PropertyProf Blog

Editor: Stephen Clowney
Univ. of Arkansas, Fayetteville

A Member of the Law Professor Blogs Network

Thursday, October 25, 2007

Westermann on Property Entitlements

W. Stephen Westermann has posted Strong Versus Standard Property Entitlements: Toward a New Theory of Legal Entitlements on SSRN.  Here's the abstract:

Historically the property entitlement has been conceived as a unitary entitlement form that permits a holder to transfer the entitlement to a third party, and the third party to remove the entitlement from its holder, pursuant to a voluntary transaction. Thus, the background presumption—of legal theorists or the Supreme Court or contract law—has been that any entitlement structured as a property entitlement is subject to voluntary transfer in the same manner as any other, be it a fundamental Constitutional right or a parcel of land or a barrel of oil. This conception of a unitary property entitlement form is mistaken. Instead, there are two distinct primary classes of property entitlements: strong property entitlements and standard property entitlements. The basis for the distinction between strong and standard property entitlements is that the power of a third party to remove an entitlement from its holder via a voluntary transaction is comprised of two salient distinct powers. The first is the power to remove the entitlement by offering in exchange therefor money or a superior direct substitute for the entitlement, which power one might call "direct economic surplus inducement." The second is the power to remove the entitlement by making its transfer or waiver a prerequisite to delivery of economic surplus from some other source or sources, what might be called "indirect economic surplus inducement." A "standard property entitlement" permits a third party to exercise both direct and indirect economic surplus inducement in attempting to remove the entitlement; whereas a "strong property entitlement" permits a third party to utilize only direct economic surplus inducement in offers for the entitlement. Distinguishing between strong and standard property entitlements enables a more precise understanding of how rights protecting fundamental liberties, which are at minimum strong property entitlements, differ from most interests in land or chattels, which are standard property entitlements, as well as resolution of longstanding doctrinal confusion in areas such as U.S. constitutional law and contract law.

In addition to introducing the strong property entitlement as a new "type" or "class" of entitlement, this article sets forth a new logical organization of legal entitlements. This article asserts there are four salient types of entitlements that correspond to four salient gradations in power of a third party to remove the entitlement:

1. the liability-rule entitlement identified and named by Calabresi and Melamed—permits a third party to remove the entitlement without the consent of the holder but which requires such third party to compensate the holder in some manner;

2. the standard property entitlement—protects entitlement against removal by force, threat of force or fraud;

3. the strong property entitlement—protects entitlement against removal by force, threat of force, fraud or indirect economic surplus inducement; or

4. the inalienable entitlement—protects entitlement against removal by any means including direct economic surplus inducement.

The last three types of entitlements—the standard property entitlement, the strong property entitlement and the inalienable entitlement—may be thought of as comprising three salient classes of the property category of entitlements. Organizing property entitlements into salient classes based on third party removal power, each of which class contains a subset of specific property entitlement forms, permits precise conversations about the motivating conception of a particular property entitlement that are distinct from conversations, typified by those in the Cathedral article and its progeny, about what specific entitlement form is optimal taking into account market failure considerations such as third-party effects or collective action problems.

Finally, the article analyzes precisely the way in which an entitlement holder's autonomy with respect to an entitlement varies with the extent of removal power granted to third parties. The article posits that a holder's autonomy with respect to an entitlement is comprised of use autonomy and transfer autonomy, with possession autonomy constituting the foundational component of use autonomy common to all entitlements. The article shows that, putting aside possible effects from wealth endowment or cognitive limitations, increasing a third party's power to remove an entitlement from none (which corresponds to the inalienable entitlement) up to and including direct economic surplus inducement (which corresponds to the strong property entitlement) will increase the holder's transfer autonomy without diminishing the holder's possession autonomy. Increasing the third party's power to remove the entitlement beyond direct economic surplus inducement to include indirect economic surplus inducement (which corresponds to the standard property entitlement) will, though, reduce the holder's possession autonomy without increasing the holder's transfer autonomy. The strong property entitlement marks the critical inflection point beyond which any increase in third party removal power begins to mitigate the entitlement's possession autonomy by empowering a third party to remove the entitlement for a price less than the holder's value of enjoyment of those benefits through continued possession.

The fact that, putting aside issues of wealth endowment and cognitive limitations, holder autonomy is maximized by structuring the entitlement as a strong property entitlement does not imply that either social wealth or any particular holder's overall wealth is maximized at this level of third party removal power. It is possible that social wealth as well as the overall wealth of certain (or most) individual holders may be increased by structuring the entitlement as a standard property entitlement. When deciding whether to structure an entitlement as a strong or standard property entitlement, the issue for lawmakers is whether any gain in material wealth from increased allocative efficiency achievable by structuring the entitlement as a standard rather than strong property entitlement exceeds the cost of impairing the absolute possession autonomy that would be conveyed to each holder by structuring the entitlement as a strong property entitlement. For entitlements the primary purpose of which is to provide the holder with autonomy benefits enjoyable free from third party interference and for which any wealth creation through transfer is an incidental concern (such as, say, a right to be free from racial discrimination), it will usually be the case that such entitlements should be structured at minimum as strong property entitlements. On the other hand, for entitlements (such as a barrel of oil) for which allocative efficiency is the primary goal and where there is little, or no, concern about protecting a holder's subjective valuation, such entitlements should normally be structured as standard property entitlements.

Ben Barros

[Comments are held for approval, so there will be some delay in posting]

October 25, 2007 in Property Theory, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 23, 2007

Shooting Your Real Estate Finance Book

The WSJ Law Blog has a post about an Indiana 3L who was arrested for shooting a rifle off his balcony.  The target?  His Nelson & Whitman Real Estate Finance casebook:

The book was found in the parking lot, shot clean through by two rounds, according to investigators. . . .

The Law Blog reached out for the authors of Real Estate Transfer Finance and Development, law professors Grant Nelson and Dale Whitman . . . .

“Are you serious?” said Whitman, the former dean of Missouri Law who is teaching this semester at Wash U Law. “Wow, he must not have liked that class very much.” Pausing to reflect upon the meaning of all this, Whitman then added, “I’ve had people that say my scholarship is shot through with holes, but I’ve never had anyone prove it literally.” . . .

[Nelson] said he thought we were calling him about the mortgage meltdown, but we explained that we wanted his reaction to the Indiana shooting, which he hadn’t heard about. “That is so bizarre,” he said. “But at least he went after our casebook instead of going after people. Thank god for small blessings.” He then joked: “But it might not be so bad from West’s perspective, because that’s one used casebook now off the market.”

Hat tip:  Eugene and Hanah at the VC.

Ben Barros

[Comments are held for approval, so there will be some delay in posting]

October 23, 2007 in Real Estate Transactions | Permalink | Comments (1) | TrackBack (0)

Monday, October 22, 2007

Machiavelli on Property

From Book 17 of The Prince, right after the passage that asks "whether it be better to be loved than feared or feared than loved?":

Nevertheless a prince ought to inspire fear in such a way that, if he does not win love, he avoids hatred; because he can endure very well being feared whilst he is not hated, which will always be as long as he abstains from the property of his citizens and subjects and from their women. But when it is necessary for him to proceed against the life of someone, he must do it on proper justification and for manifest cause, but above all things he must keep his hands off the property of others, because men more quickly forget the death of their father than the loss of their patrimony. Besides, pretexts for taking away the property are never wanting; for he who has once begun to live by robbery will always find pretexts for seizing what belongs to others; but reasons for taking life, on the contrary, are more difficult to find and sooner lapse. But when a prince is with his army, and has under control a multitude of soldiers, then it is quite necessary for him to disregard the reputation of cruelty, for without it he would never hold his army united or disposed to its duties.

Ben Barros

[Comments are held for approval, so there will be some delay in posting]

October 22, 2007 in Property Theory | Permalink | Comments (0) | TrackBack (0)

Sunday, October 21, 2007

Civil Rights History in Tuscaloosa News

Dedicated propertyprof readers will recall that I sometimes discuss charming stories related to property in my hometown paper, the Tuscaloosa News.  Although this is more about civil rights history than property, I thought that you might enjoy this story about one of our local heroes, Thomas Linton, who is a Presbyterian minister and a barber.  Here are some key excerpts:

The spirit of Linton's message at the Church of the Lord Jesus Christ on 35th Avenue in west Tuscaloosa thrives at his shop. No risque magazines make it to the table, no one smokes at the shop and a religious show flashes on the TV most days.

As a minister and owner of Howard's and Linton's Barbershop on T.Y. Rogers Jr. Avenue, he led much of the civil rights struggle in the 1950s and '60s fought on that street. He helped form the ministerial alliance with the Rev. T.Y. Rogers Jr., for whom the historical block was renamed, and led mass meetings at the First African Baptist Church that was bombed with tear gas June 9, 1964. After that, Linton persuaded the city's white leaders to hire blacks as clerks and cashiers for the first time in stores outside the black district. ...

Civil rights turbulence of the mid 1950s was starting when John Linton shined shoes as a 14-year-old at his brother's barbershop. Then, a sign still stood on the U.S. Highway 82 roadside touting Tuscaloosa as the home of Robert Shelton, imperial wizard of the Ku Klux Klan.

"I was a kid when Authurine Lucy tried to attend the University of Alabama," John Linton said in telephone interview from his home. "It was an outrage."

That February day in 1956 when Authurine Foster Lucy was suspended from the university, whites pelted her with eggs and state troopers escorted her to the black-owned newspaper, The Alabama Citizen, where a throng of more than 300 gathered. The paper was two shops away from the barber and then-beauty shop.

Robert Wade, 87, ran the linotype machine at the black newspaper. He recalled his indignation of that day.

"I had lost three brothers in World War II," said Wade, owner of a Tuscaloosa print shop. "I couldn't understand why blacks could serve their country but weren't accepted at a university."

Thomas Linton said that Lucy sought refuge in the barbershop, where beauticians helped her wash off the mess.

"It was a gathering place," John Linton said. "I saw some tremendous things happen there when I was a kid." ...

Union Morrow, a 70-year-old brick layer and Tuscaloosa resident, has barbered with Linton for 59 years. They grew up chopping cotton together on their family's small farms in Mantua, in Greene County. Linton's fortitude made a difference to him.

"I always wanted to emulate him because he was a model," said Morrow, who still lays brick and taught the craft at Fredd and Shelton State community colleges. "He was instrumental in change. He was a peaceable, very religious and down-to-earth person. He had a great conviction that everyone should be treated fairly."

Next time you're in Tuscaloosa, you really need to eat at Maggie's Diner, which is just down the block from Howard's and Linton's Barbershop.

Alfred L. Brophy
Comments are held for approval, so they will not appear immediately.

October 21, 2007 | Permalink | Comments (0) | TrackBack (0)