found it hadnt traveled far
Policy: Protect owners investment in training and domesticating the animals. We might want
to believe that the finder should know that the animal had a prior owner.

Certainty
o For finders: want clear mark to distinguish who the owner is
o For Owner: certainty that as soon as something runs away it isnt lost forever some
leeway should allow for escapes
o For Decision Maker: We like relatively bright line rules, easier to apply and determine
Marking: parted crest
Intent to Return: had escaped and returned before
Distance Escaped: found at neighbors
Time: only 4 days
Pursuit: the owner pursued the animal reasonably
Domestication/Taming: answered to name
Labor: owner spent time taming/domesticating the bird
At what point does the animal become wild again?
Natural Habitat: is a canary out in January in its natural habitat?
5
Mullett v. Bradley (NY 1898) ESCAPE CASE
Facts: Sea lions are native to the Pacific Ocean and are not found in the Atlantic. Plaintiff placed a sea
lion he owned on an island in the Atlantic off of NY, from which it escaped. Plaintiff made no effort to
recapture it. A fisherman found it in the Atlantic two weeks later, more than 70 miles from the island,
and sold it to the defendant. A year later, plaintiff recognized the sea lion and demanded its return.
Defendant refused.
Issue: Did the lower court err in dismissing the plaintiffs claim because the owner of a sea lion retains
property rights in the animal when it escapes into the Atlantic with no intent to return, because the
Atlantic is not its natural habitat?
Holding: No, the trial court did not err in dismissing plaintiffs case because the owner of a sea lion
does not retain property rights in the animal when it escaped into the Atlantic with no intent to return,
even though the Atlantic is not its natural habitat.
Rationale:
The original owner of a wild animal loses property if the animal escapes and regains its natural
liberty unless it has animus revertendi intent to return.
Here, the evidence shows that the animal broke away as soon as it could, traveled a
considerable distance, and failed to return in two weeks, thus displaying NO intent or custom to
return.
The court defined natural liberty to mean when the animal can provide for itself, in the
broadest sense which the phrase may be used; or when it is free to follow the bent of its
natural inclinations.
The court then said that this was true for the sea lion in the Atlantic, even though sea lions are
not native to that ocean.
Because the sea lion had no intent to return and had returned to its natural liberty, the
original owner lost property rights.
Policy: The court thinks that this law is well settled and familiar and that the facts at hand fit
directly into those considerations, FINDER wins.

Animus Revertendi: no intent to return
Natural liberty: able to provide for itself free of restraints
Native Habitat: does not have to be in natural habitat
Distance: traveled 70 miles in this case
Time: found two weeks later; one year after loss of sea lion owner found
Control of owner: owner did not have control
Abandonment: owner didnt demand return until 1 year later (left it for one year)
Labor: want to reward the owner who isnt careless with his property
* Court doesnt talk about abandonment specifically in this case he had already lost his property
rights
6
E.A. Stephens & Co. v. Albers (Colorado 1927) ESCAPE CASE
Facts: Albers is part of a large local profitable fox-breeding industry. Fox in question was a type NOT
found locally in the wild, was born in captivity, had registration # tattooed on its ears as is common in
the industry, was sold to Albers, and was tamed enough to eat from its keepers hand. Fox escaped.
Albers pursued but was stopped by nightfall. The next night, fox was killed 6 miles away by rancher,
who gave pelt to trapper, who sold it to EAS, an expert in the industry. EAS did NOT inspect the fox
for signs of prior ownership, but knew that fox was not being sold by its original owner and that it had
been killed in a way unusual for that type of fox.
Issue: Did the lower court err in entering judgment for the plaintiff because the original owner of an
escaped animal that was killed retains property rights in its pelt where there was a valuable animal that
was bred as part of a large industry, it was semi-domesticated, it was marked with identification tattoos
customary in the industry, the owners gave up pursuing it only by compulsion, and the finder should
have known that the animal had escaped from a breeding farm.
Holding: (Broad) The original owner of an escaped animal retains property rights in that animal where
it was a valuable animal, owner invested labor and money, and the finder should have known that the
animal had escaped from a prior owner. (can add as many facts as necessary)
Rationale:
The common law rule (Blackstone/Mullett) does not apply in this case where the escaped
animal is valuable
Here, the animals are valuable and are part of an important industry and the court will develop
rules to protect the owners investment
Economic policy: reward the fox farming industry
Like an elephant found in a cornfield, one should recognize that it belongs to another,
especially since the finder was an expert
Fairness argument
Policy: This new rule is good because it protects the time, labor, and investment of the owner
by taking into account the value of the animal. It also discourages bad finders from cashing in
on someone elses investment.

Value of the animal: very valuable in this case as opposed to Mullett
Economic Policy: want to protect the industry, realize industry is important
Marking: tattoo is a very strong mark
Custom: finder knew the customs
bad finder: expert in the field should have known the fox belonged to someone else
Abandonment: in this case by compulsion (nightfall)
Intent to return: none in this case
Taming: fox was semi-domesticated
Time/Distance: fox was 6 miles from farm
Certainty: for owner marking is clear (tattoo) and he shouldnt lose his investment
* 1st time Ds knowledge is added to discussion: what D knew or should have known
Protection of Industry, Time/Distance are key, SEE Taber

7
Kesler v. Jones (Idaho 1931) ESCAPE CASE
Facts: Fox from plaintiffs breeding farm had escaped and been recaptured once. It escaped again and
plaintiff pursued it. A short time after the escape and a short distance away, a neighbor found the fox
among her chickens and asked defendant for help. Defendant shot and killed the fox, unaware of its
prior captivity or plaintiffs ownership. Plaintiff requested the pelt but defendant refused.
Issue: (1) Did trial court err in entering judgment for the defendant because a person has no right to
kill a fox escaped from captivity when asked by a neighbor to help protect the neighbors chickens,
which the fox is attacking?
Holding: No, the trial court did not err in entering judgment for the defendant because a person has a
right to kill an escaped fox who is attacking the neighbors chickens.
Issue: (2) Did the trial court err in entering judgment for defendant because the owner of a fox loses
property rights because it has returned to natural liberty when it escapes with no intention of returning
and is reasonably killed in protection of private property rights, but has escaped and been recaptured
before, was killed a short time and distance from its escape, and its owners were still pursuing when it
was killed?
Holding: Yes, the trial court erred in entering judgment for the defendant. The owner of a fox does not
lose property rights because the fox has returned to natural liberty when it escapes with no intention of
returning and is reasonably killed in protection of private property rights, but has escaped and been
recaptured before, was killed a short time and distance from its escape, and its owners were still
pursuing when it was killed.
Rationale:
A person has a right to kill a trespassing animal, whether wild or tame, if it appears reasonably
necessary to protect his own property from the animal.
In this case the killing was reasonable
When wild animals escape from their owners and regain their natural liberty with no
intention to return, the owners lose their property rights in the animals. However, there is
an exception where the wild animals of a menagerie escape from their owners immediate
possession. In such cases, the court are constrained to hold that the animals had not so regained
their natural liberty as completely to destroy the owners property rights.
The court found that given the owners pursuit, the short time and distance involved, and the
prior escape and return, that this case fell within the exception even though the D believed the
fox to be wild and unowned.
The court believes that Albers is squarely on point with this case
Policy: the court may have believed that it would be unfair for an owner of such valuable
property to lose property rights so quickly

Time/Distance: fox had not traveled far
Pursuit/Abandonment: owner was still pursuing fox
Prior escape and return: fox had escaped and returned once before
Value of animal: very valuable fox and industry
Intent to return: no intent by fox to return
Natural Liberty: fox had returned to its natural liberty
Marking: no marking in this case
Intent of Finder: no bad finder
8
Taber v. Jenny (Mass. 1856) ESCAPE CASE
Facts: P boat has pursued and killed a whale, then proceeded to anchor the whale in the water with
irons and waifs attached to retrieve the next day. After making sure the whale would not drift, the boat
went to shore. A few hours later D boat came upon the whale and brought the whale to ship along with
the irons, waifs, and anchor attached. D captain, when asked, would not return the whale remnants and
instead took them and sold them.
Issue: When the owner of a whale, killed at sea, marks and anchors the whale but leaves it at sea, does
he lose property rights in that whale?
Holding: The owner of the whale, killed at sea, who marks and anchors the whale but leaves it at sea
with no intention of abandoning it, does not lose property rights in that whale and those rights cannot
be divested by another.
Rationale:
When property is separated from the owner, at sea, by force of the elements, or even by
abandonment by necessity, the person who finds the whale does not have a right to convert it to
his own use, and cannot thereby divest the right of the original owner.
In this case, the whale had not been abandoned by the owner, but had been left with the
intention to return, which occurred within 24 hours.
A ship or merchandise found upon the ocean is still the property of the original owner, no
matter how distant he may be. If this is the law for property found drifting upon the ocean, it is
even stronger for the property found drifting and left only temporarily, with intention to return
and possess.
By capture, killing and possession, it had become absolute property of the P, and the anchor,
waifs and irons, were unequivocal proof, not only that it had been killed and appropriated, but
of the intention of the captors to reclaim and repossess it.
Policy: Labor argument: do not want to divest OO of property rights
The custom that D will try to argue is: when a whale is found adrift on the ocean, the finding
ship may appropriate it to her own use, if those who killed it do not appear and claim it before
it is cut in.
o This custom does not apply here because the court finds that the whale was NOT adrift
in the first place
o Custom is a question of fact, not of law

Marking: Irons, waifs, anchor clear marks and clear notice to finder
Abandonment: in this case the owner was only gone overnight no abandonment from
Kesler and Albers, doing what is necessary
Bad Finder: D should have known the whale was Ps, industry knowledge
Custom: not used in this case whale was NOT adrift
Salvage: court does not discuss but it would be more appropriate in this case
Labor: people who pursue, capture, and kill a whale should not be divested of their property
rights
Natural Liberty (under Mullett): whale might be at natural liberty if it were freely drifting
but not in this case when it was anchored
Time/Distance (under Albers): whale could not travel because it was anchored and had only
been left for 12 hours (both short)
9
Protection of Industry (under Albers): Similar to Albers, the court here wants to leave
possession in OO to protect the valuable whaling industry
Barlett v. Budd (Mass. 1868) ESCAPE

Facts: P killed several whales and left one out at sea anchored with waifs attached. P left whale and
went to shore for the night. D found the whale and towed it to their ship where they cut in and boiled it
down. Witness testified that D found the whale adrift, anchor not holding, cable coiled around the
carcass, with no waifs or irons attached. The P notified them on the spot that the whale was his.
Issue: When the owner of a whale captures and kills a whale, but leaves it anchored at sea for the
night, does he lose property rights in that whale?
Holding: No, the owner does not lose property rights in a whale when they leave it out at sea anchored
for the night.
Rationale:
A whale, being ferae naturae, does not become property until a firm possession has been
established in the taker.
In this case, as in Taber the anchor attached to the whale shows sign of actual capture by a
previous owner
D tries to argue the same custom of the drifting whale that was argued in Taber
The court says whale was not adrift because of anchor attached
The court suggests that it cannot uphold a custom that gives property to a finder after such a
short amount of time and in a way that is so open to fraud and deceit
Policy: do not want to reward bad finders who should have known the whale was captured by
another owner

Marking: importance of the anchor shows sign of prior capture and possession; the marks
are not as strong as in Taber
Labor
Custom: not used in this case whale not adrift anchor still attached
*One possible way to solve these cases is the usage of salvage

*Harpoons do not always signal ownership whale could have traveled a long distance before dying
with harpoon still in it owner may not have pursued
10
Swift v. Gifford (Mass. 1872) FIRST POSSESSION CASE
Facts: Ds boat harpooned the whale, but the whale escaped dragging the iron and line and outran the
boat. P came upon the whale and captured it, not knowing that D was pursuing the whale. D came upon
Ps boat and took the whale back saying that his iron was found in the whale and the custom is that a
whale belongs to the vessel who iron first remains in it, provided claims is made before cutting in.
Issue: Does an owner lose property rights in a whale when it escapes yet the iron still remains in the
whale and he claims possession before another cuts in to the whale?
Holding: The usage is in the iron holds the whale.
Rationale:
This is an ancient usage that should not be overturned
Want to maintain order and consistency in the industry
Pursuit must still be continuing
Usage unique to whale industry in this region
11
Ghen v. Rich (Mass. 1881) FIRST POSSESSION; ESCAPED ANIMAL
Statement of the case- Ghen, killer of whale [whose carcass sank and later floated onto
beach], sued Rich, who purchased carcass from finder, presumably for conversion
seeking damages for the value of the whale.
Facts: P killed a whale, which immediately sank, and a few days later was found on the beach by Ellis.
Instead of sending word to Provincetown, as is customary, Ellis sold the whale to the D, who used the
blubber and oil. P heard of the finding and sent his crew to claim it. P claims title to this whale under
the usage.
Factual Disputes- Whether the respondent or libellants usage entitled them to the whale
Court resolves this in favor of the libellant.
Issue:
Should a wild animal marked, in accordance to custom, as the property of a particular individual be
recognized as such even though a third party has already found that animal and sold it to another
person?
Holding: Property in the whale goes to the original owner who did all that was reasonable to kill and
capture the whale. When the whale floats to surface it is assumed that whoevers bomb lance is found
in the whale is the rightful owner.
Rationale:
The usage in this case is reasonable. Unless it is sustained this industry would cease, for no
person would engage in it if the fruits of his labor could be appropriated by any chance finder.
Reasonable salvage is given to the finder

Custom: custom is used as law
Marking: there is marking on the iron
Bad Finder: finder is not from the industry, but he could have figured out that it was killed by
someone - he must have gone through someone who was familiar with the industry and custom
Certainty: industry
Externalities: If the court does not follow the custom, it will reintroduce all of the externalities
into the industry costs to the industry because whalers will not want to kill the whales if
others can appropriate them for their own use. Large cost to not using the custom. The
argument is that custom should remain the law as it handles the externalities well.
12
Carol Rose: Possession as the Origin of Property (1985)
Labor Theory:
Rewarding useful labor with possession of property
Problems with this theory:
One may not own their labor could be laboring for someone else
Isnt clear on how far labor goes in establishing a right
In Pierson v. Post: the majority was arguing for a clear act principle while the dissent was arguing for
rewarding labor. However, each side acknowledged the importance of the other sides principle.
Therefore, maybe there is a way to reconcile the labor theory with the clear act theory.
Clear-Act Theory:
Common law defines acts of possession as some kind of statement
Adverse possession example: A.P. rewards useful labor in the trespasser, but also requires the
original owner to assert her right publicly
Shoveling out a parking spot useful labor is not enough you must put a car in the spot as a
clear act that it is yours
Thus it turns out that the common law of first possession, in rewarding the one who communicates a
claim, does reward useful labor; the useful labor is the very act of speaking clearly and distinctly about
ones claim to property.
The question that Rose is asking is: are you sending out the right signals to show people that you own
something?
13
Westmoreland v. De Witt (Penn. 1889) Rule of CaptureNatural Gas
Facts: Landowner, Brown, leased the right to extract natural gas from his land to Westmoreland. After
the drilling began, a dispute arose, and Brown claimed that Westmoreland had forfeited his lease rights
and ejected Westmoreland. Brown then entered into a new extraction lease with DeWitt. DeWitt began
drilling its own well and Westmoreland sued to prevent DeWitt from extracting any gas. The learned
master who tried the case found that because Westmoreland was not in possession of the land at the
time the action was brought, it lacked standing to prevent DeWitt from drilling.
Issue: Does Westmoreland need to be in possession of the surface of the land to bring suit to stop the
extraction of gas?
Holding: No, possession of the land is not possession of the gas.
Rationale:
Gas is a mineral ferae naturae similar to animals with the power and tendency to escape
without the volition of the owner.
Minerals belong to the owner of the land, and are part of it, so long as they are on or in it, and
are subject to his control; but when they escape, and go into the land of another, or come under
anothers control, the title of the former owner is gone.
In this case, Westmoreland, under the lease, had put down a well and tapped the gas. They had
it in their control, for they had only to turn a valve to have it flow into their pipe, ready for use
Brown had no possession of the gas at all
By the lease, Westmoreland has an easement to get to the gas but has no right to use the surface
which is not directly used to extract he gas
If there are multiple claims by adjacent property owners, the first one to take it out of the land
wins

First Possession
Capture
Control
14
Hammonds v. Central Kentucky Natural Gas Co. (KY 1934) ESCAPE GAS CASE
Facts: The gas company exhausted gas from a field, most of which land it has under lease. The gas
company then brought in vast quantities of gas from different fields and put it by force through its
previously drilled wells into vacated underground reservoir, withdrawing it as desired. Hammonds
owned 54 acres of land within those boundaries which she never leased to the gas company. The
underground reservoir underlies this portion of her land.
Issue: Did the gas return to its natural liberty by being placed in a natural underground reservoir, no
longer making it the property of the original owner, and therefore becoming mineral ferae naturae until
it is again extracted and brought under the control of another?
Holding: The gas had returned to its natural liberty, therefore the gas was no longer the property of the
original owner.
Rationale:
The gas belongs to the owner of the land as a part of it so long as it is on it or subject to his
control, when the gas is gone, his title is gone.
Gas is not the property of anyone until it is reduced to actual possession by extraction under a
right to do so.
Gas is similar to a wild animal, it becomes the property of the person who captures and kills the
animal.
When the animal is restored to its natural and free state, the dominion and individual possession
of any person over that animal is at an end and then animal resumes its status as common
property.
In this case, when the gas company restored the gas to its natural reservoir, it became common
property and not under the control or possession of any one person.
Policy: This rationale rewards labor by giving property rights in the gas to the person who
extracts the gas, not the person who simply owns the land above the gas.
Policy: Beneficial to society to store gas underground. There may be hazards to above ground
storage. Underground storage is efficient, thereby reducing costs.

Capture
First Possession
Wild Animals
Right to use property: in this case, Mrs. Hammonds right to use her property or lease it to
someone else is taken away
Labor
Compensation
Burden to Society
Alternative rules to use: shares, state owned gas, marking, share plus salvage
Property rights = extraction

15
Hammonds- Capture, first possession, wild animals, right to use property, labor,
compensation,burden on society, alternative rules to use
White-Marking, natural liberty, use of statutes, labor, value, notice, use of eminent domain
White v. New York State Natural Gas Corporation (Penn. 1960)

Facts: Updegraff owned gas leases with producing wells and entered into a contract with P White
under which White obtained a right to a portion of the proceeds resulting from the sale of the
production of the gas wells. Updegraff's son sold, transferred and conveyed the leaseholds and gas
wells to D New York. D New York entered into agreement with D Tennessee to share the use of the
storage pool for gas. The production of the well was steadily declining up until 1954. D Tennessee and
other gas company United began to store gas from Southwest United States in D Tennessees part of
the pool. The gas migrated from Hebron part of pool to Ellisburg or D New Yorks part of the pool,
increasing production and pressure by July 1955. D New York, in good faith, reduced production of
well because the gas did not actually belong to him.
Issue: Are property rights in natural gas, once having been reduced to possession, lost by the injection
of such gas into a natural underground reservoir for storage purposes?
Holding: No, the property rights in natural gas, once having been reduced to possession, are not lost
by the injection of such gas into a natural underground reservoir for storage purposes.
Rationale:
This case is not analogized to wild animals Pennsylvania law does not recognize this analogy
Gas in storage has not escaped from its owners; it is in the possession of the storage companies,
being within a well-defined storage area
Subject to the control of the storage companies
The gas has not been returned to its natural habitat Southwest gas is very different chemically
and physically from gas native to this storage field
Policy: Strong public interest in promoting the development and use of underground storage
facilities. Penn. Legislature has conferred upon gas companies the power of eminent domain to
promote underground storage
The Supreme Court of Pennsylvania would hold that title to natural gas once having been
reduced to possession is not lost by the injection of such gas into a natural underground
reservoir for storage purposes.

Marking: chemical composition not easily known
Natural Liberty: In Mullett the court decided that it does not need to be a natural habitat, so
in this case the gas was returned to a gas habitat doesnt matter if it was a native habitat.
Use of Statutes: shows public interest is stronger than private interest
Labor: reward labor that is effective in containing the stored gas
Value: gas is more valuable than animals, want to protect the owner who reinserts the gas into
the ground
Notice: this could have been important in this case to notify others that the gas was theirs
Use of Eminent Domain: circumvents the trespass issue created
16
Hadacheck v. Sebastian (1915) TAKINGS
Statement of the Case: The petitioner, Hadacheck, a brickyard owner, filed a writ of habeas corpus
contending that the ordinance prohibiting him from operating his brickyard on his property is in
violation of the 14th Amendment (DPC) and constitutes a taking which requires just compensation.
Facts: P is the owner of a tract of land within the limits of LA upon which land there is a valuable bed
of clay which the P uses to make bricks. The land is estimated to be worth $800,000 for brick making
purposes, and $60,000 for residential purposes. The land cannot be used for any other purpose other
than what it is used for now. The ordinance in question was put into effect for the area 7 years after P
started the brickyard, when the city of LA expanded and residential areas grew. If the ordinance is
declared valid, P contends that he will have to abandon his business and will be deprived of the use of
his property. P also states that there is no reason for the ordinance, that his business is not a nuisance,
and is not detrimental to the health, morals, safety, or peace and welfare of the people in the
surrounding district or city.
Issue: Did the lower court err in finding for the D where the ordinance was found to be constitutionally
valid where it regulates the business for the good of the community?
Holding: No, the lower court did not err in finding for the D where the ordinance was found to be
constitutionally valid where it regulates the business for the good of the community.
Rationale: Zoning ordinances are one of the most essential powers of government. It is an imperative
necessity for its existence precludes any limitation upon it when not exerted arbitrarily. A vested
interest cannot be exerted against this power because of conditions once existing in the past. To so hold
would preclude development and fix a city forever in its primitive conditions. There must be progress,
and if in its development private interests are in the way, they must yield to the good of the community.
Certain prohibitions are justified by their effect upon the health and comfort of the community. The
ordinance in question is not prohibiting the removal of clay or the use of the property; it is a
prohibition within the locality of its manufacture into bricks.
Police Power:
Health Morals
Safety Welfare
Rational Basis Scrutiny:

Rationally related to a legitimate public purpose
Decision made, lines drawn by legislature and congress, are presumptively valid and unless
they run afoul of some constitutional provision, we will assume they are valid. When a court is
reviewing an economic statute that doesnt discriminate a suspect class, the court examines
whether the statute is mutually related to a public purpose
This is grounds for state to exercise police power with the consideration of health, safety,
welfare and morals of the state in mind
Rationally related is a term of art meaning, could a rational legislature decide that this step
could further in some way a states intent. Could you believe it could help a little?
Nuisance:
Under private nuisance law, the petitioner is immune from suit because he is there first. This is
not true about public nuisance. There is a tort of public nuisance where the harmed party is
large
17
Once you are injuring a large number of people, the fact that you were there first doesnt matter
as much
One of the things that zoning does, is that it makes generalizations that give it more power than
a nuisance suit would
When the state acts to do something more broad under zoning than they could do under
common law nuisance is that ok? Probably no.
But, states are allowed to ban certain types of nuisances that are detrimental to a community
Hadacheck stands for the notion that if you are trying to ban certain nuisances, you are allowed
to set up general zoning laws.
Hadacheck cites to
Reinman
Livery stable: like a parking garage for horses
You look at the Reinman claim and say that it is going to happen anyway, horses are not used as
much anymore as transportation and there use as that will die out/ So, closing the livery stable
was in line with what was going to happen
But, in Hadacheck the use of brick yards is only going to grow as society grows and more
building occurs. It is a viable industry, but the court treats it the same way as they treat the
livery stable
The courts says that in the context of the residential area around it, the brick yard is the same
type of nuisance as the livery stable.
Another distinction is that the brickworks is dependent on being close to the clayBUTthe
brickworks does not have to be next to the clay, they can move the clay somewhere else to
manufacture, NOT impossible to move elsewhere
Kelso
The problem with shutting down the quarry is the value of the rock itself
If you say it cannot be taken out of the ground then it has NO value
This is different from Hadacheck because in Hadacheck, the court is not limiting the use of the
clay.they can still take the clay out of the ground but just cannot manufacture the bricks there
The court distinguishes Kelso and then makes it clear that they do not have to be bound by the
California decision anyway
So what do we take out of all this?

Hadacheck contains a strong endorsement of police power
Broad Holding: if you are acting under police power, then you are not violating the
Takings Clause
Narrow Holding: if you are legislating to protect health or safety, it is not a taking
You can take the discussion of Kelso as a crucial discussion in this case. You can take under
police power as long as there is some value left to the property after
The important thing to remember with the alleged property value is that it is a snapshot of a
moment in time
Discussion of Progress:
The constitution prohibits you from saying: I was here first, you cannot take my property
The court says NO, by using that argument Hadacheck is impeding the growth of Los Angeles
in his direction
The court says that individual property rights cannot stand in the way of progress
18
This happens during the Progressive Era: they think that industrial growth and progress are the
same thingmoving towards industrial society while protecting the health and safety of our
citizens
There are externalities to what you do you cannot just say you will do whatever you want to
do. Your rights dont extend so far that you can say that because you were there first you can do
whatever you want to do.
Airspace Solution: ???????

It is clearly police power to have control over the underground right to gas companies
Are we regulating health and safety? Maybe
Is it different from Hadacheck? Maybe. One of the differences between Hadacheck and
Hammonds is that in Hadacheck you are shutting down the source of the health problems. In
Hammonds, she is NOT the source of any health or safety issues. (Hammonds has done
NOTHING)
Does this difference matter?
If we talk about value, is it like Kelso? From Mrs. Hammonds point of view if you allow the
company to use the space and dont get paid, the space is not worth anything. She cannot lease
it out or use it. In this case you could follow Kelso and say that she is not getting anything so it
is un-constitutional.
Progress: Mrs. Hammonds is said to be standing in the way of progress by refusing to agree to
a price with the gas company. This could make America stuck with above ground storage which
has possible hazards.
Takings Cases:
What matters? % reduction in Value; Loss in absolute value; return on investment; absolute
value left; loss of intended use; purpose of regulation
DEMSETZ example:
Old Rule: allow people to claim their underground property as private, required compensation
Externalities (low before change): not much need for underground storage, smaller population
requiring gas
Social change: population grows/expands, needs more gas, needs more storage options outside of
above ground tanks
Externalities (higher after change): higher risk of environmental damage from above ground storage
tanks, higher costs
New Rule: gas companies can store gas under private property without compensating the owner of the
land
This suggests that the proper role of the taking clause is to respond to changes in society and
create ways for people to use property in a way that is most beneficial to society
% reduction in value; loss of absolute value; return on investment; absolute value left; loss of
intended use; purpose of regulation
19
Joseph Sax
focuses on the purpose of the government action. First formulation = role of the government:
1. Government as enterpriser: government is using property to build for the use of the public and
itself. Everyone is going to get to use the property so everyone should pay for it.
Example: government is building roads, bridges, and airports (government should pay in these
situations acquiring property to act as enterpriser)
2. Government as arbiter: government is resolving disputes between private land owners. No

compensation is due.
There are actions that the government takes that are not clear as to what role they are taking.
Sometimes the arbitration is between a private party and the government.
The government is allowed to act to limit externalities without compensating. If you are acting
to regulate spill over effects you dont pay.
This argument becomes more interesting when you look at the Hammonds Airspace problem.
You can view the government as an arbiter between two private parties. The reason that the
public will benefit does not automatically mean the government must pay. The problem with
the underground storage on Saxs scale seems to tip away from pure arbiter because it is about
the public wants to use that space.
Helpful way to look at the theorists: there are easy and hard cases to look at under each of
them. Hadacheck is easy under Sax while Airspace Solution is a little more difficult.
State can regulate without compensating to prevent spillover effects (= negative

externalities)
o Ex: in Hadacheck, trying to prevent harm to health and property value from brick
pollution
In Airspace, surface Os not currently using, so no spillovers. BUT refusal to allow gas cos. To use
create large costs to society (safety, higher gas prices, etc.)- should we treat those as spillover effects
20
Penn Coal v. Mahon (1922)
Statement of the Case: Penn. Coal sued for the rights to mine coal, despite the statute that didnt
allow them to mine when it would cause subsidence of residential property.
Facts PA passed Kohler Act, which said no mining where homes would cave in as a result. Penn
Coal sold land surface rights, but specifically reserved the right to mine coal from underneath. Penn
Coal brought suit saying that there was a contract and property rights are protected by the Constitution.
Rule (Majority - Holmes) When the statute reduces value of property to zero (or makes activity
commercially impractical making land essentially useless), this is a taking that requires compensation.
Important that Penn Coal specifically contracted for the underground rights to mine the coal.
The property owner made this deal, and the courts will not protect the person who has given
their right away (wont kill a deal just because its a bad deal). No problem with the safety
issue because property owner has been notified of the danger.
Dissent (Brandeis) Restriction imposed to protect the public interest in safety is good and not a
taking; therefore doesnt require compensation even when property value is reduced. (GREAT TO
APPLY TO A LOT OF HYPOTHETICALS)
In fact, here, property value is not taken, the law just prevents a single, noxious use.
[Hadacheck Rule] Need to look at value the property as a whole, rather than bottom rights
versus surface rights.
Reciprocity of advantage argument burden on the company, but also a benefit. In this
argument, leaving a pillar of coal to help hold up the land, and protect the employees [benefit],
but the coal company cant get that coal [burden]. Plymouth Coal Co. v. Penn.
Holmes: government could not go on if to some extent values incident to property could not be
diminished without paying for every such change in the general law. As long recognized, some values
are enjoyed under an implied limitation and must yield to police power.
Holmes distinguishes this case by saying that there is no public nuisance because this is one
house a private matter.
No common or public damage (this is not necessarily true)
No safety concern because the home owner was under notice
The right to mine coal had been reserved home owner paid less for their house to give up the
subsidence rights
We are in danger of forgetting that a strong public desire to improve the public condition is not
enough to warrant achieving the desire by a shorter cut than the constitutional way of paying
for the change
Brandeis (Dissent)
There is a public nuisance a noxious use (Hadacheck)
The property remains in the possession of the owner it is just restricted
When looking at the diminution of the property we should look at the property as a whole
Public safety is an issue here
21
Where the police power is exercised, not to confer benefits upon property owners but to protect
the public from detriment and danger, there is no room for considering reciprocity of advantage
This is a contractual right
Is there too much interference with property rights?
What is lost by the coal company? Part of their ability to mine coal.
Welfare of the community: This isnt an explicit safety regulation. This meets minimum
standards of police power (health, safety, welfare, morals)
Justice Holmes: the constitutional rights of the petitioners are being taken away: the right
to contract and the right to property. You can mine so little that it isnt worth mining at all
Majority opinion rests on the notion that the coal is valuable. The harm to the coal company
is complete loss to the coal company. The actual loss is unclear.
Justice Brandeis: you cannot make the assumption that the surface will collapse with little
coal removed. An example is this room: it is a large empty space held up by 4 walls and a
ceiling no one is falling through the ceiling. You can engineer a solution.
Demsetz Story: What are the externalities? Before the case, miners will take coal from wherever they
want regardless of the effects.
Has the coal company already paid for the rights to mine under? They have rights to the underground
mining area.
Why does Holmes call it contract rights? Surface owners paid less for rights because of mining
underneath the land. Surface owners explicitly gave up subsidence rights. When we talk about
externalities we talk about things that people have no choice over, not about something contracted for.
A lot of possible harm from mines. So Penn. changes the laws.
Rules from Mahon:

if you contract away a property right the state cannot simply hand it back to you. Non-
interference with bargained for rights.
State has more power if there is a public nuisance present. (In this case Holmes doesnt find a
public nuisance)
Actions under police power OK unless it goes too far.
If there is no value after regulation, that equals a taking
If there is reciprocity of advantage there is no taking.
Government could hardly go on if to some extent values incident to property could not be
diminished without paying for every such change in the general law. The assumption behind this
statement is that there are many government actions that would alter private property values which
dont need to be compensated. Many briefs in cases about takings quote this statement.
The counter-statement: We are in danger of forgetting that a strong public desire to improve the
public condition is not enough to warrant achieving the desire by a shorter cut that the
constitutional way of paying for the change
These statements suggest that we are always going to be weighing the public interest versus the
private interest.
Mahon and Hadacheck: Hadacheck does not control everything there are certain police powers
that need to be limited. Mahon also brings up the issue of loss of value, which the court in
Hadacheck does not find important to discuss. Mahon also discusses reciprocity of advantage while
Hadacheck doesnt discuss this.
The language from Hadacheck discussing the Kelso opinion is clear and leads into
Mahon.
22
What do you need to look at when deciding that nothing is left in the property?
Richard Epstein
There are two situations where the government can regulate in a way that reduces property value:
1. nuisance control
2. when it supplies implicit compensation
With implicit compensation we are looking for compensation specific to the particular land, NOT to
society as a whole. Its not enough to say that you get the same benefit as other members of society. It
needs to be grounded in property value specific to the property in question.
If people could bargain freely, they would bargain for this result, so the government is doing the
bargaining. Epstein views the government as mimicking the bargaining that would happen if the
transaction costs werent present in community bargaining.
Strengths of Epstein: the implicit compensation is good because it is ok for the government to do it as
long as the landowner gets some sufficient compensation back.
Mahon: no implicit compensation. Might not be a nuisance because of the explicit contract. But, it
could be a public nuisance because of the widespread danger to peoples houses sitting on unstable
land. Holmes makes this argument go away by treating this as just one house with this problem,
therefore it is not a public nuisance.
Airspace Solution: No specific implicit compensation. Could be a nuisance control because the tanks
above ground are a nuisance to public health if they exploded, BUTthis is shaky because there is no
proximate definite harm to the public. If Hammonds doesnt allow the gas company to use her land, it
isnt a public nuisance only an indirect harm to society. In Hadacheck it was different because the
fumes and pollution from the brickyard was causing direct health problems on people in the
community. (specific harm)
23
% reduc. In value; loss of abs. value; ROI; Abs. value left; loss of intended use; purpose of reg.
Reciprocity of advantage- benefit from precisely the same way in which others are harmednot just
general benefit of regulation
When the police power is exercised, not to confer benefits upon prop. Owners but to protect the
public from harm or danger, there is no room for considering reciprocity.
Miller v. Schoene (1928)

Facts: Under the Cedar Rust Act the state ordered the plaintiffs to cut down a large number of
ornamental red cedar trees growing on their property, as a means of preventing the communication of a
rust or plant disease with which they were infected to the apple orchards in the vicinity. The plaintiffs
were awarded $100 for the cost of removal of the trees. The plaintiffs were allowed to keep the trees
and use or sell the lumber. Plaintiffs challenge the constitutionality of the statute under the due process
clause of the 14th amendment.
Holding: Govt acting as arbiter, it may choose the side that gives a greater benefit to the public
interest, without compensating the other side for its loss of property value.
Rationale:
trees infected with the cedar rust are declared to be a public nuisance
property owners in the area request an investigation by the state
Strong public interest in protecting the apple orchards large valuable industry in Virginia
(BRANDEIS DISSENT APPLIES)
The red cedar trees have mostly ornamental value
When forced to such a choice the state does not exceed its constitutional powers by
deciding upon the destruction of one class of property in order to save another which is of
greater value to the public.
Reciprocity example- MY whole building has a curfew at 10pm. It benefits me(peace and
quiet) in the same way as it will harm college students who can no longer stay out late.
Here, where the choice is unavoidable, the exercise of police power, controlled by the
considerations of public policy which are not unreasonable, involves no denial of due process
Demsetz: Old Rule: allow growth of red cedars with disease; Externalities: low before change,
limited disease; Social Change: more value placed on apples, more disease from cedar rust;
Externalities: higher after change: more diseased trees passing on disease and damaging apple
orchards; New Rule: no red cedars capable of hosting cedar rust in the vicinity of apple orchards.
Hadacheck: this case is very similar to Hadacheck. In Hadacheck there was a strong public policy
reason for shutting down the brickyard. The growth of the city was more important than the private
brickyard. Similarly, in this case, there is a strong public policy reason for cutting down trees which
24
have the potential to damage apple orchards as the apple orchards are more valuable to society as a
whole.
Also, in Hadacheck, the value of the clay was not lost, so therefore the property was still useful.
Similarly, in this case even though the petitioners had to cut down the trees, they still could use the
trees to sell as lumber, so the value was not completely lost. And, even though their property has lost a
few trees, they can still use the property.
Factors to apply; % reduction in value; loss of abs. value; ROI; abs.value left; loss of int. use;
purp. Of regulation.
Mahon: the problem in Mahon is that limiting the coal mining underneath the ground makes that land
useless to the coal company and the coal industry is very important to society at this time. Therefore,
the court held that the statute cannot stand because it deprives the coal company of their constitutional
rights. Also, the coal company had contracted with the property owner for the rights to mine. In this
case, the cutting down of the cedar trees does not render them useless, they can still be sold as lumber.
Also, the cedar trees are only a small part of the economy in Virginia, as compared to the nationwide
importance of the apple industry. Therefore, unlike in Mahon, the police power in this case is
legitimate.
Sax: in this case the government is acting as arbiter in deciding between two private interests. The
government has decided that the value of the apple orchards is more than the value of the red cedar
trees to society. Therefore, the government chooses to limit the private interests of the red cedar tree
owners.
The government can act as the arbiter to decide which property interest is more valuable to society as a
whole. It may choose the side that gives the greater benefit to society without compensating the other
property owner for its loss. The government must choose between two different private properties and
it is not unconstitutional to chose one property and destruct another.
Epstein: this is not a taking because it falls into one of the two exceptions that Epstein names. This is a
nuisance control, even though the court doesnt decide whether this is a nuisance or not. The spread of
a disease to apple orchards is a public nuisance that would benefit society as a whole if the hosting
trees are cut down.
One reading of this case is that a strong public interest takes precedent over personal property. Possibly
run into the same problem as Hadacheck.
Can argue these 3 cases (Mahon, Hadacheck, Miller) clearly state that when private property rights are
diminished for a public policy reason it is not a taking. Also, it is not a taking as long as the property is
not completely taken away and rendered useless. In Hadacheck the clay was still valuable and able to
be removed; in Miller the trees were still able to be cut down and sold as lumber; but in Mahon the
coal company was prohibited from removing the coal that they had contracted for and the court states
that this makes their property worthless. Private property interests in Hadacheck were not diminished
because it WAS NOT A PUBLIC POLICY REASON, IT WAS ONLY ONE HOUSE.
Miller reaffirms Hadacheck: you dont have to prove a nuisance in order to regulate the property. It
characterizes Hadacheck as one where there was a serious interference with private property and
equates the two cases.
What happens to Mahon? The court doesnt really discuss the Mahon case. You dont need reciprocity
in this case. It also suggests that you dont look at the smallest unit of property. It also suggests that
sometimes diminution to zero is ok. So, Mahon maybe is just a case about an explicit contract. What
25
happens to all the going too far language? The court doesnt deal with it in Miller. The courts failure to
discuss it doesnt mean that we can simply dismiss the cases. We need to use them together.
On the exam: even if you are asked to write a brief, you need to acknowledge your biggest weakness
and then dismiss it and state why your side is stronger.
Miller and Mahon are exceptions and maybe Hadacheck is a run of the mill takings case.
There are other ways to solve this. Suggest such options.
Not forced by choice because may be able to find a way to make your property not worthless
In Miller, the apples will die. Here, however, you can put the gas somewhere else so gas wont
lose value. The hold in the ground however is essentially worthless.
There is no public interest in using the hole. Same as with the cedar trees.
Is there a problem with the analogy?
o There is another way out that does not destroy the apple trees. They can pay for the
cedar trees so they are willing to kill them off the save the apple trees.
Frank Michelman
Michelman does a big cost benefit analysis.

Compensation v. no compensation (not looking at if we are going to regulate in the first place, only
about whether we pay or not)
Settlement costs: What are the costs of the choice to compensate?
Money for all similar claimants is included. Not simply the one brickwork that you are shutting
down.
Demoralization Costs: people become unhappy with the government when they are not compensated.
Who else? Hadacheck by himself not happy is not a big deal. But the more people that are
unhappy with his situation can become a problem
Rebel against the city/state government
You can set off a whole chain reaction with media, opinions, etc
The government ought to worry if a lot of people become anti-government due to not
compensating
When are the demoralization costs likely to be high?
o When they appear to be arbitrary or unfair in some way
o High settlement costs
26
o Function of social issues at the time will vary a lot
Michaelman Theory on Takings:
Legislative Questions: Is Regulation a Good Idea? (Efficiency Gains)
Constitutional Questions: Does State have to Pay Compensation (Settlement Costs v.

Demoralization Costs)
o At this point we have to assume the net efficiency gains are positive, at this point you
cant argue that the regulation was stupid
o In a case where the demoralization costs and the settlement costs are both high then you
might not want to do it no gains
o Where the settlement costs are higher, dont pay
o You cannot actually do math in this equation you must estimate
o Where settlement is cheap and demoralization is high you have to pay (small amount
of people who get their house taken away for a discrete reason)
Example from cases:

Miller:
Demoralization costs: amount of costs may depend on how well the state handles the
situation. For example: FL doesnt handle the citrus tree situation well and people get upset. In
Miller, the cedar trees are less valuable than the citrus trees in Florida. Less emotional
attachment and usefulness. Another factor to consider is whether anyone else will
sympathize with those owners who lose their cedar trees. Depends on who is losing their trees
(small property owners) and who is benefiting (large industries that make large profits).
Settlement Costs: Can you identify who the losers are? With the cedar rust act that is easy to
do you have to identify the trees before you can do anything else no additional costs in
identification. The losers are allowed the value of the trees and are given a small amount to take
down the trees. In some cases, they are losing property value aesthetic value of cedar trees. If
this is happening on a widespread basis, it might be more complicated. Need to look at if its a
cost of the regulation itself or the cost of deciding to pay compensation. (settlement v.
demoralization)
In Penn Central there are no additional settlement costs to figure out who the loser is, this is a
cost that was already factored into the regulation. Picking historic buildings in NYC is a cost of
regulation not a cost of deciding who pays
One person being unhappy is not a high demoralization cost
Fairness Principle: a notion that might mirror what happens with demoralization costs
If the affected people can realize that it is good for society, there is some sense that it is fair,
and you shouldnt have to compensate
In Miller, most people might be able to see how cutting down their trees is good for society in
saving the apple industry
Fairness Principle v. Reciprocity

Fairness is a general benefit from being part of society (Hadacheck realizes he gets a general
benefit from being part of the community)
Reciprocity is a specific benefit to the property in question ( In Miller the property owners get
nothing specifically back to their property)
27
28
Penn Central v. City of New York (1978)
Facts: Grand Central Terminal, owned by Penn Central Transportation Co., P, was one of more than
400 buildings designated as New York City landmarks, pursuant to a city landmark law. Due to the
landmark designation, all exterior alterations must be approved by a city commission. In 1968, Penn
Central entered into a lease of the terminal to UGP Properties. Under the lease, UGP was to construct a
multistory office building above the terminal. The Landmark Commission, D, denied the request for
construction. Penn Central and UGP appealed the denial, contending that the landmark designation and
the accompanying restrictions constituted a governmental taking of the property, requiring that just
compensation be paid. The lower courts denied relief. Ps appealed.
Issue: Does a landmark law which restricts the use of designated property for purposes relating to the
promotion of the general welfare constitute a governmental taking necessitating the payment of just
compensation?
Rule: A landmark law which restricts the use of designated property for purposes substantially
related to the promotion of the general welfare does not constitute an impermissible
governmental taking.
Holding/Rationale: The fact that the landmark laws affect some property owners to a greater degree
than others, due to the nature of their property, does not mean that a governmental taking has occurred.
Instead, an analogy may be drawn to zoning laws which undoubtedly have the effect of burdening
some property owners more than others. Such laws will not be deemed takings where they do not result
in the deprivation of all uses of the property by its owner and where the selection of the affected owner
is not accomplished in an arbitrary or unreasonable manner. Such is the case here. Penn Central is not
deprived of all use of its property. It may still continue to use it in the same manner which it has been
used since its inception. Furthermore, the designation of GCT cannot in any way be deemed arbitrary
or unreasonable. Its commission operated according to specified procedures, and the owners of the
affected property possess the right to appeal any commission determinations. At no time did Penn
Central attempt to appeal the designation as a landmark. Since NYs landmark law was clearly enacted
for purposes of promoting the general welfare, and since it was not applied unreasonably as to Penn
Central and UGP, and since the owners of the property in question were not entirely deprived of its use,
no compensable taking has occurred.
Penn Central has the option to use TDRs some form of compensation
Dissent (Rehnquist): Where the cost of an action which is intended to benefit the public as a whole is
borne by only a few, due process requires that the few be compensated for their loss. Because this is
precisely what happened here, the action in inverse condemnation should be successful.
29
Miller
Regulation: Cedar Rust Act
Harmed Owner: Cedar Owners
Who Benefits: Apple owners
Outcome: Constitutional
Either/Or Argument: Either you have apples or you have cedars (must choose)
The assumption is that if you leave the cedars alone and do nothing the apple orchards will die
Hadacheck
Regulation: LA Regulation
Harmed Owners: Brick works
Who Benefits: Residents
Either/Or Argument: Bricks or residents (not as strong because the residents were functioning next to
the bricks for some time, not really a Miller case)
Mahon
Regulation: Kohler Act
Harmed Owners: Coal Mining Companies
Who Benefits: Property Owners (surface)
Outcome: Unconstitutional
Either/Or Argument: Mining rights or surface (there is some either/or to this; if the mining rights are
absolute then the surface will cave in eventually. But, the opposite might not be true. It is not a Miller
case because of the money).
Hammonds Airspace Solution

Regulation: fictional statute eliminating surface
Harmed Owners: Surface owner of the empty well
Who Benefits: Gas companies
Either/Or Argument: Rights to control space or gas company gets to control this space. (its not a
case where if the state does nothing someone will lose. The owner can say no and the gas company
cant do anything. Not quite a Miller case.)
Penn Central
Regulation: Historic preservation in NYC
Harmed Owner: Owners of historic sites
Who Benefits: All of society (depends on who you believe); hard to point to anyone specific that
benefits
Either/Or Argument: None
30
Penn Central
NY passes historic landmarks law that preserves historic buildings
Built into the statute are exceptions so that owners get some sort of benefits from the
regulation. For example: tax breaks, TDR, return on investment
TDR: transfer development rights to other property. If Penn Central is sitting in area that is
zoned for 50 stories but they are not allowed to build all 50 stories, they can transfer those extra
stories to another property that they own in the area. Can move to another area even if the
zoning area is zoned for less than what they want to transfer.
What is the purpose: NYC went bankrupt in the 1970s. They start preservation acts.
Penn Central is still able to use GCS as they always have. But the harm is that they cannot use
it for what they want to build an addition on top of the terminal.
The parties accept that the railroad can make a reasonable return on this building. (This could
have been a mistake on the party of the attorneys) They are losing about 2 million a year in rent
that they could be making with the addition.
Demsetz: Landowners used to have the right to do whatever they want with their building.
Externalities: if you took away a building, people in the neighborhood would feel harmed.
Others who visit might be harmed. Building owner doesnt care. Over time if a building is
important more and more people will feel an attachment; the greater the externalities become.
As time passes and this becomes more important, people become sentimental about their cities,
you get a change in the rule. New Harm: limit on property owners use and they cant do what
they want.
The easy case is where the state buys the properties but there isnt enough money for that. So
the problem becomes, who should bear the burden of maintaining these buildings for the
benefit of society. Should everyone pick up a small cost or should it all be on the owner of the
property?
What does this case do?

Appellants claim: that the regulation is arbitrary and singling out some property owners and not
others. The court says NO: this is a comprehensive plan. There are remedies for those owners
who feel like this is an arbitrary decision, but Penn Central did not appeal. Penn also could
have appealed the decision on the certificate of appropriateness, but they dont do that either.
The court would much rather Penn go through the appeals process rather than just going
straight to the Court with a Constitutional claim. (EXAM: wont deal much with arbitrariness
claim)
Is this too much of an interference with property rights: Has it gone over some
Constitutional limit? How much protection do we give individuals who own these buildings to
do what they want regardless of the costs to society?
o The court makes it clear that there is no easy formula for this problem
o Not every case where property is affected is a taking
o Economic harm: not sufficiently tied to reasonable expectations to constitute a taking.
Example: military base closing
o Discuss zoning as an example of regulation that affects property that isnt a taking. You
must argue something more than just a regulation that affects property.
o Easy cases the other way: government is occupying your property, crossing your
property, doing something on your property.
o The form of the regulation matters: difference between you cant do that there and
we are doing something on your yard
31
o Government actions that are takings of property to do public functions, SAX:
government as an enterpriser
o Causby: Military sets up a base next to the property and flies over the farm making it
useless as a chicken farm.
Purpose of the regulation:

Why is the government doing what it is doing?
Hadacheck and Mahon regulate to avoid a nuisance
Miller keep property at the expense of another
In Penn Central we re-affirm Hadacheck
In the other cases, we are limiting a noxious use harm to others directly
Penn Central argues that they are not harming anyone else directly, no noxious use.
The court distinguished between stopping harm and benefiting society. (footnote 30) Court says
that talking about harms and benefits doesnt make sense.
Penn Central
Footnote 30: harm to property owners. P argues that any significant value loss was a taking
the court rejected this argument. They said many regulations lead to loss of value in property
Hadacheck.
Distinct investment backed Expectations:
o Distinct: the harm being caused by the government regulation to the aspect of the
property was a separate aspect of the property.
o Investment backed Expectations: negotiated for separately; something that says you put
money there specifically for the purpose of achieving that thing
The court says that this isnt met in Penn Central because Penn can still use the railroad station
for its original purpose therefore there is no interference with a distinct investment backed
expectation
The fact that they built the building strong enough to hold an addition is not a strong argument
nothing has been built for many years
Once Penn concedes that they can make a reasonable return on their investment then they are
doomed the court recognizes that they are fine as they are with a viable railroad station
How would this come out differently?
o If you just purchased the building the year before and you paid a large sum of money
with the expectation that they could build on top of the building. This would be a
stronger case because they investment is specific to building.
o Instead of renting out the space above the building, if Penn had sold those air rights then
there is a specific interference with someones expected rights
This could be seen as a really dumb test: at any time Penn Central had the right to build above
the terminal it is the same harm to the same parcel
Implicitly, what is going on here is some notion that out of pocket harm is worse. That the
government shouldnt put you in a position where a recent investment you have made doesnt
leave you with nothing
o When you buy something for a long-term investment and hold on to it you are taking
risks that regulation will develop and things will change
o The Supreme Court is less interested in protecting long term investments with
speculative expectations rather than those who just made an investment with specific
intentions
32
o One thing this suggests is that if you receive a large piece of property as a gift, there is
no investment, therefore no investment is protected the government could regulate all
they want with no compensation
o On its face the emphasis on investment backed expectations suggests a gift would not
be included.
If the question is what is too far then this investment backed expectation becomes important
in establishing a line
This is a good explanation in Mahon where there was a distinct investment on the part of the
mining company because of the distinct contract
Miller: the cedar trees are probably not a distinct investment backed expectation; not a lot of
value and they dont come apart from the property as easily as the air rights or subsidence
rights
Hadacheck: why does Hadacheck survive this test? There is a distinct investment backed
expectation in the brick yard. There is a significant interference. This doesnt violate the rules
though there are still uses to the property.
The hard part is that you have to make sense of all four cases
Penn Dissent:
It is difficult to determine what is a reasonable rate of return
This becomes a messy trial relying on accounting
This is a bad idea to have the case rely on that fact
Another hard piece is to determine which piece of the property to look at
Penn Central focuses not on amount lost but on the distinct investment backed expectation and how
much of that investment is lost.
Does the takings clause give us a stronger argument than the distinct investment backed expectation?
Penn Central provides with many tools
33
Bruce Ackerman
Ackerman: Academic Perspectives IV:
How do ordinary people in the culture view takings
If you are harmful to those around you then the taking is ok
If you own something it is yours and the government cannot take it away
High demoralizations costs coincide with when the ordinary person would view a taking
How would the ordinary observer view Mahon: no taking still left with house, property, land
Penn Central: havent taken the property away still have the railroad station
Penn Central
Like Penn Central, Mrs. Hammonds bought the land for the house and the farm, not for the
storage space under the ground
No distinct investment backed expectation
Is there a substantial public purpose? Maybe
Heightened test: reasonably necessary
We can accomplish reinsertion and pay off Mrs. Hammonds without taking property
More likely a taking if there is a physical invasion of the property
Penn Central does not give a clear answer to this hypothetical
What argument would be more important in this context?
Ackerman
Would an ordinary owner think that the government had stolen the property?
Depends on whether the ordinary owner would see the underground storage as a separate piece
Ordinary v Reasonable: when a test is reasonable the judge who makes the decision based on
what they think but if you base the test on ordinary then they have to think of how someone
else, the ordinary person, would think
Perspectives on Takings
Takings clause is a limit on the democratic process
How do we draw the line between what people want and public protection?
o 5th Amendment protects property rights
o Bright-line rule (percentage)
Answering the Questions:

Work with the opinions and play around with the rules
You can say you think one approach is stupid and overrule it in either your majority or dissent
Majority does straightforward while the dissent may suggest a more radical approach with a
new strategy
Find a way to clarify or make sense of what we are left with after Penn Central
o Government as arbiter vs. enterpriser
o Sufficient purpose
o Public policy
Are we asking the right questions or is there a better way?
How far can the government go?
Think about the new regulations that may be coming in FL regarding what people need to do to
their property in order to protect the property lines
34
Hadacheck, Mahon, Miller, and PC
% reduction in value
Loss of absolute value
ROI
Absolute value left
Loss of intended use
Purpose of regulation
Hadacheck
% reduction in value- 800,00060,000
Loss of value- Just need to move the bricks and the clay and he should be fine but he doesnt do
that. Can argue he should
ROI- Losing the brickyard
Value left- still has the clay.
Loss of intended use- Lost his brickyard, but retained the valuable aspect of his business.
Purpose of regulation- The progress of the city/avoid nuisance
DIBE-having the brickyard on his property.
Mahon
% reduction in value- None, just loses all coal if the ordinance was upheld(was not)
Loss of value- Just the coal
ROI- Leased the land for a lesser price because they wanted control underneath the house.
Would have lost the real value of the home if the regulation was upheld.
Value left- would have been coal under house but then again regulation was unconstitutional
Loss of intended use- If the regulation was considered constitutional, they would have lost their
ability to mine coal.
Purpose of regulation- Avoid a nuisance (ruled unconstitutional BECAUSE THERE WAS ONLY
ONE HOUSE)
DIBE- Mining the coal underneath the house
Miller
%reduction in value- Not much
Loss of value-not much in the present, could sell the trees as lumber $$
DIBE- Not really, dont have much value
Value left use trees for lumber
Loss of intended use- Not really, they can still use the trees to sell as lumber
Purpose of regulation-Control a nuisance
PC
% reduction in value- none
Loss of value- no still have original use, had potential to be worth a lot more tho
DIBE- Can still use railroad for original purpose
Value left- Still have original use
Loss of intended use- substantial, could have made significant money
Purpose of regulation- Preservation of historical landmarks for society
35
Epstein
GOvernemnt is allowed to reduce property value without compensating in 2 respects
-Regulating a nuisance control
-Or when it supplies implicit compensation
Sax
-Government acting as an enterpriser- the regulation is so everyone can use itgovernment
pays
- Arbiter- Resolving disputes between 2 private landownersNo compensation
- When government is regulating spillover effectsNo compensation
Michelman
Demoralization costs>settlement coststaking, government must pay off people
Settlement costs>demoralization costsNo taking most likely go back and forth here
Ackerman
Ordinary person test- Will ordinary person think all the value is good or is it a sick joke????
Penn central dissent-When the cost of an action intended to benefit the public is borne by a few, due
process requires that the few be compensated.
Mahon
Holmes- When the statute reduces property value considerably (or makes the activity commercially
impracticable) this is a taking that requires compensation.
Government could not go on if to some extent values incidental to property could not be diminished
without paying for every such change in the general law. As understood, some values are enjoyed
under an implied limitation and must yield to police power.
Brandeis-Restriction imposed for the purpose of public interest in safety is good and not a taking;
therefore compensation is not required when property value is reduced.
Reciprocity of advantage- Benefit resulting precisely from fact that others are harmed in same way.
MUST BE ONLY FROM PROPERTY
Example- Curfew on Modera harms college kids but helps me since I go to bed early.
Euclid
- Not a taking
- Zoning okay, but may be unconstitutional as applied to a particular parcel.
- Segregation of uses justified under police power.
Nectow
- Taking
- Addresses Q of zoning as applied to parcel.
- Taking where (1) eliminated profitable use of lot and (2) not in furtherance of police power
interests.
36
1st possession cases
RULE: The instant a wild animal is brought under the control of a person so that actual
possession is practically inevitable, a vested property interest in it accrues which cannot be
divested by anothers intervening and killing it. (Liesner)
37

First Possession Case Analysis

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

First Possession Case Analysis

Încărcat de

Drepturi de autor:

Formate disponibile

ELEMENTS OUTLINE

Pierson v. Post (NY 1805) FIRST POSSESSION CASE

FACTORS DISCUSSED IN ANALYSIS

FACTORS DISCUSSED IN ANALYSIS

FACTORS DISCUSSED IN ANALYSIS

DecisionOld RuleExternalitiesChangeIncrease in ExternalitiesNew Rule

Examples of Communal Ownership:

*Private property has fewer externalities

FACTORS DISCUSSED IN ANALYSIS

FACTORS DISCUSSED IN ANALYSIS

FACTORS DISCUSSED IN ANALYSIS

Protection of Industry, Time/Distance are key, SEE Taber

FACTORS DISCUSSED IN ANALYSIS

FACTORS DISCUSSED IN ANALYSIS

Barlett v. Budd (Mass. 1868) ESCAPE

FACTORS DISCUSSED IN ANALYSIS

*One possible way to solve these cases is the usage of salvage

FACTORS DISCUSSED IN ANALYSIS

FACTORS DISCUSSED IN ANALYSIS

FACTORS DISCUSSED IN ANALYSIS

Property rights = extraction

White v. New York State Natural Gas Corporation (Penn. 1960)

FACTORS DISCUSSED IN ANALYSIS

Rational Basis Scrutiny:

So what do we take out of all this?

Airspace Solution: ???????

2. Government as arbiter: government is resolving disputes between private land owners. No

State can regulate without compensating to prevent spillover effects (= negative

Rules from Mahon:

Miller v. Schoene (1928)

Michelman does a big cost benefit analysis.

Michaelman Theory on Takings:

Legislative Questions: Is Regulation a Good Idea? (Efficiency Gains)

Constitutional Questions: Does State have to Pay Compensation (Settlement Costs v.

Example from cases:

Fairness Principle v. Reciprocity

Hammonds Airspace Solution

What does this case do?

Purpose of the regulation:

Penn Central provides with many tools

Answering the Questions:

S-ar putea să vă placă și