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Property And Property Rights

By Zafar Azeem

July 11, 2014

One view is that property and law are born together, and remain together. When there was no law, there was no property, take away the laws a property ceases. In more recent times, constitutions of individual states have safeguarded the property rights.



 

The term property usually refers to tangible things, say for example, tools, clothing, furniture etc. Property is regarded in the owner’s complete command. The well-known English jurist ‘Blackstone’ stated that property is an absolute right and contains with at free use, enjoyment, disposition without hindrance except by the authority of law. However, the recent definition of the term property emphasizes different notions, the new definition denotes existence of a legal relationship between persons and the property. It is now often defined as a bundle of rights such as right to possess, use, manage, income earning, consumption, destroy, modify or to alienate.

There are different perspectives on property, for example, occupancy.

The Roman principles relating to occupancy are the source of modern international law on the subject of capture in war and of the acquisition of sovereign rights in newly-discovered countries. It is considered as the natural mode of acquiring property.

In fact this concept leads to creation of private property for an individual. The mode of acquisition of property has been considered necessary by the Natural Law Philosophers for the following reasons (a) Individual is the best judge to procure for himself; (b) The element of certainty in respect of rights creates an order in the society (c) By defining rights an environment is created for a more peaceful state. On the other hand John Locke has recognized the right of property on the basis of labor that produces it, and advocated limited government by following the contract theory and principles of citizen’s property rights. In order to minimize the utility, the utilitarian’s justified the right to property. In the words of Benthem, the idea of property consists of an established expectation in persuasion of being able to draw an advantage from the things possessed according to the nature of case.

One view is that property and law are born together, and remain together. When there was no law, there was no property, take away the laws a property ceases. In more recent times, constitutions of individual states have safeguarded the property rights.

The modern economic theories of Adam Smith and Max Weber also justify the property right on divergent concepts and criticize the rules of property law, hence there is no single theory in this regard, there are multiple approaches.

One can note the importance of personal property, because the property is either personal or real. In case of real property one has the right of restitution which is an action in rem. And for other property interests, the owner had only personal actions to recover damages. For example, the issue of title determination of property came up before the eighth circuit of US Court of Appeal (Black Hills Institution of Geological Research & South Dakota Schools of Mines and Technology1) and the question before the court was whether or not soil was land? The issue emerged in respect of determining the status of Fossil as part of land. The court held that the Fossil was land since the Fossil had for millions of years been an ingredient of the earth and as such its beneficial ownership belonged to the owner. This raised many questions, for example, when the property is held in trust the sale made by its owner is valid or void, the distinction between personal and real property2, status of fixtures3, and the impact of transformation4.

At common law, all found property is generally categorized as (i) abandoned property (ii) lost property; (iii) mislaid property; (iv) treasure trove; and (v) embedded property. Where lost or abandoned property and treasure trove is found, the finder acquires right to possess. However, the recent trend of the courts is against recognizing the finder keepers’ rule of treasure trove. The courts now view this principle as dubious heritage and misunderstood application inconsistent with the values and tradition [Corliss v. Wender].5

Then there are questions of bailment where the duty of reasonable care is an important element while discharging the duties and liabilities. Where a hotel without due diligence delivered the abandoned purse of a hotel guest to an unauthorized person, the court held them guilty of negligence and awarded damages.6

Property when transferred to new owners passes with the bundle of rights previously held by the transferor. However, if one does not own it, he cannot sell it. The law in fact protects the true owner. For examples, a thief cannot sell the stolen goods and a purchaser of such goods will be at loss as the seller is incapable of passing of the property rights. A limited exception to this rule is that of a bona fide purchaser who gets a better title than her seller had. This issue was the subject matter in the case of Charles Evans BMW Inc. v. Williams, an individual namely, Hodge purchased a car from Williams by issuing a bogus check. Hodge sold the car to BMW by masquerading as Williams. Williams and BMW took cross positions. The court of first instance allowed the petition of Williams asking for to restore the possession. The said order was challenged in appeal on the ground that BMW did purchase the vehicle in good faith. The appellate court reversed the order and declared that in the circumstances, BMW’s purchase was in good faith and the company acquired a good title.

The issues related to the transfer of property include, gifts, finder’s rights, bailment and status of gifts. A gift is a voluntary transfer of property to another without compensation. However, one of the conditions of gift is that delivery must take place, that is, physical delivery or a constructive or symbolic delivery, may be by an instrument of gift. In the case of Simpson v Simpson the district court of appeal of Florida concluded that where there is no evidence of delivery, physical or constructive, there was no gift.

Similarly a finder has a better right against others except the real owner to keep the possession of found goods. (See Armony v. Delamirie, Bridges v. Hakesworth and South Staffordshire WaterCo.v Sharman). In all these cases the finder’s right to retain the found goods was upheld. In all these cases no real owner could be/was traced. These decisions show that title and possession are important elements of law of property.

Where a personal property is delivered by one person to another for holding it for a specified purpose, such possession is known as bailment. In the case of Buena Vista Loan Bank v Bickerstaff, the court held that keeping of goods in a Banker’s Locker creates a bailment and it is incumbent on the bank to keep the goods with due care and diligence and where exercise of ordinary care is not there, the act will constitute negligence, the standard of care is an important factor in such disputes. Where a bailer establishes that there existed a relationship of bailment, and the bailer failed either to return the goods or returned them in damaged condition, the burden of proof passes onto the bailer to show that goods were handled with due care.

Regarding the cases covered by gifts. ‘Gift causamortis’ doctrine is an exception, since conditions imposed on gift are not enforceable. However, in engagement ring cases, generally fault based determination is preferred to award the ring in equity and to follow the rule of ring return.

(The writer is an advocate and is currently working as an associate with Azim-ud-Din Law Associates Karachi)

1. 12F 3d 737, 513 U.S. 810 (1994)

2. Crops once, property yielding rent becomes personal property.

3. A fixture is legally part to the real property.

4. It becomes real property after the transformation Black Hill case shows that the objects can move between real and personal property.

5. Court of appeal of Idaho, 2001 (34 P. 3d 1100),

6. Shamrock Hilton Hotel v Caranas 488 S.W. 2d 151

[This article first appeared in Business Recorder on July 10, 2014.]

 



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