PROPERTY LAW

2
EDITORIAL ADVISORS

Rachel E. Barkow
Segal Family Professor of Regulatory Law and Policy
Faculty Director, Center on the Administration of Criminal Law
New York University School of Law

Erwin Chemerinsky
Dean and Distinguished Professor of Law
Raymond Pryke Professor of First Amendment Law
University of California, Irvine School of Law

Richard A. Epstein
Laurence A. Tisch Professor of Law
New York University School of Law
Peter and Kirsten Bedford Senior Fellow
The Hoover Institution
Senior Lecturer in Law
The University of Chicago

Ronald J. Gilson
Charles J. Meyers Professor of Law and Business
Stanford University
Marc and Eva Stern Professor of Law and Business
Columbia Law School

James E. Krier
Earl Warren DeLano Professor of Law
The University of Michigan Law School

Tracey L. Meares
Walton Hale Hamilton Professor of Law
Director, The Justice Collaboratory
Yale Law School

Richard K. Neumann, Jr.

Professor of Law
Maurice A. Deane School of Law at Hofstra University

Robert H. Sitkoff

3
John L. Gray Professor of Law
Harvard Law School

David Alan Sklansky

Stanley Morrison Professor of Law
Faculty Co-Director, Stanford Criminal Justice Center
Stanford Law School

4
 ASPEN CASEBOOK SERIES

PROPERTY LAW
Rules, Policies, and Practices
Seventh Edition

JOSEPH WILLIAM SINGER

Bussey Professor of Law
Harvard Law School

BETHANY R. BERGER
Wallace Stevens Professor of Law
University of Connecticut School of Law

NESTOR M. DAVIDSON
Professor of Law
Fordham University School of Law

EDUARDO MOISÉS PEÑALVER

Allan R. Tessler Dean and Professor of Law
Cornell Law School

5
Copyright © 2017 CCH Incorporated. All Rights Reserved.

Published by Wolters Kluwer in New York.

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Library of Congress Cataloging-in-Publication Data

Names: Singer, Joseph William, 1954- author. | Berger, Bethany R., author | Davidson,
Nestor M., author | Peñalver, Eduardo M., 1973- author.
Title: Property law: rules, policies, and practices / Joseph William Singer, Bussey
Professor of Law, Harvard Law School; Bethany R. Berger, Wallace Stevens
Professor of Law, University of Connecticut School of Law; Nestor M. Davidson,
Professor of Law, Fordham University School of Law;
Eduardo Moisés Peñalver, Allan R. Tessler Dean and Professor of Law, Cornell Law
School.
Description: Seventh edition. | New York: Wolters Kluwer, [2017] | Series:
Aspen casebook series
Identifiers: LCCN 2016056674 | eISBN: 978-1-4548-8814-7
Subjects: LCSH: Property — United States. | LCGFT: Casebooks
Classification: LCC KF560.S56 2017 | DDC 346.7304 — dc23
LC record available at https://lccn.loc.gov/2016056674

6
About Wolters Kluwer Legal & Regulatory
U.S.
Wolters Kluwer Legal & Regulatory U.S. delivers expert content and
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7
 For Martha Minow,
who has made all the difference
JWS

For Caleb Berger,

who because of this project has been flipping through
property books since before he could talk
BB

For Clare Huntington,

who always keeps me climbing higher
NMD

For my grandmother, Yolanda Grave de Peralta Peñalver,

whose loss of property
sparked my interest in the subject
EMP

8
In memory of
Mary Joe Frug

9
Property rights serve human values.
They are recognized to that end,
and are limited by it.

Chief Justice Joseph Weintraub

Supreme Court of New Jersey, 1971

10
 SUMMARY OF CONTENTS

Contents
Preface to the Seventh Edition
A Guide to the Book
How to Brief a Case and Prepare for Class
Acknowledgments

PART ONE PROPERTY IN A FREE AND DEMOCRATIC

SOCIETY
Chapter 1 Trespass: The Right to Exclude and Rights of Access
Chapter 2 Competing Justifications for Property Rights

PART TWO WHAT CAN BE OWNED?

Chapter 3 Intellectual and Cultural Property
Chapter 4 Human Beings and Human Bodies

PART THREE RELATIONS AMONG NEIGHBORS

Chapter 5 Adverse Possession
Chapter 6 Nuisance: Resolving Conflicts Between Free Use and
Quiet Enjoyment
Chapter 7 Land Use and Natural Resources Regulation
Chapter 8 Servitudes: Rules Governing Contractual Restrictions
on Land Use

PART FOUR OWNERSHIP IN COMMON

Chapter 9 Concurrent, Family, and Entity Property
Chapter 10 Present Estates and Future Interests
Chapter 11 Leaseholds

PART FIVE THE LEGAL FRAMEWORK OF THE MARKET

FOR REAL ESTATE
Chapter 12 Real Estate Transactions
Chapter 13 Fair Housing Law

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PART SIX CONSTITUTIONAL PROTECTION FOR PROPERTY
Chapter 14 Equal Protection and Due Process
Chapter 15 Takings Law

Table of Cases
Selected Statutes
Index

12
 CONTENTS
Preface to the Seventh Edition
A Guide to the Book
How to Brief a Case and Prepare for Class
Acknowledgments

PART ONE
PROPERTY IN A FREE AND DEMOCRATIC SOCIETY

Chapter 1
Trespass: The Right to Exclude and Rights of Access
§1 Trespass
§1.1 Public Policy Limits on the Right to Exclude
State v. Shack (1971)
Commonwealth v. Magadini (2016)
§1.2 Limits on the Right to Exclude from Property Open to the
Public
Uston v. Resorts International Hotel, Inc. (1982)
§1.3 Trespass Remedies
Glavin v. Eckman (2008)
Jacque v. Steenberg Homes, Inc. (1997)
§1.4 Hohfeldian Terminology
§2 Discrimination and Access to “Places of Public Accommodation”
§2.1 The Antidiscrimination Principle
A. Federal Antidiscrimination Law
Civil Rights Act of 1964, Title II
Civil Rights Act of 1866
B. State and Local Laws
New York Executive Law, Art. 15
§2.2 Discrimination Against Persons with Disabilities
Americans with Disabilities Act of 1990, Title III
§3 Free Speech Rights of Access to Public and Private Property
Lloyd Corporation, Ltd. v. Tanner (1972)

13
§4 Beach Access and the Public Trust
Matthews v. Bay Head Improvement Association (1984)
§5 The Right to Be Somewhere and the Problem of Homelessness

Chapter 2
Competing Justifications for Property Rights
§1 Property and Sovereignty
§1.1 United States and American Indian Sovereignty
Johnson v. M’Intosh (1823)
§1.2 Competing Justifications for Property Rights
§1.3 Past Wrongs, Present Remedies: Modern Indian Land Claims
§2 Government Grant
§2.1 Homestead Acts and Land Grants
§2.2 Squatters
James Willard Hurst, Law and the Conditions of Freedom in
the Nineteenth-Century United States
§2.3 Freed Slaves
§2.4 Basic Needs Fulfillment
§3 Labor and Investment
§3.1 Creative Labor
International News Service v. Associated Press (1918)
§3.2 Commonly Owned Property: Tragedy or Comedy?
§3.3 Ownership of Labor
§4 Families
§4.1 Child Support
Bayliss v. Bayliss (1989)
Ex parte Christopher (2013)
§4.2 Gifts and Inheritance
§5 Possession
§5.1 Wild Animals
Pierson v. Post (1805)
§5.2 Baseballs
Popov v. Hayashi (2002)
§5.3 Capture of Natural Resources
Elliff v. Texon Drilling Co. (1948)
§5.4 Possession and the Presumption of Title
Willcox v. Stroup (2006)

14
§6 Relativity of Title
§6.1 Finders
Armory v. Delamirie (1722)
Charrier v. Bell (1986)
§6.2 Real Property
Christy v. Scott (1852)
§6.3 Transfer of Stolen Property
§7 Property Formation in Everyday Life
Erving Goffman: Asylums: Essays on the Social Situation of
Mental Patients and Other Inmates

PART TWO
WHAT CAN BE OWNED?

Chapter 3
Intellectual and Cultural Property
§1 Introduction
§1.1 Intangible Property
§1.2 Theories of Intellectual Property
§2 Unfair Competition and Misappropriation
§3 Trademark Law
Qualitex Co. v. Jacobson Products Co. (1995)
§4 Copyright Law
§4.1 Original Works of Authorship
A. The Copyright Act
Copyright Act of 1976
B. “Original” Works
Feist Publications, Inc. v. Rural Telephone Service Co. (1991)
§4.2 Fair Use
Suntrust Bank v. Houghton Mifflin Co. (2001)
§4.3 Moral Rights
§5 Patent Law
§5.1 Patentability
Association for Molecular Pathology v. Myriad Genetics, Inc.
(2013)
Juicy Whip, Inc. v. Orange Bang, Inc. (1999)
§5.2 Patent Remedies
eBay, Inc. v. MercExchange, L.L.C. (2006)

15
§6 Publicity Rights
Martin Luther King, Jr. Center for Social Change v.
American Heritage Products (1982)
§7 Cultural Property
§7.1 The International Market in Cultural Property
United States v. Schultz (2002)
§7.2 Native American Cultural Property
Wana the Bear v. Community Construction, Inc. (1982)

Chapter 4
Human Beings and Human Bodies
§1 Property Rights in Human Beings
§2 Slavery
Dred Scott v. Sanford (1857)
§3 Children
In the Matter of Baby M (1988)
§4 Frozen Embryos
§5 Body Parts
§5.1 Are Body Parts Property?
Moore v. Regents of the University of California (1990)
§5.2 Markets in Body Parts
Flynn v. Holder (2012)

PART THREE
RELATIONS AMONG NEIGHBORS

Chapter 5
Adverse Possession
§1 Title versus Possession
§1.1 Border Disputes
Brown v. Gobble (1996)
§1.2 Color of Title
Romero v. Garcia (1976)
§1.3 Squatters
Nome 2000 v. Fagerstrom (1990)
§2 Justifications for Adverse Possession: “Roots Which We Should
Not Disturb” or “Land Piracy”?

16
§3 Prescriptive Easements
Community Feed Store, Inc. v. Northeastern Culvert Corp.
(1989)
§4 Other Informal Ways to Transfer Title to Real Property
§4.1 The Improving Trespasser
A. Removal of Encroaching Structures: Relative Hardship
B. Enrichment versus Forced Sale
Somerville v. Jacobs (1969)
§4.2 Boundary Settlement
A. Oral Agreement
B. Acquiescence
C. Estoppel
D. Laches
§4.3 Dedication
§4.4 Riparian Owners: Accretion and Avulsion
§5 Adverse Possession of Personal Property

Chapter 6
Nuisance: Resolving Conflicts Between Free Use and Quiet Enjoyment
§1 Land Use Conflicts Among Neighbors
§2 Nuisance
§2.1 Defining Unreasonable Interference
Dobbs v. Wiggins (2010)
Page County Appliance Center, Inc. v. Honeywell, Inc. (1984)
§2.2 Nuisance Remedies
Boomer v. Atlantic Cement Co. (1970)
§2.3 Nuisance or Trespass?
Johnson v. Paynesville Farmers Union Cooperative Oil Co.
(2012)
§3 Light and Air
Fontainebleau Hotel Corp. v. Forty-Five Twenty-Five, Inc.
(1959)
Prah v. Maretti (1982)
Law and Economics Analysis of Nuisance
§4 Water Rights
§4.1 Diffuse Surface Water: Flooding Problems
Armstrong v. Francis Corp. (1956)

17
 Policy Arguments and Counterarguments
§4.2 Ownership of Water
§5 Support Rights
§5.1 Lateral Support
Noone v. Price (1982)
Massachusetts State Building Code
International Building Code §3307
§5.2 Subjacent Support
Friendswood Development Co. v. Smith-Southwest Industries,
Inc. (1978)

Chapter 7
Land Use and Natural Resources Regulation
§1 Land Use Regulation: Origins, Authority, and Process
§1.1 The Roots and Structure of Zoning
§1.2 Zoning Authority and Validity
Village of Euclid v. Ambler Realty Co. (1926)
§1.3 Other Land Use Regulatory Regimes
§1.4 Modernizing Zoning
§1.5 Patterns in Land Use Litigation
§2 Constraints on Zoning Authority to Protect Preexisting Property
Rights
§2.1 Prior Nonconforming Uses
Town of Belleville v. Parrillo’s, Inc. (1980)
§2.2 Vested Rights
Stone v. City of Wilton (1983)
§3 Rezoning and Challenges to Zoning Classifications
Durand v. IDC Bellingham, L.L.C. (2003)
§4 Administrative Flexibility: Zoning Boards
§4.1 Variances
Krummenacher v. Minnetonka (2010)
§4.2 Special Exceptions
§5 The Problem of Exclusionary Zoning
Southern Burlington County NAACP v. Township of Mount
Laurel (1975)
§6 Expression, Speech, and Religion in Land Use
§6.1 Aesthetic Zoning, Expression, and Discretion

18
 Anderson v. City of Issaquah (1993)
§6.2 Restrictions on Free Speech in Land Use Regulation
§6.3 Freedom of Religion and Religious Land Uses
Westchester Day School v. Village of Mamaroneck (2007)
§7 Environmental Regulations and Land Use
§7.1 Owner Liability for Hazardous Wastes
§7.2 Environmental Impact Assessment
§7.3 Climate Change and Land Use Planning: Mitigation and
Adaptation
§8 Natural Resources Regulation
§8.1 Regulating Property in Natural Resources
§8.2 Water Law
State Department of Ecology v. Grimes (1993)

Chapter 8
Servitudes: Rules Governing Contractual Restrictions on Land Use
§1 Servitudes
§2 Easements
§2.1 Definition and Background
§2.2 Creation by Express Agreement
A. Writing (Statute of Frauds)
California Statute of Frauds
New York Statute of Frauds
B. Limits on Negative Easements
C. Running with the Land
§2.3 Interpretation of Ambiguous Easements
A. Appurtenant or In Gross
Green v. Lupo (1982)
B. Scope and Apportionment
Cox v. Glenbrook Co. (1962)
Henley v. Continental Cablevision of St. Louis County, Inc.
(1985)
§2.4 Creation of Easements by Implication
A. Easements by Estoppel
Lobato v. Taylor (2002)
B. Easements Implied from Prior Use
Granite Properties Limited Partnership v. Manns (1987)
C. Easements by Necessity

19
 Finn v. Williams (1941)
§2.5 Modifying and Terminating Easements
§3 Covenants
§3.1 Definition and Background
§3.2 Creation of Covenants
A. The Traditional Test
Neponsit Property Owners’ Association v. Emigrant
Industrial Savings Bank (1938)
B. The Restatement (Third) and Its Influence
C. Remedies
§4 Covenants in Residential Subdivisions, Condominiums,
and Other Multiple Owner Developments
§4.1 Implied Reciprocal Negative Servitudes in Residential
Subdivisions
Evans v. Pollock (1990)
Sanborn v. McLean (1925)
Riley v. Bear Creek Planning Committee (1976)
§4.2 Common Interest Developments and Property Owners
Associations
A. Residential Subdivisions and Condominiums
B. Cooperatives
C. Community Land Trusts and Limited Equity Co-ops
D. Competing Perspectives
§4.3 Relationship Between Unit Owners and Developers
Appel v. Presley Cos. (1991)
§5 Substantive Limitations on Creation and Enforcement of
Covenants
§5.1 Review for Reasonableness and Public Policy Violations
A. Covenants
Davidson Brothers, Inc. v. D. Katz & Sons, Inc. (1994)
Nahrstedt v. Lakeside Village Condominium Association, Inc.
(1994)
B. Rules and Bylaws
O’Buck v. Cottonwood Village Condominium Association,
Inc. (1988)
Neuman v. Grandview at Emerald Hills, Inc. (2003)
§5.2 Constitutional Limitations
Shelley v. Kraemer (1948)

20
 §5.3 The Fair Housing Act
§5.4 Restraints on Alienation
Northwest Real Estate Co. v. Serio (1929)
Woodside Village Condominium Association, Inc. v. Jahren
(2002)
§5.5 Anticompetitive Covenants
§6 Modifying and Terminating Covenants
§6.1 Changed Conditions
El Di, Inc. v. Town of Bethany Beach (1984)
§6.2 Relative Hardship
§6.3 Other Equitable Defenses
§6.4 Statutes
Blakeley v. Gorin (1974)

PART FOUR
OWNERSHIP IN COMMON

Chapter 9
Concurrent, Family, and Entity Property
§1 Varieties of Common Ownership
§2 Concurrent Tenancies
§2.1 Forms of Concurrent Tenancies
A. Tenancy in Common
B. Joint Tenancy
C. Tenancy by the Entirety
§2.2 Sharing Rights and Responsibilities Between Co-Owners
A. Division of Benefits and Expenses
B. Conflicts over Rent and Possession
Olivas v. Olivas (1989)
C. Conflicts over Unilateral Transfers in Tenancy in
Common and Joint Tenancy
Carr v. Deking (1988)
Tenhet v. Boswell (1976)
D. Conflicts over Transfers in Tenancies by the Entirety
Sawada v. Endo (1977)
§2.3 Partition
Ark Land Co. v. Harper (2004)
§3 Family Property

21
 §3.1 Marital Property: Historical Background
A. Coverture, Dower, and Curtesy
B. Married Women’s Property Acts
C. Same-Sex Marriage
§3.2 Community Property and Separate Property
A. Separate Property
B. Community Property
C. Premarital Agreements
D. Homestead Laws
§3.3 Divorce: Equitable Distribution of Property
Montana Equitable Distribution Statute
O’Brien v. O’Brien (1985)
§3.4 Child Support
§3.5 Unmarried Partners
Watts v. Watts (1987)
§4 Entity Property
Berle & Means, The Modern Corporation and Private
Property (1932)
Butler, The Contractual Theory of the Corporation (1989)

Chapter 10
Present Estates and Future Interests
§1 Division of Ownership over Time
§2 Historical Background: Death and Taxes
§3 The Contemporary Estates System
§3.1 Fee Simple Interests
A. Fee Simple Absolute
B. Defeasible Fees
§3.2 Life Estates
A. Reversions and Remainders
B. Contingent and Vested Remainders
C. Destructibility of Contingent Remainders
§4 Interpretation of Ambiguous Conveyances
§4.1 Presumption Against Forfeitures and the Grantor’s Intent
A. Fee Simple versus Defeasible Fee
Wood v. Board of County Commissioners of Fremont County
(1988)

22
 B. Fee Simple versus Life Estate
Edwards v. Bradley (1984)
§4.2 Waste
McIntyre v. Scarbrough (1996)
§4.3 Charitable Trusts and the Cy Pres Doctrine
Evans v. Abney (1970)
§5 Restrictions on Estates and Future Interests
§5.1 Rule Against Creation of New Estates (The Numerus Clausus
Doctrine)
Johnson v. Whiton (1893)
§5.2 Rule Against Unreasonable Restraints on Alienation
§5.3 Rule Against Perpetuities
A. The Traditional Rule
B. Modern Approaches and the Rise of the Perpetuity
C. Other Statutory Limits on Future Interests
D. Commercial Future Interests: Options to Purchase and
Preemptive Rights
Symphony Space, Inc. v. Pergola Properties, Inc. (1996)
§5.4 Rule Against Unreasonable Restraints on Marriage
Estate of Guidotti (2001)

Chapter 11
Leaseholds
§1 Leasehold Estates
§1.1 Categories of Tenancies
§1.2 Commercial and Residential Tenancies
§1.3 Regulation of Landlord-Tenant Relationships
§1.4 Distinguishing Tenancies from Other Property Relationships
Vásquez v. Glassboro Service Association, Inc. (1980) 818
§1.5 The Sharing Economy in the Rental Housing Sector
§2 Conflicts About Occupancy
§2.1 Initial Occupancy: Landlord’s Duty to Deliver Possession
§2.2 During the Leasehold
A. Landlord’s Right to Inspect and Repair
Uniform Residential Landlord and Tenant Act §3.103
B. Tenant’s Right to Receive Visitors and to Marry
C. Tenant’s Duties Not to Commit Waste or Cause a
Nuisance, and the Problem of Domestic Violence

23
 D. Tenant Use Restrictions and Obligations
§2.3 Transfers of the Landlord’s Leasehold Interest
§2.4 Assigning and Subleasing
Kendall v. Ernest Pestana, Inc. (1985)
Slavin v. Rent Control Board of Brookline (1990)
§2.5 Tenant’s Right to Terminate Early
§2.6 The End of the Tenancy: Landlord’s Right to Recover
Possession versus Tenant’s Right to Remain
§3 Conflicts About Rent
§3.1 Landlord’s Remedies When Tenant Fails to Pay Rent
§3.2 Landlord’s Duty to Mitigate Damages
Sommer v. Kridel (1977)
§3.3 Security Deposits
§3.4 Rent Control
§4 Tenant’s Rights to Quiet Enjoyment and Habitable Premises
§4.1 The Covenant of Quiet Enjoyment and Constructive Eviction
Minjak Co. v. Randolph (1988)
3000 B.C. v. Bowman Properties Ltd. (2008)
§4.2 Warranty of Habitability
Javins v. First National Realty Corp. (1970)
§4.3 Retaliatory Eviction
Hillview Associates v. Bloomquist (1989)
Imperial Colliery Co. v. Fout (1988)
§4.4 Landlord’s Tort Liability to Tenants
§4.5 Minimum Standards Revisited

PART FIVE
THE LEGAL FRAMEWORK OF THE MARKET FOR REAL
ESTATE

Chapter 12
Real Estate Transactions
§1 Real Estate Transactions: Structure and Roles
§1.1 Attorneys’ Transactional Roles
§1.2 Phases of the Transaction
A. Pre-Contracting and the Role of Brokers
B. Contracting: The Purchase and Sale Agreement
C. The Executory Period

24
 D. Closing
E. Post-Closing
§2 Purchase and Sale Agreements: Form, Formalities, and Remedies
§2.1 The Terms of the Agreement
Offer to Purchase Real Estate
Standard Form Purchase and Sale Agreement
§2.2 Statute of Frauds versus Part Performance and Estoppel
Burns v. McCormick (1922)
Hickey v. Green (1982)
§2.3 What Constitutes a Breach of the Contract
A. Misrepresentation and Fraudulent Nondisclosure
Johnson v. Davis (1985)
B. Seller’s Failure to Provide Marketable Title
C. Seller’s Breach of Warranty of Habitability for New
Residential Real Estate
D. Buyer’s Failure to Make Good Faith Efforts to Obtain
Financing
§2.4 Remedies for Breach of the Purchase and Sale Agreement
A. Buyer’s Remedies
B. Seller’s Remedies
§3 Deeds
§3.1 Essential Terms
Sample Deed
§3.2 Delivery
§3.3 Title Covenants
A. Warranties of Title
B. Remedies for Breach of Warranty of Title
§4 Real Estate Finance
§4.1 The Basic Structure of Real Estate Finance
§4.2 Mortgage Regulation and the Subprime Crisis
A. Regulating Mortgage Markets
B. Securitization and the Subprime Crisis
Commonwealth v. Fremont Investment & Loan (2008)
§4.3 Defaults and the Right to Foreclose
U.S. Bank National Association v. Ibanez (2011)
§4.4 Foreclosure Sales
Baskurt v. Beal (2004)
§4.5 Alternative Financing Arrangements

25
 A. Installment Land Contracts
Sebastian v. Floyd (1979)
B. Equitable Mortgages
Koenig v. Van Reken (1979)
§5 The Recording System
§5.1 Recording Acts
A. Recording Act Fundamentals
B. How to Conduct a Title Search
C. Types of Recording Acts
D. Who Qualifies as a Bona Fide Purchaser?
§5.2 Chain of Title Problems
Sabo v. Horvath (1976)
§5.3 Equitable Subrogation
§5.4 Fraud and Forgery
Brock v. Yale Mortgage Corporation (2010)
McCoy v. Love (1980)
§5.5 Marketable Title Acts and Other Ways to Clear Title
§5.6 Title Companies and the Recording System
§5.7 Title Registration

Chapter 13
Fair Housing Law
§1 Introduction to Fair Housing
§1.1 Sources of Fair Housing Law
§1.2 The Fair Housing Act
Fair Housing Act, 42 U.S.C. §§3601-3605, 3607, 3613, 3617,
3631
§1.3 Advertising and the Reach of the Fair Housing Act
Fair Housing Council of San Fernando Valley v.
Roommate.com, LLC (2012)
§2 Intentional Discrimination or Disparate Treatment
§2.1 Discrimination on the Basis of Race
Asbury v. Brougham (1989)
§2.2 Integration and Nondiscrimination
MHANY Management v. County of Nassau (2016)
§2.3 Sex Discrimination: Sexual Harassment
Quigley v. Winter (2010)
§2.4 Discrimination Based on Familial Status

26
 Human Rights Commission v. LaBrie, Inc. (1995)
§2.5 Discrimination Based on Sexual Orientation
State ex rel. Sprague v. City of Madison (1996)
§2.6 Source of Income and Other Economic Discrimination
DiLiddo v. Oxford Street Realty, Inc. (2007)
§3 Disparate Impact or Discriminatory Effects Claims
§3.1 HUD’s Discriminatory Effects Rule
§3.2 Racially Discriminatory Effects in Land Use Regulation
MHANY Management v. County of Nassau (2016)
§4 Discrimination Against Persons with Disabilities
§4.1 Reasonable Accommodations and Modifications
Janush v. Charities Housing Development Corp. (2000)
§4.2 Integration and the Example of Group Homes for Persons with
Disabilities
Familystyle of St. Paul, Inc. v. City of St. Paul (1991)
§5 Fair Lending
M & T Mortgage Corp. v. Foy (2008)

PART SIX
CONSTITUTIONAL PROTECTION FOR PROPERTY

Chapter 14
Equal Protection and Due Process
§1 Property as a Mediator Between Citizens and the State: Defining
versus Defending Property Rights
Miller v. Schoene (1928)
§2 Equal Protection
Village of Willowbrook v. Olech (2000)
§3 Due Process
§3.1 Procedural and Substantive Due Process
Bonner v. City of Brighton (2014)
§3.2 Property Regulations Burdening Fundamental Rights
Village of Belle Terre v. Boraas (1974)
Moore v. City of East Cleveland (1977)
§3.3 Forfeiture
Bennis v. Michigan (1996)

Chapter 15

27
Takings Law
§1 Eminent Domain
§1.1 The Eminent Domain Power and the Condemnation Process
§1.2 Public Use
Kelo v. City of New London (2005)
§1.3 Just Compensation
§1.4 Expropriation Without “Taking”
Tee-Hit-Ton Indians v. United States (1955)
§2 An Introduction to Regulatory Takings
§2.1 Historical Origins
Pennsylvania Coal Co. v. Mahon (1922)
§2.2 “Categorical” Regulatory Takings and the Ad Hoc Test
§2.3 Regulatory Takings and Due Process
§3 The Ad Hoc Test: Fairness and Justice
§3.1 The Foundation of the Ad Hoc Test
Penn Central Transportation Co. v. New York City (1978)
§3.2 Takings Statutes
§3.3 Justifying Regulatory Takings
§4 “Per Se” Takings
§4.1 Physical Invasions
PruneYard Shopping Center v. Robins (1980)
Loretto v. Teleprompter Manhattan CATV Corp. (1982)
§4.2 Deprivation of All Economically Viable Use
Lucas v. South Carolina Coastal Council (1992)
Palazzolo v. Rhode Island (2001)
Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional
Planning Agency (2002)
A Note on Regulatory Takings Procedures
§5 Special Cases
§5.1 Deprivation of Core Property Rights
Babbitt v. Youpee (1997)
§5.2 Vested Rights and Transitional Relief
§5.3 Judicial Takings
Stop the Beach Renourishment, Inc. v. Florida Department of
Environmental Protection (2010)
§6 Exactions and Linkage Requirements
Koontz v. St. Johns River Water Management District (2013)

28
Table of Cases
Selected Statutes
Index

29
 PREFACE TO THE SEVENTH
EDITION

This Seventh Edition has been updated to reflect significant changes in

the law of property over the last few years. Those include: (1) the decision
by the Supreme Judicial Court of the Commonwealth of Massachusetts in
Commonwealth v. Magadini,1 recognizing the availability of the defense
of necessity in trespass cases involving homeless persons; (2) the
Loughhead 2 case finding an apartment building in Houston to be a
nuisance; (3) the Supreme Court’s broad application of the First
Amendment’s free speech clause to signage regulations in Reed v. Town of
Gilbert; 3 (4) the monumental Supreme Court decision in Obergefell v.
Hodges 4 finding a constitutional right to same-sex marriage under both
the due process and equal protection clauses; (5) the 2015 adoption of the
Revised Uniform Residential Landlord and Tenant Act; (6) the increasing
importance of the “sharing economy,” particularly in the rental housing
sector; (7) a return to direct judicial oversight of the Mount Laurel
doctrine; (8) increasing litigation over the inheritance rights of children
born through reproductive technologies after the death of their biological
parents; (9) the continuing evolution of legal responses to the housing
crisis of the last decade; (10) the Supreme Court’s affirmation of Fair
Housing Act disparate impact claims in the Inclusive Communities case,5
along with the Second Circuit’s application of the new HUD disparate
impact regulations in MHANY Management, Inc. v. County of Nassau; 6
(11) the Michigan Supreme Court’s overruling the lower court’s due
process building regulation decision in Bonner;7 and (12) important new
regulatory takings decisions by the Supreme Court, including Brandt8 and
Horne,9 as well as the grant of certiorari in Murr.10 For an area one might
have thought settled in a mature, free market economy, these
developments provide powerful evidence that property law continues to
change with surprising regularity.
As in the earlier editions, we have attempted to ensure that students
and professors can get a clear and accurate picture of the current law, as

30
well as a thorough understanding of the many disagreements among the
states on the applicable rules in force. Some of the rules governing
property are arcane and complex, and students should be able to learn
them without reading a treatise on the side. At the same time, many of the
cases have dissents, and almost all have policy discussion justifying the
court’s approach. Where no dissents are present and the states disagree
about the law, we have made this clear in the note material.
In this edition, as in the past, we have included statutory and regulatory
text as principal readings throughout the book. It is critical for first-year
students to understand that the law is as much a creature of legislatures and
agencies as it is of courts, and this is as true in property as in other areas of
the law. We have also presented problems that place students in real
lawyering roles so that they can use the materials in the book (principal
cases, subsidiary cases, textual explanation of the doctrine, and policy
concerns) to make arguments on both sides of hard cases and to learn both
to justify their judgments and to criticize the results reached by the courts
and legislatures.
For some of the principal cases, we have listed the exact or
approximate address of the property considered in the case. Here is an
example, from Glavin v. Eckman in Chapter 1:

Map: Aquinnah, Martha’s Vineyard,

Massachusetts

This will allow students and professors to go to an Internet map

service, such as Google Maps (http://maps.google.com) or Bing Maps
(http://www.bing.com/maps/) to view the property in question. Both
Google and Bing Maps have satellite or aerial views that help give a sense
of how the property is situated, as well as the surrounding terrain, and
Google Earth has other features as well. Some of us project satellite
images on a screen in the front of the classroom as we teach these cases,
and it seems to help give students a sense of the lay of the land and the
relations among the neighboring parcels. It is particularly helpful in
understanding cases that involve land use conflicts among neighbors.
Note that cases throughout the book have been edited for succinctness
and to focus students on the most relevant discussions. Some deletions of
text within cases are noted by an ellipsis ( . . . ), but the bulk of our elisions
in the text, as well as internal case citations and most footnotes, have been

31
deleted without notation. When footnotes are retained in cases, they are
renumbered so that footnotes are consecutively numbered in each chapter.
As with any new edition, especially one as thoroughly updated as this
one has been, some mistakes surely have crept in. We would be delighted
to hear about them or about any other feedback from faculty and students
who use this book. Such feedback motivated many of the changes in this
edition, and we welcome future suggestions from users of the Seventh
Edition. Feel free to write to us at bethany.berger@uconn.edu;
ndavidson@law.fordham.edu; eduardo.penalver@cornell.edu; and
jsinger@law.harvard.edu.

Joseph William Singer

Cambridge, Massachusetts

Bethany R. Berger
Hartford, Connecticut

Nestor M. Davidson
New York, New York

Eduardo Moisés Peñalver

Ithaca, New York

5777/2017

1. Commonwealth v. Magadini, 2015 WL 11070269 (Mass. 2016).

2. Loughhead v. 1717 Bissonnet, LLC, 2014 WL 8774060, final judgment at,
2014 WL 8774079 (Tex. Dist. Ct. 2014).
3. Reed v. Town of Gilbert, 135 S. Ct. 2218 (2015).
4. Obergefell v. Hodges, 123 S. Ct. 2584 (2015).
5. Texas Department of Housing & Community Affairs v. Inclusive Communities
Project, Inc., 135 S. Ct. 2507 (2015).
6. MHANY Management, Inc. v. County of Nassau, 819 F.3d 581 (2d Cir. 2016).
7. Bonner v. City of Brighton, 848 N.W.2d 380 (Mich. 2014), rev’g 828 N.W.2d
408 (Mich. Ct. App. 2012).
8. Marvin M. Brandt Revocable Trust v. United States, 134 S. Ct. 1257 (2014).
9. Horne v. Department of Agriculture, 135 S. Ct. 2419 (2015).
10. Murr v. State, 359 Wis. 2d 675 (Wis. Ct. App. 2014), cert. granted sub nom.
Murr v. Wisconsin, 136 S. Ct. 890 (2016).

32
 A GUIDE TO THE BOOK

Organization of the Book

The book is organized around six broad themes. In Part One, we
introduce a basic framework for understanding the balance of rights,
limitations, and duties inherent in ownership, using the example of
tensions between the right to exclude and the right of access. We then
address the primary justifications that have traditionally been invoked to
justify property rights, including sovereignty, reward for labor, distributive
justice, efficiency, recognition of relationships, possession, and
personhood. Part Two explores the outer boundaries of ownership by
examining how the legal system mediates a variety of resources other than
real estate and personal goods, notably ideas, culture, human beings, and
human bodies. Many of the most important doctrines in property law focus
on relationships between neighbors, and Part Three explores adverse
possession, nuisance, zoning, and private agreements between owners
(called servitudes) as examples. In Part Four, we explore the myriad ways
the law allows property to be divided and shared, both concurrently and
over time. These forms of ownership in common include concurrent
tenancies, family property, corporate and other entity property, leaseholds,
as well as the complex system of estates and future interests we have
inherited from early English law. Part Five explores two fundamental
aspects of the market for real estate, the role of property law and property
lawyers in sales and financing, and the importance of antidiscrimination
law. Finally, the book concludes in Part Six with two chapters that
highlight the fundamental tension between the role of the state in both
defining and defending property rights. The constitutional law of property,
including equal protection, due process, and takings, is a fitting way to
return to the themes explored throughout these materials. In all of this, we
seek to present a contemporary introduction to the law of property,
focusing on various pressing issues of current concern as well as the basic
rules governing the property system.

What Is Property?
Property rights concern relations among people regarding control of

33
valued resources. Property law gives owners the power to control things,
and it does this by placing duties on non-owners. For example, owners
have the right to exclude non-owners from their property; this right
imposes a duty on others not to enter property without the owner’s
consent. Property rights are relational; ownership is not just power over
things but entails relations among people. This is true not only of the right
to exclude but of the privilege to use property. An owner who operates a
business on a particular parcel may benefit the community by creating jobs
and providing needed services, and she may harm the community by
increasing traffic or causing pollution. Development of a subdivision may
affect drainage patterns and cause flooding on neighboring land. Property
use makes others vulnerable to the effects of that use, for better or for
worse. Power over things is actually power over people.
Property rights are not absolute. The recognition and exercise of a
property right in one person often affects and may even conflict with the
personal or property rights of others. To give one person an absolute legal
entitlement would mean that others could not exercise similar entitlements.
Property rights are therefore limited to ensure that property use and
ownership do not unreasonably harm the legitimate, legally protected
personal or property interests of others. The duty to exercise property
rights in a manner compatible with the legal rights of others means that
owners have obligations as well as rights.
Owners of property generally possess a bundle of entitlements. The
most important are the privilege to use the property, the right to exclude
others, the power to transfer title to the property, and immunity from
having the property taken or damaged without their consent. These
entitlements may be disaggregated — an owner can give up some of the
sticks in the bundle while keeping others. Landlords, for example, grant
tenants the right to possess their property in exchange for periodic rental
payments while retaining the right to regain possession at the end of the
leasehold. Because property rights are limited to protect the legitimate
interests of others and because owners have the power to disaggregate
property rights, entitlements in a particular piece of property are more
often shared than unitary. It is almost always the case that more than one
person will have something to say about the use of a particular piece of
property. Property law therefore cannot be reduced to the rules that
determine ownership; rather, it comprises rules that allocate particular
entitlements and define their scope.
Property is owned in a variety of forms. An infinite number of bundles
of rights can be created from the sticks in the bundle that comprise full
ownership. However, some bundles are widely used and they comprise the

34
basic forms or models of ownership. Some forms are used by individuals
while others are used by couples (married or unmarried) or families. Other
forms are used by groups of unrelated owners. Differences exist between
forms that give owners management powers and those that separate
ownership from management. Further distinctions exist between
residential and commercial property and between nonprofit organizations
and for-profit businesses. Within each of these categories are multiple
subcategories, such as the distinction between partnerships and
corporations or between male-female couples and same-sex couples.
Particular models of property ownership have been created for different
social contexts and types of property. Each model has a different way of
bundling and dispersing the rights and obligations of ownership among
various persons. Understanding property requires knowledge both of the
individual sticks in the bundle of property rights and the characteristic
bundles that characterize particular ownership forms.
Property is a system as well as an entitlement. A property right is a
legal entitlement granted to an individual or entity but the extent of the
legal right is partly determined by rules designed to ensure that the
property system functions effectively and fairly. Many property law rules
are geared not to protecting individual entitlements, but to ensuring that
the environment in which those rights are exercised is one that maximizes
the benefits of property ownership for everyone and is compatible with the
norms underlying a free and democratic society. Some rules promote
efficiency, such as the rules that facilitate the smooth operation of the real
estate market. Other rules promote fairness or distributive justice, such as
the fair housing laws that prohibit owners from denying access to property
on the basis of race, sex, religion, or disability.

Tensions Within the Property System

In 1990, roughly a year after his nation was freed from Soviet
domination, the foreign minister of Czechoslovakia, Jiri Dienstbier,
commented that “[i]t was easier to make a revolution than to write 600 to
800 laws to create a market economy.”11 If anything, he understated the
case. Each of the basic property entitlements is limited to ensure that the
exercise of a property right by one person is compatible with the property
and personal rights of others. The construction of a property system
requires property law to adjudicate characteristic core tensions in the
system.

Right to exclude versus right of access. It is often said that the most

35
fundamental right associated with property ownership is the right to
exclude non-owners from the property. If the right to exclude were
unlimited, owners could exclude non-owners based on race or religion.
Although at one time owners were empowered (and in some states
required) to do this, current law prohibits discrimination on the basis of
race, sex, national origin, religion, or disability in public accommodations,
housing, and employment. Although individuals are free to choose whom
to invite to their homes for dinner, market actors are regulated to ensure
that access to property is available without regard to invidious
discrimination. Property therefore entails a tension between privacy and
free association norms on one side and equality norms on the other.
Sometimes the right of access will take precedence over the right to
exclude. The tension between these claims is one that property law must
resolve.

Privilege to use versus security from harm. Owners are generally

free to use their property as they wish, but they are not free to harm their
neighbors’ property substantially and unreasonably. A factory that emits
pollutants into the air may be regulated to prevent the use of its property in
ways that will destroy the individual property rights of others and common
resources in air and water. Many uses of property impose ‘‘externalities’’
or spillover effects on other owners and on the community as a whole.
Because owners are legally entitled to have their own property protected
from pollutants dispatched to their property by others, owners’ freedom to
use their property is limited to ensure that their property use does not cause
such unreasonable negative externalities.

Power to transfer versus powers of ownership. Owners are generally

free to transfer their property to whomever they wish, on whatever terms
they want. Freedom of disposition gives them the power to sell it, give it
away, or write a will identifying who will get it when they die. They are
also free to contract with others to transfer particular sticks in the bundle
of sticks comprising full ownership to others while keeping the rest for
themselves. Owners may even place conditions on the use of property
when they sell it, limiting what future owners may do with it. They may,
for example, limit the property to residential purposes by including a
restriction in the deed limiting the property to such uses. Although owners
are free to disaggregate property rights in various ways, and to impose
particular restrictions on the use and ownership of land, that freedom is not
unlimited. Owners are not allowed to impose conditions that violate public
policy or that unduly infringe on the liberty interests of future owners. For

36
example, an owner could not impose an enforceable condition that all
future owners agree to vote for the Democratic candidate for president;
this condition infringes on the liberty of future owners and wrongfully
attempts to tie ownership of the land to membership in a particular
political party. Nor are owners allowed to limit the sale of the property to
persons of a particular race. Similarly, restrictions limiting the transfer of
property will ordinarily not be enforced, both to protect the freedom of
owners to move and to promote the efficient transfer of property in the
marketplace. The freedom of an owner to restrict the future use or
disposition of property must be curtailed to protect the freedom of future
owners to use their property as they wish. The law limits freedom of
contract and freedom of disposition to ensure that owners have sufficient
powers over the property they own.

Immunity from loss versus power to acquire. Property owners have

the right not to have their property taken or damaged by others against
their will. However, it is often lawful to interfere with the property
interests of others. For example, an owner who builds a house on a vacant
lot may block a view enjoyed by the neighbor for many years. A new
company may put a prior company out of business or reduce its profits
through competition. Property rights must be limited to ensure that others
can exercise similar rights in acquiring and using property. In addition,
immunity from forced seizure or loss of property rights is not absolute
when the needs of the community take precedence. To construct a new
public highway or municipal building, for example, the government may
exercise its eminent power to take private property for public uses with
just compensation.

Recurring Themes
A number of important themes will recur throughout this book. They
include the following:

Social context. Social context matters in defining property rights. We

have different typical models of property depending on whether it is
owned individually or jointly, among family members or non-family
members, by a private or a governmental entity, devoted to profitable or
charitable purposes, for residential or commercial purposes, open to public
use or limited to private use.

Formal versus informal sources of rights. Property rights generally

have their source in some formal grant, such as a deed, a will, a lease, a

37
contract, or a government grant. However, property rights also arise
informally, by an oral promise, a course of conduct, actual possession, a
family relationship, an oral gift, longstanding reliance, and social customs
and norms. Many of the basic rules of property law concern contests
between formal and informal sources of property rights. While the law
usually insists on formality to create property rights, it often protects
informally created expectations over formally created ones. Determining
when expectations based on informal arrangements should prevail over
formal ones is a central issue in property law.

The alienability dilemma. It is a fundamental tenet of the property

law system that property should be ‘‘alienable,’’ meaning that it should be
transferable from one person to another. Transferability allows a market to
function and enables efficient transactions and property use to occur. It
also promotes individual autonomy by allowing owners to sell or give
away property when they please on terms they have chosen. This suggests
that the law should allow owners to disaggregate property rights as they
please. However, if owners are allowed to disaggregate property rights at
will, it may be difficult to reconsolidate those rights. If property is
burdened by obsolete restrictions, it may be expensive or impossible to get
rid of them. Similarly, if property is disaggregated among too many
owners, transaction costs may block agreements to reconsolidate the
interests and make the property useable for current needs. The property
may therefore be rendered inalienable.
Many rules of property law limit contractual freedom to ensure that
particular bundles of property rights are consolidated in the same person
— the ‘‘owner.’’ Consolidating power in an ‘‘owner’’ ensures that
resources can be used for current purposes and current needs and allows
property to be freely transferred in the marketplace. We therefore face a
tension between promoting alienability by consolidating rights in owners
and promoting alienability by allowing owners to disaggregate their rights
into unique bundles constructed by them.

Contractual freedom and minimum standards. Individuals want to

be free to develop human relationships without having government dictate
the terms of their association with others. Having the ability to rearrange
property rights to create desirable packages of entitlements will help
enable various relationships to flourish. However, there are also bounds to
what is acceptable; this is why the law imposes certain minimum standards
on contractual relationships. For example, although landlords are entitled
to evict residential tenants who do not pay rent, the law in almost every

38
state requires landlords to use court eviction proceedings to dispossess
defaulting tenants. These proceedings give tenants a chance to contest the
landlord’s possessory claim and to have time to find a new place to live,
rather than having their belongings tossed on the street and being
dispossessed overnight. These limitations on free contract protect basic
norms of fair dealing and promote the justified expectations of individuals
who enter market transactions.

Social welfare. Granting owners power over property ensures that they
can obtain resources to satisfy human needs. It also promotes social
welfare by encouraging productive activity and by granting security to
those who invest in economic projects. Clear property rights facilitate
exchange and lower the costs of transactions by clarifying who owns what.
At the same time, owners may use their property in socially harmful ways,
and clear property rights may promote harmful, as well as beneficial,
actions. Property rights must be limited to ensure that conflicting uses are
accommodated to minimize the costs of desirable development on other
owners and on the community. Moreover, rigid property rights may inhibit
bargaining rather than facilitate it by granting owners the power to act
unreasonably, thereby encouraging litigation to clarify the limits on the
owner’s entitlements. Reasonableness requirements, while less predictable
than clear rules, may promote efficient bargaining by encouraging
competing claimants to compromise in ways that minimize the costs of
property use on others. We need to design rules of ownership and transfer
that promote efficiency and social welfare by decreasing the costs of using
and obtaining property while maximizing its benefits both to individual
owners and to society as a whole.

Justified expectations. In a famous phrase, Jeremy Bentham wrote

that
‘‘[p]roperty is nothing but a basis of expectation; the expectation of
deriving certain advantages from a thing which we are said to possess, in
consequence of the relation in which we stand towards it.”12 Owners
justifiably expect to use their own property for their own purposes and to
transfer it on terms chosen by them. However, because the property use
often affects others, it must be limited to protect the expectations of others.
Property law protects justified expectations. A central function of property
law is to determine what the parties’ actual expectations are and when they
are, and are not, justified.

Distributive justice. Property rights are the legal form of wealth.

39
Wealth takes many forms, including the right to control tangible assets,
such as land and buildings, and intangible assets, such as stocks that give
the holder the right to control and derive profit from a business enterprise.
In fact, any legal entitlement that benefits the right holder may be viewed
as a species of property. The rules of property law, like the rules of
contract, family, and tax law, play an enormous role in determining the
distribution of both wealth and income.
How well is property dispersed in the United States? One expert has
noted that
‘‘[b]y several measurements, the United States in the late twentieth
century led all other major industrial countries in the gap dividing the
upper fifth of the population from the lower — in the disparity between
top and bottom.’’13
One indicator of the distribution of property is income. Since 1967,
income distribution has become increasingly unequal in the United States.
In 2015, the Census Bureau reported that the share of total income going to
the top fifth of American households increased from 43.6 percent in 1967
to 51.2 percent in 2015.14 Within the top fifth of the population, the bulk
of this increase was obtained by those at the very top. A 2016 white paper
showed that between 1979 and 2013, the incomes of the top 1 percent of
families rose 187 percent, whereas the bottom 80 percent of families saw
increases of less than 40 percent in income.15
The distribution of income also varies according to race, gender, and
age. The median income of households in the United States was $56,516 in
2015; half of all households received more and half less than that amount.
However, differences are substantial along racial lines. While the median
income of white, non-Hispanic families was $62,950 in 2015, the median
income for African American households was only $36,898 and that of
Latino households was $45,148. The median household income of
American Indians and Native Alaskan households in 2014 was $43,448.
Poverty is similarly unequally distributed by race. While 13.5 percent
of all persons were poor by federal standards in 2015, only 9.1 percent of
non-Hispanic whites were poor; by comparison, 24.1 percent of African
Americans and 21.4 percent of Latinos fell below the poverty line. Data
from 2014 show that 28.3 percent of American Indians and Native
Alaskans were poor by official standards.
Although the gap in incomes between men and women has narrowed
over the last quarter-century, men still earn more than women on average.
In 2015, men who worked full time earned $51,212 at the median, while
the median earnings for women who worked full time was only $40,742,

40
or 80 percent of male earnings.
Children are more likely to be poor than adults, and some children are
very likely to be poor. Although 14.8 percent of the population fell below
the poverty line in 2014, 21.1 percent of children did so; moreover, 38
percent of African American children and 32 percent of Hispanic children
were living in poverty.16 Children who live in households without an adult
male are extremely likely to be poor. While only 5.4 percent of children in
families of married couples were poor in 2014, 28.2 percent of children
living in female-headed households were poor. Although 32 percent of
white, non-Hispanic, female-headed households were poor, 45.6 percent of
African American, female-headed households and 46.3 percent of
Hispanic, female-headed households were poor.17 While the median
income of married couples was $84,626 in 2015, the median income of
female-headed households was only $37,797, and the median income of
male-headed households was $55,861.
Inequalities of both income and wealth are somewhat alleviated by
transfer payments in the form of public assistance. Until the 1970s, elderly
persons were more likely to be poor than the non-elderly. By 1990,
however, the poverty rate for persons over 65 was less than that for the rest
of the population, and relatively few elderly persons are among the
homeless and extremely poor. This change in the position of the elderly
was the result of public spending in the form of Social Security pensions,
Medicare, and housing subsidies.18 In 2015, the poverty rate for those 65
and older was 8.8 percent compared to 12.4 percent for those between 18
and 64.19
Wealth data show even greater inequality than income data. Far more
than income, wealth determines financial security and economic prospects
in the United States.20 In 2012, the top 1 percent of U.S. households
owned 41.8 percent of U.S. family net wealth while the top 10 percent
owned over three quarters of all net wealth (77.2 percent).21 The top
quintile owned 88.9 percent of wealth while the bottom 40 percent of the
population has a negative net wealth.22 The racial disparities are equally
stark. In 2011, the median net worth of African American households was
only 5.7 percent that of non-Hispanic white households, while the median
net worth of Hispanic households was only 6.9 percent.23 These racial
disparities are essentially unchanged since 1983.24 The 2008 recession and
uneven recovery exacerbated wealth inequality. Declines in jobs and
property values hit the primary sources of wealth for most Americans.
Wealthy Americans, however, have a greater proportion of their assets

41
invested in financial markets. The rebound in financial markets and
sluggish recovery in jobs and home values meant that although 93 percent
of households saw their net worth decline between 2009 and 2011, the top
7 percent saw their net worth rise significantly.25

Individual versus shared ownership. Property may be owned and

controlled by individuals; the history of the development of land law in
England, for example, may be described as a shift from control over
property by feudal lords and family inheritance restrictions to control by
individual owners. But shared ownership continues to characterize
property, perhaps increasingly so. In marriages and other intimate
relationships, for example, ownership of homes and bank accounts is
typically in the name of both partners. The assets of Americans, moreover,
increasingly consist of investments in corporate stocks and ownership of
condominiums or other common interest developments, both forms of
property in which ownership and control are shared with many individuals.
In addition, because ownership rights affect others, both statutory and
common law recognize rights in the community to control property to
some degree. The recognition of shared rights in property may differ in
different cultures and legal systems. Compared to U.S. property law, for
example, continental European systems may do more to recognize and
facilitate common ownership, while English and Scottish legal systems
recognize greater rights in the community to traverse and enjoy private
lands.26
One persistent conflict between shared and individualist conceptions of
property concerns American Indian nations, the original possessors of land
in the United States. With more than 550 federally recognized tribes and
scores of unrecognized tribes, it is difficult to generalize about American
Indian land use systems, either in the past or the present. Nonetheless,
many Native peoples recognized shared and community ownership more
explicitly than did European American settlers. Native individuals and
families did own property and land was bought and sold, but indigenous
property systems often had a robust concept of shared use rights. While a
particular family might use a piece of land to plant crops, for example, this
would not preclude other tribal members from entering or gathering
nonagricultural food on such lands. Much land, moreover, was considered
to be owned by a tribe in common, and open to hunting, fishing, or the like
by the tribe as a whole. (Note, however, that this sense of shared rights is
not so different from rights of villagers to graze on common or
uncultivated lands in early England, discussed in Chapter 8, §2.1, or the
“right to roam” on unfenced land recognized for much of American

42
history, discussed in Chapter 1, §1.)
More radically, for most indigenous peoples, land was not fungible —
it could not simply be replaced with similar land elsewhere. Rather,
specific areas were deeply connected to the history and spiritual identity of
a tribe. For many Native peoples even today, particular areas may be “the
source of spiritual origins and sustaining myth which in turn provides a
landscape of cultural and emotional meaning. The land often determines
the values of the human landscape.”27 The community, therefore, could
not be excluded from such areas without doing violence to the tribe and its
identity. These differences in emphasis on shared versus individual rights
in U.S. and Indian property systems were the source of much conflict, as
well as repeated efforts by the federal government to inculcate a love of
individual property as a tool to encourage tribal assimilation and
dissolution.28

Normative Approaches
How should courts and legislatures adjudicate conflicting property
claims? Various approaches can be used to conceptualize property rights
and to adjudicate conflicts among property claimants.29 Here are brief
descriptions of the most common approaches.30

Positivism and legal realism. Positivist theories identify law with the
‘‘commands of the sovereign’’ or the rules promulgated by authoritative
government officials for reasons of public policy.31 Those rules may be
intended to protect individual rights, promote the general welfare, increase
social wealth, or maximize social utility. Judges are therefore directed to
apply the law, as promulgated by authoritative government lawmakers,
and to exercise discretion where there are gaps, conflicts, or ambiguities in
the law while respecting the need for consistency with the letter and spirit
of preexisting laws. Jeremy Bentham wrote that the ‘‘idea of property
consists in an established expectation . . . of being able to draw . . . an
advantage from the thing possessed.’’32 He believed that ‘‘this
expectation, this persuasion, can only be the work of law. It is only
through the protection of law that I am able to inclose a field, and to give
myself up to its cultivation with the sure though distant hope of harvest . . .
.”33
Property exists to the extent the law will protect it. ‘‘Property and law are
born together, and die together. Before laws were made there was no
property; take away laws, and property ceases.’’34

43
 Positivists separate law and morals; they emphasize that, although
moral judgments may underlie rules of law, they are not fully or
consistently enforced by legal sanctions. Positivism was adopted by
Progressive-era judges and scholars such as Oliver Wendell Holmes, who
suggested analyzing legal rules in the way a ‘‘bad man’’ would. Such a
person would not be interested in the moral content of the law but would
simply want to predict what legal sanctions would be imposed on him if he
engaged in prohibited conduct.35 This approach was adopted by legal
realist scholars of the 1920s and 1930s such as Karl Llewellyn, who
argued that the law is what officials will do in resolving disputes.36
All lawyers are positivists in some sense because the job of advising
clients necessarily entails identifying the rules of law that have been
explicitly or implicitly adopted by authoritative lawmakers and predicting
how those rules will be applied to the client’s situation. Judges may also
see their jobs as the enforcement of existing law and leave the job of
amending law to legislatures. On the other hand, determining whether an
existing rule was intended to apply to a particular situation requires
judgment, as well as techniques of statutory interpretation and analysis of
precedent, and a conception about the proper role of courts in the
lawmaking process.

Justice and fairness. Positivism has been criticized by scholars who

argue that ambiguities in existing laws must be filled in by judges, and that
judges should not exercise untrammeled discretion in doing so. Rather,
they should interpret gaps, conflicts, and ambiguities in the law in a
manner that protects individual rights, promotes fairness, or ensures
justice.
Rights theorists attempt to identify individual interests that are so
important from a moral point of view that they not only deserve legal
protection but may count as ‘‘trumps’’ that override more general
considerations of public policy by which competing interests are balanced
against each other. Such individual rights cannot legitimately be sacrificed
for the good of the community.37 Some natural rights theorists argue that
rights have roots in the nature of human beings or that they are natural in
the sense that people who think about human relationships from a rational
and moral point of view are bound to understand particular individual
interests as fundamental.38 Other scholars, building on Immanuel Kant,
ask whether a claim that an interest should be protected could be
universalized such that every person in similar circumstances would be
entitled to similar protection. Still others build on the social contract

44
tradition begun by John Locke and Thomas Hobbes and ask whether
individuals would choose to protect certain interests if they had to come to
agreement in a suitably defined decision-making context. John Rawls, for
example, asks what principles of justice would be adopted by individuals
who did not know morally irrelevant facts about themselves, such as their
race or sex.39
Some theorists focus on desert. John Locke argued that labor is the
foundation of property. ‘‘Whatsoever then he removes out of the state that
nature has provided and left it in, he has mixed his labor with, and joined
to it something that is his own, and thereby makes it his property.’’40
Other theorists focus on the role that property rights play in developing
individual autonomy.41 Hegel believed that property was a way that
human beings constituted themselves as people by extending their will to
manipulate the objects of the external world.42 Professor Margaret Jane
Radin, for example, has argued that ‘‘to be a person . . . an individual
needs some control over resources in the external environment.’’43 She
distinguishes between forms of property that are important for the meaning
they have to individuals (personal property such as a wedding ring) and
property that is important solely because it can be used in exchange
(fungible property such as money and investments).44
Other scholars focus on satisfying human needs or ensuring
distributive justice. Nancy Fraser has argued that an important way to
think about property rights is to focus on the ways we define people’s
needs and the ways in which the legal system does or does not meet those
needs.45 Frank Michelman has similarly argued that a system of private
property requires, by its very nature, that property be widely dispersed. If
all property were owned by one person, that person would be a dictator.
Private property implies wide availability. It therefore entails a
compromise between the principle of protecting possession and promoting
widespread distribution.46

Utilitarianism, social welfare, and efficiency. Utilitarians focus on

the consequences of alternative legal rules. They compare the costs and
benefits of alternative property rules or institutions with the goal of
adopting rules that will maximize social utility or welfare. Some scholars
in the law and economics school of thought measure social utility by the
concept of economic efficiency. Efficiency theorists measure costs and
benefits by reference to what people are willing and able to pay for
entitlements, given their resources.47

45
 Individual property rights are thought to increase efficiency by
encouraging productive activity and by granting security to those who
invest in economic projects. Clear property rights also facilitate exchange
by clarifying who owns what. They therefore create incentives to use
resources efficiently.48 On the other hand, Carol Rose has argued that
clear definitions of property rights may be overly rigid, upsetting settled
expectations and reliance interests.49 This is why property rights are often
defined by flexible standards, such as a reasonableness requirement, that
adjust the relations of the parties to achieve a fair and efficient result. Rose
has also argued that common ownership is sometimes the most efficient
way to manage property.50 Frank Michelman and Duncan Kennedy have
also argued that efficiency requires a mixture of private property, sharing,
and deregulation.51 Cass Sunstein has noted that preferences are partially
shaped by
law and that cognitive biases may affect individuals’ perceptions of their
preferences.52

Social relations. Social relations approaches analyze property rights as

relations among persons regarding control of valued resources. Legal
rights are correlative; every legal entitlement in an individual implies a
correlative vulnerability in someone else, and every entitlement is limited
by the competing rights of others.53 This analysis was developed by
pragmatic legal scholars — called ‘‘legal realists’’ — from the 1920s
through the 1930s. Property rights are interpreted as delegations of
sovereign power to individuals by the state; these rights should therefore
be defined to accommodate the conflicting interests of social actors.54
Current social relations theorists have broadened the scope of this analysis
by examining the role property rights play in structuring social relations
and the ways in which social relations shape access to property.55 These
approaches include feminist legal theory, critical race theory, critical legal
studies, communitarianism, law and society, deconstruction and cultural
studies.
Feminists such as Martha Minow argue that our identities, values, and
needs are developed in relation to and in connection with others. The legal
system relies on implicit conceptions of social relations and often
implicitly treats certain groups or individuals as the norm and others as the
exception. She argues that we must become conscious of the ways those
underlying assumptions function in both social relations and the legal
system.56 Elizabeth V. Spelman similarly analyzes the implicit

46
assumptions underlying conceptions of human relations. In particular, she
focuses on the role that race, class, and gender play in shaping the
concepts with which we understand human relations.57
These new insights have permeated recent discussions of property law.
Property has traditionally been associated with the idea of autonomy
within boundaries; for example, we assume that people are generally free
to do what they like within the borders of their land. Yet Jennifer Nedelsky
has argued that ‘‘[w]hat makes human autonomy possible is not isolation
but relationship’’ with others.58 She proposes that we replace the idea of
boundary as the central metaphor for property rights with the idea of
relationships.59 Social relations approaches assume that people are
situated in a complicated network of relationships with others, from
relations among strangers, to relations among neighbors, to continuing
relations in the market, to intimate relations in the family. Moreover, many
of the legal developments of the twentieth century can be described as
recognition of obligations that emerge over time out of relationships of
interdependence.60 The relational approach shifts our attention from
asking who the owner is to the question of what relationships have been
established.61
Feminists62 and critical race theorists have explored the relationship
between race, sex, and property.63 Patricia Williams has written
eloquently about the social meaning of race and gender and their relation
to power and to property law.64 Keith Aoki has described the thinking that
led to the alien land laws that denied property ownership to Japanese
immigrants and provided the precursor to internment during World War
II.65 Alice Kessler-Harris and many other scholars have explored the
social factors that determine the unequal wages paid to women and men as
well as the relation between those factors and the distribution of property
and power based on gender.66
Critical legal theorists have explored tensions or contradictions within
property theory and law and used marginalized doctrines to argue for
reform of property rules and institutions.67 Communitarians and
environmentalists emphasize the importance of community life as well as
individual rights and argue that individuals have obligations as well as
rights.68 Law and society theorists investigate the ‘‘law in practice’’ rather
than the ‘‘law on the books’’ to determine what norms actually govern
behavior in the real world with respect to property.69 Other scholars have
used deconstruction, poststructuralism, or cultural theory to explore the

47
unconscious assumptions underlying property law.70

Human flourishing. In recent years, some property theorists have

begun to turn to the Aristotelian idea of human flourishing.71 Human
flourishing theories of property are self-consciously pluralist in their
normative outlook. Like utilitarian theory, they view property as an
institution that (like other legal institutions) ought to be structured to
promote human well-being. Unlike utilitarianism, they understand well-
being as comprised of a plurality of goods that are both objectively
valuable and not fully commensurable with one another. These include
goods like health, practical reason, sociability, personhood, and autonomy.
These theorists draw on prior work by economists and philosophers in the
Aristotelian tradition, such as Amartya Sen and Martha Nussbaum.72

Libertarian and progressive approaches to property. Property is

not only an intensely interesting subject but also an intensely debated one.
As much or more than another subject typically covered in the first year of
law school, property law is likely to elicit disagreement between
libertarians who hope to minimize government regulation of property and
progressives who hope to promote more equal opportunities to acquire
property. The text will incorporate explicit considerations of these
alternative perspectives, as well as the contrast between approaches
focused on the normative idea of economic efficiency and approaches
focused on norms of liberty, fairness, justice, and democracy. Those who
would like background reading may look to Richard Epstein’s books and
the articles of Eric Claeys73 for excellent introductions to the libertarian
perspective and to the recent Symposium in the Cornell Law Review for
an introduction to the progressive approach.74

11. William Echikson, Euphoria Dies Down in Czechoslovakia, Wall St. J.,
Sept. 18, 1990, at A-26, 1990 WL-WSJ 56114.
12. 1 Jeremy Bentham, Theory of Legislation 137 (Boston: Weeks, Jordan &
Co., R. Hildreth trans. 1840).
13. Kevin Phillips, The Politics of Rich and Poor: Wealth and the American
Electorate in the Reagan Aftermath 8 (1990).
14. Data in this section come from Bernadette D. Proctor, Jessica L. Semega &
Melissa A. Kollar, U.S. Census Bureau, Income and Poverty in the United States:
2015 (Sept. 2016), available at
https://www.census.gov/content/dam/Census/library/publications/2016/demo/p60-
256.pdf. Data for 2014 come from U.S. Census Bureau, Facts for Features:

48
American Indian and Alaska Native Heritage Month: November 2015, CB15-
FF.22 (Nov. 2015), available at http://www.census.gov/newsroom/facts-for-
features/2015/cb15-ff22.html.
15. Chad Stone, Danilo Trisi, Arloc Sherman & Emily Horton, A Guide to
Statistics on Historical Trends in Income Inequality, 10 (Center on Budget and
Policy Priorities, July 2016), available at http://www.cbpp.org/research/poverty-
and-inequality/a-guide-to-statistics-on-historical-trends-in-income-inequality.
16. Grace Kena et al., The Condition of Education 2016, 59 (National Center for
Education Statistics, May 2016), available at
http://nces.ed.gov/pubs2016/2016144.pdf.
17. Alana Eichner & Katherine Gallagher Robbins, National Snapshot: Poverty
Among Women & Families, 2014 (National Women’s Law Center, Sept. 2015),
available at https://nwlc.org/wp-
content/uploads/2015/08/povertysnapshot2014.pdf.
18. Peter H. Rossi, Down and Out in America: The Origins of Homelessness 193
(1989).
19. Bernadette D. Proctor, Jessica L. Semega & Melissa A. Kollar, supra note
14.
20. Alfred Gottschalck, Marina Vornovytskyy & Adam Smith, U.S. Census
Bureau, Household Wealth in the U.S.: 2000 to 2011 (2013).
21. Emmanuel Saez & Gabriel Zucman, Wealth Inequality in the United States
Since 1913: Evidence From Capitalized Income Tax Data tbl.1 (Nat’l Bureau of
Econ. Research, Working Paper No. 20625, 2014),
http://www.nber.org/papers/w20625.pdf; see also Edward N. Wolff, The Asset
Price Meltdown and the Wealth of the Middle Class 50 (Nat’l Bureau of Econ.
Research, Working Paper No. 18599, 2012),
http://www.nber.org/papers/w18559.pdf.
22. Wolff, supra note 21; see also Marco Cagetti & Mariacristina De Nardi,
Wealth Inequality: Data and Models (Fed. Reserve Bank of Chi., Working Paper
No. 2005-10, 2005), available at http://papers.ssrn.com/sol3/papers.cfm?
abstract_id=838325; Lisa A. Keister, Wealth in America 64 (2000); Phillips, supra
note 13, at 1-13.
23. U.S. Census Bureau, Median Value of Assets for Households, by Type of
Asset Owned and Other Selected Characteristics: 2011 (2013), available at
http://www.census.gov/people/wealth/.
24. Edward N. Wolff, Recent Trends in Household Wealth in the United States:
Rising Debt and the Middle-Class Squeeze — An Update to 2007 (Levy Economics
Institute Working Paper No. 589, Mar. 2010), available at
http://www.levyinstitute.org/pubs/wp_589.pdf.
25. Richard Fry & Paul Taylor, Pew Research Center, An Uneven Recovery,
2009-2011: A Rise in Wealth for the Wealthy, Declines for the Lower 93% (2013),
available at http://www.pewsocialtrends.org/2013/04/23/a-rise-in-wealth-for-the-
wealthydeclines-for-the-lower-93.
26. See Michael Heller & Hanoch Dagan, The Liberal Commons, 110 Yale L.J.

49
549, 610-611 (2001); John A. Lovett, Progressive Property in Action: The Land
Reform (Scotland) Act 2003, 89 Neb. L. Rev. 739 (2011); Jerry L. Anderson,
Britain’s Right to Roam: Redefining the Landowner’s Bundle of Sticks, 19 Geo.
Intl. Envtl. L. Rev. 375 (2007).
27. Frank Pommersheim, The Reservation as Place: A South Dakota Essay, 34
S.D. L. Rev. 246, 250 (1989); see also Rebecca Tsosie, Land, Culture and
Community: Reflections on Native Sovereignty and Property in America, 34 Ind. L.
Rev. 1291, 1302-1303 (2001). See also Kate McCormick, The Dakota Pipeline
Protests: Where They Started and Where They Are Going (Hint: No Where), Geo.
Envtl. L. Rev. Online (Dec. 1, 2016).
28. See, e.g., Chapter 15, §5.1 (cases and materials on the allotment policy,
through which the United States forcibly divided tribal land among individual
households).
29. For collections of scholarly approaches to property, see Perspectives on
Property Law (Robert C. Ellickson, Carol M. Rose & Bruce A. Ackerman eds., 4th
ed. 2014); A Property Anthology (Richard H. Chused ed. 2d ed. 1997).
30. Many, if not most, scholars combine various approaches. See, e.g., Stephen
R. Munzer, A Theory of Property (1990) (adopting a pluralist perspective including
justice and equality, desert based on labor, and utility and efficiency); Carol M.
Rose, Property and Persuasion: Essays on the History, Theory, and Rhetoric of
Ownership (1994) (combining economic analysis, justice-based arguments, and
feminist legal theory); Joseph William Singer, Entitlement: The Paradoxes of
Property (2000) (using both justice and utilitarian considerations, as well as
narrative theory, feminism, critical race theory, and critical legal studies).
31. John Austin, Lectures of Jurisprudence (1861-1863); H.L.A. Hart, The
Concept of Law (1961).
32. Bentham, supra note 12, at 138.
33. Id.
34. Id. at 139.
35. See Oliver Wendell Holmes, The Path of the Law, 8 Harv. L. Rev. 1 (1894).
36. Karl Llewellyn, The Bramble Bush (1930).
37. Ronald Dworkin, Law’s Empire (1986); Ronald Dworkin, Taking Rights
Seriously (1978); Charles Fried, Right and Wrong (1978); Allan Gewirth, The
Community of Rights (1996); Jeremy Waldron, The Right to Private Property
(1989).
38. See Robert Nozick, Anarchy, State, and Utopia (1974); Judith Jarvis
Thompson, The Realm of Rights (1990).
39. John Rawls, A Theory of Justice (1971). See also Thomas M. Scanlon, What
We Owe Each Other (1998).
40. John Locke, Second Treatise of Government 17-18 (Bobbs-Merrill ed. 1952)
(originally published in 1960).
41. Richard A. Epstein, Simple Rules for a Complex World 53-70 (1995).
42. Georg Wilhelm Friedrich Hegel, Philosophy of Right 40-41 (T. Knox trans.

50
1942).
43. Margaret Jane Radin, Property and Personhood, 34 Stan. L. Rev. 957
(1982).
44. Margaret Jane Radin, Market-Inalienability, 100 Harv. L. Rev. 1849 (1987).
See also Margaret Jane Radin, Contested Commodities: The Trouble with Trade in
Sex, Children, Body Parts, and Other Things (1996); Margaret Jane Radin,
Reinterpreting Property (1993).
45. Nancy Fraser, Unruly Practices, Power, Discourse, and Gender in
Contemporary Social Theory (1989).
46. Frank Michelman, Possession and Distribution in the Constitutional Idea of
Property, 72 Iowa L. Rev. 1319 (1987). See also Waldron, supra note 37.
47. See generally Richard A. Posner, Economic Analysis and Law (9th ed.
2014); Steven Shavell, Foundations of Economic Analysis of Law (2004).
48. Shavell, supra note 47, at 11-23. See also Garrett Hardin, The Tragedy of the
Commons, reprinted in Economic Foundations of Property Law 4 (Bruce
Ackerman ed. 1975); Harold Demsetz, Toward a Theory of Property Rights, 57
Am. Econ. Rev. 347 (1967).
49. Carol Rose, Crystals and Mud in Property Law, 40 Stan. L. Rev. 577 (1988).
50. Carol Rose, The Comedy of the Commons: Customs, Commerce, and
Inherently Public Property, 53 U. Chi. L. Rev. 711 (1986). See also Frank
Michelman, Ethics, Economics, and the Law of Property, 24 Nomos: Ethics,
Economics, and the Law 3 (1982) (arguing that the institution of property, by its
nature, requires a large amount of cooperative activity). See also Anna di Robilant,
The Virtues of Common Ownership, 91 B.U. L. Rev. 1359 (2011).
51. Duncan Kennedy & Frank Michelman, Are Property and Contract
Efficient?, 8 Hofstra L. Rev. 711 (1980).
52. Cass R. Sunstein, Free Markets and Social Justice (1997).
53. Wesley Hohfield, Some Fundamental Legal Conception as Applied in
Judicial Reasoning, 28 Yale L.J. 16 (1913).
54. Walter Wheeler Cook, Privileges of Labor Unions in the Struggle for Life,
27 Yale L.J. 779 (1918); Robert Hale, Bargaining, Duress, and Economic Liberty,
43 Colum. L. Rev. 603 (1943); Morris Cohen, Property and Sovereignty, 13
Cornell L.Q. 8 (1927).
55. Gregory S. Alexander, Commodity and Propriety: Competing Visions of
Property in American Legal Thought, 1776-1970 (1997); C. Edwin Baker,
Property and Its Relation to Constitutionally Protected Liberty, 134 U. Pa. L. Rev.
741 (1986). See also Joseph William Singer, Property as the Law of Democracy,
63 Duke L.J. 1287 (2014).
56. Martha Minow, Making All the Difference: Inclusion, Exclusion, and
American Law (1990).
57. Elizabeth V. Spelman, Inessential Woman: Problems of Exclusion in
Feminist Thought (1988). See also Allison Anna Tait, The Beginning of the End of
Coverture: A Reappraisal of the Married
Woman’s Separate Estate, 26 Yale J.L. & Feminism 165 (2014); Martha Minow,

51
Forgiveness, Law, and Justice, 103 Cal. L. Rev. 1615 (2015).
58. Jennifer Nedelsky, Law, Boundaries, and the Bounded Self, 30
Representations 162, 169 (1990). See also Ana de Robilant, Common Ownership
and Equality of Autonomy, 58 McGill L.J. 263 (2012).
59. Nedelsky, supra note 58, at 171-184. See also Jennifer Nedelsky,
Reconceiving Rights as Relationships, 1 Rev. Const. Studies/Revue d’etudes
Constitutionelles 1 (1993); Singer, supra note 30.
60. Roberto Mangabeira Unger, The Critical Legal Studies Movement 83-84
(1983).
61. Joseph William Singer, The Reliance Interest in Property, 40 Stan L. Rev.
611, 657 (1988).
62. Martha Albertson Fineman, The Illusion of Equality: The Rhetoric and
Reality of Divorce Reform (1991); Vicki Schultz, Life’s Work, 100 Colum. L. Rev.
1881 (2000); Reva B. Siegel, Home as Work: The First Women’s Rights Claim
Concerning Wives’ Household Labor, 1850-1880, 103 Yale L.J. 1073, 1077
(1994); Reva B. Siegel, The Modernization of Marital Status Law: Adjudicating
Wives’ Rights to Earnings, (1860-1930), 82 Geo. L.J. 2127 (1994); Joan Williams,
Unbending Gender: Why Family and Work Conflict and What to Do About It
(2000).
63. Critical Race Theory: The Cutting Edge (Richard Delgado ed. 1995).
64. Patricia Williams, Fetal Fictions: An Exploration of Property Archetypes in
Racial and Gendered Contexts, 42 Fla. L. Rev. 81 (1990).
65. Keith Aoki, No Right to Own? The Early Twentieth-Century ‘‘Alien Land
Laws’’ as a Prelude to Internment, 40 B.C. L. Rev. 37 (1998). See also Allison
Brownell Tirres, Property Outliers: Non-Citizens, Property Rights and State
Power, 27 Geo. Immigr. L.J. 77 (2012).
66. Alice Kessler-Harris, A Woman’s Wage (1990).
67. Singer, supra note 30.
68. Mary Ann Glendon, Rights Talk (1991); Avishai Margalit, The Decent
Society (1998); Jedediah Purdy, For Common Things: Irony, Trust, and
Commitment in America Today (1999). See also Nadav Shoked, The Duty to
Maintain, 64 Duke L.J. 437 (2014).
69. Robert C. Ellickson, Order Without Law: How Neighbors Settle Disputes
(1991); Abraham Bell & Gideon Parchomovsky, Property Lost in Translation, 80
U. Chi. L. Rev. 515 (2013) (discussing how localized property norms may be more
effective at tailoring a community’s economic needs consistently with its
ideological preferences and cultural heritage).
70. Jeanne Lorraine Schroeder, The Vestal and the Fasces: Hegel, Lacan,
Property, and the Feminine (1998).
71. See Gregory S. Alexander & Eduardo Moisés Peñalver, An Introduction to
Property Theory, ch. 5 (2012).
72. See, e.g., Martha C. Nussbaum, Women and Human Development (2000);
Amartya Sen, Development as Freedom (1999); Amartya Sen, Commodities and
Capabilities (1985).

52
 73. Compare Epstein, supra note 41; Richard Epstein, Takings: Private Property
and the Power of Eminent Domain (1985). Although he is a natural rights theorist
and eschews the libertarian label, Professor Eric Claeys has written extensively,
and in a sophisticated manner, in a vein that seeks to limit government interference
with the rights of owners. See, e.g., Eric R. Claeys, Virtue and Rights in American
Property Law, 94 Cornell L. Rev. 889 (2009); Eric R. Claeys, Takings,
Regulations, and Natural Property Rights, 88 Cornell L. Rev. 1549, 1669-1671
(2003). See also Eric T. Freyfogle, Property and Liberty, 34 Harv. Envtl. L. Rev.
75 (2010); Donald J. Smythe, Liberty at the Borders of Private Law, 49 Akron L.
Rev. 1 (2016).
74. Symposium: Property and Obligation, 94 Cornell L. Rev. 743 (2009),
including Gregory S. Alexander, Eduardo Moisés Peñalver, Joseph William Singer
& Laura S. Underkuffler, A Statement of Progressive Property, 94 Cornell L. Rev.
743 (2009); Gregory S. Alexander, The Social-Obligation Norm in American
Property Law, 94 Cornell L. Rev. 745 (2009); Eduardo Moisés Peñalver, Land
Virtues, 94 Cornell L. Rev. 821 (2009). See also Timothy M. Mulvaney,
Progressive Property Moving Forward, 5 Cal. L. Rev. Circuit 349 (2014); John
Lovett, Progressive Property in Action: The Land Reform (Scotland) Act 2003, 89
Neb. L. Rev. 739 (2011); André van der Walt, The Modest Systemic Status of
Property, 1 J.L. Prop. & Soc’y 15 (2014), available at
http://www.alps.syr.edu/journal/2014/11/JLPS-2014-11-vanderWalt.pdf.

53
 HOW TO BRIEF A CASE AND
PREPARE FOR CLASS

Sources of Law
Legal rules are promulgated by a wide variety of government bodies in
a hierarchical scheme. The major sources of law in that system include the
following:

1. United States Constitution. The federal Constitution is the

fundamental law of the land. It was adopted by state constitutional
conventions, whose members were elected by (a small subset of) the
people.75 Constitutional amendments are generally passed by Congress
and ratified by state legislatures. The Constitution determines the structure
of the federal government, including the relations among the executive,
legislative, and judicial branches of the federal government, and the
relations between the federal government and the state governments. It
also defines the powers of the federal government and limits the powers of
both the federal government and the states to protect individual rights,
including property rights and other rights such as freedom of speech,
freedom from unreasonable searches and seizures, equal protection of the
laws, and due process.

2. Federal statutes. Legislation is passed by the Congress of the

United States and ratified by the president, or passed over the president’s
veto. Federal statutes address a wide variety of matters relating to property
law; examples include the Fair Housing Act of 1968, the Civil Rights Act
of 1964, the Internal Revenue Code, the Sherman Antitrust Act, and the
Worker Adjustment and Retraining Notification Act of 1988.

3. Administrative regulations. Congress may pass legislation creating

administrative agencies, such as the Environmental Protection Agency, the
Equal Employment Opportunity Commission, the Federal Trade
Commission, or the Internal Revenue Service; these agencies may have the
power to promulgate regulations in a particular field (environmental

54
protection, employment discrimination, or tax law).

4. State constitutions. Each state has its own constitution defining the
structure of state government and defining certain fundamental individual
rights against the state. In some instances, state constitutions grant greater
protection to individual rights than does the federal constitution. For
example, a search by the police that is allowed under the fourth
amendment to the U.S. Constitution may be prohibited under the New
Jersey constitution. Although state constitutions may not grant citizens less
protection than provided by the federal constitution, they may grant their
citizens more protection by going further than the U.S. Constitution in
limiting the power of state officials.

5. State statutes. State statutes are passed by state legislatures with the
consent of the governor (or by a supermajority vote over the governor’s
veto). Many state statutes deal with property law matters such as landlord-
tenant legislation, recording acts, civil rights statutes, and regulation of
family property on divorce.

6. State administrative regulations. State legislatures, like the federal

Congress, may create administrative agencies that have the power to
promulgate regulations in limited fields of law. The Massachusetts
legislature, for example, has created a Building Code Commission
endowed with the power to promulgate and enforce regulations on
building construction and materials to protect the public from unsafe
structures.

7. Common law. In the absence of any controlling statute or

regulation, state courts adjudicate civil disputes by promulgating or
applying rules of law. Judicial opinions explain and justify the rules
adopted by judges to adjudicate civil disputes. During the first year of law
school, most courses focus on common law rules and the process of
common law decision making by judges, but property law is as much a
statutory and regulatory topic as it is a product of common law decision
making.

8. Local ordinances and bylaws. State legislatures delegate to local

governments such as counties, cities, and towns the power to promulgate
ordinances or bylaws in limited areas of law, including zoning, rent
control, schools, traffic, and parking.

55
 Lawyers’ Skills
In reading materials and in preparing for class, you should keep in
mind three basic tasks that lawyers perform.

1. Counseling. In advising clients, lawyers perform a variety of roles.

First, they answer clients’ questions about their legal rights. They do so by
looking up the law in statutes, regulations, and judicial opinions. In so
doing, they may or may not find legal rules that specifically address the
question they need to answer. In either case, lawyers must predict how the
courts would rule on the question if they had the opportunity to do so. This
requires lawyers to make educated judgments about how prior case law
will be applied to new fact situations. Second, lawyers counsel clients on
how to conform their conduct to the dictates of the law and how to achieve
their goals in a lawful manner. Third, lawyers draft legal documents for
clients, including leases, deeds, purchase and sale agreements, bond
documents, and employment contracts. Fourth, lawyers negotiate with
other parties or their attorneys to settle disputes or to make deals.

2. Advocacy. If a dispute cannot be resolved amicably, one of the

parties—called the ‘‘plaintiff’’—may bring a lawsuit against the other
party—called the ‘‘defendant’’—claiming that the defendant engaged in
wrongful conduct that violated the plaintiff’s legal rights. To prevail in
such a lawsuit, the plaintiff must be able to (a) prove in court by testimony,
documentation, or other admissible evidence that the defendant engaged in
the wrongful conduct and that the conduct caused the plaintiff’s harm, and
(b) demonstrate that the defendant’s conduct violates a legally protected
interest guaranteed to the plaintiff in a way that violates the plaintiff’s
legal rights. The parties will normally hire attorneys to conduct the
lawsuit. Lawyers argue before judges about what the legal rules are
governing the dispute. Sometimes the rules in force are clear. Often,
however, the rule governing a particular situation is not clear. The rules
contain numerous gaps, conflicts and ambiguities, and lawyers are experts
in using the open
texture of the law to develop plausible competing arguments about
alternative possible
rules of law to govern the situation. The attorneys for each side engage in
advocacy of alternative possible rules of law, both in written arguments
called ‘‘briefs’’ and in oral arguments before judges. In these settings,
lawyers attempt to persuade judges to interpret existing rules or to create
new legal rules in ways that favor their clients’ interests. Lawyers must
therefore learn the kinds of arguments judges find persuasive in

56
interpreting and in modernizing the rules in force. Lawyers may also
represent clients before legislative committees considering the passage of
legislation.

3. Decision making. Finally, it is important to remember that the

judges who decide cases are also lawyers. Their role is to adjudicate the
cases before them by choosing the applicable legal rules to govern the
dispute and others like it in the future. Similarly, legislatures promulgate
statutes regulating conduct and resolving conflicts among competing
interests. It is also important for you as a participant in the legal system to
develop your own views about the wisdom and justice of our legal
institutions and rules. Legal education teaches us to consider both sides of
important contested questions of law before reaching a judgment about the
proper outcome of the dispute. This does not mean we should be
indifferent to what those outcomes are or that we should not criticize the
rules in force. Your ability to argue for and against a position does not
mean that you cannot make up your mind or present persuasive arguments
to justify the result you reach; it means simply that your judgment about
right and wrong should be true to the complexity of your own moral
beliefs and that it is important to recognize what is lost, as well as what is
gained, by any choice.

Reading Cases

Rules of law. In researching the law, attorneys might (1) find a rule of
law that clearly defines the parties’ respective rights; (2) find no rule of
law directly on point (a gap in the law); (3) find a rule of law that does not
clearly answer the question (an ambiguity in an existing rule); or (4) find
two or more rules of law that arguably govern the dispute (a conflict
among possibly applicable rules). Moreover, attorneys might find rules of
law applying to situations that are arguably analogous to the case at hand.
Lawyers find and exploit the gaps, conflicts, and ambiguities in the law to
attempt to define the law in ways that benefit their clients.
In preparing for class, you should try to identify the rule of law—the
general principle—each side in the case would like the court to
promulgate. Ask yourself: What rule of law did the plaintiff urge the court
to adopt? What rule of law did the defendant urge the court to adopt?
This is harder than it seems. Sometimes the parties’ proposed rules of
law are described in the judicial opinion, sometimes not. In either event,
you must ask whether it would be wise to argue for a broad rule of law or a
narrow one. For example, one might argue for a broad, rather vague, rule

57
of law: ‘‘Non-owners are privileged to enter property when their activity
will further a significant public policy.’’ Or one might argue for a narrow
rule of law, tied very closely to the facts of the case: ‘‘Lawyers and
physicians working for agencies funded by the federal government may
enter property to give professional assistance to migrant farmworkers.’’
Similarly, an owner might argue for a broad rule of law granting owners
the right to exclude non-owners under all circumstances, or she might
argue for a narrower rule granting owners the right to exclude non-owners
only if the owner can show just cause. It is up to you to identify the
different ways each side might have framed its proposed rules of law.

Arguments
After identifying possible rules of law for each side, you should ask
what arguments the parties might have given to justify adopting their
proposed rules, as well as what arguments they could have given against
the rule proposed by the other side. These arguments should include
considerations about the fairness of the proposed rules to the parties:
Which rule better protects individual rights? You should also consider the
social consequences of the competing rules: Which rule better promotes
the general welfare?

Briefing Cases
In preparing for class, at least at the beginning, you should brief your
cases. This means writing an outline of the important elements of the
decision. These elements include the following.

1. Facts. Who did what to whom? What is the relationship between the
parties? What is the wrongful conduct the plaintiff claims the defendant
engaged in, and how did it harm the plaintiff? What is the dispute between
the parties about?

2. Procedural history. How did the courts below rule on the case?
First, how did the trial court resolve the matter? Who won, and why? Did
the party who lost in the trial court appeal an adverse ruling of law to an
intermediate appellate court? If so, how did the appellate court rule, and
why? Did one of the parties appeal the result in the appellate court to the
state supreme court? What court issued the opinion you are reading—the
state supreme court or some lower court? (Note that because cases in this
and other casebooks have been edited, some portion of the procedural
history may be omitted from the text reprinted in the book.)

58
 3. Relief sought and judgment. What relief did the plaintiff seek? Did
she ask for (a) a declaration of her rights (a declaratory judgment); (b) an
injunction ordering the defendant to act or not to act in certain ways; or (c)
damages to compensate the plaintiff for the harm? What was the judgment
of the court issuing the opinion you are reading? Did it grant a declaratory
judgment, issue an injunction, or order the payment of damages? Did it
remand the case to a lower court for further proceedings, such as a new
trial?

4. Legal question, or rule choice. What legal question or questions

did the court resolve? To answer this, you should determine what rule of
law the plaintiff favored and what rule of law the defendant favored. What
different legal rules did the court consider? What rules should it have
considered? What rule of law would you propose if you were the
plaintiff’s attorney? The defendant’s attorney?

5. Arguments and counterarguments. Place yourself in the position

of the plaintiff’s lawyer. What arguments would you give to persuade the
court to adopt the rule of law favored by your client, and what arguments
can you give against the rule of law favored by the defendant? Next, place
yourself in the position of the defendant’s lawyer. What arguments would
you give to persuade the court to adopt the rule of law favored by your
client, and what arguments can you give against the rule of law favored by
the plaintiff?

a. Precedential arguments. These arguments appeal to existing rules

of law. You may argue that an ambiguous rule of law—such as a rule
creating a reasonableness standard of conduct—entitles your client to win.
You may also argue that one of two conflicting rules of law governs the
fact situation in your case or that a rule of law applies by analogy. To do
either of these things, you must argue that a prior case establishes a
principle of law that governs a situation that is identical—or sufficiently
similar—to the case at hand such that the policies or principles that
underlie and justify the earlier decision are applicable to the current case.
Under these circumstances, you can argue that the prior case establishes a
precedent that applies to your case. The lawyer on the other side will argue
that the case at hand is different in important ways from the prior case and
that because of those differences, the policies and principles underlying the
earlier case do not apply to the case at hand. When the rule of law in the
prior case does not apply to the case at hand, we say the lawyer has
distinguished the precedent. What rules have you learned that can be

59
applied either directly or by analogy to govern this case?

b. Statutory interpretation. The rights of the parties may be governed

by a federal or state statute that regulates their conduct. Judges must
interpret ambiguities in those statutes by reference to (1) the language of
the statute; and (2) the legislative intent behind the statute, which may be
elucidated by reference to the policies and purposes the legislation was
intended to serve. How can you persuade the judge that your proposed
interpretation of the statutory language or purposes best accords with the
intent of the legislature? What counterarguments will the attorney on the
other side make to answer your claims?

c. Policy arguments. These arguments appeal to a variety of

considerations, including (1) fairness, individual and group rights, and
justice in social relationships; and (2) the social consequences of
alternative rules such that the choice of rules promotes social utility,
efficiency, or the general welfare. What reasons can you give to persuade
the judge that your proposed rule promotes both justice and social welfare?
What counterarguments will the attorney on the other side make to answer
your claims?

6. Holding. What rule of law did the court adopt, and how did it apply
to the case? In identifying the holding of the case, it is important to
consider several possibilities. Try to describe the rule of law in as broad a
fashion as possible by (a) identifying a general category or a broad range
of situations to which the rule would apply, and/or (b) appealing to general
principles such as foreseeability, reasonableness, or promotion of
alienability. Then try to describe the rule of law in as narrow a fashion as
possible so as to limit the application of the rule to a narrow range of
circumstances by (a) identifying the specific facts of the case as necessary
to application of the rule, and/or (b) appealing to specific, rather than
general, principles. For example, a possible broad holding of a case is that
owners have an absolute right to exclude non-owners from their property
unless the owner’s act of exclusion violates public policy. An alternative
narrow holding would be that owners of property open to the general
public for business purposes have a right to exclude non-owners from their
property unless those non-owners are engaging in expressive political
activity that does not interfere with the operation of the business.

7. Reasoning of the court and criticism of that reasoning. What

reasons did the court give for deciding the case the way it did? What

60
problems can you find with the court’s reasoning? Do you agree or
disagree?

Reading Statutes and Regulations

Statutory interpretation can be the subject of entire law school courses,
but it is important to become comfortable from the outset with statutory
and regulatory language. This is because a great deal of legal practice
involves statutory or regulatory questions that have not necessarily been
ruled on by the courts.
There are examples of statutes and regulations throughout this book.
The task in reading these legal texts is different than briefing cases for
class discussion. The goal is to come to class with a broad-brush
understanding of how the relevant statute or regulation works. As you
prepare, pay attention to the details of the language and the structure of the
text, note the kinds of issues the statute or regulation covers (and does
not), what explicit exceptions or exemptions are set out, how the various
parts of the text relate to each other, and ambiguities the language creates.
It can be hard to master statutory or regulatory language in the absence of
a specific conflict or question, but the basic exercise of careful reading will
soon come naturally.

75. It is important to note that when the United States Constitution was adopted
in 1789, the voting population in the 13 states excluded women, African-American
men, American Indians, and white men who owned less than a certain amount of
property.

61
 ACKNOWLEDGMENTS

Acknowledgments from Joseph William Singer

This book would not have been possible without the substantial help,
suggestions, encouragement, and support of many people. I would like
especially to thank Duncan Kennedy, whose imprint is evident throughout
the book. He is responsible for some of the large structural components of
the book, including the idea of organizing materials around the concept of
consumer protection in the market for shelter, and many details, such as
the inclusion of building code materials in the land use regulation section.
He also developed the idea of systematizing legal arguments as a device
for legal education. His personal, moral, and intellectual support over the
years has been invaluable to me.
Jeremy Paul contributed in fundamental ways to the ideas about
property and law school teaching represented in this book. The takings
materials especially are shaped by his perspective. I want to thank Jack
Beermann for getting me to write this book. His encouragement and
intellectual support over the years buoyed me tremendously. Elizabeth V.
Spelman has been essential in teaching me to ‘‘think about thinking’’ and
to explore gender, race, and class issues in social relations. I would like
also to thank Williamson Chang and Robert A. Williams, Jr., for
prompting my interest in the legal relations between the United States and
American Indian nations and between the United States and Native
Alaskans and Native Hawaiians. Their personal insights and scholarly
contributions on the property rights of Native American peoples
contributed significantly to my own intellectual development and to
various aspects of this book.
Various colleagues and friends who have provided detailed suggestions
include Kathy Abrams, Greg Alexander, Keith Aoki, David Barron, Jack
Beermann, Bethany Berger, Robert Brauneis, Betsy Clark, Alan Feld,
Tamar Frankel, Louise Halper ( ), James Holmes, Ian Haney López,
Allan Macurdy, Martha Mahoney, Robert Merges, Ron Meyer, Frank
Michelman, Nell Jessup Newton, Eduardo Peñalver, John Powell, John
Rattigan, Aviam Soifer, Debra Pogrund Stark, Nomi Stoltzenberg, Gerald
Torres, Robert Tuttle, Laura Underkuffler, André van der Walt, Johan van

62
der Walt, and Kelly Weisberg.
Though they may not know it, a number of colleagues have especially
influenced my understanding of property, including, but not limited to,
Adeno Addis, Bob Anderson, Derrick Bell, Bethany Berger, James Boyle,
Victor Brudney, Clark Byse, William W. Fisher III, William Forbath, Jerry
Frug, Mary Joe Frug ( ), Mary Ann Glendon, Carole Goldberg, Robert
Gordon, Neil Gotanda, Kent Greenfield, Morton Horwitz, Karl Klare, John
LaVelle, Charles Lawrence, Mari Matsuda, Gary Minda, Martha Minow,
Nell Newton, Frances Olsen, Jennifer Nedelsky, Margaret Jane Radin,
Carol Rose, Judy Royster, Katherine Stone, Rennard Strickland, Cass
Sunstein, Lucie White, and Patricia Williams. Any failings in this book
cannot be attributed to anyone in this disparate group.
The library reference staffs at Boston University School of Law and
Harvard Law School made my life wonderfully easy and contributed
enormously to the research necessary to this project. Special thanks go to
Daniel Freehling, Marlene Alderman, Kim Dulin, Cynthia Murphy, Kristin
Cheney, Jon Fernald, Naomi Ronen, and Janet Katz. William Kaleva,
Carol Igoe, Holly Escott, and Patricia Fazzone provided cheerful and
dedicated administrative assistance, at various times performing feats I
would have thought impossible for human beings.
I would like to thank Deans Martha Minow, Elena Kagan, and Robert
Clark of Harvard Law School and Dean Ronald Cass of the Boston
University School of Law for financial support for research. Many aspects
of the book would have been less developed were it not for a slew of
research assistants who labored over the years, including Vanessa
Antoinette, Mekonnen Ayano, Benjamin Beasley, Alanna Buchanan,
Ariane Buglione, David Bunis, Andrew Crespo, Jeffrey Engelsman, Joel
Freedman, Melissa Friedman, Jonathan Gingerich, Rachel Gonzalez,
Steven Gould, Margaret Guzman, Ulcca Hannsen, Joseph Harrington,
Rebecca Haw, Philander Huynh, Gregory Ikonen, Laura Kershner, Vikas
Khanna, Kylie Chiseul Kim, Brian Korchin, Lerae Kroon, Sara Madge,
Stacey Moore, Garrett Moritz, Pablo Ormachea, Amanda Phillips, Michael
Qin, Luke Riley, Isaac Saidel-Goley, Nathan Sandals, Neil Shah, Edward
Tumavicus, Loren Washburn, David Wiseman, Ben Wizner, and Alithea
Zymaris.
I would like to thank the staff at Aspen for their invaluable help in
preparing and editing this book. I am also grateful to the anonymous
reviewers whose suggestions have been incorporated into the final product.
I continue to be amazed by the wonders of WESTLAW and LEXIS. The
availability of computer research techniques and the ability to download
cases and statutes shortened by years the time needed to write this book.

63
 Lila Singer has taught me about teaching and social action. Max Singer
( ) has
inspired me with his work on low-income housing and hunger. I want to
thank them for my education and for their example of how to live—my
greatest inheritance. Robert Singer and Anne Rayman have both taught me
about caretaking, and Adam and Rachel have shown me how to take care
of those who take care of you. Gale Singer Adland and Peter Adland have
taught me about making a home, and Ari, Jesse, and Naomi have shown
me how to grow up.
Newton Minow has taught me to look at the real world and to figure
out what works so that valuable resources are not wasted. Josephine
Minow has taught me about attentiveness to others, involvement in causes,
and how to get things done. Nell Minow and David Apatoff have taught
me about the government of business and the business of government, and
Benjamin and Rachel have shown me how to get totally and fanatically
engrossed in something. Mary Minow and James Robenolt have taught me
about getting information and how to use it once I have gotten it.
I would like also to thank the late Justice Morris Pashman ( ) of the
Supreme Court of New Jersey for teaching me about the art of judging. It
is impossible to define exactly what good judgment entails, but it can be
understood, at least partly, through example. Justice Pashman’s sensitivity
to the perspectives of each litigant epitomizes, for me, the preconditions
for justice. When I try to imagine how a good judge would react to a
particular problem, I turn to his example.
I wish I could show this book to Marcel Pallais Checa ( ). Marcel
taught me what it meant to be a committed intellectual and how to tie
one’s spiritual life to one’s political commitments. He taught me that a
philosopher could also be an economist. His assassination reminds me of
both the value and the limits of the rule of law.
On May 31, 1992, Mira Judith Minow Singer made her astonishing
entry into this world, voicing strong opinions, questioning authority, and
generally sticking up for herself. She has increased my respect and
admiration for parents generally and made me wonder how single parents
manage. Her presence has reminded me that one out of every five children
in the United States lives below the poverty line, and that almost half of all
African American children do so. I wonder how we could take good care
of her if we did not have a home. Mira has caused me to ponder anew the
fact that we reward only some kinds of work with property while other
kinds are not so rewarded, despite their social value, and the resultant
inequalities that go along with such distinctions.
This book is doubly (in both senses of the word) dedicated to Martha

64
Minow and Mary Joe Frug ( ).
Mary Joe Frug’s scholarship on gender issues in contracts casebooks
heavily influenced both the content and the structure of this book. From
her I learned about hidden messages—often unintended—and how to ask
who was left out of a seemingly comprehensive treatment of a subject. Her
work encouraged me to ask whether there were entitlements important to
women that are not traditionally included in introductory property courses.
Addressing this question prompted me to include materials in this
casebook on public accommodations statutes applicable to ‘‘private’’ clubs
that discriminate against women, child support, AFDC, domestic violence
restraining-order statutes, unemployment benefits for women who leave
work to take care of children or to be with a loved one, enforceability of
restraints on marriage, statutes prohibiting discrimination on the basis of
marital status, statutes prohibiting discrimination against families with
children, the relationship between sex and race discrimination, statutes
prohibiting discrimination on the basis of sexual orientation, equitable
distribution, community property, property rights of unmarried couples,
and nontraditional family relationships. Her work also encouraged me to
look for cases that included women as central actors, including opinions
written by female judges and cases involving women in a variety of roles,
as both landlords and tenants, business executives and housekeepers,
victims and villains.
Like dozens of other people, I had set up a date to talk with Mary Joe. I
hoped to get further advice from her about this casebook. Our conversation
setting up our date took place several days before her death. I have been
playing out the conversation we might have had ever since. I hope that
some of her appears in this book.
This book is dedicated also to Martha Minow. Martha has taught me
about multiplicity—the properties of family and the families of property—
and the way it all looks from the differing perspectives of different people
in their different situations. She has taught me to ask what difference an
argument or practice makes to real people in real relationships in the real
world. In her hands, abstract concepts become relations among people; real
estate is not a lifeless thing, but a setting in which people have families,
engage in work and commerce, make a home. It is those relationships that
matter.
Imagine a walled city bursting at its seams; with too many people, the
constraints of the wall cause division among the inhabitants and the
possibility of oppression—the powerful are inclined to exclude the weak.
Where others see constraints, scarcity, and frustration, Martha thinks about
how to break the wall down or how to create openings in it; if these things

65
cannot be done—for now—she imagines how relationships among people
in the city might be restructured so that this artificial constraint becomes
understood as everyone’s problem and not just the problem of minority
groups. She embodies possibility; when everything seems hopeless, she
opens doors to the land of change. In ways too many to count, to me and to
many other people, she has made all the difference.

Special Acknowledgments for the Seventh Edition from

Joseph William Singer
I want to thank Lyndsi Allsop, Luke Riley, Isaac Saidel-Goley, Nathan
Sandals, and Brandon Storm for terrific research assistance on the Seventh
Edition. Patricia Fazzone provided administrative assistance and continues
to remind me about the connections between professional and spiritual
work.

Acknowledgments from Bethany R. Berger

Thanks go to Nell Newton and Jeremy Paul for first telling me to use
Joe’s book, to my students for thoughtful questions and comments on this
and previous editions, and to the University of Connecticut Law School
Foundation for supporting this work.

Acknowledgments from Nestor M. Davidson

For the Seventh Edition, a special thanks to Allison Holtzman and
Adam Minchew for their excellent research assistance, and a note of
appreciation for all of the contributors to the casebook’s shared Dropbox
folder for posting syllabi, teaching notes, and other materials. (Any
adopter should feel free to email me if you would like to be added to this
resource.)

Acknowledgments from Eduardo Moisés Peñalver

Thanks first to Joe Singer for including me in the Seventh Edition of
his superb casebook and for being so gracious about all of our changes. I
hope they have only sharpened (and not obscured) what is so special and
distinctive about Joe’s vision. Thanks also to Bethany and Nestor for being
such exemplary co-authors, and to Oskar Liivak, Kali Murray, and Peter
Karol for their advice and suggestions. Finally, thanks to Jessica Chung
and Kristen Ferries for their excellent research assistance.

66
 Copyright Permissions
We would like to thank the following authors and publishers for kindly
granting permission to reproduce excerpts of, or illustrations from, the
following material.
Along the Wallkill Valley Rail Trail, photograph by rik-shaw (blekky),
used by permission through Creative Commons
(https://creativecommons.org/licenses/by/4.0/).
Butler, Henry N., The Contractual Theory of the Corporation, 11 Geo.
Mason U.L. Rev. 99 (1989). Reprinted by permission of Henry Butler.
Clifton Terrace photograph, provided courtesy of the District of
Columbia Public Library, Washingtoniana Division.
David Lucas’s beachfront photograph, provided courtesy of William
A. Fischel.
Fort Trumbull, Connecticut photograph, provided courtesy of the
Renaissance City Development Association (formerly the New London
Development Corporation).
Free Software Foundation, Inc. http://fsf.org/. Photo of Grand Central
Station. Everyone is permitted to copy and distribute verbatim copies of
these license documents, but changing them is not allowed.
Goffman, Erving, Asylums: Essays on the Social Situation of Mental
Patients and Other Inmates (1961). Reprinted by permission of Random
House.
Greater Boston Real Estate Board, standard form for Offer to Purchase.
Copyright © 2005 Greater Boston Real Estate Board. This form has been
made available through the courtesy of the Greater Boston Real Estate
Board and is protected by the copyright laws.
Greater Boston Real Estate Board, standard form for Purchase and Sale
Agreement. Copyright © 2005 Greater Boston Real Estate Board. This
form has been made available through the courtesy of the Greater Boston
Real Estate Board and is protected by the copyright laws.
Hardin, Garrett, The Tragedy of the Commons, 162 Science 1243
(1968). Reprinted by permission of AAAS.
Hurst, James Willard, Law and the Conditions of Freedom in the
United States © (1956) Board of Regents of the University of Wisconsin
System. Reprinted by permission of the University of Wisconsin Press.
Kades, Eric, History and Interpretation of the Great Case of Johnson v.
M’Intosh, 19 L. & Hist. Rev. 67 (2001). Reprinted by permission of Eric
Kades.
Kelman, Mark, Consumption Theory, Production Theory, and Ideology
in the Coase Theorem, 52 S. Cal. L. Rev. 669 (1979). Reprinted by

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permission of the Southern California Law Review.
Kennedy, Duncan, Form and Substance in Private Law Adjudication,
89 Harv. L. Rev. 1687 (1976). Reprinted by permission of Duncan
Kennedy and Harvard Law Review.
Laufer-Ukeles, Pamela, Mothering for Money: Regulating Commercial
Intimacy, 88 Ind. L.J. 1223 (2013).
Merryman, John Henry, Thinking About the Elgin Marbles, 83 Mich.
L. Rev. 1881 (1985).
Nash, Diane, photograph, provided courtesy of The Tennessean.
Postrel, Virginia, With Functioning Kidneys for All, The Atlantic, July
9, 2009.
Shelley family, photograph by George Harris, provided courtesy of
Black Star Agency.
Waldman, Carl, maps from Atlas of the North American Indian (3d ed.
2009).
Waldron, Jeremy, Homelessness and the Issue of Freedom, 39 UCLA
L. Rev. 295 (1991). Copyright © 1991 by The Regents of the University of
California. All rights reserved. Reprinted by permission of Jeremy
Waldron, UCLA Law Review, and William S. Hein & Co., Inc.
Williams, Patricia J., Spirit-Murdering the Messenger: The Discourse
of Fingerpointing as the Law’s Response to Racism, 42 U. Miami L. Rev.
127 (1987). Reprinted by permission of the University of Miami Law
Review.
Williams, Walter E., The Intelligent Bayesian, in Symposium, The
Jeweler’s Dilemma, The New Republic, Nov. 10, 1986, at 18. Copyright ©
1986 by Walter E. Williams. Reprinted by permission of Walter E.
Williams.

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PART ONE

PROPERTY IN A FREE AND

DEMOCRATIC SOCIETY

69
CHAPTER 1

Trespass: The Right to Exclude

and Rights of Access

§1 TRESPASS
Many rights go along with ownership or possession of property. Legal
scholars have compiled lists of the standard property rights or “incidents of
ownership,” often derived in some way from Roman law. The following
list, by professor and Harvard Law School dean Roscoe Pound, is typical:
the right to possess, the right to exclude, the right to alienate, the right to
use, the right to enjoy the fruits or profits, and the right to destroy. See
Roscoe Pound, The Law of Property and Recent Juristic Thought, 25
A.B.A. J. 993, 997 (1939). Competing lists might be longer or shorter. But
on virtually any telling, one of the central rights of ownership is the right
to exclude others from one’s property. The law of trespass both defines
and protects the owner’s right to exclude.
A trespass under the common law is an unprivileged intentional
intrusion on property possessed by another. The intent requirement is met
if the defendant engaged in a voluntary act, such as walking onto the
property. It is not necessary that the trespasser intended to violate the
owner’s legal rights; mistaken entry on the land of another does not relieve
the trespasser of liability. The intent requirement is not met if, for
example, someone carries the trespasser onto the property against her will.
The intrusion occurs the moment the non-owner enters the property. “The
gist of an action of trespass is infringement on the right of possession.”
Walker Drug Co. v. La Sal Oil Co., 972 P.2d 1238 (Utah 1998). An
intrusion may occur upon physical entry by a person, an agent such as an
employee, or an object such as a building that extends over the boundary
onto a neighbor’s property. A trespass may occur either above or below
the surface. For example, a well dug on one’s property that slants to an
area underneath the neighbor’s property constitutes a trespass. Similarly, a
second-story porch that overhangs the neighbor’s property also qualifies as
a trespass.
A trespass is privileged, and thus not wrongful, if (1) the entry is done
with the consent of the owner;1 (2) the entry is justified by the necessity
to prevent a more serious harm to persons or property; or (3) the entry is

70
otherwise encouraged by public policy. Entry on property of another may
be privileged, for example, if one is doing so to stop a crime or to help
someone out of a burning house.

§1.1 Public Policy Limits on the Right to Exclude

The right to exclude protected by trespass law is very broad, but it is
not absolute. In a variety of circumstances, legal rules limit the possessor’s
right to exclude non-owners from the property. In such cases, non-owners
may have a right of access to the property. These rights of access are
created by different sources of law, including common law, federal and
state public accommodations statutes and labor relations statutes, and
federal and state constitutional guarantees of freedom of speech. The cases
in this chapter explore the contours of these competing rights in different
contexts.

State v. Shack

277 A.2d 369 (N.J. 1971)

JOSEPH WEINTRAUB, C.J.
Defendants entered upon private property to aid migrant farmworkers
employed and housed there. Having refused to depart upon the demand of
the owner, defendants were charged with violating N.J. Stat. §2A:170-312
which provides that “[a]ny person who trespasses on any lands . . . after
being forbidden so to trespass by the owner . . . is a disorderly person and
shall be punished by a fine of not more than $50.” Defendants were
convicted in the Municipal Court of Deerfield Township.
Complainant, Tedesco, a farmer, employs migrant workers for his
seasonal needs. As part of their compensation, these workers are housed at
a camp on his property. Defendant Tejeras is a field worker for the Farm
Workers Division of the Southwest Citizens Organization for Poverty
Elimination, known by the acronym SCOPE, a nonprofit corporation
funded by the Office of Economic Opportunity pursuant to an act of
Congress, 42 U.S.C.A. §§2861-2864.3 The role of SCOPE includes
providing for the “health services of the migrant farm worker.” Defendant
Shack is a staff attorney with the Farm Workers Division of Camden
Regional Legal Services, Inc., known as “CRLS,” also a nonprofit
corporation funded by the Office of Economic Opportunity pursuant to an
act of Congress, 42 U.S.C.A. §2809(a)(3). The mission of CRLS includes
legal advice and representation for these workers.
Differences had developed between Tedesco and these defendants

71
prior to the events which led to the trespass charges now before us. Hence
when defendant Tejeras wanted to go upon Tedesco’s farm to find a
migrant worker who needed medical aid for the removal of 28 sutures, he
called upon defendant Shack for his help with respect to the legalities
involved. Shack, too, had a mission to perform on Tedesco’s farm; he
wanted to discuss a legal problem with another migrant worker there
employed and housed. Defendants arranged to go to the farm together.
Shack carried literature to inform the migrant farmworkers of the
assistance available to them under federal statutes, but no mention seems
to have been made of that literature when Shack was later confronted by
Tedesco.
Defendants entered upon Tedesco’s property and as they neared the
camp site where the farmworkers were housed, they were confronted by
Tedesco who inquired of their purpose. Tejeras and Shack stated their
missions. In response, Tedesco offered to find the injured worker, and as
to the worker who needed legal advice, Tedesco also offered to locate the
man but insisted that the consultation would have to take place in
Tedesco’s office and in his presence. Defendants declined, saying they had
the right to see the men in the privacy of their living quarters and without
Tedesco’s supervision. Tedesco thereupon summoned a State Trooper
who, however, refused to remove defendants except upon Tedesco’s
written complaint. Tedesco then executed the formal complaints charging
violations of the trespass statute.

I
The constitutionality of the trespass statute, as applied here, is
challenged on several scores.
It is urged that the First Amendment rights of the defendants and of the
migrant farmworkers were thereby offended. Reliance is placed on Marsh
v. Alabama, 326 U.S. 501 (1946), where it was held that free speech was
assured by the First Amendment in a company-owned town which was
open to the public generally and was indistinguishable from any other
town except for the fact that the title to the property was vested in a private
corporation. Hence a Jehovah’s Witness who distributed literature on a
sidewalk within the town could not be held as a trespasser. Later, on the
strength of that case, it was held that there was a First Amendment right to
picket peacefully in a privately owned shopping center which was found to
be the functional equivalent of the business district of the company-owned
town in Marsh. Amalgamated Food Employees Union Local 590 v. Logan
Valley Plaza, Inc., 391 U.S. 308 (1968). [Logan Valley rests] upon the fact

72
that the property was in fact opened to the general public.4 There may be
some migrant camps with the attributes of the company town in Marsh and
of course they would come within its holding. But there is nothing of that
character in the case before us, and hence there would have to be an
extension of Marsh to embrace the immediate situation.
Defendants also maintain that the application of the trespass statute to
them is barred by the Supremacy Clause of the United States Constitution,
Art. VI, cl. 2,5 and this on the premise that the application of the trespass
statute would defeat the purpose of the federal statutes, under which
SCOPE and CRLS are funded, to reach and aid the migrant farmworker.
The brief of the United States, amicus curiae, supports that approach. Here
defendants rely upon cases construing the National Labor Relations Act,
29 U.S.C.A. §§151 et seq., and holding that an employer may in some
circumstances be guilty of an unfair labor practice in violation of that
statute if the employer denies union organizers an opportunity to
communicate with his employees at some suitable place upon the
employer’s premises.
These constitutional claims are not established by any definitive
holding. We think it unnecessary to explore their validity. The reason is
that we are satisfied that under our State law the ownership of real
property does not include the right to bar access to governmental services
available to migrant workers and hence there was no trespass within the
meaning of the penal statute. The policy considerations which underlie that
conclusion may be much the same as those which would be weighed with
respect to one or more of the constitutional challenges, but a decision in
nonconstitutional terms is more satisfactory, because the interests of
migrant workers are more expansively served in that way than they would
be if they had no more freedom than these constitutional concepts could be
found to mandate if indeed they apply at all.

II
Property rights serve human values. They are recognized to that end,
and are limited by it. Title to real property cannot include dominion over
the destiny of persons the owner permits to come upon the premises. Their
well-being must remain the paramount concern of a system of law. Indeed
the needs of the occupants may be so imperative and their strength so
weak, that the law will deny the occupants the power to contract away
what is deemed essential to their health, welfare, or dignity.
Here we are concerned with a highly disadvantaged segment of our
society. We are told that every year farmworkers and their families

73
numbering more than one million leave their home areas to fill the
seasonal demand for farm labor in the United States. The migrant
farmworkers come to New Jersey in substantial numbers.
The migrant farmworkers are a community within but apart from the
local scene. They are rootless and isolated. Although the need for their
labors is evident, they are unorganized and without economic or political
power. It is their plight alone that summoned government to their aid. In
response, Congress provided under Title III-B of the Economic
Opportunity Act of 1964 (42 U.S.C.A. §§2701 et seq.) for “assistance for
migrant and other seasonally employed farmworkers and their families.”
Section 2861 states “the purpose of this part is to assist migrant and
seasonal farmworkers and their families to improve their living conditions
and develop skills necessary for a productive and self-sufficient life in an
increasingly complex and technological society.” Section 2862(b)(1)
provides for funding of programs “to meet the immediate needs of migrant
and seasonal farmworkers and their families, such as day care for children,
education, health services, improved housing and sanitation (including the
provision and maintenance of emergency and temporary housing and
sanitation facilities), legal advice and representation, and consumer
training and counseling.” As we have said, SCOPE is engaged in a
program funded under this section, and CRLS also pursues the objectives
of this section although, we gather, it is funded under §2809(a)(3), which
is not limited in its concern to the migrant and other seasonally employed
farmworkers and seeks “to further the cause of justice among persons
living in poverty by mobilizing the assistance of lawyers and legal
institutions and by providing legal advice, legal representation, counseling,
education, and other appropriate services.”
These ends would not be gained if the intended beneficiaries could be
insulated from efforts to reach them. It is in this framework that we must
decide whether the camp operator’s rights in his lands may stand between
the migrant workers and those who would aid them. The key to that aid is
communication. Since the migrant workers are outside the mainstream of
the communities in which they are housed and are unaware of their rights
and opportunities and of the services available to them, they can be
reached only by positive efforts tailored to that end. The Report of the
Governor’s Task Force on Migrant Farm Labor (1968) noted that “One of
the major problems related to seasonal farm labor is the lack of adequate
direct information with regard to the availability of public services,” and
that “there is a dire need to provide the workers with basic educational and
informational material in a language and style that can be readily
understood by the migrant.” The report stressed the problem of access and

74
deplored the notion that property rights may stand as a barrier, saying “In
our judgment, ‘no trespass’ signs represent the last dying remnants of
paternalistic behavior.”
A man’s right in his real property of course is not absolute. It was a
maxim of the common law that one should so use his property as not to
injure the rights of others. [Sic utere tuo ut alienum non laedas.] Although
hardly a precise solvent of actual controversies, the maxim does express
the inevitable proposition that rights are relative and there must be an
accommodation when they meet. Hence it has long been true that
necessity, private or public, may justify entry upon the lands of another.
The subject is not static. As pointed out in 5 Powell, Real Property
§745, at 493-494 (Rohan 1970), while society will protect the owner in his
permissible interests in land, yet

such an owner must expect to find the absoluteness of his property rights
curtailed by the organs of society, for the promotion of the best interests of
others for whom these organs also operate as protective agencies. The
necessity for such curtailments is greater in a modern industrialized and
urbanized society than it was in the relatively simple American society of
fifty, 100, or 200 years ago. The current balance between individualism and
dominance of the social interest depends not only upon political and social
ideologies, but also upon the physical and social facts of the time and place
under discussion.

Professor Powell added in §746, at 494-496:

As one looks back along the historic road traversed by the law of land in
England and in America, one sees a change from the viewpoint that he who
owns may do as he pleases with what he owns, to a position which
hesitatingly embodies an ingredient of stewardship; which grudgingly, but
steadily, broadens the recognized scope of social interests in the utilization of
things.
To one seeing history through the glasses of religion, these changes may
seem to evidence increasing embodiments of the golden rule. To one
thinking in terms of political and economic ideologies, they are likely to be
labeled evidences of “social enlightenment” or of “creeping socialism” or
even of “communistic infiltration,” according to the individual’s assumed
definitions and retained or acquired prejudices. With slight attention to words
or labels, time marches on toward new adjustments between individualism
and the social interests.

This process involves not only the accommodation between the right of
the owner and the interests of the general public in his use of his property,

75
but involves also an accommodation between the right of the owner and
the right of individuals who are parties with him in consensual transactions
relating to the use of the property. Accordingly substantial alterations have
been made as between a landlord and his tenant.
The argument in this case understandably included the question
whether the migrant worker should be deemed to be a tenant and thus
entitled to the tenant’s right to receive visitors, Williams v. Lubbering, 63
A. 90 (N.J. Sup. Ct. 1906), or whether his residence on the employer’s
property should be deemed to be merely incidental and in aid of his
employment, and hence to involve no possessory interest in the realty. See
Scottish Rite Co. v. Salkowitz, 197 A. 43 (N.J. 1938). These cases did not
reach employment situations at all comparable with the one before us. Nor
did they involve the question whether an employee who is not a tenant
may have visitors notwithstanding the employer’s prohibition. Rather they
were concerned with whether notice must be given to end the employee’s
right to remain upon the premises, with whether the employer may remove
the discharged employee without court order, and with the availability of a
particular judicial remedy to achieve his removal by process. We of course
are not concerned here with the right of a migrant worker to remain on the
employer’s property after the employment is ended.
We see no profit in trying to decide upon a conventional category and
then forcing the present subject into it. That approach would be artificial
and distorting. The quest is for a fair adjustment of the competing needs of
the parties, in the light of the realities of the relationship between the
migrant worker and the operator of the housing facility.
Thus approaching the case, we find it unthinkable that the farmer-
employer can assert a right to isolate the migrant worker in any respect
significant for the worker’s well-being. The farmer, of course, is entitled to
pursue his farming activities without interference, and this defendants
readily concede. But we see no legitimate need for a right in the farmer to
deny the worker the opportunity for aid available from federal, state, or
local services, or from recognized charitable groups seeking to assist him.
Hence representatives of these agencies and organizations may enter upon
the premises to seek out the worker at his living quarters. So, too, the
migrant worker must be allowed to receive visitors there of his own
choice, so long as there is no behavior hurtful to others, and members of
the press may not be denied reasonable access to workers who do not
object to seeing them.
It is not our purpose to open the employer’s premises to the general
public if in fact the employer himself has not done so. We do not say, for
example, that solicitors or peddlers of all kinds may enter on their own; we

76
may assume for the present that the employer may regulate their entry or
bar them, at least if the employer’s purpose is not to gain a commercial
advantage for himself or if the regulation does not deprive the migrant
worker of practical access to things he needs.
And we are mindful of the employer’s interest in his own and in his
employees’ security. Hence he may reasonably require a visitor to identify
himself, and also to state his general purpose if the migrant worker has not
already informed him that the visitor is expected. But the employer may
not deny the worker his privacy or interfere with his opportunity to live
with dignity and to enjoy associations customary among our citizens.
These rights are too fundamental to be denied on the basis of an interest in
real property and too fragile to be left to the unequal bargaining strength of
the parties.
It follows that defendants here invaded no possessory right of the
farmer-employer.
Their conduct was therefore beyond the reach of the trespass statute.
The judgments are accordingly reversed and the matters remanded to the
County Court with directions to enter judgments of acquittal.

Commonwealth v. Magadini

52 N.E.3d 1041 (Mass. 2016)

GERALDINE HINES, J.
We recite the facts the jury could have found, reserving certain details
for our discussion of the specific issues raised. In 2014, the defendant was
charged with trespassing on three properties in Great Barrington —
Barrington House, Castle Street, and SoCo Creamery.6 Barrington House
is a mixed-use building with several different restaurants, an enclosed
atrium, and apartments above the businesses. Castle Street is a three-story
building with retail establishments, offices, and apartments. SoCo
Creamery is an ice cream shop. The defendant was barred from each
property by no trespass orders. The owner of the Castle Street building had
the defendant served with a no trespass order in July, 2008; the manager of
Barrington House had the defendant served in June, 2012; and the owner
of SoCo Creamery had the defendant served in January, 2014. All of the
no trespass orders were in effect at the time the charges were brought
against the defendant.
Four charges related to the defendant’s presence at Barrington House.
On February 21, March 4, and March 6, police found the defendant lying
in a hallway by a heater during the evening, nighttime, or early morning

77
hours of days described as “cold” or “very cold.” At approximately noon
on April 8, a day described as “cool,” police responded to a report and
observed the defendant walking through a common area in the Barrington
House toward the front door. Two charges stemmed from the defendant’s
presence at Castle Street, where police had found the defendant lying on
the floor in the lobby next to a heater during periods of cold weather. The
first incident occurred between 8 A.M. and 10 A.M. on February 20, 2014;
the defendant was awake. The second incident occurred at approximately
6:30 A.M. on March 28; the defendant was sleeping. The seventh charge
was based on conduct that occurred on June 10, 2014, when the defendant
entered SoCo Creamery, ignored requests by the clerk to leave the
premises, and used the bathroom for ten to fifteen minutes. The defendant
did not dispute that he violated all of the trespass orders, focusing his case
instead on the necessity defense in cross-examination and his direct
testimony.
The defendant, a lifelong resident of Great Barrington, became
homeless after he moved out of his parents’ home in 2004. His purpose in
moving out was to “reorganize.” He planned to return to his parents’
home, but he was unable to do so because the “landlord,” who “wanted
[the defendant] out” refused to allow it. After leaving his parents’ home,
he generally lived outside year-round, but during the winter months, he
tried to “find a more sheltered area” from the “ice and a snow storm.”
During the cold weather, the defendant used blankets, gloves, and scarves
to try to stay warm, but when the weather was “so severe . . . that [it was]
not possible,” he would seek shelter in private buildings.
For a two- to three-month period in the winter of 2007, the defendant
stayed at the local homeless shelter, called the Construct. Three days
before he began staying there, he had gone to that shelter at approximately
3 A.M. following a blizzard. He was refused entry, and he stayed on the
porch for about an hour before being asked to leave. A few days later, he
spoke with someone from the shelter, and he was allowed to stay for a few
months before he was told to leave because of “certain issues.” Therefore,
the defendant had no other place to stay in Great Barrington. For a period
of “three to four years,” he lived outdoors, first at Stanley Park and later at
the outdoor gazebo behind the Great Barrington Town Hall, where he had
been living at the time of the trespass incidents. He considered the gazebo
his home and registered to vote from that address.7
At the time of the trial, the defendant was a sixty-seven year old
unemployed college graduate. He had worked in the past, but he was not
employed at the time he was charged with the trespassing offenses. The
defendant had attempted to obtain an apartment almost “every week for

78
about seven years.” Although he had money to pay for an apartment
depending on the day, he explained that it was very difficult to find an
apartment in Great Barrington because of the upfront fees. Accordingly, he
was unable to obtain an apartment. He was aware of a homeless shelter in
Pittsfield, but he did not consider renting lodging or staying at a homeless
shelter outside of Great Barrington. He testified, “I was born here and I
intend to stay here.” He does not have a driver’s license.

Discussion

1. Necessity Defense
The defendant claims that the judge erroneously denied his request for
a jury instruction on the defense of necessity and that he improperly
excluded evidence relevant to the defense. The common-law defense of
necessity “exonerates one who commits a crime under the ‘pressure of
circumstances’ if the harm that would have resulted from compliance with
the law . . . exceeds the harm actually resulting from the defendant’s
violation of the law.” Commonwealth v. Kendall, 451 Mass. 10, 13, 883
N.E.2d 269 (2008), quoting Commonwealth v. Hood, 389 Mass. 581, 590,
452 N.E.2d 188 (1983). As such, the necessity defense may excuse
unlawful conduct “where the value protected by the law is, as a matter of
public policy, eclipsed by a superseding value. . . .” Kendall, supra.
For a defendant to be entitled to a necessity defense instruction, he or
she must present “some evidence on each of the four underlying conditions
of the defense,” Kendall, 451 Mass. at 14, 883 N.E.2d 269: “(1) a clear and
imminent danger, not one which is debatable or speculative”; (2) [a
reasonable expectation that his or her action] will be effective as the direct
cause of abating the danger; (3) there is [no] legal alternative which will be
effective in abating the danger; and (4) the Legislature has not acted to
preclude the defense by a clear and deliberate choice regarding the values
at issue.” Id. at 13-14, 883 N.E.2d 269. If the defendant satisfies these
foundational conditions, “the burden is on the Commonwealth to prove
beyond a reasonable doubt the absence of necessity.” Commonwealth v.
Iglesia, 403 Mass. 132, 134, 525 N.E.2d 1332 (1988).
The judge focused only on the third element in his denial of the
defendant’s request for a necessity defense instruction at the close of all
the evidence. The judge ruled that the defendant had other available legal
alternatives, “motels, and hotels, the police station,” and that the evidence
was lacking on the defendant’s inability to “rent a hotel room on these
isolated evenings.” We conclude that the judge erred in ruling that the

79
defendant failed to meet his burden to provide some evidence that showed
the lack of an available legal alternative to the trespasses.

a. Clear and Imminent Danger

Before we address the third element, we review the first element,
“clear and imminent danger,” because the Commonwealth contends that
the defendant failed to meet the foundational requirement for this element
as to the seventh offense, which occurred on June 10, 2014.
There appears to be little question that the weather conditions on the
dates of the offenses in February and March presented a “clear and
imminent danger” to a homeless person.9 The temperatures on the dates of
the offenses were not admitted at trial, but the weather on the February and
March dates was described as “cold,” “really cold,” and “very cold.”
Moreover, the timing of each of those incidents, in the early morning or
late evening hours when the defendant was either sleeping or lying down,
suggests the dangerousness of the circumstances where sleeping may place
one in the same position for an extended period and, thus, increases the
potential harm from the weather. See Jones v. Los Angeles, 444 F.3d 1118,
1138 (9th Cir. 2006) (“involuntary sitting, lying, or sleeping on public
sidewalks . . . is an unavoidable consequence of being human and
homeless without shelter”). See also In re Eichorn, 69 Cal. App. 4th 382,
389, 81 Cal. Rptr. 2d 535 (1998) (“Sleep is a physiological need, not an
option for humans”). Moreover, the Commonwealth concedes that the
defendant met his burden of demonstrating a “clear and imminent danger”
for these six incidents.
We agree with the Commonwealth that the defendant did not meet his
burden to show a “clear and imminent danger” for the incident on June 10,
where the evidence showed only that he had to use the bathroom.
Accordingly, we do not include the incident on June 10 in our analysis
requirements of the availability of “legal alternatives” to trespass.

b. Availability of Lawful Alternatives

We have explained previously that satisfaction of the third element
requires a defendant to demonstrate that he “ma[d]e himself aware of any
available lawful alternatives, ‘or show[ed] them to be futile in the
circumstances.’” Kendall, 451 Mass. at 15, 883 N.E.2d 269, quoting
Commonwealth v. Pike, 428 Mass. 393, 401, 701 N.E.2d 951 (1998). On
that point, the defendant must present “some evidence,” enough that
“supports at least a reasonable doubt” whether the unlawful conduct was
justified by necessity. Kendall, 451 Mass. at 14, 883 N.E.2d 269. In other

80
words, the defendant must present enough evidence to demonstrate at least
a reasonable doubt that there were no effective legal alternatives available
before being entitled to an instruction on the necessity defense. This does
not require a showing that the defendant has exhausted or shown to be
futile all conceivable alternatives, only that a jury could reasonably find
that no alternatives were available. See Kendall, supra at 19, 883 N.E.2d
269 (Cowin, J., dissenting), citing Iglesia, 403 Mass. at 135, 525 N.E.2d
1332.
...
Here, the defendant’s evidence was sufficient to meet his burden . . . .
In determining whether there has been sufficient evidence of the
foundational conditions to the necessity defense, “all reasonable inferences
should be resolved in favor of the defendant, and, no matter how incredible
his testimony, that testimony must be treated as true.” Pike, 428 Mass. at
395, 701 N.E.2d 951. Taken in this light, there is at least “some evidence”
that the defendant lacked effective legal alternatives to trespass during cold
days and nights. Kendall, 451 Mass. at 15, 883 N.E.2d 269. The defendant
testified that he stayed at an outdoor gazebo “[p]retty much” year round,
that in 2007 he was told to leave the only local homeless shelter and had
previously been denied entry to the shelter in the middle of the night
following a blizzard, that no other places “want [him] in . . . their facility,”
that he was unable to rent an apartment despite repeated attempts, and that
there was nowhere besides public parks where he could stay. Additionally,
the officer who asked the defendant to leave the Barrington House at
approximately 9:30 P.M. on February 21 testified that the defendant had to
go back outside, and the judge sustained an objection to defense counsel’s
question about whether the officer offered to transport him to any other
shelter or facility. The manager of Castle Street corroborated the
defendant’s attempt to rent an apartment by his testimony that he called
police to have the defendant removed from the building after the defendant
“forced his way onto the third floor of the building, flashing money in
hand, demanding I rent him an apartment.”
The Commonwealth argues that the defendant failed to meet his
burden because he presented no evidence that he was unable to rent an
apartment outside of Great Barrington, that he was unable to gain entry to
the Pittsfield shelter, and that he would still be excluded from the local
homeless shelter in 2014. The Commonwealth’s argument is unavailing.
We do not require an actor facing a “clear and imminent danger” to
conceptualize all possible alternatives. Kendall, 451 Mass. at 16 n.5, 883
N.E.2d 269. So long as the defendant’s evidence, taken as true, creates a
reasonable doubt as to the availability of such lawful alternatives, the

81
defendant satisfies the third element. Contrast Kendall, supra; Pike, 428
Mass. at 401, 701 N.E.2d 951. The defendant has done so here.
Additionally, we note that the options proposed by the Commonwealth
do not appear to be effective alternatives on the record before us. Where
the only local homeless shelter had previously denied the defendant entry
at 3 A.M. following a blizzard and had later told him he had to leave, the
law does not require the defendant to continue to seek shelter there in
order to demonstrate that doing so is futile. Moreover, the defendant’s
conduct is viewed at the time of the danger, and actions that the defendant
could have taken to find shelter before the dangerous condition arose do
not negate the conclusion that there were no lawful alternatives available
at the time of his unlawful conduct. See United States v. Kpomassie, 323
F. Supp. 2d 894, 901 (W.D. Tenn. 2004) (alternatives not available at time
of crime when their availability was “sufficiently far in the past”).
We do not view the requirement that a defendant consider lawful
alternatives as broadly as suggested by the Commonwealth. Our cases do
not require a defendant to rebut every alternative that is conceivable;
rather, a defendant is required to rebut alternatives that likely would have
been considered by a reasonable person in a similar situation.7 Moreover,
we are not prepared to say as a matter of law that a homeless defendant
must seek shelter outside of his or her home town in order to demonstrate a
lack of lawful alternatives.8 Our law does not permit punishment of the
homeless simply for being homeless. See Commonwealth v. Canadyan,
458 Mass. 574, 579 (2010) (setting aside finding that defendant violated
condition of probation where homeless shelters did not have technology
required for compliance). Once the foundational requirements are met, the
necessity defense allows a jury to consider the plight of a homeless person
against any harms caused by a trespass before determining criminal
responsibility.9
Accordingly, in the circumstances of this case, we conclude that the
judge erred in denying the defendant’s request for an instruction on the
defense of necessity. As the defendant satisfied the foundational elements
entitling him to the defense, the judge’s failure to instruct the jury about
the defendant’s principal defense requires a new trial. See Commonwealth
v. Lapage, 435 Mass. 480, 486, 759 N.E.2d 300 (2001) (ordering new trial
after judge erred in omitting instruction on principal defense). We
therefore vacate the defendant’s convictions of the charges occurring in
February, March, and April, 2014.
...

82
 Conclusion
Because we conclude that the judge erred in denying the defendant’s
request for a jury instruction on the defense of necessity for the trespassing
charges that occurred in February, March, and April, 2014, we vacate
those six convictions and remand for a new trial. We affirm the conviction
stemming from conduct that occurred on June 10, 2014.
So ordered.

Notes and Questions

1. Criminal trespass. Shack and Tejeras were charged with criminal
trespass as defined by the New Jersey statute, N.J. Stat. §2A:170-31.10
Tedesco invoked the criminal system by calling the police and filing a
criminal complaint against Shack and Tejeras. Criminal proceedings are
generally initiated by federal, state, or local government officials rather
than by private citizens, and their purpose is to deter wrongful activities
and to punish those who engage in them. These proceedings may include
arrest, criminal complaint, or indictment by the prosecutor, arraignment
(bringing formal charges against the accused in court), plea bargaining,
and trial. Punishment may include imposition of a fine payable to the state,
probation (continued supervision), and incarceration. How did the charge
of criminal trespass in Shack differ from the common law definition of
trespass?
2. Legal basis for Shack decision. Did the court in Shack rest its
ruling on the U.S. Constitution, a federal statute, a state statute, or the state
common law? If the court rested its opinion on only one of these sources
of law, what role did the others play in determining the outcome of the
case?
3. Incomplete defense of necessity. As the Massachusetts Supreme
Judicial Court observes in Magadini, necessity is a defense to a trespass
claim. If someone takes refuge on your property to escape a flood, as
happened in New Orleans during Hurricane Katrina, there is no trespass. If
a trespasser damages the property, the law imposes on the trespasser a duty
to compensate the owner for the damage, but does not require the
trespasser to pay for the mere privilege of access. See Restatement
(Second) of Torts §197 (1965). Thus, in Ploof v. Putnam, 71 A. 188 (Vt.
1908), a couple and their children moored a small sailboat to the dock of
the defendant during a sudden storm that threatened to overturn the boat
and placed them in fear of their lives. But the defendant’s servant
unmoored the boat, which was driven on the shore by the storm,

83
destroying it and casting the occupants into the lake. The court held that
necessity justifies a trespass when needed to save lives or property and that
defendant committed a tort (a wrongful act) against the plaintiffs by
unmooring the boat. In Vincent v. Lake Erie Transportation Co., 124 N.W.
221 (Minn. 1910), however, the court held that a steamship moored to a
private wharf to avoid a severe storm was required to pay for the damage
when the wind thrust the ship onto the wharf. Why do you think the trial
court in Magadini tried so hard to keep the defendant’s necessity defense
away from the jury?
4. Ad coelum, ad inferos. What are the spatial dimensions of the
owner’s land protected by the law of trespass? Does an airplane flying
30,000 feet above the parcel make an entry (privileged or otherwise)? A
satellite orbiting the earth? What about someone tunneling a mine shaft
thousands of feet below the surface? For centuries, the common law’s
short response to the question of the dimensions of an owner’s parcel was
the maxim that “cujus est solum ejus est usque ad coelum et ad inferos” —
whoever owns the soil also owns up to the heavens and down to the depths
(literally, “down to hell”). Applying this principle, courts have conceived
of land ownership as ownership of a column of space (really a cone)
extending from the center of the earth up to the sky. Although, on its own
terms, the ad coelum maxim speaks in terms of ownership rather than
exclusion of trespass, courts and commentators alike have sometimes used
the maxim to argue that anything that penetrates the column is ostensibly
an unprivileged entry onto the owner’s land.
The ad coelum maxim is usually said to have made its way into the
common law through the English jurist Sir Edward Coke in the
seventeenth century, who included the principle in his influential Institutes
of the Lawes of England. 1 Coke, Institutes, 19th ed. 1832, ch. 1 §1(4a);
see also William Blackstone, Commentaries on the Laws of England 18
(Univ. of Chicago reprint 1979) (1768). For trespasses near the surface, the
doctrine accurately describes how the law defines an entry. See, e.g.,
Hannabalson v. Sessions, 116 Iowa 457 (1902) (thrusting one’s arm over a
property boundary constitutes an entry); Puerto v. Chieppa, 78 Conn. 401
(1905) (a board attached to defendant’s building and overhanging
plaintiff’s land constitutes an entry); 509 Sixth Avenue Corp. v. New York
City Transit Authority, 15 N.Y.2d 48 (1964) (encroachment by subway
line 30 feet below surface constitutes an entry).
Far from the surface in either direction, the ad coelum maxim has
come under increasing pressure within trespass law in recent years as a
result of activities that Lord Coke (as he is sometimes called) could not

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possibly have anticipated. Consider aircraft overflights. After a debate
during the early years of the aviation age, see, e.g., Swetland v. Curtiss
Airports Corp., 41 F.2d 929 (N.D. Ohio 1930), it is now settled doctrine
that airplane overflights that do not interfere with the surface owner’s use
of the land do not give rise to a cause of action for trespass. See Hinman v.
Pacific Air Transport, 84 F.2d 755 (9th Cir. 1936) (“This formula ‘from
the center of the earth to the sky’ was invented at some remote time in the
past when the use of space above land actual or conceivable was confined
to narrow limits, and simply meant that the owner of the land could use the
overlying space to such an extent as he was able, and that no one could
ever interfere with that use.”). Near the surface, courts are more willing to
find airplane overflights to violate the rights of owners. See, e.g., United
States v. Causby, 328 U.S. 256 (1946); Griggs v. Allegheny County, 369
U.S. 84 (1962); Brenner v. New Richmond Regional Airport Commission,
816 N.W.2d 291 (Wis. 2012); see also Stuart Banner, Who Owns the Sky?
(2008).
The situation has similarly become more complicated far below the
surface. As the law had traditionally operated, entering below someone’s
land constitutes a (subterranean) trespass. See, e.g., Lewey v. H.C. Fricke
Coke Co., 166 Pa. 536 (1895). New oil and gas drilling techniques, such as
hydraulic fracturing (or “fracking,” as it is called for short), have put
pressure on traditional assumptions. Fracking involves the use of
directional drilling to create a well bore through porous rock formations
that contain isolated pockets of oil or gas. Fluids under very high pressure
are then pumped into the bore hole. This high-pressure fluid creates cracks
in the adjoining rock, allowing the pockets or oil and gas to escape to the
surface. Those cracks can extend thousands of feet from the bore hole.
Along with the fracking fluid, sand or even small beads are also pumped
into the bore hole as “proppants” to prop the rock fissures open and
prevent the cracks from closing on themselves once the fluid pressure is
removed. The direction and length of the cracks that form as a result of the
fluid pressure are impossible to control with any precision. As a result,
they occasionally cross property boundaries. Applying the traditional ad
coelum principle, injecting the fracking fluid and proppants into the
column of space underlying the surface property of another person (even
several miles down) would seem to constitute an entry. But, as the Texas
Supreme Court put it, “the law of trespass need no more be the same two
miles below the surface than two miles above.” Coastal Oil & Gas Corp.
v. Garza Energy Trust, 268 S.W.3d 1, 10 (Tex. 2008). As a general matter,
law professor John Sprankling says, “when courts directly confront the
scope of deep subsurface rights, they usually soften or ignore the [ad

85
coelum] approach to the point where the exceptions swallow any supposed
rule.” John G. Sprankling, Owning the Center of the Earth, 55 UCLA L.
Rev. 979, 1004 (2008).
Do the examples of airplane overflights and drilling deep underground
show that, in the modern world, the ad coelum maxim is outmoded? Can
we reconcile the results in these cases with continued adherence to the ad
coelum understanding of the dimensions of an owner’s property? In
answering the question, it is important to remember that the issue of
whether there has been an entry is just the first step in evaluating whether
there has been an actionable trespass.
5. The significance of the right to exclude. In recent years, a number
of leading legal scholars (and some courts) have argued that the right to
exclude is not just one of the most important rights but is in fact a defining
feature of the very concept of property. Thomas W. Merrill, Property and
the Right to Exclude, 77 Neb. L. Rev. 730, 730 (1998); J.E. Penner, The
Idea of Property in Law 71 (2000) (“[T]he right to property is a right to
exclude others from things which is grounded by the interest we have in
the use of things.”); see also Loretto v. Teleprompter Manhattan CATV
Corp., 458 U.S. 419, 434 (1982) (describing “the right to exclude” as one
of the most “treasured” and “important” sticks in the owner’s “bundle of
rights”); Kaiser Aetna v. United States, 444 U.S. 164, 179 (1979) (same).
In a similar vein, some scholars have suggested that the right to
exclude — and therefore the law of trespass — is uniquely important for
how property operates as a legal institution. Protecting the right to exclude
with a relatively simple law of trespass, they argue, creates a broad zone of
discretion for owners to choose what to do with their property. This
ensures that owners are empowered to put their property to its most
productive use. In addition, a clear law of trespass also economizes on
“information costs” by sending a relatively simple message to people other
than the owner, making it easy for them to navigate through a world of
privately owned property without violating the rights of others. See, e.g.,
Thomas W. Merrill & Henry E. Smith, What Happened to Property in Law
and Economics?, 111 Yale L.J. 357, 389 (2001). As Thomas Merrill and
Henry Smith put it, “messages about everyday property must be very
simple — messages such as ‘keep off’ or ‘don’t touch’ — couched in
concepts readily comprehensible to remote people with little special legal
or asset-specific information.” Thomas W. Merrill & Henry E. Smith,
Making Coasean Property More Coasean, 54 J.L. & Econ. 77, 90 (2011).
Other scholars have criticized the notion that the right to exclude has a
privileged place within the concept or operation of property. Professor

86
Larissa Katz, for example, argues that the heart of the concept of property
is the owner’s authority to determine its use, not the right to exclude. See
Larissa Katz, Exclusion and Exclusivity in Property Law, 58 U. Toronto
L.J. 275 (2008). Does the law of airplane overflights support her view?
The rules governing aircraft navigation require all airplanes to stay 500
feet above the surface except when landing and to stay at least 500 feet
away from any structures. See 14 C.F.R. §91.119. Is a landowner who
cannot exclude an airplane from flying over her property at 500 feet still
an owner of that space in a meaningful sense? Does the rule governing
aircraft access prevent an owner from doing anything with her property
that she might otherwise be able (or want) to do?
As long as non-owners (like the aircraft pilot navigating over privately
owned land) must accommodate their activities to the owner’s use
decisions (e.g., by keeping their distance from whatever buildings an
owner happens to put up), qualifying the right to exclude does not by itself
seem to undermine an owner’s power to put the property to its most
productive use. As for the cost of navigating through a world of owned
property, placing too much importance on the law of trespass may cloud
the issue. After all, trespassing is just one way of violating the property
rights of others. And many owners wish to convey messages other than
“keep off!” or “don’t touch!” In particular, the owners of commercial
property often want to say “come in! take a look!” Giving owners too
much discretion with respect to the content of their “come in” messages
may drive up information costs for non-owners rather than reducing them.
See Gregory S. Alexander & Eduardo M. Peñalver, An Introduction to
Property Theory 138 (2012).
6. The right to roam. At one time in the United States, most
unenclosed and undeveloped land was open to the public for the purpose
of hunting, gathering kindling and berries, and walking. Eric Freyfogle,
The Lost Right to Roam, in On Private Property: Finding Common
Ground on the Ownership of Land 29 (2007); Brian Sawers, The Right to
Exclude from Unimproved Land, 83 Temp. L. Rev. 665, 675-679 (2011).
Today, about half the states still allow hunting on private land unless the
owner has posted “no trespassing” signs. Mark R. Sigmon, Hunting and
Posting on Private Land in America, 54 Duke L.J. 549 (2004). Moreover,
owners who wanted to protect their fields from wandering cattle originally
had to fence them out; they had no right to complain that a trespass had
occurred when cattle wandered onto their property. Nor could railroads
insist that cattle owners prevent them from intruding on train tracks. See,
e.g., Sawers, supra, at 677 (“Free-roaming hogs and cattle were an

87
important source of meat and income for farmers, particularly smaller
farmers.”); Nashville & Chattanooga Railroad Co. v. Peacock, 25 Ala.
229 (1854); Macon & Western Railroad Co. v. Lester, 30 Ga. 911 (1860).
Over time, the rules changed to place liability on cattle owners for damage
to crops on the neighbors’ property and denied cattle owners remedies if
their cattle wandered onto railroad tracks, effectively changing to a
fencing-in system by which owners had the duty to keep their cattle from
invading neighboring property.
The right to roam has long been recognized in Finland, Norway, and
Sweden. Known as the allemansraat (“everyman’s right”) in Sweden, it
entitles everyone to hike across or camp in the countryside on the property
of another as long as they do not damage the land, interfere with the
owner’s use, or intrude on the privacy of owners and occupants.11 In 2000,
the United Kingdom adopted the Countryside and Rights of Way Act 2000,
Acts of 2000, ch. 37, guaranteeing public rights of access for recreational
purposes (mainly walking) to certain categories of uncultivated
countryside in England and Wales.12 Scotland adopted an even broader
right-to-roam law in 2003.13 See John A. Lovett, Progressive Property in
Action: The Land Reform (Scotland) Act 2003, 89 Neb. L. Rev. 739
(2011); Jerry L. Anderson, Britain’s Right to Roam: Redefining the
Landowner’s Bundle of Sticks, 19 Geo. Intl. Envtl. L. Rev. 375 (2007).
7. Graves. Individuals may have rights of access to cemeteries to visit
the graves of their loved ones even if those graves are located on private
property that has been sold to a subsequent owner. Kentucky Department
of Fish & Wildlife Resources v. Garner, 896 S.W.2d 10 (Ky. 1995)
(cemetery on public land has duty to give a key to the locked gate to an
individual for his use and that of his heirs to visit the graves of their family
members); David v. May, 135 S.W.2d 747 (Tex. Ct. App. 2003) (plaintiff
has the right of access to land to visit the graves of her grandparents). See
Alfred L. Brophy, Grave Matters: The Ancient Rights of the Graveyard,
2006 BYU L. Rev. 1469.
8. Investigative journalism. In Desnick v. American Broadcasting
Co., 44 F.3d 1345 (7th Cir. 1995), seven employees of ABC’s
investigative news program, Primetime Live, posed as potential patients of
the Desnick Eye Center, an ophthalmic surgery practice that performed
cataract surgery. The program was investigating large cataract practices.
Desnick had 25 offices in 4 midwestern states and performed more than
10,000 cataract operations per year. In addition, a Primetime producer
asked Desnick — which did not know about the undercover operation —

88
for permission to film inside a clinic, promising to do a “fair and balanced”
report. Desnick gave the crew permission to enter the clinic, and to
interview doctors, technicians, and patients. Ultimately, ABC aired a
report that was extremely critical of Desnick and suggested that Desnick
performed unnecessary surgeries and then billed Medicare for the
procedures. Desnick sued ABC, alleging that its employees committed
trespass, both in posing as undercover patients and in misrepresenting
ABC’s intention to present a “fair and balanced” picture of Desnick’s
practice in order to gain access for their film crew.
In an opinion for the U.S. Court of Appeals for the Seventh Circuit,
rejecting Desnick’s claim, Judge Richard Posner began by noting that,
while entry upon the land of another without consent is trespass, and while
consent procured by fraud is not usually valid to defeat a claim of trespass,
sometimes it is:

How to distinguish the two classes of case . . . ? The answer can have
nothing to do with fraud; there is fraud in all the cases. It has to do with the
interest that the torts in question [protect] . . . . There was no invasion in the
present case of any of the specific interests that the tort of trespass seeks to
protect. The test patients entered offices that were open to anyone expressing
a desire for ophthalmic services and videotaped physicians engaged in
professional, not personal, communications with strangers (the testers
themselves). The activities of the offices were not disrupted. Nor was there
any “inva[sion of] a person’s private space,” as in our hypothetical meter-
reader case, as in the famous case of De May v. Roberts, 9 N.W. 146 (Mich.
1881) (where a doctor, called to the plaintiff’s home to deliver her baby,
brought along with him a friend who was curious to see a birth but was not a
medical doctor, and represented the friend to be his medical assistant), as in
Dietemann v. Time, Inc., 449 F.2d 245 (9th Cir. 1971), on which the
plaintiffs in our case rely. Dietemann involved a home. True, the portion
invaded was an office, where the plaintiff performed quack healing of
nonexistent ailments. The parallel to this case is plain enough, but there is a
difference. Dietemann was not in business, and did not advertise his services
or charge for them. His quackery was private.
No embarrassingly intimate details of anybody’s life were publicized in
the present case. There was no eavesdropping on a private conversation; the
testers recorded their own conversations with the Desnick Eye Center’s
physicians. There was no violation of the doctor-patient privilege. There was
no theft, or intent to steal, trade secrets; no disruption of decorum, of peace
and quiet; no noisy or distracting demonstrations. Had the testers been
undercover FBI agents, there would have been no violation of the Fourth
Amendment, because there would have been no invasion of a legally
protected interest in property or privacy. United States v. White, 401 U.S.

89
 745 (1971); Northside Realty Associates, Inc. v. United States, 605 F.2d
1348, 1355 (5th Cir. 1979). “Testers” who pose as prospective home buyers
in order to gather evidence of housing discrimination are not trespassers even
if they are private persons not acting under color of law. The situation of the
defendants’ “testers” is analogous. Like testers seeking evidence of violation
of antidiscrimination laws, the defendants’ test patients gained entry into the
plaintiffs’ premises by misrepresenting their purposes (more precisely by a
misleading omission to disclose those purposes). But the entry was not
invasive in the sense of infringing the kind of interest of the plaintiffs that the
law of trespass protects; it was not an interference with the ownership or
possession of land.

Desnick, 44 F.3d at 1352-1353.

In a somewhat similar case, Food Lion, Inc. v. Capital Cities/ABC,
Inc., 194 F.3d 505 (4th Cir. 1999), aff’g in part and rev’g in part 887 F.
Supp. 811 (M.D.N.C. 1995), the Primetime Live show sent two ABC
television reporters to use false résumés to get jobs at Food Lion
supermarkets. While working there, they secretly videotaped “what
appeared to be unwholesome food handling practices” for later broadcast
on television. Food Lion sued ABC, claiming, among other things, that
ABC had committed the tort of fraud, that it had violated the duty of
loyalty owed by employees to employers, and that its intrusion onto Food
Lion’s property constituted a trespass. The trial court held that ABC had
committed a trespass when its reporters had entered the property because
defendants had engaged in “wrongful conduct which could negate any
consent to enter given by Food Lion.” 887 F. Supp. at 820. Finding ABC
liable for both fraud and trespass, the jury awarded Food Lion $1 nominal
damages for trespass and $1 for violation of the duty of loyalty. It imposed
$1,400 damages for the tort of fraud and a whopping $5,545,750 in
punitive damages to punish and deter ABC from engaging in this kind of
fraudulent deception in the future. The trial judge reduced the punitive
damages to $315,000.
The Fourth Circuit reversed in part, agreeing with the Seventh Circuit
in Desnick that the initial entry was consensual despite having been
obtained by fraud so no trespass occurred when the reporters initially
entered the property. However, the court found that a trespass had
occurred after the initial entry when the reporters secretly videotaped the
meatpacking process because this action exceeded the scope of the initial
invitation. The court threw out the fraud claim. Although the fraud had
caused Food Lion to hire the employees, it could not demonstrate any
harm resulting from the hirings themselves. As at-will employees, they
could leave at any time and had made no promises to work for any

90
particular length of time. Thus Food Lion could not complain that they
stayed for only two weeks. Any harm to Food Lion was caused by the
broadcast and not by the fraud. The first amendment generally protects the
right to publish truthful information, allowing remedies only for
defamation — false statements that injure reputation — and even then,
only in restricted circumstances. Because the punitive damages judgment
had been premised on the fraud, and the fraud claim had now been thrown
out, the Fourth Circuit also threw out the punitive damages judgment,
leaving defendants with a nominal damages judgment of $2. Accord,
American Transmission, Inc. v. Channel 7 of Detroit, Inc., 609 N.W.2d
607 (Mich. Ct. App. 2000) (agreeing with Desnick and holding that despite
the existence of fraudulent misrepresentations by employees of the
television station investigating dishonest practices in transmission repair
shops, the shop owners had validly consented to the investigators’
presence on their premises and that no specific interests relating to the
peaceable possession of land were invaded). But see Medical Laboratory
Management Consultants v. ABC, Inc., 30 F. Supp. 2d 1182 (D. Ariz.
1998); Shiffman v. Empire Blue Cross & Blue Shield, 681 N.Y.S.2d 511,
512 (App. Div. 1998) (reporters who gained entry to medical offices by
posing as potential patients could not assert consent as defense to trespass
claim “since consent obtained by misrepresentation or fraud is invalid”);
Restatement (Second) of Torts §892B(2) (1965) (“if the person consenting
to the conduct of another . . . is induced [to consent] by the other’s
misrepresentation, the consent is not effective for the unexpected invasion
or harm”).
9. Trespass to computer systems. Trespass is usually a doctrine that
concerns intrusions to real property. A version of the doctrine, called
trespass to chattels, applies to personal property. The tort of trespass to
chattels allows owners of personal property to recover damages for
intentional interferences with the possession of personal property. The
owner is entitled to injunctive relief stopping any such interference with
the chattel. Mere touching of the object is usually not sufficient to
constitute trespass; the plaintiff must either allege some injury to the
property or show either dispossession or intentional “using or
intermeddling” with it. Restatement (Second) of Torts §218 (1965).
In Intel Corp. v. Hamidi, 71 P.3d 296 (Cal. 2003), a former employee
sent numerous e-mails to his former co-employees criticizing the
employer. The e-mails breached no security barriers nor disrupted the
employer’s e-mail system. The lower courts held that the former employee
had committed trespass to chattels on the ground that the former employee

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was “disrupting [the employer’s] business by using its property.” Id. at
302. The California Supreme Court reversed, holding that no trespass
could be shown in the absence of dispossession unless the communication
damaged the recipient’s computer system or impaired its functioning.
Accord, CompuServe v. Cyber Promotions, Inc., 962 F. Supp. 1015, 1022
(S.D. Ohio 1997). Cf. eBay, Inc. v. Bidder’s Edge, Inc., 100 F. Supp. 2d
1058, 1071 (N.D. Cal. 2000) (finding damage when defendant Bidder’s
Edge’s Internet-based auction aggregation site sent 80,000 to 100,000
information requests per day to eBay’s auction trading site by
“diminish[ing] the quality or value of eBay’s computer systems [by
consuming] at least a portion of [eBay’s] bandwidth and server capacity”).
10. Trespass and government searches. The fourth amendment of the
United States Constitution says that “[t]he right of the people to be secure
in their persons, houses, papers, and effects, against unreasonable searches
and seizures, shall not be violated.” But what is a search? After the U.S.
Supreme Court’s landmark decision in Katz v. United States, 389 U.S. 347
(1967), it seemed that whether a particular government action would be
deemed a “search” depended on whether the defendant had a “reasonable
expectation of privacy” that was violated by the government’s activity. In
United States v. Jones, 123 S. Ct. 945 (2012), however, the Court seemed
to change gears, turning towards the law of trespass for an alternative
definition of searches. The case involved a defendant who had been
convicted of possessing several kilograms of cocaine with the intent to
distribute. Part of the evidence used against the defendant came from a
small GPS tracking device that federal agents attached to the underside of
the defendant’s wife’s car. At trial, data from the GPS device was used to
link the defendant to the location of a drug stash house. Instead of looking
into the defendant’s expectations of privacy (with regard to either the
exterior of the vehicle or his presence on public streets), the Supreme
Court asked whether the government’s behavior constituted a trespass (to
chattels). “The text of the Fourth Amendment,” Justice Scalia wrote for the
Court, “reflects its close connection to property. . . .” Id. at 950. Although
the Court conceded its more recent cases had “deviated from that
exclusively property-based approach, . . . for most of our history the
Fourth Amendment was understood to embody a particular concern for
government trespass upon the areas (‘persons, houses, papers and effects’)
it enumerates.” Id. Because, in Jones, “[t]he Government physically
occupied private property,” its actions constituted a trespass on an
enumerated category of property, and because it did so to obtain
information, its actions amounted to a search within the meaning of the

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fourth amendment. After Jones, actions that are not a trespass might still
implicate the fourth amendment under a Katz expectation-of-privacy
analysis. And police action that would appear to involve trespass, but that
occurs on categories of property not enumerated within the fourth
amendment (such as “open fields”), might not violate the fourth
amendment. See Hester v. United States, 265 U.S. 57 (1924). But, with
respect to enumerated property (“houses, papers, and effects”), trespass
provides a minimal threshold of fourth amendment protection.
The Court in Jones assumes that attaching a GPS device to a car is an
obvious case of trespass to chattels. Do you agree? As Justice Alito noted
in his concurring opinion in Jones, most courts would require some
damage to the chattel in order to find a trespass. “Attaching to the bottom
of a car a small, light object that does not interfere in any way with the
car’s operation . . . is generally regarded as so trivial that it does not
provide a basis for recovery under modern [trespass] law.” Id. at 961
(Alito, J., concurring in the judgment). Do you agree with Justice Alito
that attaching a GPS device to a car does not harm the owner’s interest in
use or possession of the vehicle? Or do you think a car owner would be
able to obtain an injunction to remove a GPS tracker installed on her car
by a private party against her wishes, even if the tracker did not physically
damage the car or interfere with its operation?
In Florida v. Jardines, 133 S. Ct. 1409 (2013), the Court considered a
challenge to a “search” in which police officers (acting on an anonymous
tip and without a warrant) brought a drug-sniffing dog onto the front porch
of the defendant’s home. In finding the act of bringing a drug dog onto the
front porch to constitute a search, the Court acknowledged that an
invitation to approach the front door “may be implied from the habits of
the country.” Id. at 1415. Notwithstanding this implicit license, the Court
ruled out the notion that the police were acting under such an implicit
license to approach the defendant’s front door, since there is no customary
invitation to bring a drug dog onto the front porch to sniff for contraband.
Applying this logic, could a police officer approach the front door, knock,
and ask the defendant a few questions without first obtaining a warrant? If
the law of trespass defines (in part) the scope of fourth amendment
protection, to whose law should courts look in order to determine whether
some government action constitutes a trespass (and therefore a fourth
amendment search)? The law of the jurisdiction where the putative search
occurs? The law of the jurisdiction in which the criminal charges are
brought? Some federal “constitutional common law” standard of trespass?
What if different jurisdictions reach different conclusions about whether a
particular sort of activity constitutes a common law trespass or instead

93
falls within an implicit license?

Problems
1. A tenant in a three-unit apartment building allows his girlfriend to
move into the apartment with him. The landlord, who occupies one of the
three apartments, objects. Stating that she rented to him alone and not to
his girlfriend, she asks him to have the girlfriend leave. After he refuses,
the landlord sues to evict him. He argues that, like all other tenants, he has
the right to receive visitors, see Commonwealth v. Nelson, 909 N.E.2d 42
(Mass. App. Ct. 2009); State v. DeCoster, 653 A.2d 891, 894 (Me. 1995),
and that this right encompasses the right to choose to have family members
or intimate associates stay with him at his home. What arguments can you
make on both sides of this question? What rule of law would you
promulgate if you were the judge?
2. Were Desnick and Food Lion decided correctly?

a. Consent. Should fraudulently obtained consent be a defense to a

trespass claim as Desnick held, or should such consent be ineffective as a
defense to a trespass claim as Shiffman held? Was the Fourth Circuit in Food
Lion correct to find a trespass when the reporters exceeded the scope of the
invitation by secretly videotaping, or was Desnick correct to find no trespass
based on the secret videotaping?
b. Public policy. Should trespasses by investigative journalists be
privileged because they further a strong public policy of protecting
consumers from harmful products and services?
c. Punitive damages. If a trespass can be shown either because entry is
obtained by fraud or because secret videotaping exceeds the scope of the
permission to enter, should punitive damages be available for trespass to
deter investigative journalists from entering property on false pretenses and
thus obtaining embarrassing information they can broadcast to the world?
Punitive damages are generally to punish and deter “outrageous” or
“egregious” conduct, including conduct that displays a willful or reckless
disregard of the rights of others. JCB, Inc. v. Union Planters Bank, NA, 539
F.3d 862, 872-877 (8th Cir. 2008). Does intentional trespass rise to that
level? Did the conduct in Desnick and Food Lion rise to that level? If the
actual damages are only $1, is a $100,000 punitive award excessive in
relation to the harm?

3. Imagine that you are a juror in a case with facts very similar to
Magadini. Would you conclude that the defendant’s presence on private
property was justified by necessity on a very cold night if the property in

94
question were:

a. the heated vestibule of a shopping mall after closing time? during

business hours?
b. an empty, foreclosed home that the defendant had broken into?
c. the detached garage of an occupied, private home?

4. Imagine that instead of attaching a GPS unit directly to the

defendant’s car, as in Jones, the government had hidden the GPS device
inside a tire that the defendant purchased from a store that (prior to sale of
the tire) had allowed the government to install the device. Should the
defendant’s consent to the presence of the tire on his car (without
knowledge of the GPS device) shield the government from a finding that it
had committed a trespass/search? See United States v. Karo, 468 U.S. 705
(1984) (installing a tracker in a can of ether sold to the defendant and then
tracking that can to a locker in a public warehouse did not violate the
fourth amendment).

§1.2 Limits on the Right to Exclude from Property Open to

the Public

Uston v. Resorts International Hotel, Inc.

445 A.2d 370 (N.J. 1982)

Map: 1133 Boardwalk,

Atlantic City, New Jersey

MORRIS PASHMAN, J.

CONTEXT

Blackjack is the only casino game played against the house in which the odds
sometimes favor players. If a player can keep track of how many low-value
cards have already been dealt (the goal of card counting), she can identify
periods during which the odds are most favorable to her and increase her bets
accordingly. The story of one famous card-counting team of MIT students is

95
 the subject of the 2003 book Bringing Down the House, by Ben Mezrich, as
well as a (pretty bad) 2008 feature film entitled “21.”

Since January 30, 1979, appellant Resorts International Hotel, Inc.

(Resorts) has excluded respondent, Kenneth Uston, from the blackjack
tables in its casino because Uston’s strategy increases his chances of
winning money. Uston concedes that his strategy of card counting can tilt
the odds in his favor under the current blackjack rules promulgated by the
Casino Control Commission (Commission). However, Uston contends that
Resorts has no common law or statutory right to exclude him because of
his strategy for playing blackjack.
Kenneth Uston is a renowned teacher and practitioner of a complex
strategy for playing blackjack known as card counting. Card counters keep
track of the playing cards as they are dealt and adjust their betting patterns
when the odds are in their favor. When used over a period of time, this
method allegedly ensures a profitable encounter with the casino.
“[T]he statutory and administrative controls over casino operations
established by the [Casino Control] Act are extraordinarily pervasive and
intensive.” Knight v. Margate, 86 N.J. 374, 380-81, 431 A.2d 833 (1981).
The almost 200 separate statutory provisions “cover virtually every facet
of casino gambling and its potential impact upon the public.” Id. at 381,
431 A.2d 833. These provisions include a preemption clause, stating that
the act prevails over “any other provision of law” in conflict or
inconsistent with its provisions. N.J.S.A. 5:12-133(b). Moreover, the act
declares as public policy of this State “that the institution of licensed
casino establishments in New Jersey be strictly regulated and controlled.”
N.J.S.A. 5:12-1(13).
At the heart of the Casino Control Act are its provisions for the
regulation of licensed casino games. N.J.S.A. 5:12-100 provides:

e. All gaming shall be conducted according to rules promulgated by the

commission. All wagers and pay-offs of winning wagers at table games shall
be made according to rules promulgated by the commission, which shall
establish such minimum wagers and other limitations as may be necessary to
assure the vitality of casino operations and fair odds to and maximum
participation by casino patrons.

The ability of casino operators to determine how the games will be

played would undermine this control and subvert the important policy of
ensuring the “credibility and integrity of the regulatory process and of
casino operations.” N.J.S.A. 5:12-1(b). The Commission has promulgated

96
the blackjack rules that give Uston a comparative advantage, and it has
sole authority to change those rules. There is no indication that Uston has
violated any Commission rule on the playing of blackjack. N.J.A.C. 19:47-
2.1
to -2.13. Put simply, Uston’s gaming is “conducted according to rules
promulgated by the Commission.” N.J.S.A. 5:12-100(e).
The right of an amusement place owner to exclude unwanted patrons
and the patron’s competing right of reasonable access both have deep roots
in the common law. In this century, however, courts have disregarded the
right of reasonable access in the common law of some jurisdictions at the
time the Civil War Amendments and Civil Rights Act of 1866 were passed.
As Justice Goldberg noted in his concurrence in Bell v. Maryland, 378
U.S. 226 (1964):

Underlying the congressional discussions and at the heart of the Fourteenth

Amendment’s guarantee of equal protection, was the assumption that the
State by statute or by “the good old common law” was obligated to guarantee
all citizens access to places of public accommodation. [378 U.S. at 296,
Goldberg, J., concurring.]

See, e.g., Ferguson v. Gies, 46 N.W. 718 (Mich. 1890) (after passage of
the Fourteenth Amendment, both the civil rights statutes and the common
law provided grounds for a non-white plaintiff to recover damages from a
restaurant owner’s refusal to serve him, because the common law as it
existed before passage of the civil rights laws “gave to the white man a
remedy against any unjust discrimination to the citizen in all public
places”); Donnell v. State, 48 Miss. 661 (1873) (state’s common law
includes a right of reasonable access to all public places).
The current majority American rule has for many years disregarded the
right of reasonable access,14 granting to proprietors of amusement places
an absolute right arbitrarily to eject or exclude any person consistent with
state and federal civil rights laws.
At one time, an absolute right of exclusion prevailed in this state,
though more for reasons of deference to the noted English precedent of
Wood v. Leadbitter, 153 Eng. Rep. 351 (Ex. 1845), than for reasons of
policy. In Shubert v. Nixon Amusement Co., 83 A. 369 (N.J. Sup. Ct.
1912), the former Supreme Court dismissed a suit for damages resulting
from plaintiff’s ejection from defendants’ theater. Noting that plaintiff
made no allegation of exclusion on the basis of race, color or previous
condition of servitude, the Court concluded:

97
 In view of the substantially uniform approval of, and reliance on, the
decision in Wood v. Leadbitter in our state adjudications, it must fairly be
considered to be adopted as part of our jurisprudence, and whatever views
may be entertained as to the natural justice or injustice of ejecting a theater
patron without reason after he has paid for his ticket and taken his seat, we
feel constrained to follow that decision as the settled law. 83 A. at 371.

It hardly bears mention that our common law has evolved in the
intervening 70 years. In fact, Leadbitter itself was disapproved three years
after the Shubert decision by Hurst v. Picture Theatres Limited, 1 K.B. 1
(1914). Of far greater importance, the decisions of this Court have
recognized that “the more private property is devoted to public use, the
more it must accommodate the rights which inhere in individual members
of the general public who use that property.” State v. Schmid, 423 A.2d
615, 629 (N.J. 1980).
State v. Schmid involved the constitutional right to distribute literature
on a private university campus. The Court’s approach in that case balanced
individual rights against property rights. It is therefore analogous to a
description of the common law right of exclusion. Balancing the
university’s interest in controlling its property against plaintiff’s interest in
access to that property to express his views, the Court clearly refused to
protect unreasonable exclusions. Justice Handler noted that

Regulations . . . devoid of reasonable standards designed to protect both

the legitimate interests of the University as an institution of higher education
and the individual exercise of expressional freedom cannot constitutionally
be invoked to prohibit the otherwise noninjurious and reasonable exercise of
[First Amendment] freedoms. Id. at 632.

In State v. Shack, 277 A.2d 369 (N.J. 1971), the Court held that
although an employer of migrant farmworkers “may reasonably require”
those visiting his employees to identify themselves, “the employer may not
deny the worker his privacy or interfere with his opportunity to live with
dignity and to enjoy associations customary among our citizens.” The
Court reversed the trespass convictions of an attorney and a social services
worker who had entered the property to assist farmworkers there.
Schmid recognizes implicitly that when property owners open their
premises to the general public in the pursuit of their own property
interests, they have no right to exclude people unreasonably. On the
contrary, they have a duty not to act in an arbitrary or discriminatory
manner toward persons who come on their premises. That duty applies not
only to common carriers, innkeepers, owners of gasoline service stations,

98
or to private hospitals, but to all property owners who open their premises
to the public. Property owners have no legitimate interest in unreasonably
excluding particular members of the public when they open their premises
for public use.
No party in this appeal questions the right of property owners to
exclude from their premises those whose actions “disrupt the regular and
essential operations of the [premises],” or threaten the security of the
premises and its occupants. In some circumstances, proprietors have a duty
to remove disorderly or otherwise dangerous persons from the premises.
These common law principles enable the casino to bar from its entire
facility, for instance, the disorderly, the intoxicated, and the repetitive
petty offender.
Whether a decision to exclude is reasonable must be determined from
the facts of each case. Respondent Uston does not threaten the security of
any casino occupant. Nor has he disrupted the functioning of any casino
operations. Absent a valid contrary rule by the Commission, Uston
possesses the usual right of reasonable access to Resorts International’s
blackjack tables.

Notes and Questions

1. Historical background. Uston is an outlier. Most modern courts
have come out the other way, affirming the right of owners to exclude
others from their commercial property for any reason not specifically
prohibited by, for example, civil rights laws. See Madden v. Queens
County Jockey Club, Inc., 72 N.E.2d 697 (N.Y. 1947). This was not
always the case. Before the Civil War, it was well established that certain
business owners had a duty to serve anyone who sought their services and
was able to pay.
The reach of this duty is a matter of some confusion. Blackstone noted
in 1765 that “if an inn-keeper, or other victualler, hangs out a sign and
opens his house for travelers, it is an implied engagement to entertain all
persons who travel that way; and upon this universal assumpsit an action
on the case will lie against him for damages, if he without good reason
refuses to admit a traveler.” 3 William Blackstone, Commentaries on the
Laws of England 164 (Univ. of Chicago reprint 1979) (1768). For
centuries, this duty applied to “anyone who held himself out [as open to
the public] to serve all who might apply,” and any such business was liable
if, having so held itself out as open to the public, it refused to serve any
member of the public who applied. See Charles K. Burdick, The Origin of
the Peculiar Duties of Public Service Companies, 11 Colum. L. Rev. 514,

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515-516 (1911); see also Norman F. Arterburn, The Origin and First Test
of Public Callings, 75 U. Pa. L. Rev. 411, 421 (1927) (describing
fourteenth-century laws, enacted in the wake of the Black Death, requiring
all to work who were able, at a reasonable rate, and that none could refuse
to practice his calling to whomever applied). The duty to serve extended
beyond the modern categories of common carriers and innkeepers and
encompassed other businesses as well. See Burdick, supra, at 514-516, 522
(describing farriers, tailors, and even surgeons as potentially “common” in
the relevant sense of being subject to a duty to serve the general public).
Early U.S. cases affirmed the obligation on public accommodations to
serve the public. Adams v. Freeman, 12 Johns. 408 (N.Y. Sup. Ct. 1815).
The usual justification for this obligation was the assumption underlying
the traditional law of “common callings” that an owner assumes certain
duties when he holds himself out as open to the public. See Joseph William
Singer, No Right to Exclude: Public Accommodations and Private
Property, 90 Nw. U. L. Rev. 1283, 1315-1316 (1996).
The limitation of the duty to serve to the categories of innkeepers and
common carriers is a later development. The first case to clearly assert that
places of entertainment holding themselves out as open to the general
public had no common law duty to serve the public was decided in 1858 in
Massachusetts. The court held that the Howard Athenæum, a well-known
lecture hall near the State House, had the power to exclude African
Americans. McCrea v. Marsh, 78 Mass. 211 (1858); see also Burton v.
Scherpf, 83 Mass. 133 (1861) (allowing an African American to be ejected
from a theater after he had bought a ticket). The apparent connection
between the (relatively recent) narrowing of the duty to serve and the
motive to exclude free African Americans led the New Jersey Supreme
Court to comment in a footnote in Uston that the “the current majority rule
may have less than dignified origins.” 445 A.2d at 374. After the Civil
War, most southern states adopted public accommodations laws
prohibiting exclusion on the basis of race, but those laws were repealed
when Reconstruction ended. The repeals began a long period of racial
segregation in many states that ended only with passage of the federal
public accommodations law in 1964. See below §2.1.
2. Current law. Although Uston follows the early common law rule in
affirming that members of the public enjoy a right of reasonable access to
all businesses that hold themselves out as open to the public, this is now a
minority position. By the late nineteenth century, the right of access had
been narrowed to innkeepers and common carriers (planes, trains, and
buses). Most states continue to adhere to the newer version of the rule,

100
recognizing an absolute right by owners to exclude without cause and
limiting the duty to serve the public (the right of reasonable access) to
innkeepers and common carriers. For example, five years before the New
Jersey Supreme Court’s decision in Uston v. Resorts International,
Kenneth Uston had filed an almost identical case against a casino in Las
Vegas, Nevada. The U.S. Court of Appeals for the Ninth Circuit, applying
Nevada law, upheld the casino’s right to exclude card counters. Confining
the businesses with a duty to serve to innkeepers and common carriers, it
observed that “the relationship [between the casino and Uston] was not
one of innkeeper and patron, but rather one of casino owner and
prospective gambler. The policies upon which the innkeeper’s special
common law duties rested are not present in such a relationship.” Uston v.
Airport Casino, Inc., 564 F.2d 1216, 1217 (9th Cir. 1977).
The leading case affirming the majority rule is Madden v. Queens
County Jockey Club, Inc., 72 N.E.2d 697 (N.Y. 1947). In that case, the
defendant barred the plaintiff “Coley” Madden from attending races at its
racetrack on the mistaken belief that he was “Owney” Madden, a well-
known bookmaker. Plaintiff sued the racetrack, claiming that he had a
right “as a citizen and a taxpayer — upon paying the required admission
price — to enter the race course and patronize the pari-mutuel betting there
conducted.” Id. at 698. The court concluded that places of amusement and
resort enjoyed “an absolute power to serve whom they pleased.” Id.
Although New York’s Civil Rights Law prohibited discrimination on
account of race, creed, color, or national origin, because Coley Madden
was not excluded for any of these reasons he had no right of access, and
the defendant did not need to explain why it excluded him.
3. Policy. The court in Uston gave a series of policy arguments for
extending the right of access to all businesses open to the public rather
than limiting this obligation to innkeepers and common carriers. What
policies could justify the majority rule, imposing a duty to serve the public
on innkeepers and common carriers but granting most businesses a broad
right to exclude?
Three justifications have traditionally been offered for the special
obligations on innkeepers and common carriers. First, inns and common
carriers were more likely to be monopolies than other businesses, so denial
of service was tantamount to denying the ability to travel or to find a place
to sleep away from home. Second, these businesses provided necessities
whose denial would place individuals at risk from the elements or bandits
on the highway. Third, innkeepers and common carriers hold themselves
out as ready to serve the public and the public relies on this representation.

101
Joseph William Singer, No Right to Exclude: Public Accommodations and
Private Property, 90 Nw. U. L. Rev. 1283, 1305-1331 (1996). Do these
rationales distinguish innkeepers and common carriers from other
businesses, such as retail stores?
In Brooks v. Chicago Downs Association, Inc., 791 F.2d 512, 517,
518-519 (7th Cir. 1986), the Seventh Circuit Court of Appeals explained
the basis for the modern doctrine as follows:

[P]roprietors of amusement facilities, whose very survival depends on

bringing the public into their place of amusement, are reasonable people who
usually do not exclude their customers unless they have a reason to do so.
What the proprietor of a race track does not want to have to do is prove or
explain that his reason for exclusion is a just reason. He doesn’t want to be
liable to [an excluded patron] solely because he mistakenly believed he was a
mobster. The proprietor wants to be able to keep someone off his private
property even if they only look like a mobster. As long as the proprietor is
not excluding the mobster look-alike because of his national origin (or
because of race, color, creed, or sex), then the common law, and the law of
Illinois, allows him to do just that.
[I]t is arguably unfair to allow a place of amusement to exclude for any
reason or no reason, and to be free of accountability, except in cases of
obvious discrimination. In this case, the general public is not only invited
but, through advertising, is encouraged to come to the race track and wager
on the races’ outcome. But the common law allows the race track to exclude
patrons, no matter if they come from near or far, or in reasonable reliance on
representations of accessibility. We may ultimately believe that market
forces would preclude any outrageous excesses — such as excluding anyone
who has blond hair, or (like the plaintiffs) who is from Pennsylvania, or
(even more outrageous) who has $250,000 to spend in one day of betting.
But the premise of the consumer protection laws [is] that the reality of an
imperfect market allows numerous consumer depredations. Excluding a
patron simply because he is named Adam Smith arguably offends the very
precepts of equality and fair dealing expressed in everything from the
antitrust statutes to the Illinois Consumer Fraud and Deceptive Business
Practices Act.
But the market here is not so demonstrably imperfect that there is a
monopoly or any allegation of consumer fraud. Consequently, there is no
such explicit legislative directive in the context of patrons attending horse
races in Illinois — so the common law rule, relic though it may be15 still
controls.

Does this argument from competition distinguish innkeepers and

common carriers from other businesses in the modern economy? If not,

102
can you imagine a better distinction? If there is no reasonable distinction
between those businesses with a duty to serve the public and those that
have no such duty, what should the rule be? Should businesses have a duty
to serve the public without unjust discrimination, or should they have an
absolute right to exclude? Do proprietors in a competitive market have an
incentive to act on the dominant prejudices of the majority? Cf. Joel
Waldfogel, The Tyranny of the Market (2007) (arguing businesses with
high fixed costs will — rationally — target their production at majority
preferences). What factors would a hypothetical proprietor seeking to
exclude “mobsters” employ when deciding whether a potential customer
“look[s] like a mobster” (to use the Seventh Circuit’s example in Brooks)?
If the proprietor does rely on national origin (e.g., the customer “looks
Italian”), what effect (if any) does recognizing a right to exclude without
having to offer reasons have on the ability of the customer to prove that he
was the victim of unlawful discrimination?
4. Impact of the access/exclusion choice. Professor Patricia J.
Williams wrote about an incident in which she was denied entry to a
clothing store in New York City. See Patricia J. Williams, Spirit-
Murdering the Messenger: The Discourse of Fingerpointing as the Law’s
Response to Racism, 42 U. Miami L. Rev. 127 (1987). The store was
locked and equipped with a buzzer allowing the clerk inside to determine
whether to allow customers into the store. Williams writes, “Two
Saturdays before Christmas, I saw a sweater that I wanted to purchase for
my mother. I pressed my brown face to the store window and my finger to
the buzzer, seeking admittance.” The clerk looked at her and mouthed
“We’re closed,” even though it was one o’clock in the afternoon and
several white customers were in the store. She continues,

I was enraged. At that moment I literally wanted to break all of the windows
in the store and take lots of sweaters for my mother. In the flicker of his
judgmental grey eyes, that sales child had reduced my brightly sentimental,
joy-to-the-world, pre-Christmas spree to a shambles. He had snuffed my
sense of humanitarian catholicity, and there was nothing I could do to snuff
his, without simply making a spectacle of myself.
I am still struck by the structure of power that drove me into such a
blizzard of rage. There was almost nothing I could do, short of physically
intruding upon him, that would humiliate him the way he humiliated me. No
words, no gestures, no prejudices of my own would make a bit of difference
to him. His refusal to let me into the store was an outward manifestation of
his never having let someone like me into the realm of his reality. He had no
connection, no compassion, no remorse, no reference to me, and no desire to
acknowledge me even at the estranged level of arm’s length transactor. He

103
 saw me only as one who would take his money and therefore could not
conceive that I was there to give him money.
The violence of my desire to have burst into that store is probably quite
apparent to the reader. I wonder if the violence and the exclusionary hatred
are equally apparent in the repeated public urging that blacks put themselves
in the shoes of white store owners, and that, in effect, blacks look into the
mirror of frightened white faces to the reality of their undesirability; and that
then blacks would “just as surely conclude that [they] would not let
[themselves] in under similar circumstances.”

Id. at 129. Is the use of buzzers consistent with the New Jersey Supreme
Court’s decision in Uston?
Consider Walter E. Williams’s defense of the practice of store owners’
racial profiling of customers:

Imagine you are challenged to a basketball game and must select five out
of 20 people who appear to be equal in every respect except race and sex.
There are five black and five white females, five black and five white males.
You have no information about their basketball proficiency. There is a
million-dollar prize for the contest. How would you choose a team? If you
thought basketball skills were randomly distributed by race and sex, you
would randomly select. Most people would perceive a strong associative
relationship between basketball skills on the one hand, and race and sex on
the other. Most would confine their choice to males, and their choice would
be dominated by black males.
Can we say such a person is a sexist/racist? An alternative answer is that
he is behaving like an intelligent Bayesian (Sir Thomas Bayes, the father of
statistics). Inexpensively obtained information about race and sex is a proxy
for information that costs more to obtain, namely, basketball proficiency.
There is a large class of human behavior that generally falls into the same
testing procedures. Doctors can predict the probability of hypertension by
knowing race, and osteoporosis by knowing sex. A white jeweler who does
not open his door to young black males cannot be labeled a racist any more
than a black taxi driver who refuses to pick up young black males at night.
Black females and white females and white males commit holdups, but in
this world of imperfect information cab drivers and jewelers play the odds.
To ask them to behave differently is to disarm them.

Walter E. Williams, The Intelligent Bayesian, The New Republic, Nov. 10,
1986, at 18. Is there a principled difference between considering race in
choosing a basketball team and using race in deciding who to admit to a
store or who to search?
5. Rules versus standards. Scholars have long observed that property

104
doctrine sometimes allocates property rights through rigid rules and
sometimes through flexible standards. See, e.g., Carol Rose, Crystals and
Mud in Property Law, 40 Stan. L. Rev. 577 (1988). Trespass law in most
jurisdictions operates as a rigid rule — owners have virtually absolute
discretion to exclude from privately owned property for any reason not
specifically prohibited by law. In New Jersey, on the other hand, trespass
operates more like a standard, at least for commercial properties — owners
who voluntarily open up their land to the public for the operation of a
business open to all comers may only exclude on grounds that are
commercially reasonable.
Rigid rules carry two advantages. First, they clarify who has the power
to control a particular resource, thus quickly settling disputes. Second, they
promote transactions by identifying who owns a particular set of rights in
land, thereby clarifying who has the power to sell it. Without such clear
rules, negotiations may be more drawn out and costly; the parties may
spend time fighting about who really owns the entitlements about which
they are supposed to be bargaining.
To legislatures and courts, rigid rules often look good at the planning
stage. When an actual dispute arises, however, rigid rules often bring
unanticipated, and substantial, injustice. Time and again, confronted with
an actual conflict in which the application of the rigid rule seems unfair,
courts have shown themselves to be unwilling to mechanically apply the
rule. These courts often adjust relationships in ways that more closely
approach the judges’ intuitions about the just results in particular cases.
They often do so by introducing standards, such as reasonableness, that
increase flexibility.
Some scholars argue that the law of property cycles back and forth
between rules and standards as judges and (especially) legislatures
periodically try to clarify the law, which judges then muddy up with
standards and exceptions. See Rose, supra. Others see in the modern law
of property a steady shift from rules to standards as society becomes more
complex and property rights more frequently butt up against each other.
See Joseph Wiiliam Singer, The Rule of Reason in Property Law, 46 U.C.
Davis L. Rev. 1375 (2013). Is it possible to generalize about when rules
(or standards) are likely to be appropriate? See, e.g., Felix Cohen,
Dialogue on Private Property, 9 Rutgers L. Rev. 357 (1954) (suggesting
that clear rules are likely to arise in property law when numerous
normative considerations line up in favor of a particular outcome).

Problems

105
 1. Homeless persons. A large department store located in downtown
Boston has become a hangout for homeless persons during winter months
when it is freezing outside. The store begins excluding any person who
appears to be homeless. Massachusetts has the majority rule that imposes a
duty to serve the public on innkeepers and common carriers but not on
retail stores. Should Massachusetts adopt the New Jersey rule? What are
the arguments on both sides? If Massachusetts does adopt the New Jersey
rule, would exclusion of homeless persons be reasonable? What factors
would go into such a determination?
2. Teenagers. A suburban mall has turned into a hangout for teenagers,
some of whom block the entrance to shops and act in a manner the
customers consider obnoxious. The mall manager institutes an anti-
loitering policy, asking teenagers to leave if they are not in the mall to
shop. Should the mall owner have the right to exclude the teenagers?
3. Racially discriminatory surveillance. A retail clothing store
routinely has its employees follow African American customers around the
store. One such customer is stopped and loudly accused of stealing the
shirt he is wearing. He had purchased the shirt in the store several days
earlier and, by some miracle, even has the receipt in his pocket to prove it.
He sues the store, claiming that he was subjected to discriminatory
surveillance because of his race and that the store’s practice of giving
greater scrutiny to African American customers than to other customers
denies his right of reasonable access to a place of public accommodation.
The store defends the claim by noting that it is not a public
accommodation because it is neither a common carrier nor an innkeeper,
and that even if it is a common carrier, it did not deny him reasonable
access to the store.16 Are retail stores places of public accommodation
with the duty to serve the public? If they are subject to this duty, is racially
discriminatory surveillance a violation of the right of reasonable access
under the common law of property?

§1.3 Trespass Remedies

Injunctions are available to remedy a trespass where the trespass is
continuous in nature. See, e.g., Cowles v. Shaw, 2 Clarke 496 (Iowa 1856).
A trespass is continuing where someone is personally present on the land
of another or where they leave some object (such as a structure) on the
land. Sometimes, courts will grant injunctions for trespasses that, while not
strictly continuous, are so repetitious that it would put an unfair burden on
the landowner to require her to bring repeated lawsuits. See, e.g., Planned

106
Parenthood of Mid-Iowa v. Maki, 478 N.W.2d 637, 639-640 (Iowa 1991);
Theros v. Phillips, 256 N.W.2d 852 (Minn. 1977). The law occasionally
departs from the presumption in favor of injunctive relief, even for
continuing trespasses. See Chapter 5, §4.1. What if the trespass alters the
land in some way? How should the law make the injured landowner
whole? What happens when a trespass does not alter the land, is a one-off
event, and is not likely to be repeated? Is the owner without a remedy?
Consider the following cases.

Glavin v. Eckman

881 N.E.2d 820 (Mass. App. Ct. 2008)

Map: Aquinnah, Martha’s Vineyard,

Massachusetts

JOSEPH GRASSO, J.
Looking to enhance their view of the ocean, Bruce and Shelly Eckman
hired Jon R. Fragosa and his landscaping company, Three Trees, Ltd.
(Fragosa), to top and remove the trees that stood in the way. Fragosa
improved the Eckmans’ view by cutting down ten large, mature oak trees
standing on the property of a neighbor, James A. Glavin, without Glavin’s
permission.
After trial on Glavin’s claim against the Eckmans and Fragosa for the
wrongful cutting of his trees, see Mass. Gen. Laws ch. 242, §7,17 a jury
rendered a special verdict in favor of Glavin. The jury found that (1)
Fragosa wilfully cut trees on Glavin’s land; (2) Fragosa did not have good
reason to believe that he was lawfully authorized to cut the trees on
Glavin’s land; (3) the Eckmans wilfully cut trees on Glavin’s land by
directing Fragosa to do so; and (4) the Eckmans did not have good reason
to believe that they were lawfully authorized to cut the trees on Glavin’s
land. The jury assessed $30,000 in damages as “the reasonable cost of
restoring the property as nearly as reasonably possible to its original
condition.” The judge trebled those damages as required by the statute.
On appeal, the issues before us are whether . . . the restoration cost is
an appropriate measure of damages [and whether] trebling of the
restoration cost damages renders such damages unreasonable. Separately,
we consider the Eckmans’ contention that they cannot be held liable for

107
the acts of Fragosa, an independent contractor. We affirm.
1. Facts. From the evidence at trial, the jury could have found the
following. Glavin, the Eckmans, and a third individual, named Bea Gentry,
own four roughly parallel rectangular parcels of land in the Aquinnah
section of Martha’s Vineyard, a place of natural beauty. Glavin owns the
two westernmost lots. The Eckmans own the most easterly lot. Between
the Glavin and Eckman lots is the lot owned by Gentry. By virtue of its
greater elevation, the Eckmans’ lot has a southwest view to the ocean
across the adjacent lots.
Glavin lives with his wife and children in a house that he built on the
westernmost lot in 1985. In 1990, he bought the adjoining 1.7-acre lot
directly to the east of his house lot. A significant feature of the adjoining
lot was a wetland about one-half acre in size that rose to a knoll containing
a stand of ten large oak trees that were ideally situated to provide shade
and serve as a backdrop to a pond that Glavin planned to restore at the
edge of the wetland. A general contractor of considerable experience,
Glavin had previously converted wetlands into ponds at least a half dozen
times.
When building their vacation home in 1996, the Eckmans asked Glavin
for permission to cut the stand of trees on Glavin’s property to enhance
their view of the ocean. Glavin refused their request, indicating that he had
personal reasons for not cutting the trees. Subsequently, in 2001, the
Eckmans hired Fragosa to trim or cut down the trees that blocked their
view of the ocean. They directed Fragosa to clear as much as possible to
enhance their water view, a job that Fragosa characterized as opening the
view “to the max.” When discussing the job, the Eckmans and Fragosa did
not walk the Eckmans’ property, but stood on the Eckmans’ back deck
overlooking the area to be trimmed.
It was readily apparent that most of the trees the Eckmans wanted
removed were not on their property. When setting about the job, Fragosa
inquired of Gentry, who granted him permission to cut and trim trees on
her lot. Although Fragosa obtained Gentry’s permission, he did not
ascertain the boundaries of her property relative to the Eckman or Glavin
properties, nor did he seek permission from Glavin or any other property
owners in the area.
In cutting down the trees necessary to open the Eckmans’ view,
Fragosa strayed fifty to one hundred feet across the unmarked boundary
between the Gentry and Glavin lots and cut the stand of mature oaks on
Glavin’s lot. The trees that Fragosa cut ranged from eleven to thirty inches
in diameter at the stumps.
2. The Eckmans’ liability. Fragosa does not contest the jury’s findings

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of liability against him. The Eckmans, however, contend that Fragosa was
an independent contractor for whose acts they cannot be held liable absent
a finding that they directed him to cut down the trees. They maintain that
the evidence was insufficient for the jury to conclude that they so directed
Fragosa.
We disagree. The jury could permissibly conclude that the Eckmans,
not Fragosa, defined the scope of the work to be performed by virtue of
their retaining Fragosa to cut trees so as to maximize their view to the
ocean. While Fragosa retained control over the manner in which the trees
would be cut — whether by ax, hand saw, chain saw or other method —
the Eckmans retained the ultimate control over the scope of Fragosa’s
work, cutting those trees that impeded the Eckmans’ view. Photographs
taken from the Eckmans’ deck after the cutting and admitted in evidence
show a distinct gap in the treetops that Glavin identified as the area where
his trees had stood prior to being cut by Fragosa. The jury were free to
disbelieve the Eckmans’ and Fragosa’s testimony that no direction was
given to cut those particular trees. Indeed, in light of the strong evidence
that Glavin’s trees were the chief impediment to the Eckmans’ view, and
the undisputed evidence that the Eckmans had previously requested and
been denied permission from Glavin to remove the trees that impeded their
view, the jury could permissibly infer that the Eckmans had directed
Fragosa, explicitly or implicitly, to cut down those particular trees
regardless of whether the trees stood on Glavin’s land or elsewhere. The
jury could also permissibly conclude that having been denied permission
from Glavin, the Eckmans decided to resort to self-help and enlisted
Fragosa as a dupe or a willing accomplice.
3. Restoration costs as a measure of damages. The defendants
maintain that the judge erred in permitting the jury to award a restoration
cost measure of damages, rather than damages measured by the value of
the timber wrongfully cut, or by the diminution in market value of the
property as a result of the cutting. We disagree.
General Laws ch. 242, §7, specifies that one who wilfully and without
license cuts the trees of another shall be liable in tort “for three times the
amount of the damages assessed therefor.” “The statute does not prescribe
how the damages shall be measured.” Larabee v. Potvin Lumber Co., 459
N.E.2d 93, 98 (Mass. 1983). While the most common measures of
damages are (1) the value of timber wrongfully cut, or (2) the diminution
in value of the property as a result of the cutting, we discern no limitation
in the statute to these measures of damages. Indeed, to limit damages to
these measures would encourage, rather than deter, wrongdoers from
engaging in self-help in circumstances such as when an ocean or other

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view is desired. The timber wrongfully removed may amount to no more
than a single tree; and its removal may even improve, not diminish, the
market value of the property. Yet the wrongful cutting may represent a
significant loss to the property owner and a significant gain to the
wrongdoer even where the value of the timber cut is negligible, or the
diminution in value of the property owing to the cutting is minimal or
nonexistent. So to limit the damages would permit a wrongdoer to rest
assured that the cost of his improved view would be no more than treble
the value of the timber cut even where the change wrought to his
neighbor’s property by the wrongful cutting, as here, is significant. The
statute does not so confine a property owner’s redress for the wrongdoing
of an overreaching neighbor.
Although diminution in market value is one way of measuring
damages, “market value does not in all cases afford a correct measure of
indemnity, and therefore is not therefore ‘a universal test.’ ” Trinity
Church v. John Hancock Mut. Life Ins. Co., 502 N.E.2d 532, 536 (Mass.
1987). Accordingly, “[r]eplacement or restoration costs have also been
allowed as a measure of damages . . . where diminution in market value is
unavailable or unsatisfactory as a measure of damages.” Id. This is but
another way of recognizing “that more complex and resourceful methods
of ascertaining value must be used where the property is unusual . . . and
where ordinary methods will produce a miscarriage of justice.” Id.

CONTEXT

Glavin had to take out loans to cover his $100,000 legal bill. He told the Boston
Herald that he “never started this off for the money. I really saw something evil
going on that had to be addressed.” The paper also reported that “ ‘view greed’
— attempts to get better ocean views at all costs,” is a longstanding problem on
Martha’s Vineyard. “Neighbors sometimes poison each others’ trees,” one
resident told the paper, because “everyone knows what a chainsaw sounds
like.” Jerry Kronenberg, Taking a Stand, Boston Herald, Mar. 6, 2008.

The judge, as gatekeeper, has broad discretion to determine whether

evidence other than fair market value is relevant to the question of
damages. Here, the judge did not abuse that discretion in concluding that
diminution in market value was not a fair and adequate measure of the
damages that Glavin suffered by the wrongful cutting of his trees. Glavin
had no desire to sell the property. Indeed, his plan was to hold on to the lot
and utilize its mature oak trees to provide shade for a pond he planned to

110
create from the existing wetlands, and as a backdrop to a tranquil view
from his house lot. Regardless whether the planned restoration would
increase the value of the lot as a building site and regardless whether the
wrongful cutting had an impact on the market value of the lot, elimination
of the trees wrought a significant change to Glavin’s property. The trees
represented decades of natural growth that could not easily be replicated.
Moreover, any diminution in market value arising from the wrongful
cutting was of less importance than was the destruction of the special value
that the land and its stand of mature oak trees held for Glavin.
In such circumstances, the evidence supported the inference that
diminution in market value was not a fair and adequate measure of
Glavin’s damages, and the judge did not err in permitting the jury to award
restoration costs as an adequate measure of damages. A plaintiff may opt
for either the value of the timber cut or the diminution in value of his
property as the measure of damages under the statute, and when the latter
measure does not fairly measure his damages, he may permissibly opt for
restoration cost damages.
When applying a restoration cost measure of damages, a test of
reasonableness is imposed. “Not only must the cost of replacement or
reconstruction be reasonable, the replacement or reconstruction itself must
be reasonably necessary in light of the damage inflicted by a particular
defendant.” Id. Here, the evidence supported the inference that restoration
of Glavin’s lot to its predamaged condition was reasonable and reasonably
necessary in light of the damage inflicted by the defendants. The cutting
down of ten mature oak trees was not a slight injury, and was wilfully
undertaken by the defendants to achieve a previously denied view from
their property to the ocean. The cost of restoring the lot, while substantial,
was not a “very large and disproportionate expense to relieve from the
consequences of a slight injury.” See id. Glavin’s use of his property was
neither uneconomical nor improper. Likewise, restoration of the property
to its predamaged condition was neither uneconomical nor improper.
We also cannot say as matter of law that the jury erred in concluding
that because direct restoration of the affected area was either physically
impossible or so disproportionately expensive that it would not be
reasonable to undertake such a remedy, $30,000 was “the reasonable cost
of restoring the property as nearly as reasonably possible to its original
condition” (emphasis omitted). Id. The jury’s award was a reasonable
determination from the evidence presented. As discussed further below,
this was a case where making an actual restoration would be
uneconomical. The assessment of damages is traditionally a factual
undertaking appropriate for determination by a jury as the representative

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voice of the community. Likewise, the jury are equipped to evaluate and
eliminate any claimed damages that appear excessive. So long as the
damages assessed represent a reasoned weighing of the evidence by the
jury, fairly compensate the plaintiff for the loss incurred, and do not
penalize the wrongdoer, the object of compensatory damages is
accomplished. Given the unique value of the trees to Glavin, their integral
role in his intended landscaping project, and the expert evidence as to the
restoration costs, the jury’s award cannot be said to be unreasonable.
We disagree with the defendants that the restoration cost damages
awarded by the jury provided Glavin with a windfall. The defendants’
tortious actions resulted in the elimination of ten large mature trees and
effectively deprived Glavin of this feature of his property for his lifetime.
Far from being a windfall, the damages were, at best, a necessary
substitute for what nature would require decades to replace.
5. Trebling damages under G.L. ch. 242, §7. The defendants argue that
even were we to conclude that the damages awarded by the jury were
reasonable, when trebled under Mass. Gen. Laws ch. 242, §7, such
damages are unreasonable. As noted previously, the restoration cost
damages awarded by the jury fall within the range of what is reasonable.
The trebling of those damages “ineluctably flows from the plain language
of the statute,” Brewster Wallcovering Co. v. Blue Mountain
Wallcoverings, Inc., 864 N.E.2d 518, 540 (Mass. Ct. App. 2007), and does
not render the damages unreasonable. The mandated trebling of damages
represents a legislative judgment as to the punitive measure required to
dissuade wrongdoers. A court should not interfere in that determination.

Jacque v. Steenberg Homes, Inc.

563 N.W.2d 154 (Wis. 1997)

Map: (Wilke’s Lake) Schleswig,

Wisconsin

WILLIAM A. BABLITCH, J.
Steenberg Homes had a mobile home to deliver. Unfortunately for
Harvey and Lois Jacque (the Jacques), the easiest route of delivery was
across their land. Despite adamant protests by the Jacques, Steenberg
plowed a path through the Jacques’ snow-covered field and via that path,

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delivered the mobile home. Consequently, the Jacques sued Steenberg
Homes for intentional trespass. At trial, Steenberg Homes conceded the
intentional trespass, but argued that no compensatory damages had been
proved, and that punitive damages could not be awarded without
compensatory damages. Although the jury awarded the Jacques $1 in
nominal damages and $100,000 in punitive damages, the circuit court set
aside the jury’s award of $100,000. The court of appeals affirmed,
reluctantly concluding that it could not reinstate the punitive damages
because it was bound by precedent establishing that an award of nominal
damages will not sustain a punitive damage award. We conclude that when
nominal damages are awarded for an intentional trespass to land, punitive
damages may, in the discretion of the jury, be awarded. We further
conclude that the $100,000 awarded by the jury is not excessive.
Accordingly, we reverse and remand for reinstatement of the punitive
damage award.
¶2 The relevant facts follow. Plaintiffs, Lois and Harvey Jacques, are
an elderly couple, now retired from farming, who own roughly 170 acres
near Wilke’s Lake in the town of Schleswig. The defendant, Steenberg
Homes, Inc. (Steenberg), is in the business of selling mobile homes. In the
fall of 1993, a neighbor of the Jacques purchased a mobile home from
Steenberg. Delivery of the mobile home was included in the sales price.
¶3 Steenberg determined that the easiest route to deliver the mobile
home was across the Jacques’ land. Steenberg preferred transporting the
home across the Jacques’ land because the only alternative was a private
road which was covered in up to seven feet of snow and contained a sharp
curve which would require sets of “rollers” to be used when maneuvering
the home around the curve. Steenberg asked the Jacques on several
separate occasions whether it could move the home across the Jacques’
farm field. The Jacques refused. The Jacques were sensitive about
allowing others on their land because they had lost property valued at over
$10,000 to other neighbors in an adverse possession action in the mid-
1980’s. Despite repeated refusals from the Jacques, Steenberg decided to
sell the mobile home, which was to be used as a summer cottage, and
delivered it on February 15, 1994.
¶4 On the morning of delivery, Mr. Jacque observed the mobile home
parked on the corner of the town road adjacent to his property. He decided
to find out where the movers planned to take the home. The movers, who
were Steenberg employees, showed Mr. Jacque the path they planned to
take with the mobile home to reach the neighbor’s lot. The path cut across
the Jacques’ land. Mr. Jacque informed the movers that it was the Jacques’
land they were planning to cross and that Steenberg did not have

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permission to cross their land. He told them that Steenberg had been
refused permission to cross the Jacques’ land.
¶5 One of Steenberg’s employees called the assistant manager, who
then came out to the Jacques’ home. In the meantime, the Jacques called
and asked some of their neighbors and the town chairman to come over
immediately. Once everyone was present, the Jacques showed the assistant
manager an aerial map and plat book of the township to prove their
ownership of the land, and reiterated their demand that the home not be
moved across their land.
¶6 At that point, the assistant manager asked Mr. Jacque how much
money it would take to get permission. Mr. Jacque responded that it was
not a question of money; the Jacques just did not want Steenberg to cross
their land. Mr. Jacque testified that he told Steenberg to “[F]ollow the
road, that is what the road is for.” Steenberg employees left the meeting
without permission to cross the land.
¶7 At trial, one of Steenberg’s employees testified that, upon coming
out of the Jacques’ home, the assistant manager stated: “I don’t give a —
— what [Mr. Jacque] said, just get the home in there any way you can.”
¶9 When a neighbor informed the Jacques that Steenberg had, in fact,
moved the mobile home across the Jacques’ land, Mr. Jacque called the
Manitowoc County Sheriff’s Department. After interviewing the parties
and observing the scene, an officer from the sheriff’s department issued a
$30 citation to Steenberg’s assistant manager.
¶14 Steenberg argues that, as a matter of law, punitive damages could
not be awarded by the jury because punitive damages must be supported
by an award of compensatory damages and here the jury awarded only
nominal and punitive damages.
The Jacques argue that both the individual and society have significant
interests in deterring intentional trespass to land, regardless of the lack of
measurable harm that results. We agree with the Jacques.
¶21 We turn first to the individual landowner’s interest in protecting
his or her land from trespass. The United States Supreme Court has
recognized that the private landowner’s right to exclude others from his or
her land is “one of the most essential sticks in the bundle of rights that are
commonly characterized as property.” Dolan v. City of Tigard, 512 U.S.
374, 384 (1994) (quoting Kaiser Aetna v. United States, 444 U.S. 164, 176
(1979)).
¶22 Yet a right is hollow if the legal system provides insufficient
means to protect it. Felix Cohen offers the following analysis summarizing
the relationship between the individual and the state regarding property
rights:

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 [T]hat is property to which the following label can be attached:
To the world:
Keep off X unless you have my permission, which I may grant or withhold.
Signed: Private Citizen
Endorsed: The state

Felix S. Cohen, Dialogue on Private Property, 9 Rutgers L. Rev. 357, 374

(1954). Harvey and Lois Jacque have the right to tell Steenberg Homes
and any other trespasser, “No, you cannot cross our land.” But that right
has no practical meaning unless protected by the State.
¶23 Because a legal right is involved, the law recognizes that actual
harm occurs in every trespass. The law infers some damage from every
direct entry upon the land of another. The law recognizes actual harm in
every trespass to land whether or not compensatory damages are awarded.
¶25 In sum, the individual has a strong interest in excluding trespassers
from his or her land. Although only nominal damages were awarded to the
Jacques, Steenberg’s intentional trespass caused actual harm. We turn next
to society’s interest in protecting private property from the intentional
trespasser.
Society has an interest in punishing and deterring intentional
trespassers beyond that of protecting the interests of the individual
landowner. Society has an interest in preserving the integrity of the legal
system. Private landowners should feel confident that wrongdoers who
trespass upon their land will be appropriately punished. When landowners
have confidence in the legal system, they are less likely to resort to “self-
help” remedies.
¶27 People expect wrongdoers to be appropriately punished. The $30
forfeiture was certainly not an appropriate punishment for Steenberg’s
egregious trespass in the eyes of the Jacques. If punitive damages are not
allowed in a situation like this, what punishment will prohibit the
intentional trespass to land? Moreover, what is to stop Steenberg Homes
from concluding, in the future, that delivering its mobile homes via an
intentional trespass and paying the resulting Class B forfeiture, is not more
profitable than obeying the law? Steenberg Homes plowed a path across
the Jacques’ land and dragged the mobile home across that path, in the
face of the Jacques’ adamant refusal. A $30 forfeiture and a $1 nominal
damage award are unlikely to restrain Steenberg Homes from similar
conduct in the future. An appropriate punitive damage award probably
will.
¶52 Our concern for deterrence is guided by our recognition of the
nature of Steenberg’s business. Steenberg sells and delivers mobile homes.

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It is, therefore, likely that they will again be faced with what was,
apparently for them, a dilemma. Should they trespass and pay the
forfeiture, which in this case was $30? Or, should they take the more
costly course and obey the law? Today we alleviate the uncertainty for
Steenberg Homes. We feel certain that the $100,000 will serve to
encourage the latter course by removing the profit from the intentional
trespass.
¶53 Punitive damages, by removing the profit from illegal activity, can
help to deter such conduct. In order to effectively do this, punitive
damages must be in excess of the profit created by the misconduct so that
the defendant recognizes a loss. It can hardly be said that the $30 forfeiture
paid by Steenberg significantly affected its profit for delivery of the
mobile home. One hundred thousand dollars will.

Notes and Questions

1. How robust is the right to exclude? The Jacques said that the
reason they were reluctant to give Steenberg Homes the right to cross their
land was because they had lost land to adverse possession and wanted to
guard their property rights carefully. Adverse possession is a doctrine that
allows a longtime occupant of someone else’s land to obtain title to it; the
usual case is a border dispute in which both parties mistakenly place the
boundary in a place different from that notated in the deeds to their
parcels. See Chapter 5, §4.2. But permission is a defense to an adverse
possession claim; the Jacques were in little danger of losing any of their
property rights by this neighborly gesture. Should their reasons for
refusing access matter? Suppose the request was to drive the mobile home
over a road on the Jacques’ land, causing no damage to it, and the cost to
the neighbor of using a different route was $15,000 because a structure on
the land had to be removed to bring the mobile home in. Should the
Jacques have an obligation to allow access? Or does their status as owners
give them the absolute power to exclude others from their land regardless
of the reason and regardless of the neighbor’s need?
2. Damages and deterrence. Was the punitive damage award
excessive in Jacque? Or was it necessary to deter future trespasses like
this?

§1.4 Hohfeldian Terminology

What do we mean when we talk about “property rights”? In a highly
influential article published in 1913, Professor Wesley Hohfeld identified

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eight basic kinds of legal rights: four primary legal entitlements (rights,
privileges, powers, and immunities) and their opposites (no-rights, duties,
disabilities, and liabilities). Wesley Hohfeld, Some Fundamental Legal
Conceptions as Applied in Judicial Reasoning, 23 Yale L.J. 16 (1913).
Rights are claims, enforceable by state power, that others act in a certain
manner in relation to the rightholder. Privileges are permissions to act in a
certain manner without being liable for damages to others and without
others being able to summon state power to prevent those acts. Powers are
state-enforced abilities to change legal entitlements held by oneself or
others, and immunities are security from having one’s own entitlements
changed by others.
The four negations or opposites of the primary legal entitlements refer
to the absence of such entitlements. One has no-right if one does not have
the power to summon the aid of the state to alter or control the behavior of
others. Duties refer to the absence of permission to act in a certain manner.
Disabilities are the absence of power to alter legal entitlements, and
liabilities refer to the absence of immunity from having one’s own
entitlements changed by others.
The eight terms are arranged in two tables of correlatives and opposites
that structure the internal relationships among the different fundamental
legal rights.

Hohfeld’s concept of opposites conveys the message that one must

have one or the other but not both of the two opposites. For example, with
regard to any class of acts, one must either have a right that others act in a
certain manner or no right. Similarly, one must have either a privilege to
do certain acts or a duty not to do them.
The concept of correlatives is harder to grasp. Legal rights, according
to Hohfeld, are not merely advantages conferred by the state on
individuals. Any time the state confers an advantage on some citizen, it
necessarily changes the situation of others. Legal rights are not simply
entitlements but jural relations among people. The concept of correlatives
expresses legal relations from the point of view of two parties, though they
can be scaled up to incorporate larger groups. “[I]f X has a right against Y
that he shall stay off the former’s land, the correlative (and equivalent) is

117
that Y is under a duty toward X to stay off the place.” If A has a duty
toward B, then B has a right against A. The expressions are equivalent.
Similarly, privileges are the correlatives of no-rights. “[W]hereas X has a
right or claim that Y, the other man, should stay off the land, he himself
has the privilege of entering on the land; or in equivalent words, X does
not have a duty to stay off.” If A has no duty toward B, A has a privilege to
act and B has no right against A. Thus, if A has the privilege to do certain
acts or to refrain from doing those acts, B is vulnerable to the effects of A’s
actions. B cannot summon the aid of the state to prevent A from acting in
such a manner no matter how A’s actions affect B’s interests.
The concepts identified and systematized by Wesley Hohfeld are
useful in analyzing property rights (and other legal rights) for two reasons.
First, they serve as a reminder that legal rights entail relations among
persons. A’s right not to be harmed in a certain way implies duties on
others not to harm A in that way. A’s privilege to act implies that others
have no right to prevent A from acting and therefore may be vulnerable to
negative effects of A’s actions, so long as A keeps her conduct within the
scope of her privilege. In thinking about legal rights, it is important to
identify (a) who has the entitlement, (b) against which specific individuals
does the entitlement run, and (c) what specific acts are encompassed by the
entitlement.
Second, Hohfeld’s concepts help disentangle bundles of rights into
their constituent parts. For example, the owner of a restaurant has the
privilege of entering the property; non-owners have no right to prevent the
owner from so doing. Does the owner’s privilege to enter also mean that
the owner has the right to exclude non-owners from the property? Yes and
no. We have seen that the owner has the right to exclude patrons for
certain reasons. But (as we will see in the next section) federal civil rights
statutes provide that the owner has no right to exclude patrons on account
of their race; on the contrary, such persons have a privilege to enter the
restaurant and be served. The owner’s privilege to enter does not
necessarily mean that others have a duty not to enter. Both the owner and
the patron have a privilege to enter the restaurant — the owner to run the
place and the patron under an implicit invitation to obtain the service the
owner is offering.

§2 DISCRIMINATION AND ACCESS TO “PLACES

OF PUBLIC ACCOMMODATION”
§2.1 The Antidiscrimination Principle

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 The common law right to exclude (as embodied in the law of trespass)
is subject to modification by statute. The most prominent examples are
prohibitions on owners using certain categorizations (such as race) in
granting or denying access to their properties. Which owners are subject to
civil rights statutes and which groupings receive such statutory protection
are matters of disagreement. Different jurisdictions have reached various
conclusions on both questions, resulting in a complicated mixture of
federal, state and local law.

A. Federal Antidiscrimination Law

Civil Rights Act of 1964, Title II

42 U.S.C. §§2000a, 2000a-6

§2000a. Prohibition Against Discrimination or Segregation in Places
of Public Accommodation
(a) Equal access. All persons shall be entitled to the full and equal
enjoyment of the goods, services, facilities, privileges, advantages, and
accommodations of any place of public accommodation, as defined in this
section, without discrimination or segregation on the ground of race, color,
religion, or national origin.
(b) . . . Each of the following establishments which serves the public is
a place of public accommodation within the meaning of this subchapter if
its operations affect commerce, or if discrimination or segregation by it is
supported by State action:
(1) any inn, hotel, motel, or other establishment which provides
lodging to transient guests, other than an establishment located within a
building which contains not more than five rooms for rent or hire and
which is actually occupied by the proprietor of such establishment as
his residence;
(2) any restaurant, cafeteria, lunchroom, lunch counter, soda
fountain, or other facility principally engaged in selling food for
consumption on the premises, including, but not limited to, any such
facility located on the premises of any retail establishment; or any
gasoline station;
(3) any motion picture house, theater, concert hall, sports arena,
stadium or other place of exhibition or entertainment; and
(4) any establishment (A)(i) which is physically located within the
premises of any establishment otherwise covered by this subsection, or
(ii) within the premises of which is physically located any such covered

119
 establishment, and (B) which holds itself out as serving patrons of such
covered establishments.
(e) Private establishments. The provisions of this subchapter shall not
apply to a private club or other establishment not in fact open to the public,
except to the extent that the facilities of such establishment are made
available to the customers or patrons of an establishment within the scope
of subsection (b) of this section.

§2000a-6. [A]ssertion of Rights Based on Other Federal or State Laws

and Pursuit of Remedies for Enforcement of Such Rights . . .
(b) . . . [N]othing in this subchapter shall preclude any individual or
any State or local agency from asserting any right based on any other
Federal or State law not inconsistent with this subchapter, including any
statute or ordinance requiring nondiscrimination in public establishments
or accommodations, or from pursuing any remedy, civil or criminal, which
may be available for the vindication or enforcement of such right.

Diane Nash (second from left), a leader of the movement to desegregate

the lunch counters of Nashville’s department stores, sits at an integrated
lunch counter.18

Civil Rights Act of 1866

120
 42 U.S.C. §§1981-1982
§1981. Equal Rights Under the Law
(a) Statement of equal rights. All persons within the jurisdiction of the
United States shall have the same right in every State and Territory to
make and enforce contracts, to sue, be parties, give evidence, and to the
full and equal benefit of all laws and proceedings for the security of
persons and property as is enjoyed by white citizens, and shall be subject
to like punishment, pains, penalties, taxes, licenses, and exactions of every
kind, and to no other.
(b) “Make and enforce contracts” defined. For purposes of this
section, the term “make and enforce contracts” includes the making,
performance, modification, and termination of contracts, and the
enjoyment of all benefits, privileges, terms, and conditions of the
contractual relationship.
(c) Protection against impairment. The rights protected by this section
are protected against impairment by nongovernmental discrimination and
impairment under color of State law.

§1982. Property Rights of Citizens

All citizens of the United States shall have the same right, in every
State and Territory, as is enjoyed by white citizens thereof to inherit,
purchase, lease, sell, hold, and convey real and personal property.

Notes and Questions

1. The Civil Rights Act of 1964. The public accommodations
provisions of Title II of the Civil Rights Act of 1964, 42 U.S.C. §§2000a to
2000a-6, directly addressed the problem of racial discrimination in motels,
restaurants, lunch counters in department stores, gas stations, and theaters.
It was intended to rectify some aspects of the enormous problem of racial
segregation in the United States and was passed after a long period of
struggle that included sit-ins, demonstrations, and litigation. Opponents of
the law frequently criticized it as a violation of private property rights. See
Eduardo M. Peñalver & Sonia K. Katyal, Property Outlaws ch. 4 (2010).
Passage of the act was followed by widespread resistance, including
refusals by some public officials to enforce the law. Note that the statute
regulates discrimination only on the basis of race, color, religion, and
national origin. It does not prohibit discrimination on the basis of sex or
sexual orientation. Nor does any other general federal statute regulating
public accommodations.
Title II makes no provision for damages. An injured party may seek a

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court order requiring the defendant to stop discriminating in access to
public accommodations covered by the act but may not seek damages. 42
U.S.C. §2000a-3(a). The plaintiff may be able to recover attorneys’ fees
from the defendant if the plaintiff prevails. §2000a-3(b).
2. The Civil Rights Act of 1866. Unlike the 1964 act, the Civil Rights
Act of 1866, 42 U.S.C. §§1981 to 1982, regulates race discrimination only.
Also, unlike the 1964 public accommodations law, damages are available
for violations of the Civil Rights Act of 1866. Although §1981 was already
in effect at the time the Civil Rights Act of 1964 was passed, it had not yet
been interpreted by the courts to regulate private conduct, such as the
refusal by a restaurant owner to serve a patron. Rather, it was thought in
1964 that §1981 merely regulated state conduct, prohibiting (for example)
state statutes that deprived black citizens of the capacity to enter binding
contracts. In important opinions in 1968 and 1976, the Supreme Court held
that the Civil Rights Act of 1866 applied to private conduct as well as to
legislation passed by state legislatures. Jones v. Alfred Mayer Co., 392
U.S. 409 (1968) (holding that §1982 prohibits discrimination in the market
for selling or leasing real property); Runyon v. McCrary, 427 U.S. 160
(1976) (holding that §1981 prohibits commercially operated, nonreligious
schools from excluding qualified children solely on the basis of race). The
Supreme Court reaffirmed the applicability of the Civil Rights Act of 1866
to private conduct in Patterson v. McLean Credit Union, 491 U.S. 164
(1989). The Civil Rights Act of 1991, Pub. L. No. 102-166, tit. I, §101, 105
Stat. 1071 (1991), amended §1981 for the first time since 1870. This act
approved the Supreme Court’s interpretation of §1981 by providing that
§1981 reaches private conduct, but the act also clarified §1981 by stating
that it regulates the terms and conditions of contracts and not just the
“right to make and enforce” contracts. As you will see in the notes that
follow, courts continue to struggle with questions concerning the proper
relationship between the Civil Rights Act of 1866 and the Civil Rights Act
of 1964.
3. What is a “place of public accommodation”? Is the list of covered
establishments in the 1964 public accommodations law exhaustive or
merely illustrative? See Denny v. Elizabeth Arden Salons, Inc., 456 F.3d
427 (4th Cir. 2006) (holding that the list in §2000a is exhaustive). Accord,
Rhone v. Loomis, 77 N.W. 31 (Minn. 1898) (holding that a state statute
prohibiting discrimination in inns, taverns, restaurants, and places of
“refreshment” did not prohibit a “saloon” from excluding an African
American customer). But see Sellers v. Philip’s Barber Shop, 217 A.2d
121 (N.J. 1966) (interpreting a state public accommodations statute

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providing that public accommodations “shall include” a long list of
business establishments as covering barber shops even though they were
not listed) and In re Cox, 474 P.2d 992 (Cal. 1970) (list of types of
discrimination is illustrative).
Some courts have recently held that the Civil Rights Act of 1866
regulates establishments that are not listed in the 1964 act, such as retail
stores and service establishments, and that such stores may be liable for
damages if they deny the right to contract under §1981 or the right to
purchase property under §1982. See Denny v. Elizabeth Arden Salons, Inc.,
456 F.3d 427 (4th Cir. 2006) (§1981 would be violated if a salon refused
service because it did not “do black people’s hair”); Perry v. Command
Performance, 913 F.2d 99 (3d Cir. 1990) (§1981 may have been violated
when a salon refused to cut the hair of an African American woman);
Watson v. Fraternal Order of Eagles, 915 F.2d 235, 240 (6th Cir. 1990)
(noting that a “department store . . . is not directly covered by Title II but
would be amenable to suit under §1981”); Washington v. Duty Free
Shoppers, Ltd., 710 F. Supp. 1288 (N.D. Cal. 1988) (§1981 prohibits retail
store from refusing to serve customers because of race).
The Supreme Court has never addressed the question of whether the
Civil Rights Act of 1866 regulates the conduct of public accommodations
such as restaurants, innkeepers, or retail stores. Although the refusal to
serve a patron because of that person’s race arguably comes within the
language of both §1981 and §1982, it is important to know that a public
accommodations law, much like the 1964 act, was passed in 1875. After
doubts were expressed about the constitutionality of the Civil Rights Act of
1866, it was re-passed in 1870 after passage of the fourteenth amendment
in 1868 with its prohibition against state deprivations of “equal protection
of the laws.” U.S. Const. art. XIV. Five years later, Congress passed the
Public Accommodations Act of 1875, 18 Stat. 335, ch. 114, clearly
regulating private actors. The Supreme Court struck down the Public
Accommodations Act as unconstitutional in The Civil Rights Cases, 109
U.S. 3 (1883), on the ground that the fourteenth amendment authorized
Congress to regulate state action but not private action by owners of
private property, such as inns and restaurants. If the Civil Rights Act of
1866 regulates the conduct of public accommodations, wouldn’t this have
made the 1875 statute superfluous and unnecessary? If §1981 or §1982
regulates public accommodations, why did Congress pass the 1875 statute?
Because of the holding of The Civil Rights Cases that the fourteenth
amendment authorizes regulation of state action but not private action,
Congress passed the Civil Rights Act of 1964 pursuant to the commerce
clause, which authorizes Congress to regulate “interstate commerce.” See

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Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241 (1964);
Katzenbach v. McClung, 379 U.S. 294 (1964) (both upholding the act as a
valid exercise of Congress’s power to regulate interstate commerce).
Remember that the Civil Rights Act of 1866 was not interpreted to apply to
private conduct until 1968. But what private conduct is regulated by
§§1981 and 1982? Can you think of a reason §§1981 and 1982 should be
interpreted to regulate public accommodations when Congress passed a
more specific statute regulating them in 1964 — a statute that clearly omits
any provision for damages?
4. Racially discriminatory surveillance. The courts appear to agree
that the “right to make contracts” under §1981 includes the right to enter a
store or other service provider. Causey v. Sewell Cadillac-Chevrolet, Inc.,
394 F.3d 285 (5th Cir. 2004); Christian v. Wal-Mart Stores, Inc., 252 F.3d
862 (6th Cir. 2001); Ackaa v. Tommy Hilfiger, 1998 WL 136522 (E.D. Pa.
1998). Can you think of a way to interpret the language or purpose of
§1981 in a way that would not view it as creating an obligation to allow
individuals to enter retail stores to purchase goods or services? Assuming
§1981 does require stores to allow individuals to enter without regard to
race, does §1981 prohibit stores from discriminatorily following African
American, Latino, or American Indian patrons around the store, searching
them, and subjecting them to insults?
A minority of courts hold that such conduct violates the right to
contract under §1981 and/or the right to purchase personal property under
§1982. Chapman v. Higbee, 319 F.3d 825 (6th Cir. 2003) (equal benefits
clause in §1981 gives right to equal treatment in seeking contract); Phillip
v. University of Rochester, 316 F.3d 291 (2d Cir. 2003) (equal benefits
clause of §1981 applies to private university whose security guards
detained African American students but not their white friends in library
lobby, calling police who arrested them and kept them detained overnight);
McCaleb v. Pizza Hut of America, Inc., 28 F. Supp. 2d 1043 (N.D. Ill.
1998) (family denied “full benefits” of the contract when denied utensils
and harassed and threatened while at restaurant); Nwakpuda v. Falley’s,
Inc., 14 F. Supp. 2d 1213 (D. Kan. 1998) (§1981 claim for store patron
who was wrongfully detained because he was thought to be individual who
had previously robbed the store); Turner v. Wong, 832 A.2d 340 (N.J.
Super. Ct. App. Div. 2003).
However, most courts have interpreted the “right to make contracts”
extremely narrowly, holding that this right is denied only when a patron is
“actually prevented, and not merely deterred, from making a purchase or
receiving service after attempting to do so.” Ackerman v. Food-4-Less,

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1998 WL 316084, at *2 (E.D. Pa. 1988). Accord, Hampton v. Dillard
Department Stores, Inc., 247 F.3d 1091 (10th Cir. 2001). These courts
have denied relief when a patron was treated disrespectfully or refused
assistance, Arguello v. Conoco, Inc., 330 F.3d 355 (5th Cir. 2003) (no
§1981 claim when clerk shouted obscenities and made racially derogatory
remarks at Latino customer after she completed her purchase); Wesley v.
Don Stein Buick, Inc., 42 F. Supp. 2d 1192 (D. Kan. 1999); subjected to
discriminatory surveillance, searches, or detention, Gregory v. Dillard’s
Inc., 565 F.3d 464 (8th Cir. 2009) (no §1981 violation when store
employees follow African Americans around the store and stand guard
outside changing rooms when such customers try on clothes); Morris v.
Office Max, Inc., 89 F.3d 411 (7th Cir. 1996); removed from a store for
discriminatory reasons after making a purchase, Flowers v. TJX Cos., 1994
WL 382515 (N.D.N.Y. 1994); or put under surveillance and accused of
shoplifting after purchasing items and leaving the store, Garrett v. Tandy
Corp., 295 F.3d 94 (1st Cir. 2002). Are these decisions consistent with the
intent of the Civil Rights Act of 1991? Which interpretation of §1981 is
correct?
5. Private clubs. What is the difference between a public
accommodation and a private club? Courts generally look to see whether
the organization is selective in its membership and has limits on the
number of persons who can join. If the selection criteria track a statutory
category, it is unlikely the group will be held to be a private club. A group
that is limited to men, but has no other selection criteria and is unlimited in
size, is likely to be held to be a public accommodation that is violating the
law rather than a selective private club. Does it matter whether the
organization is engaged in the sale of goods or services?
In Watson v. Fraternal Order of Eagles, 915 F.2d 235 (6th Cir. 1990),
a private club was held to have violated §1981 when it refused to serve
drinks to African American guests at a party held at the club. Because
defendant was clearly a private club under 42 U.S.C. §2000a(e), its actions
were not covered by the 1964 act. Nonetheless, Judge Merritt held that,
although the defendant was immune from liability under that act, the
plaintiff could bring an independent claim for relief under §1981. He noted
that later, more specific statutes generally limit the interpretation of earlier,
more general ones. Nonetheless, the earlier, broader statute continues in
force if the legislature that passed the later act intended the general act to
retain independent force.
However, in Cornelius v. Benevolent Protective Order of the Elks, 382
F. Supp. 1182 (D. Conn. 1974), Judge Blumenfeld held that an irrevocable

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conflict between a statute that authorizes conduct and one that prohibits it
must be adjudicated by applying the later act. Thus §1981 could not be
applied to a private club. Judge Blumenfeld argued that “the provisions of
one statute which specifically focus on a particular problem will always, in
the absence of express contrary legislative intent, be held to prevail over
provisions of a different statute more general in its coverage.” Id. at 1201.
Moreover, when Congress passed the 1964 act, it believed it was enacting
the first federal legislation prohibiting private discrimination in public
accommodations. “Prior to Jones v. Mayer, 392 U.S. 409 (1968), sections
1981 and 1982 were thought to apply only to ‘state action.’ . . . Thus, the
absence of express language in the 1964 Act limiting the 1866 Act is
hardly evidence of an intention not to have that effect.” Id. Accord,
Durham v. Red Lake Fishing & Hunting Club, Inc., 666 F. Supp. 954
(W.D. Tex. 1987). Should Congress’s intent in 1964 with respect to the
reach of Title II have decisive bearing on the proper interpretation of the
1866 law? Can you think of an argument that it should? That it should not?
6. Common carriers. Common carriers engaged in interstate
commerce are regulated by the Interstate Commerce Act and are prohibited
from all forms of unreasonable discrimination, not just discrimination
based on race, religion, and national origin. 49 U.S.C. §§10741(b),
11101(a).
7. Unequal treatment and exclusion through “vibes.” Civil rights
laws require more than bare admission. They protect the rights of protected
groups to equal treatment once admitted. A recent opinion of the
Massachusetts Commission Against Discrimination, for example, found
that a restaurant owner violated Massachusetts antidiscrimination law by
requiring a black customer (who turned out to be an undercover police
officer) to pay before receiving his food while not demanding payment in
advance from the officer’s white colleagues (who were also undercover).
See Massachusetts Commission Against Discrimination v. Capitol Coffee
House, No. 05-BPA-03196, Apr. 26, 2013.
Lior Strahilevitz has observed that owners often use indirect strategies
to deter certain classes of people from even trying to enter an
establishment. He describes owners who create “exclusionary vibes”
(making people feel unwelcome by creating an environment unlikely to
appeal to them) and “exclusionary amenities” (making people less likely to
seek entry by bundling a product — say, housing in a particular
community — with a product that members of a particular racial group are
unlikely to want to consume — e.g., mandatory membership in a
community golf club). See Lior Jacob Strahilevitz, Information

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Asymmetries and the Rights to Exclude, 104 Mich. L. Rev. 1835, 1843
(2006); Lior Jacob Strahilevitz, Exclusionary Amenities in Residential
Communities, 92 Va. L. Rev. 437 (2006). One bar in New York City, for
example, has been investigated by the New York Human Rights
Commission for enforcing a “no baggy jeans, no bling” dress code. See
Douglas Quenqua, Dress Codes in New York Clubs: Will This Get Me In?,
N.Y. Times, July 27, 2011, at E-1. Would it violate the federal public
accommodations law, 42 U.S.C. §2000a, to call a sports arena Redskins
Stadium? See Note, A Public Accommodations Challenge to the Use of
Indian Team Names and Mascots in Professional Sports, 112 Harv. L.
Rev. 904 (1999) (arguing that it would). If it would violate the statute,
does the first amendment’s guarantee of free speech override the statute?
Should the court hold that a statute that prohibits an owner from using the
name Redskins is unconstitutional? Compare Urban League of Rhode
Island v. Sambo’s of Rhode Island, Inc., File Nos. 79 PRA 074-06/06, 79
ERA 073-06/06, EEOC No. 011790461 (R.I. Commn. for Human Rights
1981) (restaurant violated state public accommodations law by using
racially offensive name), with Sambo’s Restaurants, Inc. v. City of Ann
Arbor, 663 F.2d 686 (6th Cir. 1981) (holding that the first amendment’s
free speech clause protected the right to use the name Sambo’s). What
about a Ku Klux Klan themed restaurant with a white hooded mannequin
inside and signs in front that make frequent use of racial epithets? See
Larry Keller, What’s on the Menu at Georgia Eatery? A Racist Slur,
Again, Oct. 14, 2009,
https://www.splcenter.org/hatewatch/2009/10/14/whats-menu-georgia-
eatery-racist-slur-again (last visited July 6, 2016).

Problems
1. Buzzers. Some stores in New York City lock their front doors and
allow customers in after they have pressed a buzzer. The ostensible goal is
to protect the store from armed robbery and other forms of theft and
assault. Store owners and managers use the buzzer system to exclude
selected members of the public from access to their stores. If a store
installs a lock-and-buzzer system and allows entry only to patrons who the
management or employees consider “safe,” does the store come within the
definition of a “place of public accommodation” under §2000a(b), or is it a
“private establishment not in fact open to the public” under §2000a(e)?
Are retail stores “places of public accommodation” as defined in
§2000a(b)? If retail stores are generally covered by §2000a(b), do they
“serve the public” if they install a buzzer and serve selected customers

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who show up on their doorsteps, or are they “not in fact open to the
public” and thus exempt from the statute under §2000a(e)?
2. National origin discrimination. A night club in Boston that serves
liquor requires all patrons to show a driver’s license to prove they are over
21. The club refuses to allow a law student in when he shows his Puerto
Rican driver’s license on the (incorrect) ground that it is not a U.S. license.
Has the club engaged in national origin discrimination in violation of the
Civil Rights Act of 1964? What about a restaurant that refuses to serve
patrons who cannot order in English?

B. State and Local Laws

New York Executive Law, Art. 15

§292 Definitions
9. The term “place of public accommodation, resort or amusement”
shall include, except as hereinafter specified, all places included in the
meaning of such terms as: inns, taverns, road houses, hotels, motels,
whether conducted for the entertainment of transient guests or for the
accommodation of those seeking health, recreation or rest, or restaurants,
or eating houses, or any place where food is sold for consumption on the
premises; buffets, saloons, barrooms, or any store, park or enclosure where
spirituous or malt liquors are sold; ice cream parlors, confectionaries, soda
fountains, and all stores where ice cream, ice and fruit preparations or their
derivatives, or where beverages of any kind are retailed for consumption
on the premises; wholesale and retail stores and establishments dealing
with goods or services of any kind, dispensaries, clinics, hospitals, bath-
houses, swimming pools, laundries and all other cleaning establishments,
barber shops, beauty parlors, theatres, motion picture houses, airdromes,
roof gardens, music halls, race courses, skating rinks, amusement and
recreation parks, trailer camps, resort camps, fairs, bowling alleys, golf
courses, gymnasiums, shooting galleries, billiard and pool parlors; garages,
all public conveyances operated on land or water or in the air, as well as
the stations and terminals thereof; travel or tour advisory services,
agencies or bureaus; public halls and public elevators of buildings and
structures occupied by two or more tenants, or by the owner and one or
more tenants. Such term shall not include . . . any institution, club or place
of accommodation which proves that it is in its nature distinctly private. In
no event shall an institution, club or place of accommodation be
considered in its nature distinctly private if it has more than one hundred

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members, provides regular meal service and regularly receives payment
for dues, fees, use of space, facilities, services, meals or beverages directly
or indirectly from or on behalf of a nonmember for the furtherance of trade
or business.

§296 Unlawful Discriminatory Practices

2. (a) It shall be an unlawful discriminatory practice for any person,
being the owner, lessee, proprietor, manager, superintendent, agent or
employee of any place of public accommodation, resort or amusement,
because of the race, creed, color, national origin, sexual orientation,
military status, sex, or disability or marital status of any person, directly or
indirectly, to refuse, withhold from or deny to such person any of the
accommodations, advantages, facilities or privileges thereof, including the
extension of credit, or, directly or indirectly, to publish, circulate, issue,
display, post or mail any written or printed communication, notice or
advertisement, to the effect that any of the accommodations, advantages,
facilities and privileges of any such place shall be refused, withheld from
or denied to any person on account of race, creed, color, national origin,
sexual orientation, military status, sex, or disability or marital status, or
that the patronage or custom thereat of any person of or purporting to be of
any particular race, creed, color, national origin, sexual orientation,
military status, sex or marital status, or having a disability is unwelcome,
objectionable or not acceptable, desired or solicited.

Notes and Questions

1. Relation between federal and state public accommodations laws.
The federal public accommodations law was passed in 1964 as Title II of
the Civil Rights Act. The statute applies across the country and, under the
supremacy clause of the Constitution, prevails over any contrary state
law.19 Most states have also adopted public accommodations laws that
apply within their borders. State statutes that are inconsistent with federal
statutes are “preempted” by federal law and are unenforceable; state
statutes not inconsistent with federal law are enforceable. State statutes
and constitutional provisions may therefore go further than federal law in
protecting individual rights. Is Article 15 of the New York Executive Law
more protective than Title II?
For example, many state and local statutes prohibit discrimination in
places of public accommodation on account of sex and sexual orientation;
the federal statute, in contrast, does not prohibit discrimination in access to
public places on either ground. State statutes may also be worded

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differently from the federal statute; they may therefore apply to more kinds
of property or to more types of discriminatory acts than does federal law.
Even when the wording in state and federal statutes is identical, the state
statute may be interpreted by a state court to grant more protection against
discrimination than does federal law. Because statutory interpretation
involves interpreting the intent of the legislature, a state court could
conclude from the context surrounding passage of the state law that the
legislature intended to grant greater protection than did Congress when it
passed the federal statute.
2. Dale v. Boy Scouts of America. Courts have reached different
results in considering whether state public accommodations statutes apply
to membership organizations like the Boy Scouts or Jaycees that do not
have a fixed place of operations. Compare Dale v. Boy Scouts of America,
734 A.2d 1196 (N.J. 1999), rev’d on other grounds sub nom. Boy Scouts of
America v. Dale, 530 U.S. 640 (2000); Quinnipiac Council, Boy Scouts of
America, Inc. v. Commission on Human Rights & Opportunities, 528 A.2d
352 (Conn. 1987) (both holding that the Boy Scouts is a public
accommodation) and United States Jaycees v. McClure, 305 N.W.2d 764
(Minn. 1981), aff’d sub nom. Roberts v. United States Jaycees, 468 U.S.
609 (1984) (Jaycees held to be a “public accommodation”) with United
States Jaycees v. Massachusetts Commission Against Discrimination, 463
N.E.2d 1151 (Mass. 1984) (holding Jaycees not to be a place of public
accommodation).
In Dale v. Boy Scouts of America, the New Jersey Supreme Court
considered whether the Boy Scouts of America had violated New Jersey’s
law by excluding James Dale solely because of his sexuality. Dale was an
“exemplary scout,” earning over 25 merit badges, being honored as an
Eagle Scout, then serving as an Assistant Scoutmaster. When he went
away to college, he first acknowledged to himself and his friends and
family that he was gay. After a local paper interviewed him as the “co-
president of the Rutgers University Lesbian/Gay Alliance,” Dale received
a letter from the Boy Scouts Executive Office revoking his membership
and asking him to “sever any relations [he] may have with the Boy Scouts
of America.” He was later told that the Boy Scouts did not “admit avowed
homosexuals to membership.”
Dale challenged the exclusion under New Jersey’s Law Against
Discrimination (LAD), which provides that “all persons shall have the
opportunity . . . to obtain all the accommodations, advantages, facilities,
and privileges of any place of public accommodation, . . . without
discrimination because of . . . affectional or sexual orientation.” N.J. Stat.

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§10:5-4. The New Jersey Supreme Court found that “place” was a “term of
convenience, not of limitation.” 734 A.2d at 1209. The court reasoned that
any ambiguities should be decided in favor of broad application because
the statute itself provided that it should be “liberally construed.” Id. at
1208. Considering factors such as the Boy Scouts’ broad solicitations to
the public, its close relationships with federal government, schools, and
other public accommodations, as well as its similarity to other
organizations recognized as public accommodations, the court found that
the organization was covered under the statute. The court also rejected the
organization’s claim that it was excluded as a “bona fide club, or place of
accommodation, which is in its nature distinctly private,” N.J. Stat. §10:5-
5l, noting that it had over four million boys and one million adults as
members at the time. The court then found that the Boys Scouts of
America had denied Dale the privilege and advantage of being an
Assistant Scoutmaster because of his sexuality, and had thereby violated
the state law.
The U.S. Supreme Court reversed Dale in a 5-4 decision on the ground
that prohibiting the Boy Scouts from excluding gay Scouts violated the
first amendment’s protections for freedom of association. Boy Scouts of
America v. Dale, 530 U.S. 640 (2000). Writing for the Court, Chief Justice
Rehnquist noted that the Boy Scouts “engaged in instilling its system of
values in young people” and “that homosexual conduct is inconsistent with
the values it seeks to instill.” Id. at 643. “The forced inclusion of an
unwanted person in a group infringes the group’s freedom of expressive
association if the presence of that person affects in a significant way the
group’s ability to advocate public or private viewpoints.” Id. at 648.
Although the Supreme Court of New Jersey had concluded that “New
Jersey has a compelling interest in eliminating ‘the destructive
consequences of discrimination from our society,’ ” the Supreme Court
found that the “state interests embodied in New Jersey’s public
accommodations law do not justify such a severe intrusion on the Boy
Scouts’ rights to freedom of expressive association.” Id. at 647, 659.
In dissent, Justice Stevens questioned whether instilling the
wrongfulness of homosexuality was really part of the Scouts’ expressive
purpose. He noted that nothing in the Scout Oath or Law “says the
slightest thing about homosexuality” and Scoutmasters are directed “not
[to] undertake to instruct Scouts, in any formalized manner, in the subject
of sex and family life. The reasons are that it is not construed to be
Scouting’s proper area, and that you are probably not well qualified to do
this.” Id. at 669. Although the Boy Scouts issued policy statements on the
question, nothing on homosexuality was placed in the Boy Scout or

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Scoutmaster Handbook. “[N]o lessons were imparted to Scouts; no change
was made to BSA’s policy on limiting discussion of sexual matters; and no
effort was made to restrict acceptable religious affiliations to those that
condemn homosexuality. In short, there is no evidence that this view was
part of any collective effort to foster beliefs about homosexuality.” Id. at
675. He criticized the majority for giving deference to the Boy Scouts’
assertions regarding the nature of its expression. “To prevail in asserting a
right of expressive association as a defense to a charge of violating an
antidiscrimination law, the organization must at least show it has adopted
and advocated an unequivocal position inconsistent with a position
advocated or epitomized by the person whom the organization seeks to
exclude.” Id. at 687.
3. Evaluating the revised Boy Scouts of America policy under
Article 15 of the New York Executive Law. In 2013, the Boy Scouts of
America adopted a new policy admitting gay scouts but continuing to bar
gay adults from staff and leadership positions. In the resolution adopting
its new policy, the Boy Scouts made the following statement: “[T]he Boy
Scouts of America does not have an agenda on the matter of sexual
orientation, and resolving this complex issue is not the role of the
organization, nor may any member use Scouting to promote or advance
any social or political position or agenda.” An Eagle Scout in New York
turns 18 but is prohibited from becoming an Assistant Scoutmaster under
the policy; he challenges it under Article 15 of the New York Executive
Law, above. Should the New York courts find that the Boy Scouts are
covered by the law? Would enforcing the New York law against the group
violate its first amendment rights as articulated by the Supreme Court in
Dale?
4. Gender discrimination. A health club for women refuses to admit a
man for membership in New York City. Has it violated Article 15 of the
New York Executive Law? Compare LivingWell (North) Inc. v.
Pennsylvania Human Relations Commission, 606 A.2d 1287 (Pa. Commw.
Ct. 1992) (suggesting no), with Foster v. Back Bay Spas, Inc., 1997 WL
634354 (Mass. Super. Ct. 1997) (suggesting yes).
5. Public accommodations and same-sex weddings. In the wake of
judicial decisions and legislative enactments recognizing same-sex
marriage, the owners of some businesses that provide wedding-related
services refused on religious grounds to extend their services to same-sex
couples seeking to wed. In one New Mexico case, Vanessa Willock
contacted the Elane Photography studio to determine whether it would be
available to photograph her commitment ceremony to another woman. The

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owner of Elane Photography informed Willock that the studio would only
photograph “traditional weddings.” Willock filed a complaint with the
New Mexico Human Rights Commission, arguing that Elane
Photography’s refusal to photograph same-sex commitment ceremonies
discriminated against Willock on the basis of sexual orientation, in
violation of New Mexico public accommodations law. New Mexico’s
Human Rights Act prohibits discrimination on the basis of (among other
categories) sexual orientation in any “public accommodation,” which the
act defines as “any establishment that provides or offers its services,
facilities, accommodations or goods to the public.” N.M. Stat. Ann. §28-1-
2(H) (2007). Elane argued that it should not be treated a “place of public
accommodation” within the meaning of New Mexico’s antidiscrimination
law because of the expressive and artistic nature of the photographer’s
services. By forcing the photographer to speak, Elane argued, New
Mexico’s antidiscrimination laws violated Elane’s first amendment speech
rights. Elane also argued that its policy did not discriminate on the basis of
sexual orientation because the studio was willing to photograph gay and
lesbian individuals in contexts other than same-sex weddings. The New
Mexico courts rejected both of these arguments. See Elane Photography,
L.L.C. v. Willock, 309 P.3d 53 (N.M. 2013). Do you agree that businesses
like photographers should not be treated as “public accommodations” for
the purposes of civil rights statutes? If so, how much expression is
necessary to remove an occupation from the “public accommodation”
category? Would a florist qualify as sufficiently expressive? A baker? An
invitation printer? If a baker refuses to decorate a bible-shaped cake with a
message disapproving of homosexuality, does it discriminate against the
Christian man who ordered the cake on the basis of his religion? If you
were a lawyer for the baker, how might you distinguish the two cases?
In response to controversies like the Willock case, several states have
enacted statutes that attempt to shield from liability religiously motivated
businesses that refuse a service where the business owner believes that
providing the service would constitute a substantial burden on her free
exercise of religion. See, e.g., Ark. Acts of 2015, Act. 975; Ind. P.L. 3-
2015, S.E.A. No. 101; Miss. Laws 2016, H.B. 1523. The laws take various
forms. Some, such as the law in Arkansas, prohibit any state action that
“substantially burden[s] a person’s right to exercise of religion,” with state
action defined to include “the implementation or application any law,” a
definition that includes state and local antidiscrimination laws. See, e.g.,
Ark. Acts of 2015, Act. 975. In contrast, the Mississippi law singles out
views about same-sex marriage for special legal protection. See Miss.
Laws 2016, H.B. 1523. As of the time of this printing, the Mississippi law

133
has been struck down as unconstitutional. See Barber v. Bryant, ___ F.
Supp. 3d ___, 2016 WL 3562647 (June 30, 2016).

Problems
1. A 300-person country club has a “balanced” membership policy
with no criteria for admission except that the club seeks to maintain an
even balance of Christians and non-Christians (primarily Jews, but also a
few Muslims). A club member must sponsor a prospective member.
Anyone wanting to become a member of the club must find one person in
the club willing to invite him or her to join. Applications are marked
according to whether the applicant is a Jew, a Christian, a Muslim, or the
member of another faith. Nonmembers are allowed to dine at the club only
if accompanied by members. Members pay for the drinks and meals
consumed by themselves or their guests on a quarterly basis. A Jewish
man seeks to become a member but cannot because there is a two-year
waiting list for Jews seeking membership. The only spots currently open
are earmarked for Christians. Does he have a legal claim under Title II?
Under Article 15 of the New York Executive Law? See Mill River Club,
Inc. v. New York State Division of Human Rights, 59 A.D.3d 549 (2d Dept.
2009) (finding a claim under New York law).
2. Restroom facilities for transgender persons. A restaurant has two,
multiple occupancy bathrooms, one designated for men and one for
women. A transgender woman attempts to enter the women’s bathroom,
but the restaurant’s manager stops her, telling her that she must use the
bathroom corresponding to her gender at birth. When she resists using the
men’s room, the manager offers to let her use a single-occupancy
bathroom normally reserved for restaurant staff. The restaurant is located
in a town and state that (like federal law) do not treat sexual orientation or
gender identity as protected categories under their antidiscrimination laws,
but that requires “equal service” on the basis of “sex” in all “places of
public accommodation,” a category that includes “restaurants.” The
transgender patron files a complaint with the state’s human rights
commission, alleging that the restaurant’s manager has violated the state’s
human rights law. Has the restaurant violated the law? Could she have
filed a federal claim as well?

§2.2 Discrimination Against Persons with Disabilities

The Americans with Disabilities Act (ADA), passed in 1990, and
substantially amended in 2008, is one of the most important pieces of civil

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rights legislation approved by Congress since the Civil Rights Act of 1964.
It differs in important respects from the prior civil rights laws. First, the
broad diversity of disabilities it covers necessarily adds an enormous
amount of complexity to the statute’s operation. Second, while the statute
superficially resembles those earlier statutes by prohibiting discrimination
on the basis of disability in both employment and public accommodations,
it defines discrimination to include the failure to take affirmative steps to
facilitate access by the disabled. See 28 C.F.R. §§36.101 to 36.608; 42
U.S.C. §12183, 28 C.F.R. §§36.301 to 36.406.20 What is required to
comply with this mandate varies with the circumstances, such as whether
the facility was in existence at the time the statute went into effect or was
built after its enactment. The Justice Department has promulgated
regulations implementing the statute and clarifying the scope of the
obligations imposed on businesses, including modification of physical
premises, policies, and practices. See 28 C.F.R. §§36.301-36.311.

Americans with Disabilities Act of 1990, Title III — Public

Accommodations and Services Operated by Private Entities

42 U.S.C. §§12102, 12181-12183, 12187, 12201, 12210, 12211

§12102. Definition of Disability

As used in this chapter:
(1) Disability. — The term “disability” means, with respect to an
individual —
(A) a physical or mental impairment that substantially limits one or
more major life activities of such individual;
(B) a record of such an impairment; or
(C) being regarded as having such an impairment (as described in
paragraph (3)).
(2) Major life activities. —
(A) In general. — For purposes of paragraph (1), major life
activities include, but are not limited to, caring for oneself, performing
manual tasks, seeing, hearing, eating, sleeping, walking, standing,
lifting, bending, speaking, breathing, learning, reading, concentrating,
thinking, communicating, and working.
(B) Major bodily functions. — For purposes of paragraph (1), a
major life activity also includes the operation of a major bodily
function, including but not limited to, functions of the immune system,
normal cell growth, digestive, bowel, bladder, neurological, brain,

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 respiratory, circulatory, endocrine, and reproductive functions.
(3) Regarded as having such impairment. — For purposes of paragraph
(1)(C):
(A) An individual meets the requirement of “being regarded as
having such an impairment” if the individual establishes that he or she
has been subjected to an action prohibited under this Act because of an
actual or perceived physical or mental impairment whether or not the
impairment limits or is perceived to limit a major life activity.
(B) Paragraph (1)(C) shall not apply to impairments that are
transitory and minor. A transitory impairment is an impairment with an
actual or expected duration of 6 months or less.

§12181. Definitions
(7) Public accommodation. — The following private entities are
considered public accommodations for purposes of this title, if the
operations of such entities affect commerce —
(A) an inn, hotel, motel, or other place of lodging, except for an
establishment located within a building that contains not more than five
rooms for rent or hire and that is actually occupied by the proprietor of
such establishment as the residence of such proprietor;
(B) a restaurant, bar, or other establishment serving food or drink;
(C) a motion picture house, theater, concert hall, stadium, or other
place of exhibition or entertainment;
(D) an auditorium, convention center, lecture hall, or other place of
public gathering;
(E) a bakery, grocery store, clothing store, hardware store, shopping
center, or other sales or rental establishment;
(F) a laundromat, dry-cleaner, bank, barber shop, beauty shop, travel
service, shoe repair service, funeral parlor, gas station, office of an
accountant or lawyer, pharmacy, insurance office, professional office
of a health care provider, hospital or other service establishment;
(G) a terminal, depot, or other station used for specified public
transportation;
(H) a museum, library, gallery, or other place of public display or
collection;
(I) a park, zoo, amusement park, or other place of recreation;
(J) a nursery, elementary, secondary, undergraduate, or postgraduate
private school, or other place of education;
(K) a day care center, senior citizen center, homeless shelter, food
bank, adoption agency, or other social service center establishment;

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 and
(L) a gymnasium, health spa, bowling alley, golf course, or other
place of exercise or recreation.
(9) Readily achievable. — The term “readily achievable” means easily
accomplishable and able to be carried out without much difficulty or
expense. In determining whether an action is readily achievable, factors to
be considered include —
(A) the nature and cost of the action needed under this chapter;
(B) the overall financial resources of the facility or facilities
involved in the action; the number of persons employed at such
facility; the effect on expenses and resources, or the impact otherwise
of such action upon the operation of the facility;
(C) the overall financial resources of the covered entity; the overall
size of the business of a covered entity with respect to the number of its
employees; the number, type, and location of its facilities; and
(D) the type of operation or operations of the covered entity,
including the composition, structure, and functions of the workforce of
such entity; the geographic separateness, administrative or fiscal
relationship of the facility or facilities in question to the covered entity.

§12182. Prohibition of Discrimination by Public Accommodations

(a) General rule. — No individual shall be discriminated against on the
basis of disability in the full and equal enjoyment of the goods, services,
facilities, privileges, advantages, or accommodations of any place of
public accommodation by any person who owns, leases (or leases to), or
operates a place of public accommodation.
(b) Construction
(1) General prohibition
(A) Activities
(i) Denial of participation. It shall be discriminatory to subject an
individual or class of individuals on the basis of a disability or
disabilities of such individual or class, directly, or through
contractual, licensing, or other arrangements, to a denial of the
opportunity of the individual or class to participate in or benefit from
the goods, services, facilities, privileges, advantages, or
accommodations of an entity.
(ii) Participation in unequal benefit. It shall be discriminatory to
afford an individual or class of individuals, on the basis of a
disability or disabilities of such individual or class, directly, or
through contractual, licensing, or other arrangements with the

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 opportunity to participate in or benefit from a good, service, facility,
privilege, advantage, or accommodation that is not equal to that
afforded to other individuals.
(iii) Separate benefit. It shall be discriminatory to provide an
individual or class of individuals, on the basis of a disability or
disabilities of such individual or class, directly, or through
contractual, licensing, or other arrangements with a good, service,
facility, privilege, advantage, or accommodation that is different or
separate from that provided to other individuals, unless such action is
necessary to provide the individual or class of individuals with a
good, service, facility, privilege, advantage, or accommodation, or
other opportunity that is as effective as that provided to others.
(iv) Individual or class of individuals. For purposes of clauses (i)
through (iii) of this subparagraph, the term “individual or class of
individuals” refers to the clients or customers of the covered public
accommodation that enters into the contractual, licensing or other
arrangement.
(B) Integrated settings. Goods, services, facilities, privileges,
advantages, and accommodations shall be afforded to an individual
with a disability in the most integrated setting appropriate to the needs
of the individual.
(C) Opportunity to participate. Notwithstanding the existence of
separate or different programs or activities provided in accordance with
this section, an individual with a disability shall not be denied the
opportunity to participate in such programs or activities that are not
separate or different.
(D) Administrative methods. An individual or entity shall not,
directly or through contractual or other arrangements, utilize standards
or criteria or methods of administration —
(i) that have the effect of discriminating on the basis of disability;
or
(ii) that perpetuate the discrimination of others who are subject to
common administrative control.
(E) Association. It shall be discriminatory to exclude or otherwise
deny equal goods, services, facilities, privileges, advantages,
accommodations, or other opportunities to an individual or entity
because of the known disability of an individual with whom the
individual or entity is known to have a relationship or association.
(2) Specific prohibitions
(A) Discrimination. — For purposes of subsection (a) of this section,

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 discrimination includes —
(i) the imposition or application of eligibility criteria that screen
out or tend to screen out an individual with a disability or any class
of individuals with disabilities from fully and equally enjoying any
goods, services, facilities, privileges, advantages, or
accommodations, unless such criteria can be shown to be necessary
for the provision of the goods, services, facilities, privileges,
advantages, or accommodations being offered;
(ii) a failure to make reasonable modifications in policies,
practices, or procedures, when such modifications are necessary to
afford such goods, services, facilities, privileges, advantages, or
accommodations to individuals with disabilities, unless the entity can
demonstrate that making such modifications would fundamentally
alter the nature of such goods, services, facilities, privileges,
advantages, or accommodations;
(iii) a failure to take such steps as may be necessary to ensure that
no individual with a disability is excluded, denied services,
segregated or otherwise treated differently than other individuals
because of the absence of auxiliary aids and services, unless the
entity can demonstrate that taking such steps would fundamentally
alter the nature of the good, service, facility, privilege, advantage, or
accommodation being offered or would result in an undue burden;
(iv) a failure to remove architectural barriers, and communication
barriers that are structural in nature, in existing facilities, and
transportation barriers in existing vehicles and rail passenger cars
used by an establishment for transporting individuals (not including
barriers that can only be removed through the retrofitting of vehicles
or rail passenger cars by the installation of a hydraulic or other lift),
where such removal is readily achievable; and
(v) where an entity can demonstrate that the removal of a barrier
under clause (iv) is not readily achievable, a failure to make such
goods, services, facilities, privileges, advantages, or accommodations
available through alternative methods if such methods are readily
achievable.
(3) Specific construction
Nothing in this subchapter shall require an entity to permit an
individual to participate in or benefit from the goods, services, facilities,
privileges, advantages and accommodations of such entity where such
individual poses a direct threat to the health or safety of others. The term
“direct threat” means a significant risk to the health or safety of others that

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cannot be eliminated by a modification of policies, practices, or procedures
or by the provision of auxiliary aids or services.

§12183. New Construction and Alterations in Public

Accommodationsand Commercial Facilities
(a) Application of term. Except as provided in subsection (b) of this
section, as applied to public accommodations and commercial facilities,
discrimination for purposes of section 12182(a) of this title includes —
(1) a failure to design and construct facilities for first occupancy
later than 30 months after July 26, 1990, that are readily accessible to
and usable by individuals with disabilities, except where an entity can
demonstrate that it is structurally impracticable to meet the
requirements of such subsection in accordance with standards set forth
or incorporated by reference in regulations issued under this
subchapter; and
(2) with respect to a facility or part thereof that is altered by, on
behalf of, or for the use of an establishment in a manner that affects or
could affect the usability of the facility or part thereof, a failure to
make alterations in such a manner that, to the maximum extent
feasible, the altered portions of the facility are readily accessible to and
usable by individuals with disabilities, including individuals who use
wheelchairs. Where the entity is undertaking an alteration that affects
or could affect usability of or access to an area of the facility
containing a primary function, the entity shall also make the alterations
in such a manner that, to the maximum extent feasible, the path of
travel to the altered area and the bathrooms, telephones, and drinking
fountains serving the altered area, are readily accessible to and usable
by individuals with disabilities where such alterations to the path of
travel or the bathrooms, telephones, and drinking fountains serving the
altered area are not disproportionate to the overall alterations in terms
of cost and scope (as determined under criteria established by the
Attorney General).

§12187. Exemptions for Private Clubs and Religious Organizations

The provisions of this subchapter shall not apply to private clubs or
establishments exempted from coverage under title II of the Civil Rights
Act of 1964 (42 U.S.C. 2000-a(e)) [42 U.S.C.A. §2000a et seq.] or to
religious organizations or entities controlled by religious organizations,
including places of worship.

§12201. Construction

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 (b) Relationship to other laws. Nothing in this chapter shall be
construed to preclude the prohibition of, or the imposition of restrictions
on, smoking [in] . . . places of public accommodation covered by . . . this
chapter.

§12210. Illegal Use of Drugs

(a) In general. For purposes of this chapter, the term “individual with a
disability” does not include an individual who is currently engaging in the
illegal use of drugs, when the covered entity acts on the basis of such use.
(b) Rules of construction. Nothing in subsection (a) of this section shall
be construed to exclude as an individual with a disability an individual
who . . .
(3) is erroneously regarded as engaging in such use, but is not
engaging in such use.

§12211. Definitions
(a) Homosexuality and bisexuality. — For purposes of the definition of
“disability” in section 3(2) [§12102(2)], homosexuality and bisexuality are
not impairments and as such are not disabilities under this chapter.

Problems
1. Attendants. A man whose legs and arms are substantially paralyzed
but who has some movement in his hands and lower arms, and in his neck
and part of his upper torso, is admitted to law school. His wheelchair is
motor-operated, and he can use his hands to move himself around in the
wheelchair. He applies for and obtains a room in the law school dormitory
that he can share with his trained full-time attendant. He needs to be
constantly attended because he is on a respirator to enable him to breathe
and may require immediate attention if something goes wrong with the
breathing mechanism. The law school notifies him that he will have to pay
rent (the dormitory fee) both for himself and his attendant, effectively
doubling the rent he must pay, because the attendant takes a space that
would otherwise go to another paying law student. Has the law school
violated the public accommodations provisions of the ADA?
2. Building renovations. A law school library is being renovated.
Right now the only access to the library is through an underground tunnel
through the elevator, with the entrance to the library on the fourth floor.
The library stacks are not accessible by wheelchair. The $20 million
renovation project will move the library entrance to the first floor and
create two wheelchair-accessible entrances on the south side of the

141
building. Although these south entrances visually appear to be the “back
doors” to the library, in fact 90 percent of the students enter the library
through these south entrances. The north entrance has a grand staircase and
is architecturally the main entrance to the building from a design
standpoint, although only about 10 percent of the users enter the building
this way. Installing a lift or a ramp at this northern entrance would cost
$80,000 to $150,000. Is the school required by §12183 to make the north
entrance accessible by wheelchair?
3. Stadium seating. A new movie theater has stadium-style seating at
a sharp incline on steep stairs and provides spaces for wheelchairs only
down on the lowest level in the front row just in front of the screen in a
sloped area. These seats are always the last to fill up because individuals
must crane their necks back to see the film and the picture is somewhat
distorted at that angle. However, those seats are used by the general public
when the theater is full. A Justice Department regulation under the ADA
requires movie theaters and stadiums to provide “wheelchair areas” that
are “an integral part of any fixed seating plan” and to ensure that they
possess “lines of sight comparable to those for members of the general
public.” ADA Accessibility Guidelines, 28 C.F.R. pt. 36, app. A, §4.33.3.
a. Has the theater violated the ADA? Compare Lara v. Cinemark
USA, Inc., 207 F.3d 783 (5th Cir. 2000) (no violation), with Oregon
Paralyzed Veterans of America v. Regal Cinemas, Inc., 339 F.3d 1126
(9th Cir. 2003) (violation). Cf. United States v. Hoyts Cinemas Corp.,
380 F.3d 558 (1st Cir. 2004) (rejecting the holdings of both Lara and
Oregon Paralyzed Veterans and remanding for factual findings on the
angles of view and visual distortion in seat placements in the sloped
area). See Felicia H. Ellsworth, The Worst Seats in the House:
Stadium-Style Movie Theaters and the Americans with Disabilities Act,
71 U. Chi. L. Rev. 1109 (2004).
b. Must the theater reserve seats next to spots reserved for
wheelchair users for companions who accompany them so that they
can sit together, thereby requiring individuals who have taken those
seats to move to other available seats in the theater? In Fortyune v.
American Multi-Cinema, Inc., 364 F.3d 1075 (9th Cir. 2004), the court
held that a quadriplegic had the right to have his wife sit next to him
because his condition made it necessary to have someone with him at
all times, making a modification of the theater’s policy both
“necessary” for him to enjoy the services and a “reasonable
modification” of the theater’s policy that would not “fundamentally
alter” the nature of the services being offered. It held that theaters must

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 reserve companion seats near wheelchair spots until ten minutes before
show time. See 28 C.F.R. pt. 36, app. A, §4.33.3 (“At least one
companion fixed seat shall be provided next to each wheelchair seating
area”).
c. Must stadiums provide wheelchair locations that allow patrons to
view sports events even when spectators in front of them stand up?
Recently adopted regulations say that they do. Compare Miller v.
California Speedway Corp., 536 F.3d 1020 (9th Cir. 2008) (holding
that a facility violated the ADA and §4.33.3 when it provided
wheelchair seating that did not allow lines of sight to the racetrack over
standing spectators); with Caruso v. Blockbuster-SONY Music
Entertainment Centre at the Waterfront, 193 F.3d 730 (3d Cir. 1999)
(holding that neither the ADA nor §4.33.3 required sightlines over
standing spectators but merely dispersal of seating). Is this a proper
interpretation of the statute?
4. Historic landmarks. The ADA requirements for alteration of
existing facilities do not apply to buildings that have been designated
historic landmarks under federal or state law if the alterations will
“threaten or destroy the historic significance” of the building. 42 U.S.C.
§12204(a); 28 C.F.R. §36.405. A building that is now listed as a historical
landmark under the National Historic Preservation Act, 16 U.S.C. §470 et
seq., has been in continuous use as a law school classroom building since
1880. The ceilings are very high and the acoustics in the classrooms are
terrible. Students have great difficulty hearing each other when they speak.
The law school wants either to drop the ceilings, float panels hung from
the ceiling in the rooms, or install microphones at every seat to rectify the
situation. The local historic preservation board refuses to grant the school
permission to do any of these things on the ground that they would impair
the historical and architectural integrity of the building. How should a
court reconcile the requirements of the ADA with the historic preservation
laws that prohibit alterations of historic buildings that would impair their
historic significance?
5. Modifying policies. In PGA Tour, Inc. v. Martin, 531 U.S. 1049
(2001), the Supreme Court ruled that the Professional Golf Association
(PGA) violated the ADA when it refused to allow golfer Casey Martin to
use a cart to travel between holes in a professional golf tournament, which
the Court treated as a place of public accommodation. Martin has a
degenerative circulatory disorder that causes pain when he walks too far,
and he sought a “reasonable modification” of the policy prohibiting the use
of golf carts in its competitions under §12182(b)(2)(A)(ii). The PGA

143
claimed that this would “fundamentally alter the nature” of the game
because walking induced fatigue and was an essential part of the game at
the high level of competition the PGA represented. The Court found to the
contrary, concluding that waiving the rule would neither give Martin a
competitive advantage nor alter the “essential character of the game of
golf,” which had always been shot-making. Justice Stevens noted that the
trial court had found that the fatigue from walking during the tournament
was not significant, thereby finding the defendant’s justification
insubstantial. Justices Scalia and Thomas dissented. Justice Scalia argued
that the ADA gives individuals a right to participate in whatever services a
public accommodation offers, not to change the nature of those services.
A law school professor gives an eight-hour take-home exam to be
picked up at 8:30 A.M. and returned at 4:30 P.M. A student with dyslexia
asks to be allowed to add 24 hours to the exam, picking it up at 8:30 A.M.
one day and returning it at 4:30 P.M. the next day. Is the school obligated to
comply? If so, may the school note on the student’s transcript that she was
given extra time to do the exam?
A woman suffers from limb girdle muscular dystrophy, which makes it
difficult for her to walk or stand from a seated position. She seeks
permission to use a Segway in Walt Disney World, despite a policy against
two-wheeled vehicles in the park. Disney refuses to make an exception to
its policy. Does its refusal violate the ADA? See Baughman v. Walt Disney
World Co., 685 F.3d 1131 (9th Cir. 2012) (finding the requested exception
to constitute a reasonable accommodation). What sorts of arguments
would you make if you represented Disney in defense of the existing
policy?
6. Virtual “places.” Do the ADA public accommodations provisions
apply to businesses that do not operate at specific physical locations but
offer services over the phone, by mail, or through the Internet? Compare
Carparts Distribution Center, Inc. v. Automotive Wholesalers Association
of New England, 37 F.3d 12, 26 (1st Cir. 1994) (ADA applies to goods and
services “sold over the telephone or by mail with customers never
physically entering the premises of a commercial entity to purchase the
goods or services”), with Weyer v. Twentieth Century Fox Film Corp., 198
F.3d 1104, 1114 (9th Cir. 2000) (concluding that places of public
accommodation are “actual, physical places”), and Parker v. Metropolitan
Life Insurance Co., 121 F.3d 1006 (6th Cir. 1997) (public accommodations
provisions of ADA require access only to physical places). See also
National Federation of the Blind v. Target Corp., 452 F. Supp. 2d 946
(N.D. Cal. 2006) (web sites are subject to the ADA only to the extent they

144
impede access to a physical store).
If virtual places are covered by the statute, must they be made
accessible to the blind through computer protocols that vocally describe
screen images and allow navigation by use of the keyboard rather than a
mouse? Contrast Cullen v. Netflix, Inc., 880 F. Supp. 2d 1017 (N.D. Cal.
2012) (web sites are not places of public accommodation); with National
Association of the Deaf v. Netflix, Inc., 869 F. Supp. 2d 196 (D. Mass.
2012) (“In a society in which business is increasingly conducted online,
excluding businesses that sell services through the Internet . . . would
severely frustrate Congress’s intent that individuals with disabilities fully
enjoy the goods, services, privileges and advantages, available
indiscriminately to other members of the general public.”); see also Tara
E. Thompson, Locating Discrimination: Interactive Web Sites as Public
Accommodations Under Title II of the Civil Rights Act, 2002 U. Chi. Legal
F. 409.
Does the ADA require health insurance companies to offer coverage
for mental illness as well as physical illness? See MacNeil v. Time
Insurance Co., 205 F.3d 179, 186 (5th Cir. 2000) (insurance company
does not violate ADA when it caps benefits for patients with AIDS
because the ADA does not “regulate the content of goods and services that
are offered”); Ford v. Schering-Plough Corp., 145 F.3d 601 (3d Cir. 1998)
(no ADA violation when insurance company capped benefits for mental
but not physical disabilities).

§3 FREE SPEECH RIGHTS OF ACCESS TO

PUBLIC AND PRIVATE PROPERTY
Lloyd Corporation, Ltd. v. Tanner

407 U.S. 551 (1972)

Mr. Justice LEWIS POWELL delivered the opinion of the Court.
Lloyd Corp., Ltd. (Lloyd), owns a large, modern retail shopping center
in Portland, Oregon. Lloyd Center embraces altogether about 50 acres,
including some 20 acres of open and covered parking facilities which
accommodate more than 1,000 automobiles. It has a perimeter of almost
one and one-half miles, bounded by four public streets. It is crossed in
varying degrees by several other public streets, all of which have adjacent
public sidewalks. Lloyd owns all land and buildings within the Center,
except these public streets and sidewalks. There are some 60 commercial
tenants, including small shops and several major department stores.

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 The Center embodies a relatively new concept in shopping center
design. The stores are all located within a single large, multi-level building
complex sometimes referred to as the “Mall.” Within this complex, in
addition to the stores, there are parking facilities, malls, private sidewalks,
stairways, escalators, gardens, an auditorium, and a skating rink. Some of
the stores open directly on the outside public sidewalks, but most open on
the interior privately owned malls. Some stores open on both. There are no
public streets or public sidewalks within the building complex, which is
enclosed and entirely covered except for the landscaped portions of some
of the interior malls.
The Center is open generally to the public, with a considerable effort
being made to attract shoppers and prospective shoppers, and to create
“customer motivation” as well as customer goodwill in the community. In
this respect the Center pursues policies comparable to those of major
stores and shopping centers across the country, although the Center affords
superior facilities for these purposes. Groups and organizations are
permitted, by invitation and advance arrangement, to use the auditorium
and other facilities. Rent is charged for use of the auditorium except with
respect to certain civic and charitable organizations, such as the Cancer
Society and Boy and Girl Scouts. The Center also allows limited use of the
malls by the American Legion to sell poppies for disabled veterans, and by
the Salvation Army and Volunteers of America to solicit Christmas
contributions. It has denied similar use to other civic and charitable
organizations. Political use is also forbidden, except that presidential
candidates of both parties have been allowed to speak in the auditorium.
The Center had been in operation for some eight years when this
litigation commenced. Throughout this period it had a policy, strictly
enforced, against the distribution of handbills within the building complex
and its malls. No exceptions were made with respect to handbilling, which
was considered likely to annoy customers, to create litter, potentially to
create disorders, and generally to be incompatible with the purpose of the
Center and the atmosphere sought to be preserved.
On November 14, 1968, the respondents in this case distributed within
the Center handbill invitations to a meeting of the “Resistance
Community” to protest the draft and the Vietnam war. The distribution,
made in several different places on the mall walkways by five young
people, was quiet and orderly, and there was no littering. There was a
complaint from one customer. Security guards informed the respondents
that they were trespassing and would be arrested unless they stopped
distributing the handbills within the Center. Respondents left the premises
as requested “to avoid arrest” and continued the handbilling outside.

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Subsequently this suit was instituted in the District Court seeking
declaratory and injunctive relief.
The District Court, emphasizing that the Center “is open to the general
public,” found that it is “the functional equivalent of a public business
district.” 308 F. Supp., at 130. That court then held that Lloyd’s “rule
prohibiting the distribution of handbills within the Mall violates . . . First
Amendment rights.” 308 F. Supp., at 131. In a per curiam opinion, the
Court of Appeals . . . concluded that the decisions of this Court in Marsh v.
Alabama, 326 U.S. 501 (1946), and Amalgamated Food Employees Union
Local 590 v. Logan Valley Plaza, Inc., 391 U.S. 308 (1968), compelled
affirmance.
Marsh involved Chickasaw, Alabama, a company town wholly owned
by the Gulf Shipbuilding Corp. The opinion of the Court, by Mr. Justice
Black, described Chickasaw as follows:

“Except for (ownership by a private corporation) it has all the characteristics

of any other American town. The property consists of residential buildings,
streets, a system of sewers, a sewage disposal plant and a ‘business block’ on
which business places are situated. A deputy of the Mobile County Sheriff,
paid by the company, serves as the town’s policeman. Merchants and service
establishments have rented the stores and business places on the business
block and the United States uses one of the places as a post office from
which six carriers deliver mail to the people of Chickasaw and the adjacent
area. The town and the surrounding neighborhood, which can not be
distinguished from the Gulf property by anyone not familiar with the
property lines, are thickly settled, and according to all indications the
residents use the business block as their regular shopping center. In short the
town and its shopping district are accessible to and freely used by the public
in general and there is nothing to distinguish them from any other town and
shopping center except the fact that the title to the property belongs to a
private corporation.” 326 U.S., at 502-503.

A Jehovah’s Witness undertook to distribute religious literature on a

sidewalk near the post office and was arrested on a trespassing charge. In
holding that First and Fourteenth Amendment rights were infringed, the
Court emphasized that the business district was within a company-owned
town, an anachronism long prevalent in some southern States and now
rarely found.
In Logan Valley the Court extended the rationale of Marsh to peaceful
picketing [by a Union] of a store located in a large shopping center, known
as Logan Valley Mall, near Altoona, Pennsylvania. The Court noted that . .
. publicly owned streets, sidewalks, and parks are so historically associated

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with the exercise of First Amendment rights that access to them for
purposes of exercising such rights cannot be denied absolutely. Lovell v.
Griffin, 303 U.S. 444 (1938); Hague v. CIO, 307 U.S. 496 (1939);
Schneider v. State, 308 U.S. 147 (1939); Jamison v. Texas, 318 U.S. 413
(1943). The Court then considered Marsh v. Alabama and concluded that:
“The shopping center here is clearly the functional equivalent of the
business district of Chickasaw involved in Marsh.” Logan Valley, 391 U.S.
at 318.
The Court also took specific note of the facts that the Union’s
picketing was “directed solely at one establishment within the shopping
center,” Id. at 321. Logan Valley was decided on the basis of this factual
situation, and the facts in this case are significantly different.21
The basic issue in this case is whether respondents, in the exercise of
asserted First Amendment rights, may distribute handbills on Lloyd’s
private property contrary to its wishes and contrary to a policy enforced
against all handbilling. In addressing this issue, it must be remembered
that the First and Fourteenth Amendments safeguard the rights of free
speech and assembly by limitations on state action, not on action by the
owner of private property used nondiscriminatorily for private purposes
only.
[T]his Court has never held that a trespasser or an uninvited guest may
exercise general rights of free speech on property privately owned and
used nondiscriminatorily for private purposes only. Even where public
property is involved, the Court has recognized that it is not necessarily
available for speaking, picketing, or other communicative activities.
Respondents contend, however, that the property of a large shopping
center is “open to the public,” serves the same purposes as a “business
district” of a municipality, and therefore has been dedicated to certain
types of public use. The argument reaches too far. The Constitution by no
means requires such an attenuated doctrine of dedication of private
property to public use. The closest decision in theory, Marsh v. Alabama,
involved the assumption by a private enterprise of all of the attributes of a
state-created municipality and the exercise by that enterprise of
semiofficial municipal functions as a delegate of the State. In effect, the
owner of the company town was performing the full spectrum of
municipal powers and stood in the shoes of the State. In the instant case
there is no comparable assumption or exercise of municipal functions or
power.
Nor does property lose its private character merely because the public
is generally invited to use it for designated purposes. Few would argue that
a free-standing store, with abutting parking space for customers, assumes

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significant public attributes merely because the public is invited to shop
there. Nor is size alone the controlling factor. The essentially private
character of a store and its privately owned abutting property does not
change by virtue of being large or clustered with other stores in a modern
shopping center.
Judgment reversed and case remanded.

Mr. Justice THURGOOD MARSHALL, with whom Mr. Justice WILLIAM O.

DOUGLAS, Mr. Justice WILLIAM J. BRENNAN, and Mr. Justice POTTER
STEWART join, dissenting.
. . . Lloyd Center is even more clearly the equivalent of a public
business district than was Logan Valley Plaza. Lloyd Center invites
schools to hold football rallies, presidential candidates to give speeches,
and service organizations to hold Veterans Day ceremonies on its
premises. The court also observed that the Center permits the Salvation
Army, the Volunteers of America, and the American Legion to solicit
funds in the Mall. Thus, the court concluded that the Center was already
open to First Amendment activities, and that respondents could not
constitutionally be excluded from distributing leaflets solely because
Lloyd Center was not enamored of the form or substance of their speech.
On Veterans Day, Lloyd Center allows organizations to parade through
the Center with flags, drummers, and color guard units and to have a
speaker deliver an address on the meaning of Veterans Day and the valor
of American soldiers. Presidential candidates have been permitted to speak
without restriction on the issues of the day, which presumably include war
and peace. The American Legion is annually given permission to sell
poppies in the Mall because Lloyd Center believes that “veterans . . .
deserves (sic) some comfort and support by the people of the United
States.”
Members of the Portland community are able to see doctors, dentists,
lawyers, bankers, travel agents, and persons offering countless other
services in Lloyd Center. They can buy almost anything that they want or
need there. For many Portland citizens, Lloyd Center will so completely
satisfy their wants that they will have no reason to go elsewhere for goods
or services. If speech is to reach these people, it must reach them in Lloyd
Center.
For many persons who do not have easy access to television, radio, the
major newspapers, and the other forms of mass media, the only way they
can express themselves to a broad range of citizens on issues of general
public concern is to picket, or to handbill, or to utilize other free or
relatively inexpensive means of communication. The only hope that these

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people have to be able to communicate effectively is to be permitted to
speak in those areas in which most of their fellow citizens can be found.
One such area is the business district of a city or town or its functional
equivalent. And this is why respondents have a tremendous need to
express themselves within Lloyd Center.
Petitioner’s interests, on the other hand, pale in comparison. It is
undisputed that some patrons will be disturbed by any First Amendment
activity that goes on, regardless of its object. But, there is no evidence to
indicate that speech directed to topics unrelated to the shopping center
would be more likely to impair the motivation of customers to buy than
speech directed to the uses to which the Center is put, which petitioner
concedes is constitutionally protected under Logan Valley.
It would not be surprising in the future to see cities rely more and more
on private businesses to perform functions once performed by
governmental agencies. The advantage of reduced expenses and an
increased tax base cannot be overstated. As governments rely on private
enterprise, public property decreases in favor of privately owned property.
It becomes harder and harder for citizens to find means to communicate
with other citizens. Only the wealthy may find effective communication
possible unless we adhere to Marsh v. Alabama and continue to hold that
“(t)he more an owner, for his advantage, opens up his property for use by
the public in general, the more do his rights become circumscribed by the
statutory and constitutional rights of those who use it,” 326 U.S. 276.
When there are no effective means of communication, free speech is a
mere shibboleth. I believe that the First Amendment requires it to be a
reality. Accordingly, I would affirm the decision of the Court of Appeals.

Notes
1. State constitutions. Most states interpret their state constitutional
free speech guarantees in a manner similar to the federal constitution, thus
granting shopping center owners the power to exclude people handing out
leaflets or others seeking to engage in similar speech activities. See, e.g.,
United Food & Commercial Workers Union, Local 919 v. Crystal Mall
Associates, L.P., 852 A.2d 659 (Conn. 2004); City of West Des Moines v.
Engler, 641 N.W.2d 803 (Iowa 2002) (no free speech access rights to
shopping centers). However, California and New Jersey have interpreted
their state constitutions in a manner that adopts the views of Justice
Marshall’s dissenting opinion in Lloyd. While states may not adopt laws
that deny constitutional rights protected by the U.S. Constitution, they may
grant more expansive rights than those guaranteed by federal law either by

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interpretation of their state constitutions or through state statutes. Thus
California held that the state constitution protected the right to hand out
leaflets protesting the United Nation’s resolution defining “Zionism” as a
form of racism, and the U.S. Supreme Court upheld its right to do so. See
Robins v. PruneYard Shopping Center, 592 P.2d 341 (Cal. 1979), aff’d,
PruneYard Shopping Center v. Robins, 447 U.S. 74 (1980), and the New
Jersey Supreme Court affirmed state constitutional rights to hand out
leaflets to protest the first Iraq war. New Jersey Coalition Against War in
the Middle East v. J.M.B. Realty Corp., 650 A.2d 757 (N.J. 1994). See also
Wood v. State, 2003 WL 1955433 (Fla. Cir. Ct. 2003) (state constitution
prohibits a private owner of a “quasi-public” place from using state
trespass laws to exclude peaceful political activity); State v. Schmid, 423
A.2d 615, 629 (N.J. 1980) (state constitution protects right to distribute
literature on a private university campus).
A small number of states have found state constitutional rights to enter
shopping centers seeking signatures to place a political candidate’s name
on the ballot or to get an initiative or referendum question placed on the
ballot, Batchelder v. Allied Stores International, Inc., 445 N.E.2d 590
(Mass. 1983); Alderwood Associates v. Washington Environmental
Council, 635 P.2d 108 (Wash. 1981).
2. Statutory labor organizing access rights. Although there is no
federal constitutional right of access to property open to the public for free
speech purposes under the first amendment, the National Labor Relations
Act (NLRA), a federal statute governing employment relations between
employees and employers, does provide for some rights of access for labor
organizations. Sections 7 and 8 of the NLRA prohibit employers from
engaging in certain enumerated “unfair labor practices” that interfere with
the rights of employees to form unions and engage in collective bargaining
and other types of concerted activities for “mutual aid or protection,”
including striking and picketing. 29 U.S.C. §§157, 158. The Supreme
Court has held that under some circumstances it may constitute an unfair
labor practice under the NLRA for an employer to deny a right of access to
certain areas of her property for purposes of picketing that property owner
herself or an employer who is a lessee of a portion of that property.
Hudgens v. National Labor Relations Board, 424 U.S. 507 (1976).
Employees who are on strike or involved in a labor dispute with their
employer may want access to the employer’s property to picket,
communicating to the employer and the public their side in the
controversy. Nonemployees may want access to the parking lot or cafeteria
of a workplace to distribute information designed to encourage the

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employees to form or join a union. In determining whether a right of
access should be provided, the courts must balance the employer’s
property rights against the employees’ rights under §7 to be free of unfair
labor practices. See Lechmere v. National Labor Relations Bd., 502 U.S.
527 (1992) (holding that union organizers had no right to enter the parking
lot of a shopping center to put leaflets on the windshields of cars when
there were reasonably effective alternative means of communicating with
the employees); Seattle-First National Bank v. National Labor Relations
Board, 651 F.2d 1272 (9th Cir. 1980) (unfair labor practice for the owner
of an office building to refuse to allow striking restaurant employees to
picket in the foyer outside a restaurant on the forty-sixth floor of the
building); Scott Hudgens, 230 N.L.R.B. 414 (1977) (finding that striking
employees of a business located in a shopping mall had a right to enter the
mall to picket in front of their employer’s place of business).
3. Gun rights on private property. Georgia’s concealed carry law
prohibits the holder of a properly licensed concealed firearm from carrying
the firearm into certain types of premises, such as bars and churches,
without first reporting the firearm to the management of the property and
following the management’s directions concerning the firearm. A gun-
rights group sued, arguing that the statute violated the second amendment
right to bear arms. On appeal from the district court’s dismissal of the
claim, the U.S. Court of Appeals for the Eleventh Circuit held that a
private property owner’s right to exclude people from carrying firearms on
private property trumps gun-owners’ rights to carry their firearms where
they want. Consequently, a law delegating to property owners the right to
dictate the terms on which firearms will be allowed on their premises does
not violate the second amendment. According to the court, “[a]n
individual’s right to bear arms as enshrined in the Second Amendment,
whatever its full scope, certainly must be limited by the equally
fundamental right of a private property owner to exercise exclusive
dominion and control over its land.” Georgiacarry.org, Inc. v. Georgia,
687 F.3d 1244 (11th Cir. 2012).

Problems
1. A shopping mall allows members of the Republican Party to hand
out leaflets urging customers to vote for Republican candidates for
Congress and for the president but refuses to allow members of the
Democratic Party to hand out leaflets. Assume you are in a state that has
not interpreted its constitution to require owners of private property open
to the public to grant rights of access for free speech purposes. A

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Democrat who is excluded from handing out leaflets sues the shopping
center owner and claims that even though the owner has no duty to allow
all members of the public to pass out leaflets, once the owner allows some
members of the public to do this, it must allow others to do so on a
nondiscriminatory basis. Argue both sides.
2. A large shopping mall in New Jersey is owned by a survivor of the
Nazi concentration camps. The Ku Klux Klan begins peaceably handing
out literature in the shopping center, praising the Nazi Party and urging
shoppers to vote for a member of the KKK who is running for public
office and who has stated that the United States should adopt Nazi
methods to deal with African Americans, Latinos, Asian Americans, and
American Jews. The owner ejects the KKK members from the mall. They
subsequently sue and claim that the owner is violating their free speech
rights under the state constitution, as defined in New Jersey Coalition. The
owner defends by arguing that she has the right to prevent her property
from being used as a base from which to hand out literature that preaches
hatred against particular ethnic groups. What should the court do?
3. A major Internet search engine refuses to list among its search
results web pages that criticize the third-world labor practices of the
conglomerate that owns the search engine. The group that maintains the
blocked pages complains that this violates their rights to free speech; they
argue that since nearly all Internet users locate web pages using a few
major search engines, these engines are the equivalent of a public square
or a modern shopping mall: the central way to get a message to the public.
The search engine company responds that a search engine is private
property: the company can choose to make accessible whatever
information it wants, and it must have this right if it is to exclude pages
containing pornography from its database. The company also argues that
storing information is expensive, and it must be able to exclude at will to
prevent its database from growing too large. The Electronic Frontier
Foundation, a nonprofit organization that promotes free speech on the
Internet, proposes legislation prohibiting search engines from refusing to
include any web page in their database if the page’s owner requests
inclusion. If you were a member of the legislature, how would you vote
and why?
4. A couple of weeks before the United States invaded Iraq in March
2003, a father and son were ousted from a mall in New York State for
wearing T-shirts that protested the decision to go to war. The father’s T-
shirt said “Give Peace a Chance,” while his son’s shirt read “No War with
Iraq” on one side and “Let Inspections Work” on the other. Winnie Hu, A

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Message of Peace on 2 Shirts Touches Off Hostilities at a Mall, N.Y.
Times, Mar. 6, 2003, at B-1. As the father and son were eating lunch,
security guards asked them to remove the shirts or to leave the premises.
Although the son complied by removing his shirt, the father did not. It
appears that he also refused to leave the premises. He was arrested and
charged with criminal trespass. New York has not adopted the PruneYard
rule, and no other New York law apparently limited the owner’s decision
to exclude under these circumstances. The director of operations of the
mall explained that the father and son were interfering with other shoppers
and that “[t]heir behavior, coupled with their clothing, to express to others
their personal views on world affairs were disruptive of customers.” Id.
Should the law protect the owner’s right to exclude in a case like this, or
should the courts recognize a right based on either the common law or the
state constitution that would prohibit exclusion under these circumstances?

§4 BEACH ACCESS AND THE PUBLIC TRUST

Matthews v. Bay Head Improvement Association

471 A.2d 355 (N.J. 1984)

Map: Bay Head, New Jersey

SIDNEY M. SCHREIBER, J.
The public trust doctrine acknowledges that the ownership, dominion
and sovereignty over land flowed by tidal waters, which extend to the
mean high water mark, is vested in the State in trust for the people. The
public’s right to use the tidal lands and water encompasses navigation,
fishing and recreational uses, including bathing, swimming and other shore
activities. Borough of Neptune City v. Borough of Avon-by-the-Sea, 294
A.2d 47 (N.J. 1972). In Avon we held that the public trust applied to the
municipally owned dry sand beach immediately landward of the high
water mark.22 The major issue in this case is whether, ancillary to the
public’s right to enjoy the tidal lands, the public has a right to gain access
through and to use the dry sand area not owned by a municipality but by a
quasi-public body.

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 I. Facts
The Borough of Bay Head (Bay Head) borders the Atlantic Ocean.
Adjacent to it on the north is the Borough of Point Pleasant Beach, on the
south the Borough of Mantoloking, and on the west Barnegat Bay. Bay
Head consists of a fairly narrow strip of land, 6,667 feet long (about 1¼
miles). A beach runs along its entire length adjacent to the Atlantic Ocean.
There are 76 separate parcels of land that border the beach. All except six
are owned by private individuals. Title to those six is vested in the [Bay
Head Improvement] Association [(the Association)].
The Association was founded in 1910 and incorporated as a nonprofit
corporation in 1932. Its certificate of incorporation states that its purposes
are the improving and beautifying of the Borough of Bay Head, New
Jersey, cleaning, policing and otherwise making attractive and safe the
bathing beaches in said Borough, and the doing of any act which may be
found necessary or desirable for the greater convenience, comfort and
enjoyment of the residents. Its constitution delineates the Association’s
object to promote the best interests of the Borough and “in so doing to own
property, operate bathing beaches, hire life guards, beach cleaners and
policemen.”
Nine streets in the Borough, which are perpendicular to the beach, end
at the dry sand. The Association owns the land commencing at the end of
seven of these streets for the width of each street and extending through
the upper dry sand to the mean high water line, the beginning of the wet
sand area or foreshore. In addition, the Association owns the fee in six
shore front properties, three of which are contiguous and have a frontage
aggregating 310 feet. Many owners of beachfront property executed and
delivered to the Association leases of the upper dry sand area. These leases
are revocable by either party to the lease on thirty days’ notice. Some
owners have not executed such leases and have not permitted the
Association to use their beaches. Some also have acquired riparian grants
from the State extending approximately 1000 feet east of the high water
line.
The Association controls and supervises its beach property between the
third week in June and Labor Day. It engages about 40 employees who
serve as lifeguards, beach police and beach cleaners. Lifeguards, stationed
at five operating beaches, indicate by use of flags whether the ocean
condition is dangerous (red), requires caution (yellow), or is satisfactory
(green). In addition to observing and, if need be, assisting those in the
water, when called upon lifeguards render first aid. Beach cleaners are
engaged to rake and keep the beach clean of debris. Beach police are

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stationed at the entrances to the beaches where the public streets lead into
the beach to ensure that only Association members or their guests enter.
Some beach police patrol the beaches to enforce its membership rules.
Membership is generally limited to residents of Bay Head. Class A
members are property owners. Class B are non-owners. Large families (six
or more) pay $90 per year and small families pay $60 per year. Upon
application residents are routinely accepted. Membership is evidenced by
badges that signify permission to use the beaches. Members, which include
local hotels, motels and inns, can also acquire badges for guests. The
charge for each guest badge is $12. Members of the Bay Head Fire
Company, Bay Head Borough employees, and teachers in the
municipality’s school system have been issued beach badges irrespective
of residency.
Except for fishermen, who are permitted to walk through the upper dry
sand area to the foreshore, only the membership may use the beach
between 10:00 A.M. and 5:30 P.M. during the summer season. The public is
permitted to use the Association’s beach from 5:30 P.M. to 10:00 A.M.
during the summer and, with no hourly restrictions, between Labor Day
and mid-June.
No attempt has ever been made to stop anyone from occupying the
terrain east of the high water mark. During certain parts of the day, when
the tide is low, the foreshore could consist of about 50 feet of sand not
being flowed by the water. The public could gain access to the foreshore
by coming from the Borough of Point Pleasant Beach on the north or from
the Borough of Mantoloking on the south.
Association membership totals between 4,800 to 5,000. The
Association President testified during depositions that its restrictive policy,
in existence since 1932, was due to limited parking facilities and to the
overcrowding of the beaches. The Association’s avowed purpose was to
provide the beach for the residents of Bay Head.
There is also a public boardwalk, about one-third of a mile long,
parallel to the ocean on the westerly side of the dry sand area. The
boardwalk is owned and maintained by the municipality.

II. The Public Trust

In Borough of Neptune City v. Borough of Avon-by-the-Sea, 294 A.2d
47, 51 (N.J. 1972), Justice Hall alluded to the ancient principle “that land
covered by tidal waters belonged to the sovereign, but for the common use
of all the people.” . . . This underlying concept was applied in New Jersey
in Arnold v. Mundy, 6 N.J.L. 1 (Sup. Ct. 1821).

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 The defendant in Arnold tested the plaintiff’s claim of an exclusive
right to harvest oysters by taking some oysters that the plaintiff had
planted in beds in the Raritan River adjacent to his farm in Perth Amboy.
The oyster beds extended about 150 feet below the ordinary low water
mark. The tide ebbed and flowed over it.
Chief Justice Kirkpatrick . . . concluded that all navigable rivers in
which the tide ebbs and flows and the coasts of the sea, including the water
and land under the water, are “common to all the citizens, and that each
[citizen] has a right to use them according to his necessities, subject only
to the laws which regulate that use.” Id. at 93. Later in Illinois Central R.R.
v. Illinois, 146 U.S. 387, 453 (1892), the Supreme Court, in referring to the
common property, stated that “[t]he State can no more abdicate its trust
over property in which the whole people are interested . . . than it can
abdicate its police powers.”
In Avon, Justice Hall reaffirmed the public’s right to use the waterfront
as announced in Arnold v. Mundy. He observed that the public has a right
to use the land below the mean average high water mark where the tide
ebbs and flows. These uses have historically included navigation and
fishing. In Avon the public’s rights were extended “to recreational uses,
including bathing, swimming and other shore activities.” 294 A.2d at 54.
The Florida Supreme Court has held:

The constant enjoyment of this privilege [bathing in salt waters] of thus using
the ocean and its foreshore for ages without dispute should prove sufficient
to establish it as an American common law right, similar to that of fishing in
the sea, even if this right had not come down to us as a part of the English
common law, which it undoubtedly has. It has been said that “[h]ealth,
recreation and sports are encompassed in and intimately related to the
general welfare of a well-balanced state.” Extension of the public trust
doctrine to include bathing, swimming and other shore activities is consonant
with and furthers the general welfare. The public’s right to enjoy these
privileges must be respected. White v. Hughes, 190 So. 446, 449 (Fla. 1939).

In order to exercise these rights guaranteed by the public trust doctrine,

the public must have access to municipally owned dry sand areas as well
as the foreshore. The extension of the public trust doctrine to include
municipally owned dry sand areas was necessitated by our conclusion that
enjoyment of rights in the foreshore is inseparable from use of dry sand
beaches. In Avon we struck down a municipal ordinance that required
nonresidents to pay a higher fee than residents for the use of the beach. We
held that where a municipal beach is dedicated to public use, the public
trust doctrine “dictates that the beach and the ocean waters must be open to

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all on equal terms and without preference and that any contrary state or
municipal action is impermissible.” 294 A.2d at 54.

III. Public Rights in Privately Owned Dry Sand Beaches

In Avon . . . our finding of public rights in dry sand areas was
specifically and appropriately limited to those beaches owned by a
municipality. We now address the extent of the public’s interest in
privately owned dry sand beaches. This interest may take one of two
forms. First, the public may have a right to cross privately owned dry sand
beaches in order to gain access to the foreshore. Second, this interest may
be of the sort enjoyed by the public in municipal beaches under Avon . . . ,
namely, the right to sunbathe and generally enjoy recreational activities.
Beaches are a unique resource and are irreplaceable. The public
demand for beaches has increased with the growth of population and
improvement of transportation facilities. Furthermore the projected
demand for salt water swimming will not be met “unless the existing
swimming capacities of the four coastal counties are expanded.”
Department of Environmental Protection, Statewide Comprehensive
Outdoor Recreation Plan 200 (1977). The DEP estimates that, compared to
1976, the State’s salt water swimming areas “must accommodate 764,812
more persons by 1985 and 1,021,112 persons by 1995.”
Exercise of the public’s right to swim and bathe below the mean high
water mark may depend upon a right to pass across the upland beach.
Without some means of access the public right to use the foreshore would
be meaningless. To say that the public trust doctrine entitles the public to
swim in the ocean and to use the foreshore in connection therewith without
assuring the public of a feasible access route would seriously impinge on,
if not effectively eliminate, the rights of the public trust doctrine. This does
not mean the public has an unrestricted right to cross at will over any and
all property bordering on the common property. The public interest is
satisfied so long as there is reasonable access to the sea.
[T]he particular circumstances must be considered and examined
before arriving at a solution that will accommodate the public’s right and
the private interests involved. Thus an undeveloped segment of the shore
may have been available and used for access so as to establish a public
right-of-way to the wet sand. Or there may be publicly owned property,
such as in Avon, which is suitable. Or, as in this case, the public streets and
adjacent upland sand area might serve as a proper means of entry. The test
is whether those means are reasonably satisfactory so that the public’s
right to use the beachfront can be satisfied.

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 The bather’s right in the upland sands is not limited to passage.
Reasonable enjoyment of the foreshore and the sea cannot be realized
unless some enjoyment of the dry sand area is also allowed. The complete
pleasure of swimming must be accompanied by intermittent periods of rest
and relaxation beyond the water’s edge. The unavailability of the physical
situs for such rest and relaxation would seriously curtail and in many
situations eliminate the right to the recreational use of the ocean. This was
a principal reason why in Avon and [Van Ness v. Borough of Deal, 393
A.2d 571 (N.J. 1978),] we held that municipally owned dry sand beaches
“must be open to all on equal terms.” Avon, 294 A.2d at 54. We see no
reason why rights under the public trust doctrine to use of the upland dry
sand area should be limited to municipally owned property. It is true that
the private owner’s interest in the upland dry sand area is not identical to
that of a municipality. Nonetheless, where use of dry sand is essential or
reasonably necessary for enjoyment of the ocean, the doctrine warrants the
public’s use of the upland dry sand area subject to an accommodation of
the interests of the owner.
We perceive no need to attempt to apply notions of prescription, City
of Daytona Beach v. Tona-Rama, Inc., 294 So. 2d 73 (Fla. 1974),
dedication, Gion v. City of Santa Cruz, 465 P.2d 50 (Cal. 1970), or custom,
State ex rel. Thornton v. Hay, 462 P.2d 671 (Or. 1969), as an alternative to
application of the public trust doctrine. Archaic judicial responses are not
an answer to a modern social problem. Rather, we perceive the public trust
doctrine not to be “fixed or static,” but one to “be molded and extended to
meet changing conditions and needs of the public it was created to
benefit.” Avon, 294 A.2d at 54.
Precisely what privately owned upland sand area will be available and
required to satisfy the public’s rights under the public trust doctrine will
depend on the circumstances. Location of the dry sand area in relation to
the foreshore, extent and availability of publicly owned upland sand area,
nature and extent of the public demand, and usage of the upland sand land
by the owner are all factors to be weighed and considered in fixing the
contours of the usage of the upper sand.
Today, recognizing the increasing demand for our State’s beaches and
the dynamic nature of the public trust doctrine, we find that the public
must be given both access to and use of privately owned dry sand areas as
reasonably necessary. While the public’s rights in private beaches are not
co-extensive with the rights enjoyed in municipal beaches, private
landowners may not in all instances prevent the public from exercising its
rights under the public trust doctrine. The public must be afforded
reasonable access to the foreshore as well as a suitable area for recreation

159
on the dry sand.

V. The Beaches of Bay Head

The Bay Head Improvement Association, which services the needs of
all residents of the Borough for swimming and bathing in the public trust
property, owns the street-wide strip of dry sand area at the foot of seven
public streets that extends to the mean high water line. It also owns the fee
in six other upland sand properties connected or adjacent to the tracts it
owns at the end of two streets. In addition, it holds leases to approximately
42 tracts of upland sand area. The question that we must address is
whether the dry sand area that the Association owns or leases should be
open to the public to satisfy the public’s rights under the public trust
doctrine. Our analysis turns upon whether the Association may restrict its
membership to Bay Head residents and thereby preclude public use of the
dry sand area.
The general rule is that courts will not compel admission to a voluntary
association. Ordinarily, a society or association may set its own
membership qualifications and restrictions. However, that is not an
inexorable rule. Where an organization is quasi-public, its power to
exclude must be reasonably and lawfully exercised in furtherance of the
public welfare related to its public characteristics.
[A] nonprofit association that is authorized and endeavors to carry out
a purpose serving the general welfare of the community and is a quasi-
public institution holds in trust its powers of exclusive control in the areas
of vital public concern. When a nonprofit association rejects a membership
application for reasons unrelated to its purposes and contrary to the general
welfare, courts have “broad judicial authority to insure that exclusionary
policies are lawful and are not applied arbitrarily or [discriminatorily].”
Greisman v. Newcomb Hospital, 192 A.2d 817, 820 (1963). That is the
situation here.
Bay Head Improvement Association is a non-profit corporation whose
primary purpose as stated in its certificate of incorporation is the
“cleaning, policing and otherwise making attractive and safe the bathing
beaches” in the Borough of Bay Head “and the doing of any act which
may be found necessary or desirable for the greater convenience, comfort
and enjoyment of the residents.” . . .
The Association’s activities paralleled those of a municipality in its
operation of the beachfront. The size of the beach was so great that it
stationed lifeguards at five separate locations. The beach serviced about
5,000 members. The lifeguards performed the functions characteristic of

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those on a public beach. When viewed in its totality — its purposes,
relationship with the municipality, communal characteristic, activities, and
virtual monopoly over the Bay Head beachfront — the quasi-public nature
of the Association is apparent. The Association makes available to the Bay
Head public access to the common tidal property for swimming and
bathing and to the upland dry sand area for use incidental thereto,
preserving the residents’ interests in a fashion similar to Avon.
There is no public beach in the Borough of Bay Head. If the residents
of every municipality bordering the Jersey shore were to adopt the Bay
Head policy, the public would be prevented from exercising its right to
enjoy the foreshore. The Bay Head residents may not frustrate the public’s
right in this manner. By limiting membership only to residents and
foreclosing the public, the Association is acting in conflict with the public
good and contrary to the strong public policy “in favor of encouraging and
expanding public access to and use of shoreline areas.” Gion v. City of
Santa Cruz, 465 P.2d 50, 59 (Cal. 1970). Indeed, the Association is
frustrating the public’s right under the public trust doctrine. It should not
be permitted to do so.
Accordingly, membership in the Association must be open to the
public at large.
The Public Advocate has urged that all the privately owned beachfront
property likewise must be opened to the public. Nothing has been
developed on this record to justify that conclusion. We have decided that
the Association’s membership and thereby its beach must be open to the
public. That area might reasonably satisfy the public need at this time. [I]f
the Association were to sell all or part of its property, it may necessitate
further adjudication of the public’s claims in favor of the public trust on
part or all of these or other privately owned upland dry sand lands
depending upon the circumstances. However, we see no necessity to have
those issues resolved judicially at this time since the beach under the
Association’s control will be open to the public and may be adequate to
satisfy the public trust interests.
The record in this case makes it clear that a right of access to the beach
is available over the quasi-public lands owned by the Association, as well
as the right to use the Association’s upland dry sand. It is not necessary for
us to determine under what circumstances and to what extent there will be
a need to use the dry sand of private owners who either now or in the
future may have no leases with the Association. Resolution of the
competing interests, private ownership and the public trust, may in some
cases be simple, but in many it may be most complex. In any event,
resolution would depend upon the specific facts in controversy.

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 We realize that considerable uncertainty will continue to surround the
question of the public’s right to cross private land and to use a portion of
the dry sand as discussed above. Where the parties are unable to agree as
to the application of the principles enunciated herein, the claim of the
private owner shall be honored until the contrary is established.

Notes and Questions

1. Public trust. In Illinois Central Railroad Co. v. Illinois, 146 U.S.
387, 435 (1892), the Supreme Court held as follows:

It is the settled law of this country that the ownership of and dominion and
sovereignty over lands covered by tide waters, within the limits of the several
states, belong to the respective states within which they are found, with the
consequent right to use or dispose of any portion thereof, when that can be
done without substantial impairment of the interest of the public in the
waters, and subject always to the paramount right of Congress to control
their navigation so far as may be necessary for the regulation of commerce
with foreign nations and among the states.

Some courts have held that the state may extinguish public rights of access
under the public trust doctrine by conveying property to private owners
free of such rights. See, e.g., Greater Providence Chamber of Commerce v.
Rhode Island, 657 A.2d 1038 (R.I. 1995). Other courts, however, have
held that the rights encompassed by the public trust doctrine are
inalienable and lands subject to those rights cannot be reduced to private
property free from public trust obligations. See, e.g., Glass v. Goeckel, 473
Mich. 667 (Mich. 2005).
2. Uses encompassed by the public trust doctrine. The New Jersey
Supreme Court notes its earlier holding that the public trust doctrine
included the right to enjoy the lands over which the tides flowed (tidal
lands) for a broad variety of purposes, including navigation, fishing, and
recreation such as swimming. It further extended the doctrine to
encompass public rights of access to the dry sand area adjacent to the tidal
lands, inland from the tidal lands to the line where vegetation started on
lands owned by the municipalities. See also Raleigh Avenue Beach
Association v. Atlantis Beach Club, Inc., 879 A.2d 112 (N.J. 2005) (private
club that holds title to the only beach in the township could not exclude
members of the public from access to the dry sand area of the beach
beyond the high tide line and could not charge high fees designed to limit
access). In the earlier case of Borough of Neptune City v. Borough of
Avon-by-the-Sea, 294 A.2d 47, 54 (N.J. 1972), Justice Hall explained the

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extension of the public trust doctrine to recreational uses in the following
way:

We have no difficulty in finding that, in this latter half of the twentieth

century, the public rights in tidal lands are not limited to the ancient
prerogatives of navigation and fishing, but extend as well to recreational
uses, including bathing, swimming and other shore activities. The public
trust doctrine, like all common law principles, should not be considered fixed
or static, but should be molded and extended to meet changing conditions
and needs of the public it was created to benefit.

In contrast, the Supreme Judicial Court of Massachusetts has limited

public access under the public trust doctrine to tidal lands (defined as the
lands seaward of the mean high water line) rather than the dry sand area.
The court also limited public use rights to navigation and fishing purposes,
specifically excluding recreational uses such as walking along the
beachfront or bathing. Opinion of the Justices, 313 N.E.2d 561 (Mass.
1974). The Massachusetts court rejected the idea that the uses
encompassed by the public trust doctrine could change or expand over
time as social values and conditions changed. Rather, the court held that a
statute redefining the public trust doctrine to allow a right of way for the
public to walk along the beach on tidal lands constituted a physical
invasion of the property rights of beachfront owners and could not be
constitutionally required without paying just compensation to those owners
for the loss of their property rights. To allow an expansion of public access
would infringe on the property owners’ right to exclude. Accord,
Severance v. Patterson, 370 S.W.3d 705 (Tex. 2012) (limiting the public
trust doctrine to land seaward of the mean high tide line and suggesting
that the extension of the public trust doctrine to adjacent dry sand areas
would raise constitutional concerns); Bell v. Town of Wells, 557 A.2d 168
(Me. 1989); Opinion of the Justices, 649 A.2d 604, 609 (N.H. 1994). See
also Leydon v. Town of Greenwich, 777 A.2d 552, 564 n.17 (Conn. 2001)
(limiting the public trust doctrine to the land seaward of the mean high tide
line); State ex rel. Haman v. Fox, 594 P.2d 1093 (Ind. 1979) (same).
Should it make a difference whether the public has customarily used
the beachfront adjoining private property for recreational purposes? Does
longstanding customary use justify recognizing rights of access in the
public?
If there is no longstanding public use, should the courts interpret the
public trust doctrine to be rigidly limited to those uses customarily enjoyed
in colonial times? Or should the doctrine be interpreted to authorize uses

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needed by the public and considered legitimate under evolving community
standards? If the common law changes over time, as we have seen in State
v. Shack and Uston v. Resorts International, why should the public trust
doctrine be frozen in its colonial form? Was the New Jersey Supreme
Court wrong to change the law in Shack and Uston to adjust the balance
between the right to exclude and the right of access?
3. Dedication, prescription, and custom. Justice Schreiber notes that
state courts have relied on three common law doctrines besides public trust
to grant rights of access to beaches by the general public. The doctrines are
dedication, prescription, and custom.
Dedication involves a gift of real property from a private owner to the
public at large. It requires an offer by the owner and acceptance by the
public. Such an offer generally must be made by some unequivocal act by
the property owner giving clear evidence of an intent to dedicate the land
to public use. Longstanding acquiescence in use of beachfront property by
the public may be interpreted as an implied dedication by the property
owner and acceptance by the public. Gion v. City of Santa Cruz, 465 P.2d
50 (Cal. 1970). However, Gion was effectively overturned by the
California legislature, which prohibited acquisition of public rights by
implied dedication, although allowing public rights of access to arise by
prescription. Cal. Civ. Code §1009.
Some states grant public rights of access to tidelands or the dry sand
area of beaches under the doctrine of prescription. If the public has used
property possessed by another for a particular purpose for a long time
(measured by the relevant state statute of limitations), the public can
acquire such rights permanently even if they never had them originally or
if they had previously been reduced to private ownership. The permanent
right to do something on another’s land is called an easement. Such rights
are generally created by agreement. However, if the owner fails to exclude
trespassers from her property, she may lose her right to sue them under the
relevant statute of limitations. The public acquires what is called a
prescriptive easement to continue using the property for this purpose. City
of Daytona Beach v. Tona-Rama, Inc., 294 So. 2d 73 (Fla. 1974);
Concerned Citizens of Brunswick County Taxpayers Association v.
Rhodes, 404 S.E.2d 677 (N.C. 1991). For more on prescriptive easements,
see Chapter 5, §3.
Most courts traditionally refused to allow the public to obtain an
easement by prescription. Today, most courts will recognize such
easements. Jon Bruce & James W. Ely, Jr., The Law of Easements and
Licenses in Land ¶5.09[1] (rev. ed. 1995). They did so partly because (a) it

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was difficult to show continuous use by the public at large; (b) prescription
might apply only to the particular tract of land at issue in the case,
necessitating cumbersome and expensive litigation about every disputed
parcel along the oceanfront; and (c) when private land is used by the
public, courts may infer that the use was permissive, thereby defeating an
element needed for prescriptive rights to vest.
Perhaps to avoid these problems, the Oregon Supreme Court relied on
the doctrine of custom, rather than prescription, to hold that longstanding,
uninterrupted, peaceable, reasonable, uniform use of the beachfront by the
public for recreational purposes conferred continuing rights of access.

The dry-sand area in Oregon has been enjoyed by the general public as a
recreational adjunct of the wet-sand or foreshore area since the beginning of
the state’s political history. The first European settlers on these shores found
the aboriginal inhabitants using the foreshore for clam-digging and the dry-
sand area for their cooking fires. The newcomers continued these customs
after statehood. Thus, from the time of the earliest settlement to the present
day, the general public has assumed that the dry-sand area was a part of the
public beach, and the public has used the dry-sand area for picnics, gathering
wood, building warming fires, and generally as a headquarters from which to
supervise children or to range out over the foreshore as the tides advance and
recede.

State ex rel. Thornton v. Hay, 462 P.2d 671, 674 (Or. 1969). Applying the
doctrine, the court prevented beachfront owners from enclosing the dry-
sand area of their property in an attempt to limit access to members of a
private beach club. In a later case, however, the Oregon Supreme Court
limited the doctrine to those beaches for which proof exists of actual use
by the public in the past. See McDonald v. Halvorson, 780 P.2d 714 (Or.
1989).
Hawai`i has a unique legal system recognizing public access to all
beaches up to the “stable vegetation line” in accord with traditional
Hawaiian custom. See Diamond v. State Board of Land & Natural
Resources, 145 P.3d 704, 712 (Haw. 2006); In re Banning, 832 P.2d 724
(Haw. 1992); Application of Ashford, 440 P.2d 76 (Haw. 1968). Cf. Ka
Pa`akai O Ka`aina v. Land Use Commission, 7 P.3d 1068 (Haw. 2000);
Public Access Shoreline Hawaii (PASH) v. Hawaii County Planning
Commission, 903 P.2d 1246 (Haw. 1995) (recognizing customary
gathering rights of native Hawaiians along the shoreline).

Problems

165
 1. Matthews involved beachfront property owned by a nonprofit
charitable organization. In Raleigh Avenue Beach Association v. Atlantis
Beach Club, Inc., 185 N.J. 40 (N.J. 2005), the Supreme Court of New
Jersey extended the Matthews ruling to require the owner of a beach club
to allow anyone to become a member and prohibited the club from
charging exorbitant fees designed to limit membership. The private owner
had previously allowed the public to use the beach and had only recently
converted it to a private beach club accessible only by members upon
payment of fees higher than necessary to pay for costs of operation. The
court applied the Matthews factors and found that the public interests in
access outweighed the private interests in exclusion when there were no
publicly owned beaches in the township and demand for beach access was
very high. Two judges dissented on the ground that a nearby hotel allowed
the public to use its beach. Did the court reach the correct result?
2. Now suppose members of the public begin using the dry sand area
between the mean high water mark and the vegetation line in an area next
to a private home. The owner puts up a fence and signs warning against
trespassing on the beach. A member of the public sues the beachfront
owner and asks for declaratory and injunctive relief preventing the owner
from interfering with the public’s right of access to the dry sand area along
the beach, arguing that the state should adopt the standards used in
Hawai`i.
a. What arguments could you make for the plaintiff that the principle
underlying the rule of Matthews applies to this case? What arguments
could you make for the defendant that this case is distinguishable from
Matthews and Raleigh Avenue Beach Association and that the plaintiff
has no right of access to the beach adjoining a private home?
b. If you were the judge deciding this case, which rule of law would
you promulgate and how would you justify it?

§5 THE RIGHT TO BE SOMEWHERE AND THE

PROBLEM OF HOMELESSNESS
The American Civil Liberties Union brought a lawsuit in Miami,
Florida, challenging the city’s sweep of homeless people from city parks
before the 1988 Orange Bowl parade. Pottinger v. City of Miami, 810 F.
Supp. 1551 (S.D. Fla. 1992). Miami had many more homeless people than
it could handle in shelters. On November 16, 1992, District Judge C. Clyde
Atkins ordered the police to stop arresting homeless persons for “innocent,
harmless, and inoffensive acts” such as sleeping, eating, bathing, and

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sitting down in public and ordered the city to establish two “ ‘safe zones’
where homeless people who have no alternative shelter can remain without
being arrested for harmless conduct such as sleeping or eating.” Id. at
1584. The case presented a conflict between the “need of homeless
individuals to perform essential, life-sustaining acts in public and the
responsibility of the government to maintain orderly, aesthetically pleasing
public parks and streets.” Id. at 1554. Judge Atkins explained his ruling
this way:

As a number of expert witnesses testified, people rarely choose to be

homeless. Rather, homelessness is due to various economic, physical or
psychological factors that are beyond the homeless individual’s control.
Professor Wright testified that one common characteristic of homeless
individuals is that they are socially isolated; they are part of no community
and have no family or friends who can take them in. Professor Wright also
testified that homelessness is both a consequence and a cause of physical or
mental illness. Many people become homeless after losing their jobs, and
ultimately their homes, as a result of an illness. Many have no home of their
own in the first place, but end up on the street after their families or friends
are unable to care for or shelter them. Dr. Greer testified that once a person is
on the street, illnesses can worsen or occur more frequently due to a variety
of factors such as the difficulty or impossibility of obtaining adequate health
care, exposure to the elements, insect and rodent bites, and the absence of
sanitary facilities for sleeping, bathing, or cooking. Both Professor Wright
and Dr. Greer testified that, except in rare cases, people do not choose to live
under these conditions.
According to Professor Wright’s testimony, joblessness, like physical and
mental illness, becomes more of a problem once a person becomes homeless.
This is so because of the barriers homeless individuals face in searching for a
job. For example, they have no legal address or telephone. Also, they must
spend an inordinate amount of time waiting in line or searching for
seemingly basic things like food, a space in a shelter bed or a place to bathe.
In addition to the problems of social isolation, illness, and unemployment,
homelessness is exacerbated by the unavailability of many forms of
government assistance. Gail Lucy, an expert in the area of government
benefits available to homeless people, testified that many homeless
individuals are ineligible for most government assistance programs. For
example, Supplemental Security Income is available only to people who are
sixty-five years of age or more, who are blind or disabled, and who are
without other resources. Social Security Disability Insurance is available
only to workers who have paid into the Social Security fund for five of the
past ten years prior to the onset of the disability. Aid to Families with
Dependent Children is available only to low-income families with physical
custody of children under the age of eighteen. The only benefit that is widely

167
 available to the homeless is food stamps.
Another notable form of assistance that is unavailable to a substantial
number of homeless individuals is shelter space. Lucy testified that there are
approximately 700 beds available in local shelters. However, approximately
200 of these are “program beds,” for which one must qualify. In addition,
some of these beds are set aside for families. Given the estimated 6,000
individuals who were homeless at the time of trial and the untold number of
people left homeless by Hurricane Andrew, the lack of adequate housing
alternatives cannot be overstated. The plaintiffs truly have no place to go.
In sum, class members rarely choose to be homeless. They become
homeless due to a variety of factors that are beyond their control. In addition,
plaintiffs do not have the choice, much less the luxury, of being in the
privacy of their own homes. Because of the unavailability of low-income
housing or alternative shelter, plaintiffs have no choice but to conduct
involuntary, life-sustaining activities in public places. The harmless conduct
for which they are arrested is inseparable from their involuntary condition of
being homeless. Consequently, arresting homeless people for harmless acts
they are forced to perform in public effectively punishes them for being
homeless. [A]rresting the homeless for harmless, involuntary, life-sustaining
acts such as sleeping, sitting or eating in public is cruel and unusual
[punishment].
The City suggests, apparently in reference to the aftermath of Hurricane
Andrew, that even if homelessness is an involuntary condition in that most
persons would not consciously choose to live on the streets, “it is not
involuntary in the sense of a situation over which the individual has
absolutely no control such as a natural disaster which results in the
destruction of one’s place of residence so as to render that person homeless.”
The court cannot accept this distinction. An individual who loses his home as
a result of economic hard times or physical or mental illness exercises no
more control over these events than he would over a natural disaster.
Furthermore, as was established at trial, the City does not have enough
shelter to house Miami’s homeless residents. Consequently, the City cannot
argue persuasively that the homeless have made a deliberate choice to live in
public places or that their decision to sleep in the park as opposed to some
other exposed place is a volitional act. As Professor Wright testified, the lack
of reasonable alternatives should not be mistaken for choice.

Id. at 1564-1565. Accord Jones v. City of Los Angeles, 444 F.3d 1118 (9th
Cir. 2006), opinion vacated due to settlement by 505 F.3d 1006 (9th Cir.
2007); Johnson v. City of Dallas, 860 F. Supp. 344 (N.D. Tex. 1994),
rev’d on standing grounds, 61 F.3d 442 (5th Cir. 1995). In 1998, Miami
settled the Pottinger litigation, agreeing to expand its social services for
the homeless and to refrain from arresting the homeless for “life-sustaining
activities” without offering them an available bed in a shelter. In April

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2013, the City of Miami’s commissioners voted to go back to court to try
to undo aspects of the Pottinger settlement in order to give the police
greater latitude to arrest the homeless and dispose of their possessions. See
Charles Rabin & Andres Viglucci, Miami to Go to Federal Court to Undo
Homeless-Protection Act, Miami Herald, Apr. 11, 2013.
Consider the following argument by Jeremy Waldron.

Everything that is done has to be done somewhere. No one is free to

perform an action unless there is somewhere he is free to perform it.
One of the functions of property rules, particularly as far as land is
concerned, is to provide a basis for determining who is allowed to be where.
A person who is homeless is, obviously enough, a person who has no
home. One way of describing the plight of a homeless individual might be to
say that there is no place governed by a private property rule where he is
allowed to be.
Our society saves the homeless from this catastrophe only by virtue of the
fact that some of its territory is held as collective property and made
available for common use. The homeless are allowed to be — provided they
are on the streets, in the parks, or under the bridges. Some of them are
allowed to crowd together into publicly provided “shelters” after dark
(though these are dangerous places and there are not nearly enough shelters
for all of them). But in the daytime and, for many of them, all through the
night, wandering in public places is their only option.
[There] is . . . increasing regulation of the streets, subways, parks, and
other public places to restrict the activities that can be performed there. What
is emerging — and it is not just a matter of fantasy — is a state of affairs in
which a million or more citizens have no place to perform elementary human
activities like urinating, washing, sleeping, cooking, eating, and standing
around.
For a person who has no home, and has no expectation of being allowed
into something like a private office building or a restaurant, prohibitions on
things like sleeping that apply particularly to public places pose a special
problem. For although there is no general prohibition on acts of these types,
still they are effectively ruled out altogether for anyone who is homeless and
who has no shelter to go to. The prohibition is comprehensive in effect
because of the cumulation, in the case of the homeless, of a number of
different bans, differently imposed. The rules of property prohibit the
homeless person from doing any of these acts in private, since there is no
private place that he has a right to be. And the rules governing public places
prohibit him from doing any of these acts in public, since that is how we
have decided to regulate the use of public places. So what is the result? Since
private places and public places between them exhaust all the places that
there are, there is nowhere that these actions may be performed by the
homeless person. And since freedom to perform a concrete action requires

169
 freedom to perform it at some place, it follows that the homeless person does
not have the freedom to perform them. If sleeping is prohibited in public
places, then sleeping is comprehensively prohibited to the homeless. If
urinating is prohibited in public places (and if there are no public lavatories)
then the homeless are simply unfree to urinate. These are not altogether
comfortable conclusions, and they are certainly not comfortable for those
who have to live with them.

Jeremy Waldron, Homelessness and the Issue of Freedom, 39 UCLA L.

Rev. 295 (1991).
In contrast to Pottinger, the California Supreme Court upheld a
municipal ordinance that banned camping and storage of personal property
in public areas despite evidence that the number of available shelter beds
was 2,500 less than the need. Tobe v. City of Santa Ana, 892 P.2d 1145
(Cal. 1995). The court merely sustained the ordinance from a facial
challenge, however, finding that it did not inevitably conflict with
constitutional prohibitions; the court did not rule on the question whether,
as applied to the particular facts of the case, the ordinance had the effect of
infringing on constitutionally protected rights. The court held that “Santa
Ana has no constitutional obligation to make accommodations on or in
public property available to the transient homeless to facilitate their
exercise of the right to travel,” and rejected the notion that the ordinance
punished individuals for the “involuntary status of being homeless”
because the ordinance regulated conduct, not merely status. Id. at 1166.
Disagreeing with the analysis in Pottinger, the court concluded that
“[a]ssuming arguendo the accuracy of the declarants’ descriptions of the
circumstances in which they were cited under the ordinance, it is far from
clear that none had alternatives to either the condition of being homeless or
the conduct that led to homelessness and to the citations.” Id. at 1167.
Concurring Justice Joyce Kennard emphasized that the ruling merely
upheld the ordinance on its face and did not reject on the merits the claim
accepted in Pottinger that “a homeless person may not constitutionally be
punished for publicly engaging in harmless activities necessary to life,
such as sleeping.” Id. Accord, Davison v. City of Tucson, 924 F. Supp. 989
(D. Ariz. 1996). But cf. Lavan v. City of Los Angeles, 797 F. Supp. 2d
1005 (C.D. Cal. 2011) (finding that city violated constitutional rights of
the homeless by seizing and destroying property stored on streets without
notice and an opportunity to be heard).
Do you agree with the Pottinger ruling?

Problems

170
 Seventy convicted sex offenders live under a causeway connecting the
City of Miami to Miami Beach because local laws bar them from living
within 2,500 feet of where children gather, and there is apparently no place
that they are allowed to live in the city. On July 9, 2009, the American
Civil Liberties Union sued Miami-Dade County, arguing that its 2,500-
foot restriction is preempted by state law, which provides for only a 1,000-
foot protective zone. See Damien Cave, Roadside Camp for Miami Sex
Offenders Leads to Lawsuit, N.Y. Times, July 10, 2009. Assuming the
local government has the power to enact the 2,500-foot ordinance, do the
sex offenders have any remedy? If you were advising the county
government, what advice would you give?

1. One who enters property with the permission of the owner or possessor is
called a licensee and has a property interest called a license. If the owner revokes
the license, the non-owner must leave the land within a reasonable time; failure to
do so will constitute a trespass.
2. This statute has been superseded by N.J. Stat. §2C:18-3. — EDS.
3. This statute, as well as the subsequently referenced statute, 42 U.S.C.A.
§2809(a)(3), have been repealed. See Pub. L. No. 95-568, §8(a)(2), 92 Stat. 2428
(1978); Pub. L. No. 97-35, tit. VI, §683(a), 95 Stat. 519 (1981). — EDS.
4. Logan Valley was substantially limited in application by the Supreme Court in
Lloyd Corp., Ltd. v. Tanner, 407 U.S. 551 (1972) and substantially overruled in
Hudgens v. National Labor Relations Board, 424 U.S. 507 (1976). See infra §3. —
EDS.
5. That clause states: “This Constitution, and the Laws of the United States
which shall be made in Pursuance thereof; and all Treaties made, or which shall be
made, under the Authority of the United States, shall be the supreme Law of the
Land; and the Judges in every State shall be bound thereby, any Thing in the
Constitution or laws of any State to the Contrary notwithstanding.” — EDS.
6. The criminal trespass statute, G.L. c. 266, §120, provides in relevant part:
“Whoever, without right enters or remains in or upon the dwelling house, [or]
buildings . . . of another . . . after having been forbidden so to do by the person who
has lawful control of said premises . . . shall be punished.” — EDS.
7. As the level of harm that could arise from the unlawful conduct increases, so
does the requirement for considering lawful alternatives. See Commonwealth v.
Hutchins, 410 Mass. 726, 731-732, 575 N.E.2d 741 (1991) (discussing weighing of
“competing harms”). We recognize that the defendant’s conduct may not have
been appreciated by owners, managers, and residents of the private buildings in
which the defendant sought cover, but there was no evidence that the defendant’s
presence did, or had the potential to, cause physical harm to any persons.
Accordingly, the requirement to consider alternatives may be viewed more
leniently where the potential harm was only property-related than it would be

171
viewed where the unlawful conduct, as in Kendall, 451 Mass. at 15, 883 N.E.2d
269, had the potential to harm both persons and property. The doctrine of necessity
has its roots in the notion that “[t]he law deems the lives of all persons far more
valuable than any property.” United States v. Ashton, 24 F. Cas. 873, 874 (C.C.D.
Mass. 1834) (No. 14,470).
8. The viability of this option proposed by the Commonwealth is hampered for
the additional reason that the defendant had no driver’s license or any other
apparent method to make the twenty-mile trek to Pittsfield.
9. Allowing a defendant to defend his trespassing charges by claiming necessity
will not, of course, condone all illegal trespass by homeless persons. It simply
allows a jury of peers to weigh the “competing harms” to determine criminal
responsibility. See Hutchins, 410 Mass. at 730, 575 N.E.2d 741. In Hutchins, this
court reviewed different circumstances where the balance of harms was considered.
Id. at 731-732, 575 N.E.2d 741, discussing Commonwealth v. Thurber, 383 Mass.
328, 418 N.E.2d 1253 (1981), and Commonwealth v. Iglesia, 403 Mass. 132, 525
N.E.2d 1332 (1988). Specifically, the court noted that a prison escape would likely
be justified where a prisoner was in imminent danger at the prison and submitted
himself directly to authorities after escape or where an individual who was
unlawfully carrying a firearm would likely be justified where the carrier “wrested
the gun” from an attacker and immediately went to the police station. Id. Here,
whether a homeless person’s trespass in a privately-owned building where he
previously had been barred from entry is a greater or lesser harm than the intrusion
suffered by the owner and occupiers of the building is a question properly decided
by a jury where the defendant met the foundational elements for the necessity
defense. Iglesia, supra at 135, 525 N.E.2d 1332 (jury instructed on whether
defendant made “better choice” by acting illegally).
10. This law has been superseded by N.J. Stat. §2C:18-3, which provides, at
§2C:18-3(b), that a “person commits a petty disorderly persons offense if, knowing
that he is not licensed or privileged to do so, he enters or remains in any place as to
which notice against trespass is given by: (1) Actual communication to the actor;
or (2) Posting in a manner prescribed by law or reasonably likely to come to the
attention of intruders; or (3) Fencing or other enclosure manifestly designed to
exclude intruders.”
11. For information on Sweden, see Swedish Environmental Protection Agency,
The Right of Public Access, http://www.naturvardsverket.se/en/Enjoying-
nature/The-Right-of-Public-Access/ (last visited Nov. 7, 2016).
12. See Countryside and Rights of Way Act of 2000, available at
http://www.legislation.gov.uk/ukpga/2000/37/contents (last visited Nov. 7, 2016).
13. See Scottish Outdoor Access Code (2003), available at
http://www.outdooraccess-scotland.com (last visited Nov. 7, 2016).
14. The denial of freedom of reasonable access in some States following passage
of the Fourteenth Amendment, and the creation of a common law freedom to
arbitrarily exclude following invalidation of segregation statutes, suggest that the
current majority rule may have had less than dignified origins. See Bell v.

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Maryland, supra.
15. As the New Jersey Supreme Court noted in Uston, the rise of the American
common law right to exclude without cause alarmingly corresponds to the fall of
the old segregation laws. . . .
16. This problem is loosely based on a real case. See Reuters, Eddie Bauer
Settles Suit Based on Race, N.Y. Times, Nov. 26, 1998, at A-26.
17. Mass. Gen. Laws ch. 242, §7 provides:

A person who without license wilfully cuts down, carries away, girdles or
otherwise destroys trees, timber, wood or underwood on the land of another
shall be liable to the owner in tort for three times the amount of the damages
assessed therefor; but if it is found that the defendant had good reason to
believe that the land on which the trespass was committed was his own or
that he was otherwise lawfully authorized to do the acts complained of, he
shall be liable for single damages only.

18. Reprinted by permission of the Tennessean.

19. Article VI of the Constitution provides that the “Constitution, and the Laws
of the United States which shall be made in Pursuance thereof . . . shall be the
supreme Law of the Land; and the Judges in every State shall be bound thereby,
any Thing in the Constitution or Laws of any State to the Contrary
notwithstanding.”
20. In 1988, two years before passage of the ADA, Congress amended Fair
Housing Act of 1968, 42 U.S.C. §§3601-3631, to prohibit discrimination on the
basis of disability in the sale or rental of dwellings. See Chapter 13.
21. In Hudgens v. National Labor Relations Board, 424 U.S. 507 (1976), the
Supreme Court rejected even this narrow reading of Logan Valley, effectively
overruling the case altogether. — EDS.
22. The dry sand area is generally defined as the land west (landward) of the
high water mark to the vegetation line or where there is no vegetation to a seawall,
road, parking lot, or boardwalk.

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CHAPTER 2

Competing Justifications
for Property Rights

Property serves many policy goals, and parties justify their claims with
many arguments. Some of the core justifications for property claims
include sovereign allocation of rights; efficiency or social welfare
maximization; distributive justice or equality; settled expectations; labor
and investment; and possession or occupancy of the property. You will see
courts and litigants invoking various arguments along these lines
throughout the materials in this book. In arguing for and evaluating legal
claims, lawyers need to be able to identify and employ these arguments to
support their legal assertions. This chapter provides an introduction to
some of these justifications.
Justifications may point in different directions: one could argue that the
first to occupy the property is not the one who will use it most efficiently,
for example, or that the government-sanctioned distribution is unequal and
therefore unjust. Different justifications may also support each other:
awarding rights to the current possessor might encourage investment in the
property; or correcting distributive inequalities may facilitate full and
efficient use. Some may argue that particular justifications are more
compelling than others. Today, for example, much scholarship focuses on
economic efficiency, while early American common law placed more
emphasis on protecting established expectations. But almost everyone
recognizes multiple justifications for property rights. Although the sections
below are divided among different kinds of arguments for property rights,
you will see litigants and courts making multiple arguments within each
section.

§1 PROPERTY AND SOVEREIGNTY

Property and sovereignty are inextricably linked. First, property is the
product of sovereignty: without authoritative enforcement of rights to
things — without, that is, a sovereign — many argue that there is no
property. Second, property in effect delegates sovereign rights to owners
— by creating control over use of valuable resources, property gives

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owners legal control over other individuals. Morris Cohen, Property and
Sovereignty, 13 Cornell L.Q. 8 (1928).
What justifies sovereign power to allocate and set rules for control of
valuable resources? What if there is conflict over which sovereign has that
authority? What if the rules set by the sovereign violate justice, equality,
efficiency, or expectations founded on other sources? As you will see,
while sovereign allocation is a powerful source of property rights,
governmental actors (whether judicial, legislative, or executive) sometimes
enforce rights acquired in violation of official rules.

§1.1 United States and American Indian Sovereignty

In the United States, all land held by non-Indians theoretically can be
traced to title ultimately derived from the U.S. government or a prior
colonial power, which in turn obtained title from an American Indian
nation. In the mid-fifteenth century, an estimated five to ten million native
inhabitants occupied the land mass that is now the United States. By a
process of cultural extermination and diseases such as measles and
smallpox, the population of American Indians shrank to about 200,000 by
1910. Louise Erdrich notes that this “is proportionately as if the population
of the United States were to decrease from its present level to the
population of Cleveland.” Louise Erdrich, Where I Ought to Be: A
Writer’s Sense of Place, N.Y. Times Book Rev., July 28, 1985, at 1, 23.
European nations colonizing the Americas initially distributed the land
without regard to Indian property rights. Asserting divine authority, they
granted charters to the Americas from sea to sea and pole to pole. But in
North America, both colonial and British law soon required Indian consent
to acquire rights in Indian lands. This “consent” was often coerced, forged,
or misunderstood. Land acquisition created intense conflict, both between
American Indian nations and settlers and among the settlers themselves,
who disagreed both about whether a government could regulate their
acquisition of Indian land and which government could do so.
Johnson v. M’Intosh, 21 U.S. (8 Wheat.) 543 (1823), involves a
conflict between non-Indians over the acquisition of Indian land. The
plaintiffs claimed to have obtained title directly from the Illinois and
Piankeshaw Indians. The defendant was later granted title by the United
States after the government entered into treaties with a number of Indian
tribes. In adjudicating this dispute, the Supreme Court had the unenviable
task of justifying the process by which American Indian nations were
robbed of their ancestral lands. At the same time, Chief Justice John
Marshall’s opinion provided the basis for substantial legal protection of

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Indian possessions. How well did the Chief Justice do in attempting to
reconcile the demands of justice and power?

Johnson v. M’Intosh

21 U.S. 543 (1823)

[Joshua Johnson and Thomas Graham sued to eject William M’Intosh
from certain lands in Illinois. Johnson and Graham claimed the lands by
purchase from the Piankeshaw Indians, and M’Intosh claimed it under a
grant from the United States. The parties stipulated to the following facts.
The lands were within those that the King of England had originally
granted the Virginia Company in 1609. At the time of the grant this
territory was “held, occupied, and possessed, in full sovereignty, by
various independent tribes or nations of Indians, who were the sovereigns
of their respective portions of the territory, and the absolute owners and
proprietors of the soil.” In 1624, the Virginia Company was dissolved, and
it and its lands became the British colony of Virginia.
On October 7, 1763, the King of England issued the Royal
Proclamation, reserving for the Indians all lands west of the Appalachians,
and forbidding British subjects from purchasing or settling on any of those
lands. In 1773, chiefs of the Illinois Nation sold William Murray and
others two tracts of land west of the Appalachians for 24,000 dollars. The
lands were within the limits of Virginia, east of the Mississippi and
northwest of the Ohio Rivers. In 1775, certain chiefs of the Piankeshaw
Nation sold Louis Viviat and others lands in the same area for $31,000.
In 1776, the colony of Virginia declared its independence from Great
Britain. In 1779, the new State of Virginia decreed that it had the sole right
to purchase lands from the Indians within its territory, and that any past or
future purchases by individuals from the Indians were void. In 1783,
Virginia conveyed all its lands northwest of the Ohio River to the United
States. The lands ultimately became part of the State of Illinois. In 1803
and 1809 treaties, the United States acquired parts of the same territory
previously purchased by Murray and Viviat from various Indian tribes. In
1818, the United States sold 11,560 acres of this territory to William
M’Intosh.
Joshua Johnson and Thomas J. Graham inherited a portion of the lands
purchased from the Piankeshaw in 1775 from one of the original private
grantees. Neither they nor any of the grantees claiming under the 1773 and
1775 sales had ever had actual possession of the lands. The private
grantees had, between 1781 and 1816, repeatedly petitioned the Congress
of the United States to acknowledge and confirm their title to those lands

176
without success.]
On the part of the plaintiffs, it was contended,
1. That the Piankeshaw Indians were the owners of the lands in
dispute, at the time of executing the deed of October 10th, 1775, and had
power to sell. But as the United States had [later] purchased the same lands
of the same Indians, both parties claim from the same source. [The Indian]
title by occupancy is to be respected, as much as that of an individual,
obtained by the same right, in a civilized state. The circumstance, that the
members of the society held in common, did not affect the strength of their
title by occupancy. In short, all, or nearly all, the lands in the United
States, is holden under purchases from the Indian nations; and the only
question in this case must be, whether it be competent to individuals to
make such purchases, or whether that be the exclusive prerogative of
government.
2. That the British king’s proclamation of October 7th, 1763, could not
affect this right of the Indians to sell; because they were not British
subjects, nor in any manner bound by the authority of the British
government, legislative or executive. And, because, even admitting them
to be British subjects, absolutely, or sub modo, they were still proprietors
of the soil, and could not be devested of their rights of property, or any of
its incidents, by a mere act of the executive government, such as this
proclamation.
3. That the proclamation of 1763 could not restrain the purchasers
under these deeds from purchasing. [T]he establishment of a government
establishes a system of laws, and excludes the power of legislating by
proclamation. The proclamation could not have the force of law within the
chartered limits of Virginia. A proclamation, that no person should
purchase land in England or Canada, would be clearly void.
4. That the act of Assembly of Virginia, passed in May, 1779, cannot
affect the right of the plaintiffs, and others claiming under these deeds;
because, on general principles, and by the constitution of Virginia, the
legislature was not competent to take away private, vested rights, or
appropriate private property to public use, under the circumstances of this
case.
On the part of the defendants, it was insisted, that the uniform
understanding and practice of European nations, and the settled law, as
laid down by the tribunals of civilized states, denied the right of the
Indians to be considered as independent communities, having a permanent
property in the soil, capable of alienation to private individuals. They
remain in a state of nature, and have never been admitted into the general
society of nations. Even if it should be admitted that the Indians were

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originally an independent people, they have ceased to be so. A nation that
has passed under the dominion of another, is no longer a sovereign state.
The same treaties and negotiations, before referred to, show their
dependent condition. Or, if it be admitted that they are now independent
and foreign states, the title of the plaintiffs would still be invalid: as
grantees from the Indians, they must take according to their laws of
property, and as Indian subjects. The law of every dominion affects all
persons and property situate within it; and the Indians never had any idea
of individual property in lands. It cannot be said that the lands conveyed
were disjoined from their dominion; because the grantees could not take
the sovereignty and eminent domain to themselves.
By the law of nature, [American Indians] had not acquired a fixed
property capable of being transferred. The measure of property acquired
by occupancy is determined, according to the law of nature, by the extent
of men’s wants, and their capacity of using it to supply them. It is a
violation of the rights of others to exclude them from the use of what we
do not want, and they have an occasion for. Upon this principle the North
American Indians could have acquired no proprietary interest in the vast
tracts of territory which they wandered over; and their right to the lands on
which they hunted, could not be considered as superior to that which is
acquired to the sea by fishing in it. The use in the one case, as well as the
other, is not exclusive. According to every theory of property, the Indians
had no individual rights to land; nor had they any collectively, or in their
national capacity; for the lands occupied by each tribe were not used by
them in such a manner as to prevent their being appropriated by a people
of cultivators. All the proprietary rights of civilized nations on this
continent are founded on this principle.

Mr. Chief Justice JOHN MARSHALL delivered the opinion of the Court.
The plaintiffs in this cause claim the land, in their declaration
mentioned, under two grants, purporting to be made, the first in 1773, and
the last in 1775, by the chiefs of certain Indian tribes, constituting the
Illinois and the Piankeshaw nations; and the question is, whether this title
can be recognized in the Courts of the United States?
The facts, as stated in the case agreed, show the authority of the chiefs
who executed this conveyance, so far as it could be given by their own
people; and likewise show, that the particular tribes for whom these chiefs
acted were in rightful possession of the land they sold. The inquiry,
therefore, is, in a great measure, confined to the power of Indians to give,
and of private individuals to receive, a title which can be sustained in the
Courts of this country.

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 As the right of society, to prescribe those rules by which property may
be acquired and preserved is not, and cannot be drawn into question; as the
title to lands, especially, is and must be admitted to depend entirely on the
law of the nation in which they lie; it will be necessary, in pursuing this
inquiry, to examine, not singly those principles of abstract justice, which
the Creator of all things has impressed on the mind of his creature man,
and which are admitted to regulate, in a great degree, the rights of civilized
nations, whose perfect independence is acknowledged; but those principles
also which our own government has adopted in the particular case, and
given us as the rule for our decision.
On the discovery of this immense continent, the great nations of
Europe were eager to appropriate to themselves so much of it as they could
respectively acquire. Its vast extent offered an ample field to the ambition
and enterprise of all; and the character and religion of its inhabitants
afforded an apology for considering them as a people over whom the
superior genius of Europe might claim an ascendency. The potentates of
the old world found no difficulty in convincing themselves that they made
ample compensation to the inhabitants of the new, by bestowing on them
civilization and Christianity, in exchange for unlimited independence. But,
as they were all in pursuit of nearly the same object, it was necessary, in
order to avoid conflicting settlements, and consequent war with each other,
to establish a principle, which all should acknowledge as the law by which
the right of acquisition, which they all asserted, should be regulated as
between themselves. This principle was, that discovery gave title to the
government by whose subjects, or by whose authority, it was made,
against all other European governments, which title might be
consummated by possession.
The exclusion of all other Europeans, necessarily gave to the nation
making the discovery the sole right of acquiring the soil from the natives,
and establishing settlements upon it. It was a right with which no
Europeans could interfere. It was a right which all asserted for themselves,
and to the assertion of which, by others, all assented.
Those relations which were to exist between the discoverer and the
natives, were to be regulated by themselves. The rights thus acquired being
exclusive, no other power could interpose between them.
In the establishment of these relations, the rights of the original
inhabitants were, in no instance, entirely disregarded; but were necessarily,
to a considerable extent, impaired. They were admitted to be the rightful
occupants of the soil, with a legal as well as just claim to retain possession
of it, and to use it according to their own discretion; but their rights to
complete sovereignty, as independent nations, were necessarily

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diminished, and their power to dispose of the soil at their own will, to
whomsoever they pleased, was denied by the original fundamental
principle, that discovery gave exclusive title to those who made it.
While the different nations of Europe respected the right of the natives,
as occupants, they asserted the ultimate dominion to be in themselves; and
claimed and exercised, as a consequence of this ultimate dominion, a
power to grant the soil, while yet in possession of the natives. These grants
have been understood by all, to convey a title to the grantees, subject only
to the Indian right of occupancy.
The history of America, from its discovery to the present day, proves,
we think, the universal recognition of these principles.
No one of the powers of Europe gave its full assent to this principle,
more unequivocally than England. The documents upon this subject are
ample and complete. So early as the year 1496, her monarch granted a
commission to the Cabots, to discover countries then unknown to Christian
people, and to take possession of them in the name of the king of England.
Two years afterwards, Cabot proceeded on this voyage, and discovered the
continent of North America, along which he sailed as far south as Virginia.
To this discovery the English trace their title.
[A]ll the nations of Europe, who have acquired territory on this
continent, have asserted in themselves, and have recognized in others, the
exclusive right of the discoverer to appropriate the lands occupied by the
Indians. Have the American States rejected or adopted this principle?
By the treaty which concluded the war of our revolution, Great Britain
relinquished all claim, not only to the government, but to the “propriety
and territorial rights of the United States,” whose boundaries were fixed in
the second article. By this treaty, the powers of government, and the right
to soil, which had previously been in Great Britain, passed definitively to
these States. We had before taken possession of them, by declaring
independence; but neither the declaration of independence, nor the treaty
confirming it, could give us more than that which we before possessed, or
to which Great Britain was before entitled. It has never been doubted, that
either the United States, or the several States, had a clear title to all the
lands within the boundary lines described in the treaty, subject only to the
Indian right of occupancy, and that the exclusive power to extinguish that
right, was vested in that government which might constitutionally exercise
it.
The States, having within their chartered limits different portions of
territory covered by Indians, ceded that territory, generally, to the United
States, on conditions expressed in their deeds of cession, which
demonstrate the opinion, that they ceded the soil as well as jurisdiction,

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and that in doing so, they granted a productive fund to the government of
the Union. The lands in controversy lay within the chartered limits of
Virginia, and were ceded with the whole country northwest of the river
Ohio.
The ceded territory was occupied by numerous and warlike tribes of
Indians; but the exclusive right of the United States to extinguish their
title, and to grant the soil, has never, we believe, been doubted.
The magnificent purchase of Louisiana, was the purchase from France
of a country almost entirely occupied by numerous tribes of Indians, who
are in fact independent. Yet, any attempt of others to intrude into that
country, would be considered as an aggression which would justify war.
Our late acquisitions from Spain are of the same character; and the
negotiations which preceded those acquisitions, recognize and elucidate
the principle which has been received as the foundation of all European
title in America.
The United States, then, have unequivocally acceded to that great and
broad rule by which its civilized inhabitants now hold this country. They
hold, and assert in themselves, the title by which it was acquired. They
maintain, as all others have maintained, that discovery gave an exclusive
right to extinguish the Indian title of occupancy, either by purchase or by
conquest; and gave also a right to such a degree of sovereignty, as the
circumstances of the people would allow them to exercise.
The power now possessed by the government of the United States to
grant lands, resided, while we were colonies, in the crown, or its grantees.
The validity of the titles given by either has never been questioned in our
Courts. It has been exercised uniformly over territory in possession of the
Indians. The existence of this power must negative the existence of any
right which may conflict with, and control it. An absolute title to lands
cannot exist, at the same time, in different persons, or in different
governments. An absolute, must be an exclusive title, or at least a title
which excludes all others not compatible with it. All our institutions
recognise the absolute title of the crown, subject only to the Indian right of
occupancy, and recognise the absolute title of the crown to extinguish that
right. This is incompatible with an absolute and complete title in the
Indians.
We will not enter into the controversy, whether agriculturists,
merchants, and manufacturers, have a right, on abstract principles, to expel
hunters from the territory they possess, or to contract their limits. Conquest
gives a title which the Courts of the conqueror cannot deny, whatever the
private and speculative opinions of individuals may be, respecting the
original justice of the claim which has been successfully asserted. The

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British government, which was then our government, and whose rights
have passed to the United States, asserted title to all the lands occupied by
Indians, within the chartered limits of the British colonies. It asserted also
a limited sovereignty over them, and the exclusive right of extinguishing
the title which occupancy gave to them. These claims have been
maintained and established as far west as the river Mississippi, by the
sword. The title to a vast portion of the lands we now hold, originates in
them. It is not for the Courts of this country to question the validity of this
title, or to sustain one which is incompatible with it.
Although we do not mean to engage in the defence of those principles
which Europeans have applied to Indian title, they may, we think, find
some excuse, if not justification, in the character and habits of the people
whose rights have been wrested from them.
The title by conquest is acquired and maintained by force. The
conqueror prescribes its limits. Humanity, however, acting on public
opinion, has established, as a general rule, that the conquered shall not be
wantonly oppressed, and that their condition shall remain as eligible as is
compatible with the objects of the conquest. Most usually, they are
incorporated with the victorious nation, and become subjects or citizens of
the government with which they are connected. The new and old members
of the society mingle with each other; the distinction between them is
gradually lost, and they make one people. Where this incorporation is
practicable, humanity demands, and a wise policy requires, that the rights
of the conquered to property should remain unimpaired; that the new
subjects should be governed as equitably as the old, and that confidence in
their security should gradually banish the painful sense of being separated
from their ancient connexions, and united by force to strangers.
When the conquest is complete, and the conquered inhabitants can be
blended with the conquerors, or safely governed as a distinct people,
public opinion, which not even the conqueror can disregard, imposes these
restraints upon him; and he cannot neglect them without injury to his fame,
and hazard to his power.
But the tribes of Indians inhabiting this country were fierce savages,
whose occupation was war, and whose subsistence was drawn chiefly from
the forest. To leave them in possession of their country, was to leave the
country a wilderness; to govern them as a distinct people, was impossible,
because they were as brave and as high spirited as they were fierce, and
were ready to repel by arms every attempt on their independence.
What was the inevitable consequence of this state of things? The
Europeans were under the necessity either of abandoning the country, and
relinquishing their pompous claims to it, or of enforcing those claims by

182
the sword, and by the adoption of principles adapted to the condition of a
people with whom it was impossible to mix, and who could not be
governed as a distinct society, or of remaining in their neighbourhood, and
exposing themselves and their families to the perpetual hazard of being
massacred.
Frequent and bloody wars, in which the whites were not always the
aggressors, unavoidably ensued. European policy, numbers, and skill,
prevailed. As the white population advanced, that of the Indians
necessarily receded. The country in the immediate neighbourhood of
agriculturists became unfit for them. The game fled into thicker and more
unbroken forests, and the Indians followed. The soil, to which the crown
originally claimed title, being no longer occupied by its ancient
inhabitants, was parcelled out according to the will of the sovereign power,
and taken possession of by persons who claimed immediately from the
crown, or mediately, through its grantees or deputies.
That law which regulates, and ought to regulate in general, the
relations between the conqueror and conquered, was incapable of
application to a people under such circumstances. The resort to some new
and different rule, better adapted to the actual state of things, was
unavoidable. Every rule which can be suggested will be found to be
attended with great difficulty.
However extravagant the pretension of converting the discovery of an
inhabited country into conquest may appear; if the principle has been
asserted in the first instance, and afterwards sustained; if a country has
been acquired and held under it; if the property of the great mass of the
community originates in it, it becomes the law of the land, and cannot be
questioned. So, too, with respect to the concomitant principle, that the
Indian inhabitants are to be considered merely as occupants, to be
protected, indeed, while in peace, in the possession of their lands, but to be
deemed incapable of transferring the absolute title to others. However this
restriction may be opposed to natural right, and to the usages of civilized
nations, yet, if it be indispensable to that system under which the country
has been settled, and be adapted to the actual condition of the two people,
it may, perhaps, be supported by reason, and certainly cannot be rejected
by Courts of justice.
The absolute ultimate title has been considered as acquired by
discovery, subject only to the Indian title of occupancy, which title the
discoverers possessed the exclusive right of acquiring. Such a right is no
more incompatible with a seisin in fee, than a lease for years, and might as
effectually bar an ejectment.

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 CONTEXT

Map of Land Claims in Johnson v.

M’Intosh
Map of Illinois with land claims superimposed, courtesy of Eric Kades, History
and Interpretation of the Great Case of Johnson v. M’Intosh, 19 Law & Hist.
Rev. 67 (2001). The striped and hatch marked areas are the Murray and Viviat
purchases, and the black boxes represent the townships with M’Intosh’s land at
issue in the case. The plaintiffs’ and defendant’s lands are not within 50 miles
of each other (the gray box at the tip of Illinois includes M’Intosh land not
challenged in the case). Why then did they pursue the claim?

Another view has been taken of this question, which deserves to be

considered. The title of the crown, whatever it might be, could be acquired
only by a conveyance from the crown. If an individual might extinguish
the Indian title for his own benefit, or, in other words, might purchase it,
still he could acquire only that title. Admitting their power to change their
laws or usages, so far as to allow an individual to separate a portion of
their lands from the common stock, and hold it in severalty, still it is a part
of their territory, and is held under them, by a title dependent on their laws.
The grant derives its efficacy from their will; and, if they choose to resume
it, and make a different disposition of the land, the Courts of the United
States cannot interpose for the protection of the title. The person who
purchases lands from the Indians, within their territory, incorporates
himself with them, so far as respects the property purchased; holds their

184
title under their protection, and subject to their laws. If they annul the
grant, we know of no tribunal which can revise and set aside the
proceeding. We know of no principle which can distinguish this case from
a grant made to a native Indian, authorizing him to hold a particular tract
of land in severalty.
As such a grant could not separate the Indian from his nation, nor give
a title which our Courts could distinguish from the title of his tribe, as it
might still be conquered from, or ceded by his tribe, we can perceive no
legal principle which will authorize a Court to say, that different
consequences are attached to this purchase, because it was made by a
stranger. By the treaties concluded between the United States and the
Indian nations, whose title the plaintiffs claim, the country comprehending
the lands in controversy has been ceded to the United States, without any
reservation of their title. These nations had been at war with the United
States, and had an unquestionable right to annul any grant they had made
to American citizens. Their cession of the country, without a reservation of
this land, affords a fair presumption, that they considered it as of no
validity. They ceded to the United States this very property, after having
used it in common with other lands, as their own, from the date of their
deeds to the time of cession; and the attempt now made, is to set up their
title against that of the United States.
It has never been contended, that the Indian title amounted to nothing.
Their right of possession has never been questioned. The claim of
government extends to the complete ultimate title, charged with this right
of possession, and to the exclusive power of acquiring that right.
After bestowing on this subject a degree of attention which was more
required by the magnitude of the interest in litigation, and the able and
elaborate arguments of the bar, than by its intrinsic difficulty, the Court is
decidedly of opinion, that the plaintiffs do not exhibit a title which can be
sustained in the Courts of the United States.

Notes and Questions

1. Role of doctrine of discovery. What was the purpose of the
doctrine of discovery according to Justice Marshall? To whom did it
apply?
2. Indian property rights under doctrine. What property rights did
Indian nations have under the doctrine? What rights do they lack? Imagine,
for example, that a non-Indian individual without federal consent forced an
Indian off her land. Does the Indian have a cause of action to remove him?
See Fellows v. Blacksmith, 60 U.S. 366 (1856) (deciding whether non-

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Indian state grantees have right to forcibly dispossess Seneca Indian
landowners).
3. United States property rights under doctrine. What rights did the
United States get in Indian lands under the doctrine of discovery? What
property rights did they lack? Imagine, for example, that the United States
grants an individual a right to lands subject to the Indian title of
occupancy. What has to happen before the individual can legally move
onto the land and start farming?
4. The courts of the conqueror. At the beginning of the opinion, the
court reporter summarizes the arguments made by the parties. Note that the
opinion does not adopt either of these arguments. Instead, Justice Marshall
declared, “Conquest gives a title which the Courts of the conqueror cannot
deny, whatever the private and speculative opinions of individuals may be,
respecting the original justice of the claim which has been successfully
asserted.” What does this mean? Can you tell what Justice Marshall’s
“private and speculative opinion” is of the original justice of the loss of
Indian property rights through the doctrine of discovery?
5. Role of public opinion. Justice Marshall states that “[h]umanity”
has established “as a general rule” that the property rights of a conquered
people remain unchanged after conquest, declaring that “public opinion,
which not even the conqueror can disregard, imposes these restraints upon
him; and he cannot neglect them without injury to his fame, and hazard to
his power.” In United States v. Percheman, 32 U.S. 51 (1833), the
Supreme Court followed this rule in interpreting various laws to validate
titles to private citizens granted by Spain before the United States acquired
Florida. Chief Justice Marshall’s opinion explained, “The modern usage of
nations, which has become law, would be violated; that sense of justice
and of right which is acknowledged and felt by the whole civilized world
would be outraged, if private property should be generally confiscated, and
private rights annulled.” Percheman at 86-87. Why does public opinion
limit governmental actions? What are the costs to a government of
ignoring public opinion? Why did the general rule not apply to Indian
lands?
6. Later Supreme Court statements on Indian land. Johnson v.
M’Intosh was among the earliest of many Supreme Court statements
regarding Indian land. In 1831, Justice Marshall described the discovery
doctrine in these words: “The extravagant and absurd idea, that the feeble
settlements made on the sea coast, or the companies under whom they
were made, acquired legitimate power by them to govern the people, or

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occupy the lands from sea to sea, did not enter the mind of any man. [All
they gained] was the exclusive right of purchasing such lands as the
natives were willing to sell.” Worcester v. Georgia, 31 U.S. 515, 544-545
(1832). In 1835, the Court stated that “it [is] a settled principle, that
[American Indians’] right of occupancy is considered as sacred as the fee
simple of the whites.” Mitchel v. United States, 34 U.S. 711, 746 (1835).
Are these statements consistent with Johnson v. M’Intosh?
In Tee-Hit-Ton Indians v. United States, 348 U.S. 272 (1955), the
Supreme Court rejected a claim by Alaska Native tribes against the United
States for compensation for millions of acres of land. The Court held that
although the fifth amendment provides that property shall not be taken
without just compensation, U.S. Const., amdt. V, the Constitution did not
protect tribal property unless the federal government had formally
affirmed title to the land. The Court claimed to base its holding on “the
rule derived from Johnson v. M’Intosh that the taking by the United States
of unrecognized Indian title is not compensable under the Fifth
Amendment”:

The line of cases adjudicating Indian rights on American soil leads to the
conclusion that Indian occupancy, not specifically recognized as ownership
by action authorized by Congress, may be extinguished by the Government
without compensation. Every American schoolboy knows that the savage
tribes of this continent were deprived of their ancestral ranges by force and
that, even when the Indians ceded millions of acres by treaty in return for
blankets, food and trinkets, it was not a sale but the conquerors’ will that
deprived them of their land.
In the light of the history of Indian relations in this Nation, no other course
would meet the problem of the growth of the United States. Our conclusion
does not uphold harshness as against tenderness toward the Indians, but it
leaves with Congress, where it belongs, the policy of Indian gratuities for the
termination of Indian occupancy of Government-owned land rather than
making compensation for its value a rigid constitutional principle.

In 1884 and 1900, laws for the acquisition and settlement of the Alaska
Territory, the United States had provided that the Indians “shall not be
disturbed in the possession of any lands actually in their use or occupation
or now claimed by them,” but the Court found these laws did not recognize
any property rights in the Alaska Natives, but simply reserved the question
for another day. Therefore the Alaska Natives had no legal protection —
besides the “Indian gratuities” Congress was willing to provide — for the
acquisition of the lands they had occupied for centuries. Is Tee-Hit-Ton
consistent with Johnson?

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 §1.2 Competing Justifications for Property Rights
Johnson v. M’Intosh, together with the arguments of the parties at the
beginning of the opinion, is a rich source of competing justifications for
property rights. To help you spot and evaluate these arguments in the rest
of the book, let’s trace some of these competing justifications. (Note,
however, that Johnson has been the subject of perhaps hundreds of articles
and multiple full-length books: the list below is necessarily incomplete.)
1. First possession or occupancy. One of the most common
arguments for property rights is that one is the first possessor or occupier
of the property. See Carol Rose, Possession as the Origin of Property, 52
U. Chi. L. Rev. 73 (1985). What interests

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 By superimposing official transfers of land from Indian nations over
transfers from foreign nations, one can see that the United States
recognized the need for consent from both. Maps by Carl Waldman,
superimposed by Mira Singer.

does a rule according title to first possessors serve? Well, it might prevent
disputes about title, by preventing latecomers from challenging those there
first, and encourage individuals to quickly find and claim useful property.
What objections can you think of to these justifications? More importantly,
why don’t these arguments work in Johnson? As the plaintiffs argue, the
Indians were clearly the first occupants of the land in question. Justice
Marshall acknowledges that “converting the discovery of an inhabited
country into conquest” is an “extravagant pretension.” So why don’t the
Indians have full property rights?
2. Labor and investment. The defendants counter that the Indians
never acquired property rights because as hunters rather than farmers, “the
lands occupied by each tribe were not used by them in such a manner as to
prevent their being appropriated by a people of cultivators.” Does this

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mean I can demand my neighbor’s land if I intend to farm it, while he
simply occasionally picnics on it? Recent scholarship shows that in fact
Indians had transformed the North American landscape by their work
before non-Indians arrived; and as the facts stipulate, neither of the parties
in Johnson had ever set foot on the land. Regardless, Justice Marshall
rejects that as a basis for deciding the case as well, saying, “We will not
enter into the controversy, whether agriculturists, merchants, and
manufacturers, have a right, on abstract principles, to expel hunters from
the territory they possess, or to contract their limits.”
3. Efficiency and maximization of social welfare. The farmers over
hunters argument is also an efficiency argument that the farmers maximize
overall social welfare by engaging in the most productive use of the land.
Marshall’s opinion does not turn on this argument, but he acknowledges it
with his statement that part of the “excuse” for the discovery doctrine is
that “[t]o leave [the Indians] in possession of their country, was to leave
the country a wilderness.” Two central tenets in efficiency-based
arguments for property rules are (1) that property rights should be
protected, to “assure to the cultivator the fruits of his industry,” and so
encourage productive labor, and (2) that property should be freely
alienable because “[e]very alienation imports advantage” by transferring
property from one who values it less to one who values it more. Jeremy
Bentham, Principles of the Civil Code, chs. 3 & 19 (1802). Can you think
of challenges to these principles? Does the rule in Johnson further these
principles?
4. Distributive justice. The defendants also raise a distributive justice
argument, by claiming that the Indians do not have property rights in their
lands because “[i]t is a violation of the rights of others to exclude them
from the use of what we do not want, and they have occasion for.” The
desire to prevent gross inequality and ensure distribution to those in great
need has also been influential in American law and policy, influencing, for
example, the passage of the Homestead Act in 1862, and the Social
Security Act in 1934. Thomas Jefferson urged James Madison in 1785, “I
am conscious that an equal division of property is impracticable. But the
consequences of this enormous inequality producing so much misery to the
bulk of mankind, legislators cannot invent too many devices for
subdividing property.” Does inequality justify redistribution of property?
Under which circumstances, if any?
5. Sovereign authority or might makes right? That brings us back to
Marshall’s central point: the discovery doctrine is the law because the
government in charge said so, and the government has to have the power

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to say who can acquire property rights and how. One could see this as a
simple statement that property arises from law: in order to prevent constant
insecurity of property rights and to facilitate transfers, we have agreed to
governmental rules regarding what property rights are and how they are
acquired. To settle a vast continent, and prevent settlers from getting the
United States into wars it could not handle, the government needed
authority over when Indian land was acquired and how.
For the Indians, however, the doctrine that they lacked rights to
transfer their land based on the decree of foreigners who had never set foot
on that land must have felt like a subtly different rule: that property rights
are created by and favor those in power. U.S. history provides other
support for such a perception. African slaves not only were property, but
were prevented from owning property. See, e.g., Graves v. Allan, 52 Ky.
190 (Ky. App. 1852). But see Dylan C. Penningroth, The Claims of
Kinfolk: African American Property and Community in the Nineteenth-
Century South (2003) (describing the well-established ownership networks
slaves developed with the consent of their masters). Married women’s
property became that of their husbands until the late nineteenth century.
See Chapter 9, §3.1.B; Reva Siegel, Home as Work: The First Women’s
Rights Claims Concerning Wives’ Household Labor: 1850-1880, Yale L.J.
1073, 1082 (1994) (“[A] wife negotiated marriage as a dependent: without
property or the legal prerogative to earn it.”). And “immigrants ineligible
for citizenship,” a category that included almost all Asian immigrants until
well into the twentieth century, were prevented from owning property up
and down the West Coast and in many other states. See Keith Aoki, No
Right to Own? The Early Twentieth-Century “Alien Land Laws” as a
Prelude to Internment, 40 B.C. L. Rev. 37 (1998); Rose Cuison Villazor,
Oyama v. California: At the Intersection of Property, Race, and
Citizenship, 87 Wash. U. L. Rev. 979 (2010). At the same time, these laws
clashed with another fundamental precept of property: that the system
works better when everyone can participate in property ownership.

§1.3 Past Wrongs, Present Remedies: Modern Indian Land

Claims
In 1790, the year after the U.S. Constitution was ratified, Congress
codified the prohibition on purchasing Indian land without federal consent.
The Trade and Intercourse Act, also called the Nonintercourse Act,
remains in effect with slight amendments today:

No purchase, grant, lease, or other conveyance of lands, or of any title or

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 claim thereto, from any Indian nation or tribe of Indians, shall be of any
validity in law or equity, unless the same be made by treaty or convention
entered into pursuant to the Constitution.

25 U.S.C. §177. Despite the statute, both states and private parties
continued to acquire Indian land without federal consent. New York, for
example, purchased most of the treaty lands of the Iroquois Nations of the
Haudenosaunee Confederacy. Federal officials urged New York to comply
with the Nonintercourse Act, but the state ignored them. Rather than
enforcing the restriction, the United States tried to convince the tribes to
exchange their remaining land for lands west of the Mississippi River.
Although the tribes challenged the state purchases (including by arguing
that they were fraudulent), procedural obstacles made it difficult for tribes
to sue the states directly. State law prohibited tribes from bringing suit
regarding Indian lands except through state-appointed guardians. Until
1875, federal courts lacked general jurisdiction to review questions of
federal law. Even after 1875, state sovereign immunity barred suits against
the state to acquire their lands. See Robert N. Clinton & Margaret Tobey
Hotopp, Judicial Enforcement of the Federal Restraints on the Alienation
of Indian Land: The Origins of the Indian Land Claims, 31 Me. L. Rev. 17
(1979-1980); Joseph William Singer, Nine-Tenths of the Law: Title,
Possession & Sacred Obligations, 38 Conn. L. Rev. 605 (2006). In the
meantime, non-Indians bought and sold the acquired lands, cities and
towns developed, and homes and businesses were built. The federal
treaties guaranteeing the land to the Iroquois Nations seemed a thing of the
past.
In 1966, however, the United States enacted a statute allowing tribes to
bring actions against third parties in federal court without federal consent.
In 1969, the Oneida Indian Nation of New York sued Oneida County
seeking rent for occupation between 1968 and 1969 of 100,000 acres of
land. The United States had guaranteed the land to the Oneidas in a 1794
treaty, but New York purchased the treaty land in 1795. In 1974, the
Supreme Court held that the Nonintercourse Act granted the tribes a
federal common law right to sue for violations of the act. Oneida Indian
Nation v. County of Oneida, 414 U.S. 661 (1974) (Oneida I). On remand,
the district court and court of appeals held that the 1795 purchase was
void, and ordered the county to pay rent for the land. Oneida Indian
Nation v. Oneida County, 719 F.2d 525 (2d Cir. 1983). The Supreme
Court affirmed the decision, holding that no federal statute of limitations
barred the tribal claims. County of Oneida v. Oneida Indian Nation, 470
U.S. 226 (1985) (Oneida II).

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 While this litigation was pending, the Oneidas brought an additional
claim for possession of all of their original treaty land. Over the course of
the 1970s, other tribes in New York, Maine, Massachusetts, Rhode Island,
and Connecticut brought Nonintercourse Act claims challenging state and
private acquisitions of their land. Some of these claims were defeated or
delayed by arguments that the plaintiffs were not really Indian tribes.
Other claims were settled, usually with agreements that the tribe would
cede most of its original land in exchange for the guarantee of some
publicly owned lands as a reservation and funds to purchase additional
reservation lands from willing sellers in a specified area. E.g., Rhode
Island Indian Claims Settlement Act, 25 U.S.C. §1701 et seq.; Maine
Indian Claims Settlement Act, 25 U.S.C. §1721 et seq.; Mashantucket
Pequot Indian Claims Settlement Act, 25 U.S.C.A. §1751 et seq.; Mohegan
Nation (Connecticut) Land Claims Settlement Act, 25 U.S.C. §1755 et seq.
In order to secure the settlements, the tribes also agreed to significant state
jurisdiction over the new lands.
But New York and the Iroquois Nations did not settle. The ongoing
litigation created concern among landowners, who feared ejectment from
the land, and hostility against the tribes. Signs reading “no sovereign
nation, no reservation” appeared along county roads. In 1999, in a case
concerning land claims by the Cayuga Indian Nation, the U.S. district
court held that the parties could not join private landowners to the
litigation or seek to eject them, finding that such a remedy was impossible
given the passage of time. Cayuga Indian Nation of New York v. Cuomo,
1999 U.S. Dist. LEXIS 10579 (N.D.N.Y. 1999). The district judge found
that “the loss of their homeland has had an immeasurable impact upon the
Cayuga culture and Cayuga society as a whole,” id. at *77, and that the
tribes had continuously tried to get back the land but that the “systems
which theoretically should have assisted the Cayugas seemingly thwarted
their efforts.” Id. at *77 & *83. Nevertheless, ejectment of private
landowners would “potentially displace literally thousands of private
landowners and several public landowners” and would “prove all too
vividly the old axiom: ‘Two wrongs don’t make a right.’ ” Id. at *90-*91;
see also Oneida Indian Nation of N.Y. v. County of Oneida, 199 F.R.D. 61
(N.D.N.Y. 2000). In a later opinion, the court awarded the Cayuga Indian
Nation approximately $247 million in damages for the lost rental value of
their land, Cayuga Indian Nation of New York v. Pataki, 165 F. Supp. 2d
266 (N.D.N.Y. 2002), rev’d, 413 F.3d 266 (2d Cir. 2005), but, as you will
see, the Second Circuit later held the Cayuga could not claim even that.
As the legal battle continued, the Oneida Indian Nation of New York
bought back some of the lands within the boundaries laid out by its 1794

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treaty with the United States. It began to operate businesses on the lands,
arguing that because the treaty had never been legally terminated, the lands
were part of a reservation and free from state taxation. The district court
and Second Circuit agreed, but Supreme Court reversed. Sherrill v. Oneida
Indian Nation of New York, 544 U.S. 197 (2005), held that laches,
acquiescence, and impossibility barred the claim to freedom from state
jurisdiction.
Laches is an equitable doctrine barring actions by those whose
unreasonable delay in suing has resulted in prejudice to their opponents in
defending the claim. See Kathryn E. Fort, The New Laches: Creating Title
Where None Existed, 16 Geo. Mason L. Rev. 357 (2009). The Court did
not discuss whether the Oneidas could have brought the suit earlier, or find
that the passage of time would prejudice the defendants. Nevertheless, it
held, laches applied because the state and counties had long exercised
sovereignty over the territory, the Oneida Indian Nation had acquiesced in
this state of affairs, and it would be disruptive now to alter the jurisdiction
with respect to these parcels of land. The Second Circuit has applied the
Sherrill decision to other ongoing land claims, reversing the
aforementioned damages award in favor of the Cayugas as barred by
laches as well. Cayuga Indian Nation v. Pataki, 413 F.3d 266 (2d Cir.
2005); see also Oneida Indian Nation of N.Y. v. County of Oneida, 617
F.3d 114 (2d Cir. 2010).

Notes and Questions

1. No one today argues that unauthorized state acquisitions of tribal
lands were legal in 1795, and few still argue that they were justified at the
time. But uncorrected injustice in allocations of property often leads to
justifiable expectations by those who later purchase and improve the lands.
How should these conflicting expectations — between Indian nations
deprived of their homelands and those who later built homes and towns on
those lands — be resolved? Do you agree with Judge McCurn that while
states may be held liable today for the illegal acquisition of land, private
landowners cannot be? Do you agree with the Supreme Court that even
when tribes purchase land within their treaty boundaries from private
sellers, it is too disruptive for tribes to assert immunity from state
jurisdiction on those lands?
2. Many nations face the conflict between past injustice and present
land possession. In South Africa, for example, apartheid segregated the
races and concentrated all political and economic power in a white
minority until the 1990s. Even after the formal end of apartheid in 1994,

194
the same white minority owned most of the productive land in the country.
Although the country began a voluntary land distribution program, the
program stalled because funds that might have been used to pay
landowners were necessary for other social and economic programs. In
addition, the existing landowners, who could take advantage of economies
of scale and had far more capital and experience, were often more
productive farmers. In the meantime, some landless black South Africans
left desperately overcrowded townships to occupy lands they believed
were unowned, or at least unneeded by their owners. See Sharon
LaFraniere & Michael Wines, Africa Quandary: Whites’ Land v. the
Landlessness of Blacks, N.Y. Times, Jan. 6, 2004, at A-1.
In one case, over 40,000 squatters moved onto a portion of the
Modderklip-Boerdery farm, building a makeshift town with thousands of
shacks and streets. Although the lower courts granted Modderklip-
Boerdery an order of eviction, when the residents refused to leave
voluntarily, the sheriff demanded that Modderklip-Boerdery provide a
deposit of 1.8 million rand (about 200,000 dollars) to cover the costs of the
security firm the sheriff would need to hire to assist with the removal. The
owner appealed, and the Supreme Court of Appeal of South Africa held
that because government enforcement of property rights is an essential part
of property, denying enforcement was therefore the equivalent of a taking
of property. Eviction without provision of alternate housing, however,
would violate the right to housing provided by the South African
Constitution. The court found that Modderklip-Boerdery was entitled to
damages for the loss of the land, and that the squatters were entitled to stay
until the state provided them with other housing. Modder East Squatters v.
Modderklip Boerdery (PTY), Ltd., 2004 (8) BCLR 821 (SCA) (S. Afr.).
How should the government respond to such conflicts? What are the
potential costs of different courses of action?

§2 GOVERNMENT GRANT
§2.1 Homestead Acts and Land Grants
Once lands were taken from American Indian nations, they were held
by the U.S. government as public lands. How were those lands distributed?
The United States adopted a mixed strategy. Although the federal
government retained a substantial amount, especially in the western states,
it also sold or gave away millions of acres. “A whole continent was sold or
given away — to veterans, settlers, squatters, railroads, states, colleges,
speculators, and land companies.” Lawrence M. Friedman, A History of

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American Law 231 (2d ed. 1985). The main reason for getting rid of the
land was the promotion of the “basic postulate of American social
structure. The ideal was a country of free citizens, small-holders living on
their own bits of land.” Id. at 232. Much of the land was granted as a gift
under specific conditions rather than sold. A great deal of land was given
to colleges and railroads, and other lands were granted to the state
governments themselves. At least 130 million acres were granted to
railroads. Id. at 415.
Beginning in 1796, land was sold in large tracts for relatively high
prices. This policy provoked fears of land monopoly and seemed to favor
speculators over farmers. Demands for cheaper, more available land
prompted passage of an 1820 law reducing the price of land. Yet many
settlers resisted federal policy, occupying federal lands before formally
purchasing them. Bowing to settler demands, laws were repeatedly passed
giving preferences (preemption rights) to actual settlers, including illegal
settlers, culminating in a general law in 1841. That law gave the head of a
family who had settled “in person” on land and “improved” it the first
claim to buy the land, up to a maximum of 160 acres, at the minimum
government price. Id. at 233-234.
After the Civil War, the Morrill Act of 1862 gave away vast tracts of
land to the states: 30,000 acres for each senator and representative the state
was entitled to under the 1860 census. The land was to be used to establish
“Colleges for the Benefit of Agriculture and Mechanic Arts” — the land
grant colleges existing in every state are the result. In addition, the
Homestead Act of 1862 granted most heads of families, persons over 21,
and veterans (except those who had “borne arms against the United States
or given aid and comfort to its enemies”) the right to “enter one quarter
section or a less quantity of unappropriated public lands” if they would
certify that they wanted the land for their own “exclusive use and benefit”
and “for the purpose of actual settlement.” Id. at 416. After five years of
settlement, the government would issue a patent for the land. An actual
settler who qualified could, however, buy up the land at the minimum
price (generally $1.25 an acre) before the end of the five-year period.
The land laws were, in Friedman’s words, “hopelessly inconsistent.” A
variety of policies were followed. “Some land was free for settlers; other
land was for sale. The government proposed to sell some land to the
highest bidder; proposed using other land to induce private enterprise to
build railroads; gave other land to the state to fund their colleges.” Id. at
417. The “homestead principle” of “giving land free to the landless poor”
was the “weakest of all, and the first to go. The government continued to
sell land for cash; and the best land was ‘snapped up’ by speculators.” Id.

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 §2.2 Squatters
Despite emphasis on governmental allocation of property rights,
individuals and groups often assert property rights inconsistent with the
law, and perhaps more surprising, the government often recognizes these
assertions by granting formal rights. Eduardo Moises Peñalver and Sonia
K. Katyal note that “[t]ime and again, groups of people have intentionally
violated property laws, and in a number of important instances, property
law has responded by shifting to accommodate their demands, bringing
them back within the fold of the law-abiding community.” Property
Outlaws: How Squatters, Pirates, and Protesters Improve the Law of
Property (2010). Why does the government sometimes acquiesce to
squatting? What does the excerpt below suggest?

James Willard Hurst, Law and the Conditions of Freedom in the

Nineteenth-Century United States

3-5 (1956)

One day in February of 1836, in the scarce-born village of Pike Creek

on the southeastern Wisconsin shore of Lake Michigan, Jason Lothrop —
Baptist minister, schoolteacher, boarding house proprietor, and civic leader
— set up on a stump a rude press of his own construction and with ink
which he had made himself printed a handbill setting forth the record of
the organizational meeting of “The Pike River Claimants Union . . . for the
attainment and security of titles to claims on Government lands.”
The settlers whose Union this was had begun to move into the lands
about Pike Creek beginning in the summer of 1835. They were squatters;
put less sympathetically, they were trespassers. They might not lawfully
come upon the lands before the federal survey was made, and this was not
completed in this area until about February 1, 1836; they might not make
formal entry and buy until the President proclaimed a sale day, and
Presidents Jackson and Van Buren withheld proclaiming these newly
surveyed lands until 1839; they might not establish claims by pre-emption,
for the existing pre-emption law expired by limitation in June, 1836, and
was not immediately renewed because of objections to speculators’ abuses.
Jason Lothrop recalled twenty years later: “Before the lands were
surveyed, this often brought confusion and disputes with reference to
boundary lines, and still greater confusion followed when the Government
surveys were made in the winter of 1835-36. These contentions often led
to bitter quarrels and even bloodshed.”
The settlers met several times to discuss the need of a more orderly

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framework within which growth might go on. Finally their discussions
produced a meeting at Bullen’s store in Pike Creek on February 13, 1836,
where they adopted the constitution of their Claimants Union[:]

Whereas, a union and co-operation of all the inhabitants will be

indispensably necessary, in case the pre-emption law should not pass, for the
securing and protecting of our claims;
And whereas, we duly appreciate the benefit which may result from such
an association, not only in regulating the manner of making and sustaining
claims, and settling differences in regard to them, but in securing the same to
the holders thereof against speculators at the land sale; and being well aware
that consequences the most dangerous to the interests of settlers will follow,
if such a union be not formed; and as Government has heretofore encouraged
emigration by granting pre-emption to actual settlers, we are assured that our
settling and cultivating the public lands is in accordance with the best wishes
of Government; and knowing that in some instances our neighbors have been
dealt with in an unfeeling manner, driven from their homes, their property
destroyed, their persons attacked, and their lives jeopardized, to satisfy the
malignant disposition of unprincipled and avaricious men; and looking upon
such proceedings as unjust, calculated to produce anarchy, confusion and the
like among us, destroy our fair prospects, subvert the good order of society,
and render our homes the habitations of terror and distrust — those homes, to
obtain which we left our friends, deprived ourselves of the many blessings
and privileges of society, have borne the expenses, and encountered the
hardships of a perilous journey, advancing into a space beyond the bounds of
civilization, and having the many difficulties and obstructions of a state of
nature to overcome, and on the peaceable possession of which our all is
depending;
We, therefore, as well meaning inhabitants, having in view the promotion
of the interest of our settlement, and knowing the many advantages derived
from unity of feeling and action, do come forward this day, and solemnly
pledge ourselves to render each other our mutual assistance, in the protection
of our just rights.

From the survey Ordinance of 1785 on, squatters settled large areas of the
public lands in defiance of law, ahead of official survey, without color of
title other than that created by the impact of a popular feeling that would
not be denied. At government auctions, they assembled in force unlawfully
to frighten off free outside bidding and prevent competition from forcing
any of their company to pay the public land office more than the legal
minimum to regularize his holdings. But, as at Pike Creek, while they
waited for the public sale day, these settlers all over the central and
midwestern states set up local governments in the form of “claims

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associations,” elected officers with whom to record their land claims and
from whom to obtain decisions of conflicts, and then generally abided
among themselves by these records and decisions. Often unlawful in
origin, settlement nevertheless quickly brought effective demand for law.

§2.3 Freed Slaves

I and my children are now free! We are as free from the power of
slaveholders as are the white people of the north; and though that, according to
my ideas, is not saying a great deal, it is a vast improvement in my condition.
The dream of my life is not yet realized. I do not sit with my children in a home
of my own. I still long for a hearthstone of my own, however humble. I wish it
for my children’s sake far more than for my own.
— Harriet A. Jacobs1

Many freed slaves saw land ownership as a crucial element of freedom.

As slave owners fled in advance of federal troops, their former slaves
staked claims to the plantations as compensation for their years of unpaid
labor. Yankee soldiers encouraged them, telling them they were entitled to
40 acres and a mule.

“My master has had me ever since I was seven years old, and never give
me nothing,” observed a twenty-one-year-old laborer in Richmond. “I
worked for him twelve years, and I think something is due me.” The day a
South Carolina rice planter anticipated trouble was when one of his field
hands told him that “the land ought to belong to the man who (alone) could
work it,” not to those who “sit in the house” and profit by the labor of others.
[P]lanters derived considerable comfort from the knowledge that Federal
officials were prepared to confirm their property rights. Until the blacks
acknowledged the futility of land expectations, the Freedmen’s Bureau
recognised how difficult it would be to stabilize agricultural operations. With
that sense of priorities, the Bureau instructed its agents to do everything in
their power to disabuse the ex-slaves of any lingering illusions about taking
over their masters’ lands.
Rather than confirm the settlers in possession of the land they had
cultivated and on which they had erected their homes, the government now
proposed to return the plantations to those for whom they had previously
labored as slaves.

Leon Litwack, Been in the Storm So Long: The Aftermath of Slavery 399-
405 (1980). On May 29, 1865, President Andrew Johnson issued a
Proclamation of Amnesty, pardoning most former Confederates and
ordering their property returned. News of the proclamation helped fuel a

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rumor that the president had revoked the Emancipation Proclamation.
Some refused to abandon their land. In Norfolk County, Virginia, ex-slave
Richard Parker urged his fellow freedmen to fight to defend their lands
together, arguing that “the white man had secured this land only by
forcibly expelling the Indians and he suggested that they now exercise the
same prerogative. After a pitched battle with county agents, the black
settlers were finally driven off the land.” Id. at 406.
Freedmen bureau officials and missionaries preached self-help instead
of redistribution, telling the freedmen that if they worked hard and saved
their wages, they would soon be able to buy land of their own. But many
planters refused to sell or rent to blacks, for fear of losing a stable
workforce and generating feelings of “impudence and independence.”
Litwack at 407. Labor contracts became new forms of peonage,
criminalizing leaving before the contract was over or before debts to the
landowner for seeds and supplies had been paid. See Aviam Soifer, Status,
Contract, and Promises Unkept, 96 Yale L.J. 1916, 1944-1951 (1987).
Blacks who did manage to buy land of their own also often became the
targets of extralegal violence and fraud.

Notes and Questions

1. Contemporary implications. Johnson v. M’Intosh discussed the
acquisition of vast amounts of land from American Indian nations. A great
deal of this land was given to the railroads for free. In the middle of the
nineteenth century, land grants to railroads encompassed 155 million
acres, “or more than one fourth of the Louisiana purchase, one ninth of
what was then the nation’s entire land area.” Dee Brown, Hear That
Lonesome Whistle Blow 176-177 (1977). Other land in the West was sold
or distributed by the government at below-market prices. Still other land
was sold at fair market value; some of this land went to speculators who
resold it. James Willard Hurst notes that squatters often defeated federal
land policies by trespassing on public lands; many of their claims were
later recognized by the federal government. Leon Litwack recounts how
freed slaves were denied not only access to land but also compensation for
their years of unpaid labor; they were often constrained by economic
necessity to continue working that same land, sometimes for the same
master.
Together, these historical reports suggest an activist government taking
and distributing land for a variety of purposes. They also suggest a fair
amount of self-help and creation of law by communities of settlers who
squatted on government land. What implications does such government

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policy have for us today?
2. Squatters on tribal land. A perennial problem was what to do
about squatters who illegally entered tribal or federal lands without a
permit from the federal government or a federal patent. Sometimes the
United States used force to remove such trespassers. It might do so to
ensure an orderly transfer of property and to give each person an equal
chance to acquire the best lands. But politics often caused the government
to look away when illegal settlements occurred. Pressure from illegal
squatters also often led the United States to pressure tribes to sign new
treaties giving up yet more land. The famous legal battle between the
Cherokee Nation and the State of Georgia resulted from Cherokee refusal
to bow to this pressure; the Cherokees won an initial legal victory in
Worcester v. Georgia, 31 U.S. 515 (1832), but the United States ultimately
forced the Cherokees off the land in what has become known as the Trail
of Tears.

Problem
A group of homeless persons takes over abandoned property in a major
city. The city has foreclosed on the property for failure to pay property
taxes and has not yet resold it or begun looking for a buyer, since the
property is dilapidated. The squatters claim a right to take over the
abandoned property and point to the experience of the American West,
where squatters took over property and interfered with land sales to others.
More often than not, those squatters’ claims were later confirmed by
legislation. The city objects to random occupations of its property and
hopes to develop a rational plan for the future use of the property.

1. As attorney for the city, what advice would you give the mayor?
2. As attorney for the squatters, what arguments would you make to
persuade the city to allow your clients to claim possessory rights in
abandoned city property? As attorney for the city, how would you
respond to these arguments?

§2.4 Basic Needs Fulfillment

The constitutions of some countries, such as South Africa, contain a
right to housing and basic welfare needs. See, e.g., S. Afr. Const. ch. 2,
§26 (“Everyone has the right to have access to adequate housing”); S. Afr.
Const. ch. 2, §27(1) (“Everyone has the right to have access to a. health
care services, including reproductive health care; b. sufficient food and

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water; and c. social security, including, if they are unable to support
themselves and their dependants, appropriate social assistance”). The U.S.
Constitution does not contain such a guarantee. In 1969, Professor Frank
Michelman argued that the U.S. Constitution should be interpreted to
require the states to provide minimum levels of government financial
assistance sufficient to enable the poor to provide for their basic needs and
to avoid severe deprivation. In effect, he suggested that individuals have a
constitutional right to minimum protection to obtain access to the means
necessary for human life. Frank Michelman, Foreword: On Protecting the
Poor Through the Fourteenth Amendment, 83 Harv. L. Rev. 7 (1969); see
also Frank Michelman, In Pursuit of Constitutional Welfare Rights: One
View of Rawls’ Theory of Justice, 121 U. Pa. L. Rev. 962 (1973). No court
in the United States has accepted this argument.
The New York Constitution requires provision of social welfare for the
needy, but its enforcement is subject to legislative discretion. N.Y. Const.
art. XVII, §1 (“The aid, care and support of the needy are public concerns
and shall be provided by the state and by such of its subdivisions, and in
such manner and by such means, as the legislature may from time to time
determine”); Tucker v. Toia, 371 N.E.2d 449, 451 (N.Y. 1977) (although
the legislature has the discretion to determine the means and amount of aid
to the needy, the constitution prohibits the legislature from refusing to aid
those it has classified as needy). Some courts have interpreted their state
welfare statutes to impose obligations on the legislature to provide
sufficient funding to enable families to live with their children and avoid
placing their children in foster care. See, e.g., Massachusetts Coalition for
the Homeless v. Secretary of Human Services, 511 N.E.2d 603 (Mass.
1987); Jiggetts v. Grinker, 553 N.E.2d 570 (N.Y. 1990); Hodge v.
Ginsberg, 303 S.E.2d 245 (W. Va. 1983). Such rulings are subject to
legislative amendment; the Massachusetts legislature overruled the
Massachusetts Coalition case by inserting the words “subject to
appropriation” in the statute. See, e.g., Mass. Gen. Laws ch. 18, §2. Most
state courts have agreed with a New Jersey court that ruled that “the extent
to which funds are to be made available to meet the standard of need under
New Jersey statutes is a political question to be decided by the
representatives of the people.” In re Petitions for Rulemaking, 538 A.2d
1302 (N.J. Super. Ct. App. Div. 1988).
At the time Professor Michelman wrote, federal welfare legislation
guaranteed families with children an entitlement to a minimum level of
government benefits. However, in 1996, Congress passed the Personal
Responsibility and Work Opportunity Act of 1996, 42 U.S.C. §§601-619.
This “welfare reform” bill abolished the old Aid to Families with

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Dependent Children (AFDC) program and replaced it with Temporary
Assistance to Needy Families (TANF). The new law abolishes the welfare
entitlement and replaces it with a more limited right to temporary
assistance with a five-year lifetime limit on such government benefits and
a requirement that recipients start working within two years in order to
continue receiving benefits. States are empowered to apply even more
stringent requirements, such as requiring recipients to go to work
immediately, a policy that was originally adopted in Wisconsin. Wis. Stat.
§49.141(2)(b) (repealed, 1999 Wis. Laws Act 9).
If a mother obtains a job paying the minimum wage, she is unlikely to
be able to care for herself and her children and pay for housing, clothing,
adequate childcare, and transportation without additional funding from
some other source. Kathryn Edin & Laura Lein, Making Ends Meet: How
Single Mothers Survive Welfare and Low-Wage Work (1997). Should
individuals be entitled to minimum levels of assistance? Should parents be
entitled to sufficient resources to live with their children? Consider the
following story from the New York Times.

The [welfare mother] had signed an agreement with the state to go to college,
which she believed offered her the best route to a job that paid enough to
support her three children. She was put on a waiting list. Her caseworker told
her she would have to get a job in the meantime. A few weeks after she
began working for $5.50 an hour, her 5-year-old got sick. The boy was
running a fever and could not go to the day-care center. The worker then told
the mother that the only acceptable excuse for missing work was a doctor’s
note saying that she herself was ill. So she left her son with a neighbor.
When she came home, she found him alone and untended. She stayed home
with him and was fired from her job. Her welfare benefits were then reduced
because she had not done what her worker required. Unable to pay the rent,
the family was evicted . . . and slept in a friend’s car. Because of the family
homelessness, one of the children’s teachers reported them to child-
protection services. The child-protection worker told the mother that her
children would be placed in foster care if she could not provide for them.

Celia W. Dugger, Iowa Plan Tries to Cut Off the Cash, N.Y. Times, Apr.
7, 1995, at A-1, quoted in Joel F. Handler & Yeheskel Hasenfeld, We the
Poor People: Work, Poverty, and Welfare 98 (1997).
Assume the mother sues the state, claiming that she has a constitutional
right not to be separated from her children and that, if government
assistance is needed to ensure this right, that she is constitutionally entitled
to it so that she can raise her children in her own home. How would you
decide the case?

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§3 LABOR AND INVESTMENT
John Locke famously asserted that labor and investment were the basis
for property rights: “Whatsoever then he removes out of the state that
nature hath provided, and left it in, he hath mixed his labour with, and
joined to it something that is his own, and thereby makes it his property.”
John Locke, Second Treatise on Government, ch. 5 §27 (1690). But labor
only sometimes results in property rights. Even Locke immediately
qualified his statement with the proviso that it would only apply “at least
where there is enough, and as good, left in common for others.” Id. What
role should labor and investment play in claims to property? What kinds of
labor are sufficient? Must the labor increase the objective value of the
resource? How much does the individual’s labor have to contribute to the
final product as compared to the raw materials? Philosopher Robert
Nozick, for example, asked whether someone who throws her can of
tomato juice into the sea has gained ownership of the sea or simply lost her
tomato juice? Robert Nozick, Anarchy, State and Utopia 175 (1974).

§3.1 Creative Labor

Questions of the effect of labor and investment are particularly
pressing when the alleged property is not physical, but is instead the result
of creation, invention, or, as in the next case, fact-gathering. Here, the
useful product of the labor can be shared by many with very little
additional effort. What are the arguments for and against creating property
rights that prevent such sharing?

International News Service v. Associated Press

248 U.S. 215 (1918)

Mr. Justice MAHLON PITNEY delivered the opinion of the Court.
The parties are competitors in the gathering and distribution of news
and its publication for profit in newspapers throughout the United States.
The Associated Press, which was complainant in the District Court, is a
co-operative organization, incorporated under the Membership
Corporations Law of the state of New York, its members being individuals
who are either proprietors or representatives of about 950 daily
newspapers published in all parts of the United States. Complainant
gathers in all parts of the world, by means of various instrumentalities of
its own, by exchange with its members, and by other appropriate means,
news and intelligence of current and recent events of interest to newspaper

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readers and distributes it daily to its members for publication in their
newspapers. The cost of the service, amounting approximately to
$3,500,000 per annum, is assessed upon the members and becomes a part
of their costs of operation, to be recouped, presumably with profit, through
the publication of their several newspapers. Under complainant’s by-laws
each member agrees upon assuming membership that news received
through complainant’s service is received exclusively for publication in a
particular newspaper, language, and place specified in the certificate of
membership, that no other use of it shall be permitted, and that no member
shall furnish or permit any one in his employ or connected with his
newspaper to furnish any of complainant’s news in advance of publication
to any person not a member. And each member is required to gather the
local news of his district and supply it to the Associated Press and to no
one else.
Defendant [International News Service] is a corporation organized
under the laws of the state of New Jersey, whose business is the gathering
and selling of news to its customers and clients, consisting of newspapers
published throughout the United States, under contracts by which they pay
certain amounts at stated times for defendant’s service. It has widespread
news-gathering agencies; the cost of its operations amounts, it is said, to
more than $2,000,000 per annum; and it serves about 400 newspapers
located in the various cities of the United States and abroad, a few of
which are represented, also, in the membership of the Associated Press.
The parties are in the keenest competition between themselves in the
distribution of news throughout the United States; and so, as a rule, are the
newspapers that they serve, in their several districts.
The value of the service, and of the news furnished, depends upon the
promptness of transmission, as well as upon the accuracy and impartiality
of the news; it being essential that the news be transmitted to members or
subscribers as early or earlier than similar information can be furnished to
competing newspapers by other news services, and that the news furnished
by each agency shall not be furnished to newspapers which do not
contribute to the expense of gathering it. And further, to quote from the
answer:

Prompt knowledge and publication of worldwide news is essential to the

conduct of a modern newspaper, and by reason of the enormous expense
incident to the gathering and distribution of such news, the only practical
way in which a proprietor of a newspaper can obtain the same is, either
through co-operation with a considerable number of other newspaper
proprietors in the work of collecting and distributing such news, and the

205
 equitable division with them of the expenses thereof, or by the purchase of
such news from some existing agency engaged in that business.

The bill was filed to restrain the pirating of complainant’s news by

defendant in three ways: First, by bribing employees of newspapers
published by complainant’s members to furnish Associated Press news to
defendant before publication, for transmission by telegraph and telephone
to defendant’s clients for publication by them; second, by inducing
Associated Press members to violate its by-laws and permit defendant to
obtain news before publication; and, third, by copying news from bulletin
boards and from early editions of complainant’s newspapers and selling
this, either bodily or after rewriting it, to defendant’s customers.
The only matter that has been argued before us is whether defendant
may lawfully be restrained from appropriating news taken from bulletins
issued by complainant or any of its members, or from newspapers
published by them, for the purpose of selling it to defendant’s clients.
Complainant asserts that defendant’s admitted course of conduct in this
regard both violates complainant’s property right in the news and
constitutes unfair competition in business. And notwithstanding [that] the
case has proceeded only to the stage of a preliminary injunction, we have
deemed it proper to consider the underlying questions, since they go to the
very merits of the action and are presented upon facts that are not in
dispute. As presented in argument, these questions are: (1) Whether there
is any property in news; (2) Whether, if there be property in news collected
for the purpose of being published, it survives the instant of its publication
in the first newspaper to which it is communicated by the news-gatherer;
and (3) Whether defendant’s admitted course of conduct in appropriating
for commercial use matter taken from bulletins or early editions of
Associated Press publications constitutes unfair competition in trade.
Complainant’s news matter is not copyrighted. It is said that it could
not, in practice, be copyrighted, because of the large number of dispatches
that are sent daily; and, according to complainant’s contention, news is not
within the operation of the copyright act. Defendant, while apparently
conceding this, nevertheless invokes the analogies of the law of literary
property and copyright, insisting as its principal contention that, assuming
complainant has a right of property in its news, it can be maintained
(unless the copyright act be complied with) only by being kept secret and
confidential, and that upon the publication with complainant’s consent of
uncopyrighted news of any of complainant’s members in a newspaper or
upon a bulletin board, the right of property is lost, and the subsequent use
of the news by the public or by defendant for any purpose whatever

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becomes lawful.
In considering the general question of property in news matter, it is
necessary to recognize its dual character, distinguishing between the
substance of the information and the particular form or collocation of
words in which the writer has communicated it.
No doubt news articles often possess a literary quality, and are the
subject of literary property at the common law; nor do we question that
such an article, as a literary production, is the subject of copyright by the
terms of the act as it now stands.
But the news element — the information respecting current events
contained in the literary production — is not the creation of the writer, but
is a report of matters that ordinarily are publici juris; it is the history of the
day. It is not to be supposed that the framers of the Constitution, when they
empowered Congress “to promote the progress of science and useful arts,
by securing for limited times to authors and inventors the exclusive right to
their respective writings and discoveries” (Const. art. I, §8, par. 8),
intended to confer upon one who might happen to be the first to report a
historic event the exclusive right for any period to spread the knowledge of
it.
We need spend no time, however, upon the general question of
property in news matter at common law, or the application of the copyright
act, since it seems to us the case must turn upon the question of unfair
competition in business. And, in our opinion, this does not depend upon
any general right of property analogous to the common-law right of the
proprietor of an unpublished work to prevent its publication without his
consent; nor is it foreclosed by showing that the benefits of the copyright
act have been waived. We are dealing here not with restrictions upon
publication but with the very facilities and processes of publication. The
peculiar value of news is in the spreading of it while it is fresh; and it is
evident that a valuable property interest in the news, as news, cannot be
maintained by keeping it secret. Besides, except for matters improperly
disclosed, or published in breach of trust or confidence, or in violation of
law, none of which is involved in this branch of the case, the news of
current events may be regarded as common property. What we are
concerned with is the business of making it known to the world, in which
both parties to the present suit are engaged. That business consists in
maintaining a prompt, sure, steady, and reliable service designed to place
the daily events of the world at the breakfast table of the millions at a price
that, while of trifling moment to each reader, is sufficient in the aggregate
to afford compensation for the cost of gathering and distributing it, with
the added profit so necessary as an incentive to effective action in the

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commercial world. The service thus performed for newspaper readers is
not only innocent but extremely useful in itself, and indubitably constitutes
a legitimate business. The parties are competitors in this field; and, on
fundamental principles, applicable here as elsewhere, when the rights or
privileges of the one are liable to conflict with those of the other, each
party is under a duty so to conduct its own business as not unnecessarily or
unfairly to injure that of the other.
The question here is not so much the rights of either party as against
the public but their rights as between themselves. And, although we may
and do assume that neither party has any remaining property interest as
against the public in uncopyrighted news matter after the moment of its
first publication, it by no means follows that there is no remaining property
interest in it as between themselves. For, to both of them alike, news
matter, however little susceptible of ownership or dominion in the absolute
sense, is stock in trade, to be gathered at the cost of enterprise,
organization, skill, labor, and money, and to be distributed and sold to
those who will pay money for it, as for any other merchandise. Regarding
the news, therefore, as but the material out of which both parties are
seeking to make profits at the same time and in the same field, we hardly
can fail to recognize that for this purpose, and as between them, it must be
regarded as quasi property, irrespective of the rights of either as against
the public.
Not only do the acquisition and transmission of news require elaborate
organization and a large expenditure of money, skill, and effort; not only
has [news] an exchange value to the gatherer, dependent chiefly upon its
novelty and freshness, the regularity of the service, its reputed reliability
and thoroughness, and its adaptability to the public needs; but also, as is
evident, the news has an exchange value to one who can misappropriate it.
The peculiar features of the case arise from the fact that, while novelty
and freshness form so important an element in the success of the business,
the very processes of distribution and publication necessarily occupy a
good deal of time. Complainant’s service, as well as defendant’s, is a daily
service to daily newspapers; most of the foreign news reaches this country
at the Atlantic seaboard, principally at the city of New York, and because
of this, and of time differentials due to the earth’s rotation, the distribution
of news matter throughout the country is principally from east to west;
and, since in speed the telegraph and telephone easily outstrip the rotation
of the earth, it is a simple matter for defendant to take complainant’s news
from bulletins or early editions of complainant’s members in the eastern
cities and at the mere cost of telegraphic transmission cause it to be
published in western papers issued at least as early as those served by

208
complainant. Besides this, and irrespective of time differentials,
irregularities in telegraphic transmission on different lines, and the normal
consumption of time in printing and distributing the newspaper, result in
permitting pirated news to be placed in the hands of defendant’s readers
sometimes simultaneously with the service of competing Associated Press
papers, occasionally even earlier.
Defendant insists that when, with the sanction and approval of
complainant, and as the result of the use of its news for the very purpose
for which it is distributed, a portion of complainant’s members
communicate it to the general public by posting it upon bulletin boards so
that all may read, or by issuing it to newspapers and distributing it
indiscriminately, complainant no longer has the right to control the use to
be made of it; that when it thus reaches the light of day it becomes the
common possession of all to whom it is accessible; and that any purchaser
of a newspaper has the right to communicate the intelligence which it
contains to anybody and for any purpose, even for the purpose of selling it
for profit to newspapers published for profit in competition with
complainant’s members.
The fault in the reasoning lies in applying as a test the right of the
complainant as against the public, instead of considering the rights of
complainant and defendant, competitors in business, as between
themselves. The right of the purchaser of a single newspaper to spread
knowledge of its contents gratuitously, for any legitimate purpose not
unreasonably interfering with complainant’s right to make merchandise of
it, may be admitted; but to transmit that news for commercial use, in
competition with complainant — which is what defendant has done and
seeks to justify — is a very different matter. In doing this defendant, by its
very act, admits that it is taking material that has been acquired by
complainant as the result of organization and the expenditure of labor,
skill, and money, and which is salable by complainant for money, and that
defendant in appropriating it and selling it as its own is endeavoring to
reap where it has not sown, and by disposing of it to newspapers that are
competitors of complainant’s members is appropriating to itself the harvest
of those who have sown. Stripped of all disguises, the process amounts to
an unauthorized interference with the normal operation of complainant’s
legitimate business precisely at the point where the profit is to be reaped,
in order to divert a material portion of the profit from those who have
earned it to those who have not; with special advantage to defendant in the
competition because of the fact that it is not burdened with any part of the
expense of gathering the news. The transaction speaks for itself and a court
of equity ought not to hesitate long in characterizing it as unfair

209
competition in business.
The contention that the news is abandoned to the public for all
purposes when published in the first newspaper is untenable.
Abandonment is a question of intent, and the entire organization of the
Associated Press negatives such a purpose. The cost of the service would
be [prohibitive] if the reward were to be so limited. No single newspaper,
no small group of newspapers, could sustain the expenditure. Indeed, it is
one of the most obvious results of defendant’s theory that, by permitting
indiscriminate publication by anybody and everybody for purposes of
profit in competition with the news-gatherer, it would render publication
profitless, or so little profitable as in effect to cut off the service by
rendering the cost prohibitive in comparison with the return.
It is to be observed that the view we adopt does not result in giving to
complainant the right to monopolize either the gathering or the distribution
of the news, or, without complying with the copyright act, to prevent the
reproduction of its news articles, but only postpones participation by
complainant’s competitor in the processes of distribution and reproduction
of news that it has not gathered, and only to the extent necessary to prevent
that competitor from reaping the fruits of complainant’s efforts and
expenditure, to the partial exclusion of complainant, and in violation of the
principle that underlies the maxim sic utere tuo, etc.

Mr. Justice OLIVER WENDELL HOLMES, JR., dissenting.

When an uncopyrighted combination of words is published there is no
general right to forbid other people repeating them — in other words there
is no property in the combination or in the thoughts or facts that the words
express. Property, a creation of law, does not arise from value, although
exchangeable — a matter of fact. Many exchangeable values may be
destroyed intentionally without compensation. Property depends upon
exclusion by law from interference, and a person is not excluded from
using any combination of words merely because some one has used it
before, even if it took labor and genius to make it. If a given person is to
be prohibited from making the use of words that his neighbors are free to
make some other ground must be found. One such ground is vaguely
expressed in the phrase unfair trade. This means that the words are
repeated by a competitor in business in such a way as to convey a
misrepresentation that materially injures the person who first used them,
by appropriating credit of some kind which the first user has earned. The
ordinary case is a representation by device, appearance, or other
indirection that the defendant’s goods come from the plaintiff. But the only
reason why it is actionable to make such a representation is that it tends to

210
give the defendant an advantage in his competition with the plaintiff and
that it is thought undesirable that an advantage should be gained in that
way. Apart from that the defendant may use such unpatented devices and
uncopyrighted combinations of words as he likes. The ordinary case, I say,
is palming off the defendant’s product as the plaintiff’s but the same evil
may follow from the opposite falsehood — from saying whether in words
or by implication that the plaintiff’s product is the defendant’s, and that, it
seems to me, is what has happened here.
Fresh news is got only by enterprise and expense. To produce such
news as it is produced by the defendant represents by implication that it
has been acquired by the defendant’s enterprise and at its expense. When it
comes from one of the great news collecting agencies like the Associated
Press, the source generally is indicated, plainly importing that credit; and
that such a representation is implied may be inferred with some confidence
from the unwillingness of the defendant to give the credit and tell the truth.
If the plaintiff produces the news at the same time that the defendant does,
the defendant’s presentation impliedly denies to the plaintiff the credit of
collecting the facts and assumes that credit to the defendant. If the plaintiff
is later in Western cities it naturally will be supposed to have obtained its
information from the defendant. The falsehood is a little more subtle, the
injury, a little more indirect, than in ordinary cases of unfair trade, but I
think that the principle that condemns the one condemns the other. It is a
question of how strong an infusion of fraud is necessary to turn a flavor
into a poison. The dose seems to me strong enough here to need a remedy
from the law. But as, in my view, the only ground of complaint that can be
recognized without legislation is the implied misstatement, it can be
corrected by stating the truth; and a suitable acknowledgment of the source
is all that the plaintiff can require. I think that within the limits recognized
by the decision of the Court the defendant should be enjoined from
publishing news obtained from the Associated Press for hours after
publication by the plaintiff unless it gives express credit to the Associated
Press; the number of hours and the form of acknowledgment to be settled
by the District Court.

Mr. Justice LOUIS D. BRANDEIS, dissenting.

There are published in the United States about 2,500 daily papers.
More than 800 of them are supplied with domestic and foreign news of
general interest by the Associated Press — a corporation without capital
stock which does not sell news or earn or seek to earn profits, but serves
merely as an instrumentality by means of which these papers supply
themselves at joint expense with such news. Papers not members of the

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Associated Press depend for their news of general interest largely upon
agencies organized for profit. Among these agencies is the International
News Service which supplies news to about 400 subscribing papers. It has,
like the Associated Press, bureaus and correspondents in this and foreign
countries; and its annual expenditures in gathering and distributing news is
about $2,000,000. Ever since its organization in 1909, it has included
among the sources from which it gathers news, copies (purchased in the
open market) of early editions of some papers published by members of
the Associated Press and the bulletins publicly posted by them.
No question of statutory copyright is involved. The sole question for
our consideration is this: Was the International News Service properly
enjoined from using, or causing to be used gainfully, news of which it
acquired knowledge by lawful means (namely, by reading publicly posted
bulletins or papers purchased by it in the open market) merely because the
news had been originally gathered by the Associated Press and continued
to be of value to some of its members, or because it did not reveal the
source from which it was acquired? . . .
An essential element of individual property is the legal right to exclude
others from enjoying it. If the property is private, the right of exclusion
may be absolute; if the property is affected with a public interest, the right
of exclusion is qualified. But the fact that a product of the mind has cost its
producer money and labor, and has a value for which others are willing to
pay, is not sufficient to ensure to it this legal attribute of property. The
general rule of law is, that the noblest of human productions —
knowledge, truths ascertained, conceptions, and ideas — become, after
voluntary communication to others, free as the air to common use. Upon
these incorporeal productions the attribute of property is continued after
such communication only in certain classes of cases where public policy
has seemed to demand it. These exceptions are confined to productions
which, in some degree, involve creation, invention, or discovery. But by
no means all such are endowed with this attribute of property. The
creations which are recognized as property by the common law are
literary, dramatic, musical, and other artistic creations; and these have also
protection under the copyright statutes. The inventions and discoveries
upon which this attribute of property is conferred only by statute, are the
few comprised within the patent law. There are also many other cases in
which courts interfere to prevent curtailment of plaintiff’s enjoyment of
incorporeal productions; and in which the right to relief is often called a
property right, but is such only in a special sense. In those cases, the
plaintiff has no absolute right to the protection of his production; he has
merely the qualified right to be protected as against the defendant’s acts,

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because of the special relation in which the latter stands or the wrongful
method or means employed in acquiring the knowledge or the manner in
which it is used. Protection of this character is afforded where the suit is
based upon breach of contract or of trust or upon unfair competition.
Plaintiff contended that defendant’s practice constitutes unfair
competition, because there is “appropriation without cost to itself of values
created by” the plaintiff; and it is upon this ground that the decision of this
court appears to be based. To appropriate and use for profit, knowledge
and ideas produced by other men, without making compensation or even
acknowledgment, may be inconsistent with a finer sense of propriety; but,
with the exceptions indicated above, the law has heretofore sanctioned the
practice. Thus it was held that one may ordinarily make and sell anything
in any form, may copy with exactness that which another has produced, or
may otherwise use his ideas without his consent and without the payment
of compensation, and yet not inflict a legal injury; and that ordinarily one
is at perfect liberty to find out, if he can by lawful means, trade secrets of
another, however valuable, and then use the knowledge so acquired
gainfully, although it cost the original owner much in effort and in money
to collect or produce.

CONTEXT

Media mogul William Randolph Hearst created INS after the AP denied his
papers membership. INS became dependent on AP stories about World War I
after France and Great Britain refused it access to European wire and cable
service because of Hearst’s anti-war editorials. See Ben Procter, William
Randolph Hearst: The Later Years, 1911-1951, 50 (2007).

He who follows the pioneer into a new market, or who engages in the
manufacture of an article newly introduced by another, seeks profits due

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largely to the labor and expense of the first adventurer; but the law
sanctions, indeed encourages, the pursuit.
The means by which the International News Service obtains news
gathered by the Associated Press is also clearly unobjectionable. It is taken
from papers bought in the open market or from bulletins publicly posted.
No breach of contract or of trust, and neither fraud nor force, is involved.
The manner of use is likewise unobjectionable. No reference is made by
word or by act to the Associated Press, either in transmitting the news to
subscribers or by them in publishing it in their papers. Neither the
International News Service nor its subscribers is gaining or seeking to gain
in its business a benefit from the reputation of the Associated Press. They
are merely using its product without making compensation. That they have
a legal right to do, because the product is not property, and they do not
stand in any relation to the Associated Press, either of contract or of trust,
which otherwise precludes such use. The argument is not advanced by
characterizing such taking and use a misappropriation.
The great development of agencies now furnishing country-wide
distribution of news, the vastness of our territory, and improvements in the
means of transmitting intelligence, have made it possible for a news
agency or newspapers to obtain, without paying compensation, the fruit of
another’s efforts and to use news so obtained gainfully in competition with
the original collector. The injustice of such action is obvious. But to give
relief against it would involve more than the application of existing rules
of law to new facts. It would require the making of a new rule in analogy
to existing ones. The unwritten law possesses capacity for growth; and has
often satisfied new demands for justice by invoking analogies or by
expanding a rule or principle. This process has been in the main wisely
applied and should not be discontinued. Where the problem is relatively
simple, as it is apt to be when private interests only are involved, it
generally proves adequate. But with the increasing complexity of society,
the public interest tends to become omnipresent; and the problems
presented by new demands for justice cease to be simple. Then the
creation or recognition by courts of a new private right may work serious
injury to the general public, unless the boundaries of the right are
definitely established and wisely guarded. In order to reconcile the new
private right with the public interest, it may be necessary to prescribe
limitations and rules for its enjoyment; and also to provide administrative
machinery for enforcing the rules. It is largely for this reason that, in the
effort to meet the many new demands for justice incident to a rapidly
changing civilization, resort to legislation has latterly been had with
increasing frequency.

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 The rule for which the plaintiff contends would effect an important
extension of property rights and a corresponding curtailment of the free
use of knowledge and of ideas; and the facts of this case admonish us of
the danger involved in recognizing such a property right in news, without
imposing upon news-gatherers corresponding obligations. A large majority
of the newspapers and perhaps half the newspaper readers of the United
States are dependent for their news of general interest upon agencies other
than the Associated Press. The channel through which about 400 of these
papers received, as the plaintiff alleges, “a large amount of news relating
to the European war of the greatest importance and of intense interest to
the newspaper reading public” was suddenly closed. The closing to the
International News Service of these channels for foreign news (if they
were closed) was due not to unwillingness on its part to pay the cost of
collecting the news, but to the prohibitions imposed by foreign
governments upon its securing news from their respective countries and
from using cable or telegraph lines running therefrom. For aught that
appears, all of the 400 subscribers of the International News Service would
gladly have then become members of the Associated Press, if they could
have secured election thereto.2
A Legislature, urged to enact a law by which one news agency or
newspaper may prevent appropriation of the fruits of its labors by another,
would consider such facts and possibilities and others which appropriate
inquiry might disclose. Legislators might conclude that it was impossible
to put an end to the obvious injustice involved in such appropriation of
news, without opening the door to other evils, greater than that sought to
be remedied. Or legislators dealing with the subject might conclude, that
the right to news values should be protected to the extent of permitting
recovery of damages for any unauthorized use, but that protection by
injunction should be denied.
Or again, a Legislature might conclude that it was unwise to recognize
even so limited a property right in published news as that above indicated;
but that a news agency should, on some conditions, be given full
protection of its business; and to that end a remedy by injunction as well as
one for damages should be granted, where news collected by it is gainfully
used without permission. If legislators reached that conclusion, they would
probably go further, and prescribe the conditions under which and the
extent to which the protection should be afforded; and they might also
provide the administrative machinery necessary for insuring to the public,
the press, and the news agencies, full enjoyment of the rights so conferred.
Courts are ill-equipped to make the investigations which should
precede a determination of the limitations which should be set upon any

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property right in news or of the circumstances under which news gathered
by a private agency should be deemed affected with a public interest.
Courts would be powerless to prescribe the detailed regulations essential to
full enjoyment of the rights conferred or to introduce the machinery
required for enforcement of such regulations. Considerations such as these
should lead us to decline to establish a new rule of law in the effort to
redress a newly disclosed wrong, although the propriety of some remedy
appears to be clear.

Notes and Questions

1. Copying and property. The case for labor as a justification for
property rights is easiest when the claimants claim ownership of tangible
objects. But what if the competitor doesn’t want the physical thing, but
simply wants to copy the result? Generally, the law poses no obstacle. If
my neighbor discovers through much experiment and research that a
valuable food crop grows abundantly in the area, there is no barrier to me
planting the same crop, with the same methods, next door. Indeed, at early
common law, there would be nothing to stop anyone from copying the text
of the Harry Potter series and selling the reproductions without giving J.K.
Rowling a cent. INS v. AP discusses some of the policy tensions involved
in the choice to give creators a right to consent to copying. What are the
arguments in favor of giving creators the right to consent before others can
copy their works? What are the arguments against giving creators rights?
2. Property or unfair competition? INS v. AP resolves these tensions
by creating what has been called “quasi property.” Note the limits on this
protection. If I read an AP story in the newspaper, nothing prevents me
from telling all my friends about what I just read. Nor does the holding
prevent INS from using the facts reported in the story in another story
published several months later. AP’s rights extend only against
competitors in the news business, and only for the limited time necessary
to allow it to profit from its labor. Some have argued that the INS v. AP
rule is not really about property at all, but is instead a rule against unfair
competition. See Shyamkrishna Balganesh, “Hot News”: The Enduring
Myth of Property in News, 111 Colum. L. Rev. 419 (2011). One could also
see the case as an example of the property doctrine of “relativity of title”
— the question is not whether plaintiff would win against everyone in the
world but only whether plaintiff’s title is better than defendant’s title.
3. Institutional competence. Justice Brandeis’s dissent focuses less on
what, if any, rights AP should have than on which institution, the
legislature or the courts, should determine those rights. Why does he argue

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that this dispute is particularly ill suited to judicial resolution? Are you
convinced? If you were representing AP, how would you rebut his
argument?
4. Which comes first — exchangeable value or exclusive rights to
exchange? Justice Pitney suggests that there is a property right in fresh
news because it has “exchange value, dependent on its novelty and
freshness.” Id. at 238. Because it is valuable, it should be protected as a
property right with rules against misappropriation by a competitor. But
Justice Pitney also states that the news will have no value unless it is
legally protected; allowing INS to disseminate information collected by
AP would render news collection “profitless, or so little profitable as in
effect to cut off the service by rendering the cost prohibitive in comparison
with the return.” So is news valuable or isn’t it?
Justice Holmes dissents, arguing that there is no property in fresh
news. “Property, a creation of law, does not arise from value, although
exchangeable — a matter of fact. Many exchangeable values may be
destroyed intentionally without compensation. Property depends upon
exclusion by law from interference.” Well, yes, but this doesn’t establish
that there shouldn’t be a property right in news. Do you see why?
Not all valuable interests are privately owned; many of the most
valuable pieces of information, such as scientific truths or historical facts,
are the common property of humankind. News does have value to many
people. At the same time, its market value will vary depending on how
much legal protection the courts grant for the news as against competitors.
The greater the legal protection granted the plaintiff’s interest, the more
valuable the property interest to the plaintiff. Is there a way out of this
circle?
5. The common law hot news tort. The precedential value of INS v.
AP was abrogated by Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938),
which held that federal courts could not create common law where state
law created the rule of decision. But state courts have adopted the doctrine
as a matter of state law. In National Basketball Association v. Motorola,
Inc., 105 F.3d 841, 853 (2d Cir. 1997), the Second Circuit summarized
New York’s common law hot news tort as requiring three elements:

(i) time-sensitive factual information,

(ii) free-riding by a defendant, and
(iii) a threat to “the very existence of the product or service provided
by the plaintiff.”

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In that case, the NBA brought a complaint against the manufacturer of
handheld pagers that provided “real-time” information about professional
basketball games, including updated scores and statistics as the games
were in process. How do the three factors above apply to the NBA claim?
Why do you think the Second Circuit rejected it?
6. Intellectual property statutes. Part of the argument that the courts
should not grant relief to AP is that federal statutes already provided
significant protection for creative works, and those statutes did not prohibit
the INS conduct. Copyright, patent, and trademark law are the core areas
of federal intellectual property protection. Copyright and patent law are
designed to fulfill the constitutional authorization to “promote the Progress
of Science and the useful arts,” U.S. Const. art. 1, §8, while trademark law
is an outgrowth of common law protection. Chapter 3 provides a more
detailed discussion of these laws.
a. Copyright. Copyright applies to “original works of authorship
fixed in any tangible medium of expression,” including literary,
musical, dramatic, and pictorial works. 17 U.S.C. §102. It gives owners
of the copyright the exclusive right to use or authorize the use of the
work for a limited time. After that, the work enters the public domain
and can be copied by anyone. Interestingly, John Locke, associated in
property theory with the idea that labor gives rise to property rights,
strongly advocated for time limits on the rights accorded by the Statute
of Anne (1710), the original English copyright statute. The Statute of
Anne granted authors rights for 14 years after publication, with the
option of a single additional 14-year term; rights did not continue after
the death of the author. In the United States, the period of exclusive
copyright has progressively lengthened, and is now generally the
author’s life plus 70 years after the date of publication, or 95 years
after publication or 120 years after creation for works made for hire. 17
U.S.C. §302.
Note that although AP could have copyrighted its articles, the law as
it existed at the time required registration of the work, which was
impracticable given the volume and time sensitivity of its articles.
Copyright also would not have protected the news itself, only the
“medium of expression,” i.e., the writing used to convey the news.
b. Patent. Patents may be issued to anyone who “invents or
discovers any new and useful process, machine, manufacture, or
composition of matter, or any new and useful improvement thereof.”
35 U.S.C. §101. Unlike modern copyright law, protection in patent law
depends on registration of the invention; before issuing a patent, the

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 U.S. Patent and Trademark Office must determine that the subject of
the patent is both new and non-obvious. (These decisions are
sometimes questionable; in 2002, the PTO issued a patent to Ross E.
Long, III for “an apparatus for use as a toy by an animal, for example a
dog, to either fetch carry or chew . . . that resembles a branch in
appearance . . . formed of any of a number of materials including . . .
wood.” U.S. Patent No. 6,360,693. That’s right, he patented a stick for
dogs.) Patents generally last 20 years from the date of issuance before
they enter the public domain. 35 U.S.C. §154. What explains the
shorter period for patent as opposed to copyright protection?
c. Trademark. Trademark law protects non-functional words,
symbols, names, and devices used to identify one’s goods and services.
15 U.S.C. §1127. Trademark does not bar uses of the mark that would
not deceive consumers or dilute the value of the mark for the owner. 15
U.S.C. §1125. In particular, parodies and comparisons to existing
products are fair game. 15 U.S.C. §1125(c)(3). So Haute Diggity Dog
did not infringe Louis Vuitton’s trademark with its Chewy Vuiton
plush chew toys, Louis Vuitton Malletier, S.A. v. Haute Diggity Dog,
LLC, 507 F.3d 252 (4th Cir. 2007), nor did Saxony Products infringe
Guerlain’s trademark by telling consumers that its “Fragrance S” was
like Shalimar (although it might have been liable for false advertising).
Saxony Products, Inc. v. Guerlain, Inc., 513 F.2d 716, 185 U.S.P.Q.
474 (9th Cir. 1975).

Problems
1. Several lawsuits have challenged practices of “media aggregators,”
web sites that provide snippets, photos, or links to content created by
others. Most have settled without a reported decision. One that did not
settle is Barclays Capital v. Theflyonthewall.com, 650 F.3d 876 (2d Cir.
2011). The plaintiffs, Barclays Capital, Merrill Lynch, and Morgan
Stanley, were firms providing investment and asset management
recommendations and brokerage services to their clients. They all engaged
in extensive research in order to advise their clients, and wrote up this
research and investment recommendations in reports that they provided to
clients and prospective clients before the start of business. One reason for
writing the reports was to encourage recipients to purchase the
recommended stocks using the firms’ brokerage services.
Theflyonthewall.com, which sends a daily e-mail with investment
information to subscribers for a fee, obtained these reports and distributed
the recommendations (but not the reports themselves) to their subscribers,

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often before the brokerage firms were able to do so. This reduced the
investment advantage of the plaintiffs’ clients, and made it less likely that
they would use the plaintiffs’ brokerage services. The district court found
the defendant guilty of the hot news tort, Barclays Capital Inc. v.
Theflyonthewall.com, 700 F. Supp. 2d 310 (S.D.N.Y. 2010), but the
Second Circuit reversed. What are the arguments for each side under the
NBA hot news test?
Compare a suit against Mario Lavandeira, who blogs about celebrities
for perezhilton.com. X17, which owned the rights to many of the paparazzi
photographs that Lavandeira posted, brought both copyright and hot news
suits against him. The suit survived a motion to dismiss but ended in a
private settlement. X17, Inc. v. Lavandeira, 563 F. Supp. 2d 1112 (C.D.
Cal. 2007). Is this a stronger or weaker case than Barclays? Is the hot news
claim here preempted by the Copyright Act?

§3.2 Commonly Owned Property: Tragedy or Comedy?

Without intellectual property rights, inventions and artistic creations
are, in effect, common property. The physical manifestation of the creation
may be owned, but the right to copy and use it belongs to everyone.
Common property may be physical as well — public parks, oceans, and
highways are in many respects also common property. Much of property
law is organized around the idea that common ownership of property
results in “tragedy.” As described by ecologist Garrett Hardin,

The tragedy of the commons develops in this way. Picture a pasture open to
all. It is to be expected that each herdsman will try to keep as many cattle as
possible on the commons. Such an arrangement may work reasonably
satisfactorily for centuries because tribal wars, poaching, and disease keep
the numbers of both man and beast well below the carrying capacity of the
land. Finally, however, comes the day of reckoning, that is, the day when the
long-desired goal of social stability becomes a reality. At this point, the
inherent logic of the commons remorselessly generates tragedy.
As a rational being, each herdsman seeks to maximize his gain. Explicitly
or implicitly, more or less consciously, he asks, “What is the utility to me of
adding one more animal to my herd?” This utility has one negative and one
positive component.

1. The positive component is a function of the increment of one animal.

Since the herdsman receives all the proceeds from the sale of the
additional animal, the positive utility is nearly +1.
2. The negative component is a function of the additional overgrazing

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 created by one more animal. Since, however, the effects of overgrazing
are shared by all the herdsman, the negative utility for any particular
decision-making herdsman is only a fraction of –1.

Adding together the component partial utilities, the rational herdsman

concludes that the only sensible course for him to pursue is to add another
animal to his herd. And another; and another. . . . But this is the conclusion
reached by each and every rational herdsman sharing a commons. Therein is
the tragedy. Each man is locked into a system that compels him to increase
his herd without limit — in a world that is limited. Ruin is the destination
toward which all men rush, each pursuing his own best interest in a society
that believes in the freedom of the commons. Freedom in a commons brings
ruin to all.

Garrett Hardin, The Tragedy of the Commons, 162 Science 1243 (1968).
Although Hardin was an ecologist, tragedy of the commons arguments
are common in law and economics analysis. Law and economics
undertakes cost-benefit analysis of legal rules to determine whether a
change from one legal rule to another will increase or decrease social
wealth. Writing a year before Hardin, Harold Demsetz identified the same
dynamic, arguing that “communal property results in great externalities.
The full costs of the activities of an owner of a communal property right
are not borne directly by him, nor can they be called to his attention easily
by the willingness of others to pay him an appropriate sum.” Harold
Demsetz, Toward a Theory of Property Rights, 57 Am. Econ. Rev. 347,
354-358 (1967).
Hardin emphasized governmental controls as a solution to the tragedy
of the commons. He even supported forcing individuals to “relinquish[]
the freedom to breed” in order to limit the environmental impact of an
increasing population. Law and economics scholars more frequently argue
for property rights as a solution to the tragedy of the commons. Demsetz
argued that creating individual property in valuable resources, where cost-
effective, leads to more efficient use because individuals experience a
greater share of the costs and benefits of their use. See Demsetz, supra, at
350-353. What are the advantages of property rights over governmental
controls? What might the objection of an environmentalist be? More
generally, what are the costs of individual property regimes? See Duncan
Kennedy & Frank Michelman, Are Property and Contract Efficient?, 8
Cardozo L. Rev. 711 (1980).
Hardin, Demsetz, and classic economic analysis assume that
individuals are perfectly rational actors and that rational actors pursue the
course of action that will yield them the greatest individual wealth.

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Contrary to this assumption, experimental studies have shown that people
demonstrate far more cooperative and even altruistic behavior than the
rational actor model would predict. Interestingly, for certain sorts of
interactions, this deviation from self-interested behavior seems to be
especially strong among those living in advanced capitalist economies. See
Joseph Henrich et al., The Weirdest People in the World, 33 Behavioral
and Brain Sciences 61 (2010). People living in such societies frequently
demonstrate more cooperative and sharing behavior (at least with respect
to certain tasks, such as dividing a pot of money) than those living in less
economically developed societies. Why might that be? Henrich and his
collaborators suggest that “norms and institutions for exchange in
ephemeral interactions culturally coevolved with markets and expanding
larger-scale sedentary populations.”
What is the consequence of modifying the rational actor model for the
predictions of the tragedy of the commons? Nobel Prize winning
economist Elinor Ostrom and others have pointed out there are many
instances of communally created and owned commons property, and that
where they exist they are often more productive than neighboring
individually owned property systems. See Elinor Ostrom, Governing the
Commons (1990). Many of the fastest growing forms of property rely on
common ownership and governance. Condominiums and residential
subdivisions, where 62 million Americans now live, usually have
significant common elements, such as lobbies, streets, and pools, and unit
owners have the power to regulate these external elements of the
development as a collective. Corporations and partnerships, important
drivers of the modern economy, also depend on collective ownership of
assets and profits. See Chapter 9, §4.
In The Comedy of the Commons, Carol Rose argued that for some
kinds of property, open access actually increases its value. Rose identified
a long history in English and American common law of recognizing public
rights in private paths and roads, navigable waterways, and even
recreational beaches or maypoles. These public access rights were justified
in part by the danger of holdouts, or refusal to sell rights of access, and the
difficulty of organizing a diffuse public to bargain with the property
owner. More important, they reflected instances where use by more people
actually increased the productivity of the property, by creating economies
of scale and opportunities for trade and interaction with diverse
individuals:

Used in commerce, some property had qualities akin to infinite “returns to

scale.” Thus here, the commons was not tragic, but comedic, in the classical

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 sense of a story with a happy outcome. And customary doctrines suggest that
commerce might be thought a “comedy of the commons” not only because it
may infinitely expand our wealth, but also, at least in part, because it has
been thought to enhance the sociability of the members of an otherwise
atomized society.

Carol Rose, The Comedy of the Commons: Custom, Commerce, and

Inherently Public Property, 53 U. Chi. L. Rev. 711, 723 (1986); see also
Anna di Robilant, The Virtues of Common Ownership, 91 B.U. L. Rev.
1359 (2011). Are there other kinds of resources in which use by the public
generally is more comedy than tragedy?

§3.3 Ownership of Labor

John Locke rested his labor theory of acquisition on the grounds that
although the resources of the world were given to humanity in common,
each individual owned her own labor. In mixing the labor one owned with
commonly owned natural resources, one made them one’s own. But the
relationship between labor and goods is rarely so direct. Locke himself
quickly obscured the relationship between labor and property by asserting
that “the grass my horse has bit; the turfs my servant has cut . . . [t]he
labour that was mine . . . hath fixed my property in them.” Locke, Two
Treatises on Government, ch. 5, §29.
Today, most of us work to create goods or services for other
individuals in exchange for money from yet other individuals, which we
then exchange with other individuals for the goods and services we want.
Most agree that, in general, this works out better for all concerned. Our
clothes and cars, for example, are much more functional and plentiful than
they would be if we had to make them for ourselves. Slavery is now
illegal, so, in general, today’s workers consent to this exchange. But given
that few can be self-sufficient in an exchange-based economy, for most,
the consent to work for others is made in the face of few meaningful
alternatives. How much control do or should we have over the conditions
of our labor? How much should the law intervene to regulate labor
conditions?
In Upton v. JWP Businessland, 682 N.E.2d 1357 (Mass. 1997), an
employer fired an at-will employee when she refused to work long hours
because of her need to be with her young son. “The general rule is that an
at-will employee may be terminated at any time for any reason or for no
reason at all. Liability may be imposed on an employer, however, if an at-
will employee is terminated for a reason that violates a clearly established
public policy.” Id. at 1358. Examples of such policies are being

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“terminated for asserting a legal right (e.g., filing a workers’ compensation
claim), for doing what the law requires (e.g., serving on a jury), or for
refusing to disobey the law (e.g., refusing to commit perjury).” Id. The
question was whether refusing to work overtime in order to take care of
one’s child was a public policy that justified denying the employer the
right to terminate the employee. The court held that it was not:

There is no clearly established public policy which requires employers to

refrain from demanding that their adult employees work long hours. Nor is
any public policy directly served by an employee’s refusal to work long
hours. Because no public purpose is served by the conduct for which the
plaintiff asserts she was discharged, this case is unlike those cases in which
we have held that the employer may be liable for the discharge of an at-will
employee.
To advance her claim that her termination violated public policy, the
plaintiff relies on the Commonwealth’s strong policy favoring the care and
protection of children. Her theory is that an employer may not properly
discharge an employee whose refusal to work long hours is based on her
sense of obligation to be with her young child. She argues that meeting the
defendant’s demands regarding work hours would cause her to neglect her
child in contravention of public policy.
There is no public policy which mandates that an employer must adjust its
expectations, based on a case-by-case analysis of an at-will employee’s
domestic circumstances, or face liability for having discharged the employee.
Construing the public policy exception to cover terminations of employees in
the plaintiff’s situation would tend to convert the general rule into a rule that
requires just cause to terminate an at-will employee. Liability to an at-will
employee for a discharge in violation of public policy must be based on
general principles, and not on the special domestic circumstances of any
particular employee.

The work of taking care of children in the home traditionally was

uncompensated. It is still the case that more women than men engage in
this uncompensated labor. This affects the ability of women to enter the
workforce full time and is a primary reason for the continued disparity in
incomes between men and women. In 2015, the median income of men
who worked full time was $51,212, while the median income of women
who worked full time was only $40,742, or 80 percent of male earnings.
Bernadette D. Proctor, Jessica L. Semega & Melissa A. Kollar, U.S.
Census Bureau, Income and Poverty in the United States: 2015 (Sept.
2016),
https://www.census.gov/content/dam/Census/library/publications/2016/demo/p60-
256.pdf. Most women now work outside the home. The 1996 federal

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welfare reform statute, the Personal Responsibility and Work Opportunity
Act of 1996, 42 U.S.C. §§601-619, requires most women with children to
do so as a condition of receiving welfare benefits. Despite this fact, the
organization of work remains hostile to parents and makes it difficult to
meet the challenges of reconciling market work with care of one’s
children. Ann Crittenden, The Price of Motherhood: Why the Most
Important Job in the World Is Still the Least Valued 4 (2001); Mary Joe
Frug, Securing Job Equality for Women: Labor Market Hostility to
Working Mothers, 59 B.U. L. Rev. 55 (1979); Meredith Johnson Harbach,
Outsourcing Childcare, 24 Yale J.L. & Feminism 254, 258-270 (2012).
Joanna Upton would have been subject to criminal penalties if she had
failed to support and protect her child or had otherwise neglected him.
Commonwealth v. Twitchell, 617 N.E.2d 609 (Mass. 1993). She also could
have lost custody. In re Adoption of Greta, 729 N.E.2d 273 (Mass. 2000).
Why then was the duty to care for her children not deemed a “clearly
established public policy”? Or should the case be decided on other
grounds? To what extent should work in the home taking care of children
affect the rules governing paid employment?

§4 FAMILIES
Much of our property comes not from our individual actions, but from
our families. These familial endowments often determine our ability to get
and keep other property. In an earlier time, economic status was largely
determined by one’s participation in the family business or residence in a
family home; today, economic status is significantly determined by
familial support for education and skill development. John Langbein, The
Twentieth-Century Revolution in Family Wealth Transmission, 86 Mich.
L. Rev. 722, 732-734 (1988). While most familial property transfers are
voluntary, in many places the law sets a floor that relatives cannot sink
below. Both custodial and noncustodial parents, for example, are required
to support their children, at least to the age of majority, and all states
require some division of property between spouses on divorce or death.
The materials below concern debates about how far the obligation of
familial support should extend.

§4.1 Child Support

Bayliss v. Bayliss

550 So. 2d 986 (Ala. 1989)

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GORMAN HOUSTON, Justice.
We granted certiorari in this case to address the following issue: In
Alabama, does a trial court have jurisdiction to require parents to provide
post-minority support for college education to children of a marriage that
has been terminated by divorce?
The trial court does have that jurisdiction. In a proceeding for
dissolution of marriage or a modification of a divorce judgment, a trial
court may award sums of money out of the property and income of either
or both parents for the post-minority education of a child of that dissolved
marriage, when application is made there for, as in the case at issue, before
the child attains the age of majority. In doing so, the trial court shall
consider all relevant factors that shall appear reasonable and necessary,
including primarily the financial resources of the parents and the child and
the child’s commitment to, and aptitude for, the requested education. The
trial court may consider, also, the standard of living that the child would
have enjoyed if the marriage had not been dissolved and the family unit
had been preserved and the child’s relationship with his parents and
responsiveness to parental advice and guidance.
Alabama Code 1975, §30-3-1, provides, in pertinent part: “Upon
granting a divorce, the court may give the custody and education of the
children of the marriage to either father or mother, as may seem right and
proper.” (Emphasis supplied.) In Ex parte Brewington, 445 So. 2d 294
(Ala. 1983), this Court held that the term “children” in §30-3-1 did not
apply only to “minor” children. Mr. Justice Beatty, in overruling cases that
had given the word “children” that limited definition, wrote, for a majority
of the Court:

The statute, however, does not express such a limitation, and such a narrow
interpretation is unacceptable. In the frame of reference of the present case,
we believe the legislature intended that support be provided for dependent
children, regardless of whether that dependency results from minority, or
from physical and/or mental disabilities that continue to render them
incapable of self-support beyond minority.

445 So. 2d at 296.

Beginning with the landmark case of Esteb v. Esteb, 244 P. 264 (Wash.
1926), courts have increasingly recognized a college education as a legal
necessary for minor children of divorced parents. Justice Askren wrote:

The rule in Middlebury v. Chandler, supra was clearly based upon conditions
which existed at that time. An opportunity at that early date for a common
school education was small, for a high school education less, and for a

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 college education was almost impossible to the average family, and was
generally considered as being only within the reach of the most affluent
citizens. . . . But conditions have changed greatly in almost a century that has
elapsed since that time. Where the college graduate of that day was the
exception, today such a person may almost be said to be the rule. The law in
an attempt to keep up with the progress of society has gradually placed
minimum standards for attendance upon public schools, and even provides
punishment for those parents who fail to see that their children receive at
least such minimum education. It cannot be doubted that the minor who is
unable to secure a college education is generally handicapped in pursuing
most of the trades or professions of life, for most of those with whom he is
required to compete will be possessed of that greater skill and ability which
comes from such an education. 244 P. at 266-267.

Until Ex parte Brewington, 445 So. 2d 294 (Ala. 1983), our cases and
the cases of the Court of Civil Appeals held that a trial court had no
continuing equitable jurisdiction over the issues or parties to a divorce to
require that a noncustodial parent provide support of any kind to any child
that had reached the legislatively prescribed age of majority. In
Brewington, we expanded our interpretation of the word “children” in the
Alabama child support statute, to impose a duty on a divorced,
noncustodial parent to support his children who continue to be disabled
beyond the legislatively prescribed age of majority. We have previously
interpreted the word “education” in the Alabama child support statute to
include a college education as a necessary. We now expand the exception
to the general rule — i.e., the rule that a divorced, noncustodial parent has
no duty to contribute to the support of his or her child after that child has
reached the legislatively prescribed age of majority — beyond Brewington,
supra (dealing with a physically or mentally disabled child) to include the
college education exception.
In expanding the exception to the general rule (that a divorced,
noncustodial parent has no duty to support his child after that child reaches
majority) to include the college education exception, we are merely
refusing to limit the word “children” to minor children, because of what
we perceive to be just and reasonable in 1989. The Latin phrase stare
decisis et non quieta movere (stare decisis) expresses the legal principle of
certainty and predictability; for it is literally translated as “to adhere to
precedents, and not to unsettle things which are established.” Black’s Law
Dictionary (5th ed. 1979). By this opinion, we are unsettling things that
have been established by the appellate court of this State. However, we are
persuaded that the ground or reason of those prior decisions by the Court
of Civil Appeals would not be consented to today by the conscience and

227
the feeling of justice of all those whose obedience is required by the rule
on which the ratio decidendi of those prior decisions was logically based.
Therefore, we overrule that portion of cases that are inconsistent with
this opinion.
Had the Bayliss family unit not been put asunder by divorce, would the
father, who had attended college and was a man of significant means, have
continued to provide a college education for Patrick (a young man who
would be an Alpha Plus if this were Huxley’s Brave New World) after
Patrick reached 19 years of age? If so, the father’s educational support
obligations should not cease when Patrick reached 19 years of age.
This Court in Ogle v. Ogle, 156 So. 2d at 349 (Ala. 1963), quoted the
following from Pass v. Pass, 118 So. 2d 769, 773 (Miss. 1960), with
approval:

[W]e are living today in an age of keen competition, and if the children of
today . . . are to take their rightful place in a complex order of society and
government, and discharge the duties of citizenship as well as meet with
success the responsibilities devolving upon them in their relations with their
fellow man, the church, the state and nation, it must be recognized that their
parents owe them the duty to the extent of their financial capacity to provide
for them the training and education which will be of such benefit to them in
the discharge of the responsibilities of citizenship. It is a duty which the
parent not only owes to his child, but to the state as well, since the stability of
our government must depend upon a well-equipped, a well-trained, and well-
educated citizenship. We can see no good reason why this duty should not
extend to a college education. Our statutes do not prohibit it, but they are
rather susceptible of an interpretation to allow it. The fact is that the
importance of a college education is being more and more recognized in
matters of commerce, society, government, and all human relations, and the
college graduate is being more and more preferred over those who are not so
fortunate. No parent should subject his worthy child to this disadvantage if
he has the financial capacity to avoid it.

This is the public policy of our State. Since the normal age for
attending college extends beyond the age of 19 years, under §30-3-1 courts
have the right to assure that the children of divorced parents, who are
minors at the time of the divorce, are given the same right to a college
education before and after they reach the age of 19 years that they
probably would have had if their parents had not divorced.

Ex parte Christopher

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 145 So. 3d 60 (Ala. 2013)
ROY MOORE, Chief Justice.
Carolyn [Sue Christopher] and her husband, Charles Phillip
Christopher (“Phillip”), were divorced by a judgment of the trial court in
2010. At the time of the divorce they had one adult child and two children
under the age of majority, a son C.C. and a daughter Ca.C. On April 18,
2011, four days before C.C.’s 19th birthday, Phillip petitioned the trial
court to order Carolyn to pay a portion of C.C.’s college expenses. Carolyn
answered that she was financially unable to contribute to C.C.’s college
education and that this Court’s holding in Bayliss authorizing awards of
postminority educational support was unconstitutional.
After a trial, the court entered a judgment requiring Carolyn to pay
25% of C.C.’s college expenses of $9,435 per semester. The issue in this
appeal is whether the Bayliss Court correctly interpreted Alabama law to
authorize a trial court to award postminority educational support when
application is made before the child attains the age of majority.
The Alabama child-custody statute is functionally unchanged from its
origin in 1852. “Upon granting a divorce, the court may give the custody
and education of the children of the marriage to either father or mother, as
may seem right and proper. . . .” §30-3-1, Ala. Code 1975. The statute
neither defines “children” nor designates when a child becomes an adult
and thus ineligible for parental support.
“When interpreting a statute, a court must first give effect to the intent
of the legislature. . . . To discern the legislative intent, the Court must first
look to the language of the statute. If, giving the statutory language its
plain and ordinary meaning, we conclude that the language is
unambiguous, there is no room for judicial construction.” City of Bessemer
v. McClain, 957 So. 2d 1061, 1074 (Ala. 2006).
The “plain and ordinary meaning” of statutory language may often be
found in a dictionary. The term “children” in §30-3-1, referring to giving
“the custody and education of the children of the marriage to either father
or mother” appears in the context of the parent-child relationship. The
“parent-child relationship,” according to a leading legal dictionary, is
“[t]he association between an adult and a minor in the adult’s care, esp. an
offspring or an adoptee. The relationship imposes a high duty of care on
the adult, including the duties to support, to rescue, to supervise and
control, and to educate.” Black’s Law Dictionary 1402 (9th ed. 2009). The
dictionary not only defines “child” in the parent-child context as a minor,
but also refers to the fact of custody (“in the adult’s care”) and to the
responsibility of the parent to “educate,” both of which §30-3-1 expressly
addresses. Therefore, the plain meaning of “children” as that term is used

229
in §30-3-1 unambiguously means “minors.”
At common law the parental-support obligation ceased at the age of
majority. Before the 1980s, this Court uniformly defined “child” in the
context of divorce as a minor. In 1983 this Court recognized an exception
to the ordinary and common-law definition of “child” as a minor in favor
of a “majority trend” in courts of other states to require a noncustodial
parent to support a disabled child past the age of majority. Ex parte
Brewington, 445 So. 2d 294, 296 (Ala. 1983).
Using as a springboard the substitution of “dependents” for “children”
in Brewington, the Court in Ex parte Bayliss, 550 So. 2d 986 (Ala. 1989),
“expanded” the Brewington exception to require a noncustodial parent to
pay college expenses for children who had passed the age of majority.
Regardless of whether the common law might have recognized an
obligation to support disabled children past their majority, an issue not
before us, it certainly never contemplated granting a divorce court the
power to require payment for postminority educational expenses. The
common law recognized no such obligation, nor does §30-3-1.
When the legislature reduced the age of majority from 21 to 19 in
1975, this Court did not acquire the privilege to raise it back to 21 or
higher to serve a “public policy” it thought desirable. By reducing the age
of majority by two years, the legislature not only bestowed the burdens
and privileges of adulthood upon persons not formerly entitled to them, but
also relieved their parents of responsibility for their support during the
same period. By reweighing and altering that balance as it pertains to
college education, the Bayliss Court improperly overrode the statutory
designation of the age of majority.
Stare decisis is the principle that, all things being equal, cases should
be decided as they have been in the past. The Bayliss Court openly
confessed its departure from this principle. Reversing Bayliss and
returning to the legislature the power to decide if postminority educational
support should be authorized in a divorce case does not make new law but,
instead, “vindicate[s] the old one from misrepresentation.” 1 Sir William
Blackstone, Commentaries *70. Thus, our decision in this case is remedial,
returning the stream of judicial power to its proper channel.
Reversed and Remanded.
JAMES SHAW, Justice (dissenting).
Section 30-3-1 states, in pertinent part: “Upon granting a divorce, the
court may give the custody and education of the children of the marriage
to either father or mother, as may seem right and proper. . . .” The operable
portion of the Code section, I believe, is the phrase “the children of the
marriage.” It does not refer to the custody or education of “a child” or of

230
“minor children”; instead, the plain language “the children of the
marriage” refers to the offspring of the divorcing parents’ marriage. Both
adult children of married parents and minor children of married parents are
“the children of the marriage.” By the ordinary and plain usage of the
phrase “children of the marriage,” C.C. is the mother’s and the father’s
child and one of the “children of the marriage” even though he is not a
minor.
The phrase “children of the marriage” is sufficiently clear to apply to
the facts of this case. I would not isolate the word “children” from the rest
of the phrase — “of the marriage” — to draw a definition of that single
word, because it is the phrase as a whole that is determinative of its
meaning.

Notes and Questions

1. A college education has only grown more important in determining
life chances since 1983. See Pew Research Center, The Rising Cost of Not
Going to College 5 (2014) (high school graduates had 77 percent of the
income of college graduates in 1979, but only 62 percent in 2013). What
explains the shift between Bayliss and Christopher? What are the
differences in legal reasoning between the three opinions?
2. Courts generally hold that children of divorced parents are entitled
“to be supported at least according to the standard of living to which they
had grown accustomed prior to the separation of their parents.” Pascale v.
Pascale, 660 A.2d 485 (N.J. 1995). Does this include an obligation to pay
for college? As a general rule, the duty to provide child support does not
usually continue past the age of majority. Ironically, the age of majority
was reduced from 21 to 18 just as college education was becoming more
common. The reduction had nothing to do with family law, but instead was
a response to the Vietnam War intended to ensure that 18-year-olds subject
to the draft could also vote on the leaders deciding war policy.
About 14 states permit judges to order noncustodial parents to pay for
post-minority education expenses if they find that the parent would have
paid for such expenses if not for the divorce. The rest do not permit
involuntary orders of support for post-secondary education. See Monica
Hoff Wallace, A Federal Referendum: Extending Child Support for Higher
Education, U. Kan. L. Rev. 665, 674-676 (2010). Even states that do not
permit orders of support for higher education often require child support
past the age of majority if the child has significant disabilities that prevent
economic self-sufficiency. See, e.g., Hastings v. Hastings, 841 So. 2d 484
(Fla. Ct. App. 2003).

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 3. In holding that divorced parents have no legal duty to pay for their
children’s college education, the Florida Supreme Court explained that
“[w]hile most parents willingly assist their adult children in obtaining a
higher education that is increasingly necessary in today’s fast-changing
world, any duty to do so is a moral rather than a legal one.” Grapin v.
Grapin, 450 So. 2d 853, 854 (Fla. 1984). In Florida, the court noted,
married parents have no legal obligation to pay for their children’s college
education; thus, the imposition of higher obligations on divorced parents
would deny them equal protection under the law.
Should support orders replicate the legal obligations of the parent or
the expectations of the child in the absence of divorce? One longitudinal
study found that although 88 percent of all college students received
parental financial support, only 29 percent of college students with
divorced parents received such support from either parent, and only 10
percent of noncustodial fathers provided such support. See Judith
Wallerstein et al., The Unexpected Legacy of Divorce: A 25 Year
Landmark Study 335-336 n.6 (2000). Another study found that divorced
fathers did contribute to college expenses when they shared legal custody
with the mother, but were far less likely to when they lacked legal custody.
William V. Fabricius, Listening to Children of Divorce: New Findings
That Diverge from Wallerstein, Lewis and Blakelee, 52 Family Relations
385 (2003).

§4.2 Gifts and Inheritance

A gift is a transfer of property from one person to another without
payment. Inter vivos gifts are transfers from one living person to another,
while testamentary transfers are those effectuated at death through a valid
will or inheritance.
The law of gifts requires (1) intent to transfer title, (2) delivery of the
property, and (3) acceptance by the donee. See In re Irrevocable Trust
Agreement of 1979, 331 P.3d 881, 885 (Nev. 2014). Delivery requires
either physical transfer of the object itself or constructive or symbolic
delivery. For example, constructive delivery would be recognized if the
owner of a locked box gave the only key to the donee. Some courts,
however, recognize constructive delivery only if physical delivery is
inconvenient or impossible. Today, the delivery requirement may be
accomplished by a writing rather than physical delivery. Many states allow
a gift to be made through a formal deed or even a more informal writing
that indicates a present intent to relinquish possession and to transfer title
to the donee.

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 To make a gift, the donor must have a present intent to transfer
ownership rights in the object. However, this does not mean that actual
possession of the gift must be transferred to the donee. For example, a
mother could give her daughter a piano but retain the right to keep it in her
house until her death. In effect, the mother has retained a life estate in the
piano and presently transferred a vested remainder to the daughter. See
Gruen v. Gruen, 496 N.E.2d 869 (N.Y. 1986).
At death, people usually leave their property to a surviving spouse,
although they may reserve a portion of the property for the children. If
there is no surviving spouse, parents generally leave their property to
surviving children with some portion reserved for charitable donations.
Property is transferred either by a written will or, in the absence of a will,
by the terms of state law, called the intestacy statute. Although the law
allows individuals to determine who owns property after they die by
writing a will, it limits their ability to completely disinherit a spouse. Laws
in every state grant surviving spouses some portion of the property owned
by the deceased spouse (called the decedent) at death. This topic is
covered in Chapter 9, §3.2.B. However, the law in the United States allows
parents to completely disinherit their children, leaving them nothing. Most
European nations take a different tack, guaranteeing children some portion
of the family assets when their parents die, thereby extending to children
the same rights granted in the United States to surviving spouses.

Problems
1. Two people get engaged and exchange rings; they break off the
engagement. Must they return the rings? Traditionally, donors were not
allowed to impose conditions on gifts. Delivery of a gift with intent to
transfer title would be held to be irrevocable. Albinger v. Harris, 48 P.3d
711, 719 (Mont. 2002). However, some courts have begun to abandon this
rule, and most will do so in the context of gifts given in contemplation of
marriage. Because a wedding ring is clearly given under the understanding
that the parties would be married, most courts will require the ring to be
returned if the engagement is called off. Lipton v. Lipton, 514 N.Y.S.2d
158 (Sup. Ct. 1986); Lindh v. Surman, 742 A.2d 643 (Pa. 1999); Crippen
v. Campbell, 2007 WL 2768076 (Tenn. Ct. App. 2007).
Should it matter whose fault it is that the marriage fell through? Some
courts refuse to look into fault, Fierro v. Hoel, 465 N.W.2d 669 (Iowa Ct.
App. 1990); Benassi v. Back & Neck Pain Clinic, Inc., 629 N.W.2d 475
(Minn. Ct. App. 2001); Aronow v. Silver, 538 A.2d 851 (N.J. Super. Ct.
Ch. Div. 1987); Cooper v. Smith, 800 N.E.2d 372 (Ohio Ct. App. 2003),

233
while others only allow donors to recover rings if the end of the
engagement was mutual or instigated by the donee. Clippard v.
Pfefferkorn, 168 S.W.3d 616, 620 (Mo. Ct. App. 2005); Spinnell v.
Quigley, 785 P.2d 1149 (Wash. Ct. App. 1990); Curtis v. Anderson, 106
S.W.3d 251, 256 (Tex. Ct. App. 2003). Which approach is better?
2. Should parents be entitled to completely disinherit their children, as
is the law in the United States, or should children have a right to a portion
of family assets owned by their parents at death, as is the law in most
European states?

§5 POSSESSION
Possession is not really nine-tenths of the law (otherwise law school
would be much shorter) but it is an important concept in property rights.
The government has often distributed property based on possession even
when possessors were violating prior law. Yet just as often, possessors’
claims will be defeated in favor of a superior claim. What is necessary to
legally possess a wild animal? A home run baseball? Oil or gas? The
answers involve judgments about rewards for labor and investment, wealth
maximization, justified expectations, and other policy concerns.

§5.1 Wild Animals

Pierson v. Post

2 Am. Dec. 264 (N.Y. 1805)

This was an action of trespass on the case commenced in a justice’s
court, by the present defendant against the now plaintiff.
The declaration stated that Post, being in possession of certain dogs
and hounds under his command, did, “upon a certain wild and uninhabited,
unpossessed and waste land, called the beach, find and start one of those
noxious beasts called a fox,” and whilst there hunting, chasing and
pursuing the same with his dogs and hounds, and when in view thereof,
Pierson, well knowing the fox was so hunted and pursued, did, in the sight
of Post, to prevent his catching the same, kill and carry it off. A verdict
having been rendered for the plaintiff below, the defendant there sued out
a certiorari, and now assigned for error, that the declaration and the matters
therein contained were not sufficient in law to maintain an action.

DANIEL TOMPKINS, J., delivered the opinion of the court.

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 The question submitted by the counsel in this cause for our
determination is, whether Lodowick Post, by the pursuit with his hounds in
the manner alleged in his declaration, acquired such a right to, or property
in, the fox, as will sustain an action against Pierson for killing and taking
him away.
The cause was argued with much ability by the counsel on both sides,
and presents for our decision a novel and nice question. It is admitted that
a fox is an animal ferae naturae and that property in such animals is
acquired by occupancy only. These admissions narrow the discussion to
the simple question of what acts amount to occupancy, applied to
acquiring right to wild animals?
If we have recourse to the ancient writers upon general principles of
law, the judgment below is obviously erroneous. Justinian’s Institutes, lib.
2, tit. 1, s.13, and Fleta, lib. 3, c.2, p.175, adopt the principle, that pursuit
alone vests no property or right in the huntsman; and that even pursuit,
accompanied with wounding, is equally ineffectual for that purpose, unless
the animal be actually taken. The same principle is recognised by Bracton,
lib. 2, c.1, p.8.
Puffendorf, lib. 4, c.6, s.2 and 10, defines occupancy of beasts ferae
naturae, to be the actual corporal possession of them, and Bynkershoek is
cited as coinciding in this definition. It is indeed with hesitation that
Puffendorf affirms that a wild beast mortally wounded, or greatly maimed,
cannot be fairly intercepted by another, whilst the pursuit of the person
inflicting the wound continues. The foregoing authorities are decisive to
show that mere pursuit gave Post no legal right to the fox, but that he
became the property of Pierson, who intercepted and killed him.
It therefore only remains to inquire whether there are any contrary
principles, or authorities, to be found in other books, which ought to
induce a different decision.
Barbeyrac, in his notes on Puffendorf, does not accede to the definition
of occupancy by the latter, but, on the contrary, affirms, that actual bodily
seizure is not, in all cases, necessary to constitute possession of wild
animals. He does not, however, describe the acts which, according to his
ideas, will amount to an appropriation of such animals to private use, so as
to exclude the claims of all other persons, by title of occupancy, to the
same animals; and he is far from averring that pursuit alone is sufficient
for that purpose. To a certain extent, and as far as Barbeyrac appears to me
to go, his objections to Puffendorf’s definition of occupancy are
reasonable and correct. That is to say, that actual bodily seizure is not
indispensable to acquire right to, or possession of, wild beasts; but that, on
the contrary, the mortal wounding of such beasts, by one not abandoning

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his pursuit, may, with the utmost propriety, be deemed possession of him;
since, thereby, the pursuer manifests an unequivocal intention of
appropriating the animal to his individual use, has deprived him of his
natural liberty, and brought him within his certain control. So also,
encompassing and securing such animals with nets and toils, or otherwise
intercepting them in such a manner as to deprive them of their natural
liberty, and render escape impossible, may justly be deemed to give
possession of them to those persons who, by their industry and labor, have
used such means of apprehending them. Barbeyrac seems to have adopted,
and had in view of his notes, the more accurate opinion of Grotius, with
respect to occupancy. The case now under consideration is one of mere
pursuit, and presents no circumstances or acts which can bring it within the
definition of occupancy by Puffendorf, or Grotius, or the ideas of
Barbeyrac upon that subject.
The case cited [Keeble v. Hickeringill], I think clearly distinguishable
from the present; inasmuch as there the action was for maliciously
hindering and disturbing the plaintiff in the exercise and enjoyment of a
private franchise; and . . . that the ducks were in the plaintiff’s decoy pond,
and so in his possession, from which it is obvious that the court laid much
stress in the opinion upon the plaintiff’s possession of the ducks.
We are the more readily inclined to confine possession or occupancy
of beasts ferae naturae, within the limits prescribed by the learned authors
above cited, for the sake of certainty, and preserving peace and order in
society. If the first seeing, starting, or pursuing such animals, without
having so wounded, circumvented or ensnared them, so as to deprive them
of their natural liberty, and subject them to the control of their pursuer,
should afford the basis of actions against others for intercepting and killing
them, it would prove a fertile source of quarrels and litigation.
However uncourteous or unkind the conduct of Pierson towards Post,
in this instance, may have been, yet his act was productive of no injury or
damage for which a legal remedy can be applied. We are of opinion the
judgment below was erroneous, and ought to be reversed.

BROCKHOLST LIVINGSTON, J. My opinion differs from that of the court.

Whether a person who, with his own hounds, starts and hunts a fox on
waste and uninhabited ground, and is on the point of seizing his prey,
acquires such an interest in the animal, as to have a right of action against
another, who in view of the huntsman and his dogs in full pursuit, and with
knowledge of the chase, shall kill and carry him away?
This is a knotty point, and should have been submitted to the
arbitration of sportsmen, without poring over Justinian, Fleta, Bracton,

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Puffendorf, Locke, Barbeyrac, or Blackstone, all of whom have been cited;
they would have had no difficulty in coming to a prompt and correct
conclusion. In a court thus constituted, the skin and carcass of poor
reynard would have been properly disposed of, and a precedent set,
interfering with no usage or custom which the experience of ages has
sanctioned, and which must be so well known to every votary of Diana.
But the parties have referred the question to our judgment, and we must
dispose of it as well as we can, from the partial lights we possess, leaving
to a higher tribunal, the correction of any mistake which we may be so
unfortunate as to make. By the pleadings it is admitted that a fox is a “wild
and noxious beast.” Both parties have regarded him, as the law of nations
does a pirate, hostem humani generis, and although de mortuis nil nisi
bonum, be a maxim of our profession, the memory of the deceased has not
been spared. His depredations on farmers and on barn yards have not been
forgotten; and to put him to death wherever found, is allowed to be
meritorious, and of public benefit. Hence it follows, that our decision
should have in view the greatest possible encouragement to the destruction
of an animal, so cunning and ruthless in his career. But who would keep a
pack of hounds; or what gentleman, at the sound of the horn, and at peep
of day, would mount his steed, and for hours together, sub jove frigido, or
a vertical sun, pursue the windings of this wily quadruped, if, just as night
came on, and his stratagems and strength were nearly exhausted, a saucy
intruder, who had not shared in the honours or labours of the chase, were
permitted to come in at the death, and bear away in triumph the object of
pursuit? Whatever Justinian may have thought of the matter, it must be
recollected that his code was compiled many hundred years ago, and it
would be very hard indeed, at the distance of so many centuries, not to
have a right to establish a rule for ourselves. In his day, we read of no
order of men who made it a business, in the language of the declaration in
this cause, “with hounds and dogs to find, start, pursue, hunt and chase,”
these animals, and that, too, without any other motive than the preservation
of Roman poultry; if this diversion had been then in fashion, the lawyers
who composed his institutes would have taken care not to pass it by,
without suitable encouragement. If any thing, therefore, in the digests or
pandects shall appear to militate against the defendant in error, who, on
this occasion, was the foxhunter, we have only to say tempora mutantur;
and if men themselves change with the times, why should not laws also
undergo an alteration?
It may be expected, however, by the learned counsel, that more
particular notice be taken of their authorities. I have examined them all,
and feel great difficulty in determining, whether to acquire dominion over

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a thing, before in common, it be sufficient that we barely see it, or know
where it is, or wish for it, or make a declaration of our will respecting it; or
whether, in the case of wild beasts, setting a trap, or lying in wait, or
starting, or pursuing, be enough; or if an actual wounding, or killing, or
bodily tact and occupation be necessary. Writers on general law, who have
favoured us with their speculations on these points, differ on them all; but,
great as is the diversity of sentiment among them, some conclusion must
be adopted on the question immediately before us. After mature
deliberation, I embrace that of Barbeyrac, as the most rational, and least
liable to objection. If at liberty, we might imitate the courtesy of a certain
emperor, who, to avoid giving offence to the advocates of any of these
different doctrines, adopted a middle course, and by ingenious distinctions,
rendered it difficult to say (as often happens after a fierce and angry
contest) to whom the palm of victory belonged. He ordained, that if a beast
be followed with large dogs and hounds, he shall belong to the hunter, not
to the chance occupant; and in like manner, if he be killed or wounded
with a lance or sword; but if chased with beagles only, then he passed to
the captor, not to the first pursuer. If slain with a dart, a sling, or a bow, he
fell to the hunter, if still in chase, and not to him who might afterwards
find and seize him.
Now, as we are without any municipal regulations of our own, and the
pursuit here, for aught that appears on the case, being with dogs and
hounds of imperial stature, we are at liberty to adopt one of the provisions
just cited, which comports also with the learned conclusion of Barbeyrac,
that property in animals ferae naturae may be acquired without bodily
touch or manucaption, provided the pursuer be within reach, or have a
reasonable prospect (which certainly existed here) of taking, what he has
thus discovered an intention of converting to his own use.
When we reflect also that the interest of our husbandmen, the most
useful of men in any community, will be advanced by the destruction of a
beast so pernicious and incorrigible, we cannot greatly err, in saying, that a
pursuit like the present, through waste and unoccupied lands, and which
must inevitably and speedily have terminated in corporal possession, or
bodily seisin, confers such a right to the object of it, as to make any one a
wrongdoer, who shall interfere and shoulder the spoil. The justice’s
judgment ought, therefore, in my opinion, to be affirmed.

Notes and Questions

1. Fairness and justice. The court suggested that Pierson’s conduct in
seizing the fox at the last moment was “uncourteous or unkind” but not

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unlawful. Was Pierson’s conduct unfair? And if so, why should it be
lawful? If it was not fair, what was unfair about it? Do you need to know
more about the social customs of hunters to answer this question? Or can it
be answered without looking into social practice?
Who do you think had a right to take possession of the fox? Suppose
Post had been hunting the fox for a week, and Pierson had been outside for
a few minutes before coming upon it and seizing it. Does the principle of
rewarding labor suggest giving property rights to Post — who worked for
a week toward the goal of getting the fox? Or does it suggest that one who
took a week was a poor hunter and deserved to lose the fox to Pierson?
2. Social utility. What rule of law would best encourage productive
labor? Justice Livingston notes that wild foxes were “noxious beasts” who
preyed on barnyards. He suggested that the rules of law should encourage
people to hunt them. How could you argue that the rule of law
promulgated by the court in Justice Tompkins’s opinion achieved that end?
What reasons did Justice Livingston give for believing that his proposed
rule would better serve this purpose? With current fears about extinction of
species, how do we determine whether social welfare will be best
advanced by promoting hunting of wild animals or by preserving them?
Fox-hunting, as Justice Livingston pictured it, cost hundreds of pounds
and countless hours training dogs and horses. Andrea McDowell, Legal
Fictions in Pierson v. Post, 105 Mich. L. Rev. 735, 752, 762-763 (2006).
The town of Bridgehampton was interested in reducing the fox population,
but only paid four shillings as a reward for dead foxes to encourage their
extermination. Bethany R. Berger, It’s Not About the Fox: The Untold
History of Pierson v. Post, 55 Duke L.J. 1089, 1130 (2006). What does this
suggest about Livingston’s argument?
3. Certainty. Which rule of law — Tompkins’s or Livingston’s —
creates the most certainty about ownership rights? What are the advantages
of certainty in property rules? Will the simplest rule necessarily discourage
litigation or quarrels between parties or result in the most predictable
application by the courts? See Carol Rose, Crystals and Mud in Property
Law, 40 Stan. L. Rev. 577 (1988); Joseph William Singer, The Rule of
Reason in Property Law, 46 U.C. Davis L. Rev. 1375 (2013).
4. Trespassing. How would the case have been resolved if Pierson had
caught the fox on Post’s land? Should the rule of capture still apply?
Would it make a difference if Pierson had begun hunting the fox on his
own land and chased it onto Post’s land to make the capture? See Chapter
1, §1.1 (discussing hunting on private land).

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 5. Custom. Justice Livingston’s dissent declares that the dispute
should have been “submitted to the arbitration of sportsmen” and decided
according to the customs of “votaries of Diana,” i.e., hunters. What would
be the advantages of applying the customs prevailing among hunters to
resolve the dispute? What would be the potential risks? For an early
empirical study examining the prevalence of custom over law in resolving
trespass disputes between farmers and ranchers in California, see Robert
Ellickson, Of Coase and Cattle: Dispute Resolution Among Neighbors in
Shasta County, 38 Stan. L. Rev. 623 (1986).
In the nineteenth century, the customs of the whaling industry were
used to resolve a series of cases involving rights to whales. In Swift v.
Gifford, 23 F. Cas. 558 (D. Mass. 1872), whalers on the ship Rainbow had
harpooned a whale, and continued the chase after the whale broke free
with the harpoon still in its side. Whalers on the ship Hercules, however,
had spotted and killed the whale shortly before the Rainbow caught up
with it. Following the custom that a whale belonged to those whose
harpoon remained in the whale, so long as they continued the chase, the
court awarded the whale to the Rainbow. In Ghen v. Rich, 8 F. 159 (D.
Mass. 1881), the whale had been killed with a bomb lance and
immediately sank to the bottom of the sea, rising a few days later to wash
ashore on Cape Cod, where it was found and sold to others. In a dispute
between the whalers and the finder, the court followed the Cape Cod
custom to hold that the whale belonged to the ship that had shot it. Was it
more appropriate to apply custom in such cases than to the dispute
between Pierson and Post? Why or why not?
6. Why a lawsuit about a fox? The costs of suit alone would be greater
than any possible recovery. Bethany Berger argues that the dispute was
really about control of the village common. See Bethany R. Berger, It’s
Not About the Fox: The Untold History of Pierson v. Post, 55 Duke L.J.
1089 (2006). Although the New York Court of Appeals treated the land as
“waste and unoccupied lands,” the town of Southampton on Long Island
had long endured conflicts over control of the common lands in the town
and had attempted to solve them by dividing ownership among various
interest groups. These included the investors in the original settlement,
those who purchased land in the first decade of settlement, the Shinnecock
Tribe that had reserved rights in the lands, and all the town residents.
Pierson was among the “proprietors” who inherited from the town’s
original settlers special rights in undivided lands, while Post’s father was a
wealthy merchant who had profited from the West India trade after the
Revolutionary War. Professor Berger argues that “Post’s elaborate fox

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hunt over the commons would have been perceived as [a] display of
conspicuous wealth, inimical to the town’s agricultural traditions . . . of
puritan thrift,” and the lawsuit may have been “part of this growing
conflict over who could regulate and use the common resources of the
town, and over whether commerce and wealth would define its social
organization.” Id.3

Problems
1. Fleet v. Hegeman, 14 Wend. 42 (N.Y. 1934), applied the question of
capture of wild animals to oysters. The plaintiff had placed small immature
oysters in a marked bed in common waters open to all inhabitants of the
town, and left them to mature for two years. The defendant then collected
the oysters without the permission of the plaintiff. If you were representing
the defendant, how could you use Pierson to support your client? If you
were representing the plaintiff, how would you distinguish it? How should
the case be resolved?
2. How would the rule of Pierson v. Post apply to other animals and
other contexts? Imagine that rather than a fox in a rural area, the animal is
a dog wandering in a city street. May you take the dog home and keep it?
Now imagine that the animal is a tiger. If you shoot the tiger, may you
claim its pelt? Or are you liable to a suit by the owner of the tiger from
whose home it escaped?

§5.2 Baseballs

Popov v. Hayashi

2002 WL 31833731 (Cal. Super. 2002)

KEVIN MCCARTHY, J.
In 1927, Babe Ruth hit sixty home runs. That record stood for thirty
four years until Roger Maris broke it in 1961 with sixty one home runs.
Mark McGwire hit seventy in 1998. On October 7, 2001, at PacBell Park
in San Francisco, Barry Bonds hit number seventy three. That
accomplishment set a record which, in all probability, will remain un-
broken for years into the future.
The event was widely anticipated and received a great deal of
attention. The ball that found itself at the receiving end of Mr. Bond’s bat
garnered some of that attention. Baseball fans in general, and especially
people at the game, understood the importance of the ball. It was worth a

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great deal of money4 and whoever caught it would bask, for a brief period
of time, in the reflected fame of Mr. Bonds.
With that in mind, many people who attended the game came prepared
for the possibility that a record setting ball would be hit in their direction.
Among this group were plaintiff Alex Popov and defendant Patrick
Hayashi. They were unacquainted at the time. Both men brought baseball
gloves, which they anticipated using if the ball came within their reach.
Barry Bonds came to bat in the first inning. With nobody on base and a
full count, Bonds swung at a slow knuckleball. He connected. The ball
sailed over the right-field fence and into the arcade. When the seventy-
third home run ball went into the arcade, it landed in the upper portion of
the webbing of a softball glove worn by Alex Popov. While the glove
stopped the trajectory of the ball, it is not at all clear that the ball was
secure. Popov had to reach for the ball and in doing so, may have lost his
balance.
Even as the ball was going into his glove, a crowd of people began to
engulf Mr. Popov. He was tackled and thrown to the ground while still in
the process of attempting to complete the catch. Some people intentionally
descended on him for the purpose of taking the ball away, while others
were involuntarily forced to the ground by the momentum of the crowd.
Eventually, Mr. Popov was buried face down on the ground under
several layers of people. At one point he had trouble breathing. Mr. Popov
was grabbed, hit and kicked. People reached underneath him in the area of
his glove. Neither the tape nor the testimony is sufficient to establish
which individual members of the crowd were responsible for the assaults
on Mr. Popov.
The videotape clearly establishes that this was an out of control mob,
engaged in violent, illegal behavior. Although some witnesses testified in a
manner inconsistent with this finding, their testimony is specifically
rejected as being false on a material point. At some point the ball left his
glove and ended up on the ground. It is impossible to establish the exact
point in time that this occurred or what caused it to occur.
Mr. Hayashi was standing near Mr. Popov when the ball came into the
stands. He, like Mr. Popov, was involuntarily forced to the ground. He
committed no wrongful act. While on the ground he saw the loose ball. He
picked it up, rose to his feet and put it in his pocket.
We will never know if Mr. Popov would have been able to retain
control of the ball had the crowd not interfered with his efforts to do so.
Resolution of that question is the work of a psychic, not a judge.
The deciding question in this case is whether Mr. Popov achieved
possession or the right to possession as he attempted to catch and hold on

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to the ball.
The parties have agreed to a starting point for the legal analysis. Prior
to the time the ball was hit, it was possessed and owned by Major League
Baseball. At the time it was hit it became intentionally abandoned
property. The first person who came in possession of the ball became its
new owner.
The parties fundamentally disagree about the definition of possession.
In order to assist the court in resolving this disagreement, four
distinguished law professors participated in a forum to discuss the legal
definition of possession. The professors also disagreed.
The disagreement is understandable. Although the term possession
appears repeatedly throughout the law, its definition varies depending on
the context in which it is used. Various courts have condemned the term as
vague and meaningless.
While there is a degree of ambiguity built into the term possession, that
ambiguity exists for a purpose. Courts are often called upon to resolve
conflicting claims of possession in the context of commercial disputes. A
stable economic environment requires rules of conduct which are
understandable and consistent with the fundamental customs and practices
of the industry they regulate. Without that, rules will be difficult to enforce
and economic instability will result. Because each industry has different
customs and practices, a single definition of possession cannot be applied
to different industries without creating havoc.
[S]ome cases recognize possession even before absolute dominion and
control is achieved. Those cases require the actor to be actively and ably
engaged in efforts to establish complete control. Moreover, such efforts
must be significant and they must be reasonably calculated to result in
unequivocal dominion and control at some point in the near future.
This rule is applied in cases involving the hunting or fishing of wild
animals or the salvage of sunken vessels.
These rules are contextual in nature. They are crafted in response to the
unique nature of the conduct they seek to regulate. Moreover, they are
influenced by the custom and practice of each industry. The reason that
absolute dominion and control is not required to establish possession in the
cases cited by Mr. Popov is that such a rule would be unworkable and
unreasonable. The “nature and situation” of the property at issue does not
immediately lend itself to unequivocal dominion and control. It is
impossible to wrap ones arms around a whale, a fleeing fox or a sunken
ship.
The opposite is true of a baseball hit into the stands of a stadium. Not
only is it physically possible for a person to acquire unequivocal dominion

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and control of an abandoned baseball, but fans generally expect a claimant
to have accomplished as much. The custom and practice of the stands
creates a reasonable expectation that a person will achieve full control of a
ball before claiming possession. There is no reason for the legal rule to be
inconsistent with that expectation.
The central tenant of [the] Rule [advocated by Professor Brian Gray] is
that the actor must retain control of the ball after incidental contact with
people and things. Mr. Popov has not established by a preponderance of
the evidence that he would have retained control of the ball after all
momentum ceased and after any incidental contact with people or objects.
Consequently, he did not achieve full possession.
That finding, however, does not resolve the case. The reason we do not
know whether Mr. Popov would have retained control of the ball is not
because of incidental contact. It is because he was attacked. His efforts to
establish possession were interrupted by the collective assault of a band of
wrongdoers.
As a matter of fundamental fairness, Mr. Popov should have had the
opportunity to try to complete his catch unimpeded by unlawful activity.
To hold otherwise would be to allow the result in this case to be dictated
by violence. That will not happen.
A court sitting in equity has the authority to fashion rules and remedies
designed to achieve fundamental fairness. Consistent with this principle,
the court adopts the following rule. Where an actor undertakes significant
but incomplete steps to achieve possession of a piece of abandoned
personal property and the effort is interrupted by the unlawful acts of
others, the actor has a legally cognizable pre-possessory interest in the
property. That pre-possessory interest constitutes a qualified right to
possession which can support a cause of action for conversion.
[T]his does not, however, address the interests of Mr. Hayashi. Mr.
Hayashi was not a wrongdoer. He was a victim of the same bandits that
attacked Mr. Popov. The difference is that he was able to extract himself
from their assault and move to the side of the road. It was there that he
discovered the loose ball. When he picked up and put it in his pocket he
attained unequivocal dominion and control.
If Mr. Popov had achieved complete possession before Mr. Hayashi
got the ball, those actions would not have divested Mr. Popov of any
rights, nor would they have created any rights to which Mr. Hayashi could
lay claim. Mr. Popov, however, was able to establish only a qualified pre-
possessory interest in the ball. That interest does not establish a full right
to possession that is protected from a subsequent legitimate claim.
An award of the ball to Mr. Popov would be unfair to Mr. Hayashi. It

244
would be premised on the assumption that Mr. Popov would have caught
the ball. That assumption is not supported by the facts. An award of the
ball to Mr. Hayashi would unfairly penalize Mr. Popov. It would be based
on the assumption that Mr. Popov would have dropped the ball. That
conclusion is also unsupported by the facts.
Both men have a superior claim to the ball as against all the world.
Each man has a claim of equal dignity as to the other. We are, therefore,
left with something of a dilemma. Thankfully, there is a middle ground.
The concept of equitable division was fully explored in a law review
article authored by Professor R.H. Helmholz in the December 1983 edition
of the Fordham Law Review. As Helmholz points out, it is useful in that it
“provides an equitable way to resolve competing claims which are equally
strong.” Moreover, “[i]t comports with what one instinctively feels to be
fair.”
Mr. Hayashi’s claim is compromised by Mr. Popov’s pre-possessory
interest. Mr. Popov cannot demonstrate full control. Albeit for different
reasons, they stand before the court in exactly the same legal position as
did the five boys [in Keron v. Cashman, 33 A. 1055 (N.J. 1896), who
found an old sock and played with the sock together until it broke open,
spilling out $775. Here, as in Keron, Popov and Hayashi’s] legal claims
are of equal quality and they are equally entitled to the ball.
The court therefore declares that both plaintiff and defendant have an
equal and undivided interest in the ball. Plaintiff’s cause of action for
conversion is sustained only as to his equal and undivided interest. In order
to effectuate this ruling, the ball must be sold and the proceeds divided
equally between the parties.

Notes and Questions

1. Aftermath. The full story of the battle for Barry Bonds’s home run
ball is captured in the documentary Up for Grabs. The ball ultimately sold
only for $450,000, far less than was expected. (The same collector had
purchased Mark McGwire’s record-breaking ball for $3.2 million in 1999.)
Popov’s lawyer later sued Popov for his attorneys’ fees, which he claimed
at an hourly rate amounted to $473,000. Hayashi, who was an engineering
student at the time of the suit, had retained his attorney on a contingency
basis and so did not have a legal bill that dwarfed his gains. David Kravets,
Lawyer Sues Client Who Caught Bond’s Ball: Fan Owes $473,000,
National Journal (Canada), July 9, 2003.
2. Custom. Ownership of the ball was only up for grabs because the
original owner, Major League Baseball, had a policy of intentionally

245
abandoning any balls hit into the stands. Major League Baseball only
provides balls in games that are likely to have record-breaking hits, but
home teams provide balls for other games and universally follow the same
fan-friendly policy. This policy has been a matter of custom and practice
for more than 60 years. Could a ball club reverse this policy? In 2001,
Raphael Vasquez caught Mike Piazza’s three-hundredth career home run
and gave it to his six-year old daughter, Denise. Mets security guards
surrounded the father and daughter and forced them to give up the ball,
apparently because Piazza wanted it as a souvenir. Could Vasquez
successfully sue the ball club?
What about balls that stay in the field? In 2004, backup Boston Red
Sox first baseman Doug Mientkiewicz caught the ball that won the World
Series for the team, breaking the “curse of the Bambino” of Red Sox lore.
When he kept the ball, the Red Sox sued, claiming that Mientkiewicz’s
possession was only the result of his employment for the team. Who
should win? Does it matter that the stadium was owned by the St. Louis
Cardinals, which also supplied the ball? The suit was ultimately settled
with the agreement that the ball would go to the National Baseball Hall of
Fame. For more on ball ownership, see Paul Finkelman, Fugitive
Baseballs and Abandoned Property: Who Owns the Home Run Ball?, 23
Cardozo L. Rev. 1609 (2002). For its surprisingly complicated tax
consequences, see Andrew Appleby, Ball Busters: How the IRS Should
Tax Record-Setting Baseballs and Other Found Property Under the
Treasure Trove Regulation, 33 Vt. L. Rev. 43 (2008).
3. Constructive possession. What would have happened had Popov
been able to prove that he got the ball firmly in his glove and was walking
away, but the “gang of bandits” subsequently made him lose it? He would
win against Hayashi. This illustrates that the doctrine of acquisition by
possession does not require continual possession, but rather clear marking
of ownership without abandonment of the property. Major League
Baseball having abandoned the ball, once Popov had reduced it to his
possession it remained in his constructive possession, and he could claim it
against all others.
4. Equitable division. Scholars have advocated equitable division
resolutions to different categories of cases. A 2007 article advocates their
use in the case of what the authors call “windfalls,” gains or losses that
neither party could reasonably predict, so that the possibility of the
windfall would not change the behavior of either party. In such cases, they
assert, equitable division is efficient, because a normally risk-averse
person would ex ante choose the equal division remedy as insurance

246
against total loss; it is more just because it does not place the unforeseen
loss entirely on any one party; and it furthers judicial integrity because it
does not force courts into judicial contortions to justify choosing one party
or the other. See Gideon Parchomovsky, Peter Siegelman & Steve Thel, Of
Equal Wrongs and Half Rights, 82 N.Y.U. L. Rev. 738 (2007). Is this
correct? If it is, why aren’t split-the-difference remedies more common?

§5.3 Capture of Natural Resources

The law of capture has also been applied to disputes over ownership of
oil and gas as well as water. How is an oil pool beneath your and your
neighbor’s land like a wild animal? How is it different? What about the
water in a stream that flows past your land and your neighbor’s? How do
these similarities and differences affect the legal tests that should govern
ownership of these resources? The materials below consider the rule of
capture and oil and gas; rights and duties regarding water are covered in
Chapter 7, §8.

Elliff v. Texon Drilling Co.

210 S.W.2d 558 (Tex. 1948)

A.J. FOLLEY, Justice.
This is a suit by the petitioners, Mrs. Mabel Elliff, Frank Elliff, and
Charles C. Elliff, against the respondents, Texon Drilling Company, a
Texas corporation, Texon Royalty Company, a Texas corporation, Texon
Royalty Company, a Delaware corporation, and John L. Sullivan, for
damages resulting from a “blowout” gas well drilled by respondents in the
Agua Dulce Field in Nueces County.
The petitioners owned the surface and certain royalty interests in
3054.9 acres of land in Nueces County, upon which there was a producing
well known as Elliff No. 1. They owned all the mineral estate underlying
the west 1500 acres of the tract, and an undivided one-half interest in the
mineral estate underlying the east 1554.9 acres. Both tracts were subject to
oil and gas leases, and therefore their royalty interest in the west 1500
acres was one-eighth of the oil or gas, and in the east 1554.9 acres was
one-sixteenth of the oil and gas.
It was alleged that these lands overlaid approximately fifty per cent of
a huge reservoir of gas and distillate and that the remainder of the reservoir
was under the lands owned by Mrs. Clara Driscoll, adjoining the lands of
petitioners on the east. Prior to November 1936, respondents were engaged
in the drilling of Driscoll-Sevier No. 2 as an offset well at a location 466

247
feet east of petitioners’ east line. On the date stated, when respondents had
reached a depth of approximately 6838 feet, the well blew out, caught fire
and cratered. Attempts to control it were unsuccessful, and huge quantities
of gas, distillate and some oil were blown into the air, dissipating large
quantities from the reservoir into which the offset well was drilled. When
the Driscoll-Sevier No. 2 well blew out, the fissure or opening in the
ground around the well gradually increased until it enveloped and
destroyed Elliff No. 1. The latter well also blew out, cratered, caught fire
and burned for several years. Two water wells on petitioners’ land became
involved in the cratering and each of them blew out. Certain damages also
resulted to the surface of petitioners’ lands and to their cattle thereon. The
cratering process and the eruption continued until large quantities of gas
and distillate were drained from under petitioners’ land and escaped into
the air, all of which was alleged to be the direct and proximate result of the
negligence of respondents in permitting their well to blow out. The extent
of the emissions from the Driscoll-Sevier No. 2 and Elliff No. 1, and the
two water wells on petitioners’ lands, was shown at various times during
the several years between the blowout in November 1936, and the time of
the trial in June 1946. There was also expert testimony from petroleum
engineers showing the extent of the losses from the underground reservoir,
which computations extended from the date of the blowout only up to June
1938. It was indicated that it was not feasible to calculate the losses
subsequent thereto, although lesser emissions of gas continued even up to
the time of the trial. All the evidence with reference to the damages
included all losses from the reservoir beneath petitioners’ land without
regard to whether they were wasted and dissipated from above the Driscoll
land or from petitioners’ land.
The jury found that respondents were negligent in failing to use
drilling mud of sufficient weight in drilling their well, and that such
negligence was the proximate cause of the well blowing out.
On the findings of the jury the trial court rendered judgment for
petitioners for $154,518.19, which included $148,548.19 for the gas and
distillate, and $5970 for damages to the land and cattle. The Court of Civil
Appeals reversed the judgment and remanded the cause.
The reversal by the Court of Civil Appeals rests [on the ground] that
since substantially all of the gas and distillate which was drained from
under petitioners’ lands was lost through respondents’ blowout well,
petitioners could not recover because under the law of capture they had
lost all property rights in the gas or distillate which had migrated from
their lands.
[T]he sole question [is] whether the law of capture absolves

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respondents of any liability for the negligent waste or destruction of
petitioners’ gas and distillate, though substantially all of such waste or
destruction occurred after the minerals had been drained from beneath
petitioners’ lands.
In the more recent trend of the decisions of our state, with the growth
and development of scientific knowledge of oil and gas, it is now
recognized “that when a[n] oil field has been fairly tested and developed,
experts can determine approximately the amount of oil and gas in place in
a common pool, and can also equitably determine the amount of oil and
gas recoverable by the owner of each tract of land under certain operating
conditions.” Brown v. Humble Oil & Refining Co., 83 S.W.2d 935, 940
(Tex. 1935).
In our state the landowner is regarded as having absolute title in
severalty to the oil and gas in place beneath his land. The only
qualification of that rule of ownership is that it must be considered in
connection with the law of capture and is subject to police regulations. The
oil and gas beneath the soil are considered a part of the realty. Each owner
of land owns separately, distinctly and exclusively all the oil and gas under
his land and is accorded the usual remedies against trespassers who
appropriate the minerals or destroy their market value.
The conflict in the decisions of the various states with reference to the
character of ownership is traceable to some extent to the divergent views
entertained by the courts, particularly in the earlier cases, as to the nature
and migratory character of oil and gas in the soil. In the absence of
common law precedent, and owing to the lack of scientific information as
to the movement of these minerals, some of the courts have sought by
analogy to compare oil and gas to other types of property such as wild
animals, birds, subterranean waters and other migratory things, with
reference to which the common law had established rules denying any
character of ownership prior to capture. However, as was said by Professor
A.W. Walker, Jr., of the School of Law of the University of Texas: “There
is no oil or gas producing state today which follows the wild-animal
analogy to its logical conclusion that the landowner has no property
interest in the oil and gas in place.” 16 Tex. L. Rev. 370, 371. In the light
of modern scientific knowledge these early analogies have been disproven,
and courts generally have come to recognize that oil and gas, as commonly
found in underground reservoirs, are securely entrapped in a static
condition in the original pool, and, ordinarily, so remain until disturbed by
penetrations from the surface. It is further established, nevertheless, that
these minerals will migrate across property lines towards any low pressure
area created by production from the common pool. This migratory

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character of oil and gas has given rise to the so-called rule or law of
capture. That rule simply is that the owner of a tract of land acquires title
to the oil or gas which he produces from wells on his land, though part of
the oil or gas may have migrated from adjoining lands. He may thus
appropriate the oil and gas that have flowed from adjacent lands without
the consent of the owner of those lands, and without incurring liability to
him for drainage. The non-liability is based upon the theory that after the
drainage the title or property interest of the former owner is gone.
Thus it is seen that, notwithstanding the fact that oil and gas beneath
the surface are subject both to capture and administrative regulation, the
fundamental rule of absolute ownership of the minerals in place is not
affected in our state. In recognition of such ownership, our courts, in
decisions involving well-spacing regulations of our Railroad Commission,
have frequently announced the sound view that each landowner should be
afforded the opportunity to produce his fair share of the recoverable oil
and gas beneath his land, which is but another way of recognizing the
existence of correlative rights between the various landowners over a
common reservoir of oil or gas.
It must be conceded that under the law of capture there is no liability
for reasonable and legitimate drainage from the common pool. The
landowner is privileged to sink as many wells as he desires upon his tract
of land and extract therefrom and appropriate all the oil and gas that he
may produce, so long as he operates within the spirit and purpose of
conservation statutes and orders of the Railroad Commission. These laws
and regulations are designed to afford each owner a reasonable opportunity
to produce his proportionate part of the oil and gas from the entire pool
and to prevent operating practices injurious to the common reservoir. In
this manner, if all operators exercise the same degree of skill and
diligence, each owner will recover in most instances his fair share of the
oil and gas. This reasonable opportunity to produce his fair share of the oil
and gas is the landowner’s common law right under our theory of absolute
ownership of the minerals in place. But from the very nature of this theory
the right of each land holder is qualified, and is limited to legitimate
operations. Each owner whose land overlies the basin has a like interest,
and each must of necessity exercise his right with some regard to the rights
of others. No owner should be permitted to carry on his operations in
reckless or lawless irresponsibility, but must submit to such limitations as
are necessary to enable each to get his own.
While we are cognizant of the fact that there is a certain amount of
reasonable and necessary waste incident to the production of oil and gas to
which the non-liability rule must also apply, we do not think this immunity

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should be extended so as to include the negligent waste or destruction of
the oil and gas.
In 85 A.L.R. 1156, the annotator states: “The fact that the owner of the
land has a right to take and to use gas and oil, even to the diminution or
exhaustion of the supply under his neighbor’s land, does not give him the
right to waste the gas. His property in the gas underlying his land consists
of the right to appropriate the same, and permitting the gas to escape into
the air is not an appropriation thereof in the proper sense of the term.”
In like manner, the negligent waste and destruction of petitioners’ gas
and distillate was neither a legitimate drainage of the minerals from
beneath their lands nor a lawful or reasonable appropriation of them.
Consequently, the petitioners did not lose their right, title and interest in
them under the law of capture. At the time of their removal they belonged
to petitioners, and their wrongful dissipation deprived these owners of the
right and opportunity to produce them. That right is forever lost, the same
cannot be restored, and petitioners are without an adequate legal remedy
unless we allow a recovery under the same common law which governs
other actions for damages and under which the property rights in oil and
gas are vested. This remedy should not be denied.
In common with others who are familiar with the nature of oil and gas
and the risks involved in their production, the respondents had knowledge
that a failure to use due care in drilling their well might result in a blowout
with the consequent waste and dissipation of the oil, gas and distillate from
the common reservoir. In the conduct of one’s business or in the use and
exploitation of one’s property, the law imposes upon all persons the duty
to exercise ordinary care to avoid injury or damage to the property of
others. Thus under the common law, and independent of the conservation
statutes, the respondents were legally bound to use due care to avoid the
negligent waste or destruction of the minerals imbedded in petitioners’ oil
and gas-bearing strata. This common-law duty the respondents failed to
discharge. For that omission they should be required to respond in such
damages as will reasonably compensate the injured parties for the loss
sustained as the proximate result of the negligent conduct. The fact that the
major portion of the gas and distillate escaped from the well on
respondents’ premises is immaterial. Irrespective of the opening from
which the minerals escaped, they belonged to the petitioners and the loss
was the same. They would not have been dissipated at any opening except
for the wrongful conduct of the respondents. Being responsible for the loss
they are in no position to deny liability because the gas and distillate did
not escape through the surface of petitioners’ lands.
We are therefore of the opinion the Court of Civil Appeals erred in

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holding that under the law of capture the petitioners cannot recover for the
damages resulting from the wrongful drainage of the gas and distillate
from beneath their lands.

Notes and Questions

Continuing impact of the rule of capture in oil and gas production.
Although oil and gas production are subject to extensive regulation to
prevent waste and protect the environment, the rule of capture generally
remains the law. See Coastal Oil & Gas v. Garza Energy Trust, 268
S.W.3d 1 (Tex. 2008) (holding that rule of capture prevented claim based
on hydraulic fracking that created fractures on plaintiff’s land through
which natural gas leaked to defendants’ land); 6 Thompson on Real
Property, Thomas Editions §49.02. Is the rule fair? Does it promote or
inhibit investment in producing oil and gas? The effect of the rule has been
diminished by the correlative rights recognized in cases like Elliff as well
as spacing and drilling regulations designed to conserve the resource. In
some situations, these regulations may involve compulsory unitization, or
coordination between all surface owners to ensure maximum recovery
from the common pool. Thompson, supra, at §49.02(d).

Problems
1. Plaintiff Corporation invests $1 million in exploring for oil on its
property. After it discovers oil and begins to extract it for sale, its
neighboring landowner, Defendant Corporation, begins to do likewise.
Because the oil is part of a common pool underlying the neighboring
pieces of property, the defendant is able to extract oil from the same pool
discovered by the plaintiff. Defendant’s costs are much less than plaintiff’s
because it does not have to undergo the expense of searching for the oil.
This gives the defendant a competitive advantage. Plaintiff sues defendant,
asking for an injunction ordering defendant to stop exploiting oil
discovered by plaintiff’s investment and labor. Defendant claims a right to
extract oil from beneath its own property.
a. As plaintiff’s attorney, what rule of law would you advocate that
the court adopt? How would you justify that rule in terms of both
fairness and social utility?
b. As defendant’s attorney, what rule of law would you advocate that
the court adopt? How would you justify that rule in terms of both
fairness and social utility?
c. As the judge deciding the case, what rule of law would you adopt,
and why?

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 2. The Exxon Valdez ran aground off the coast of Alaska in 1989,
resulting in one of the largest oil spills in United States history. A lawsuit
was filed against Exxon representing a class of tens of thousands of
individuals who made their livelihood through commercial and subsistence
fishing in the area. Exxon Valdez v. Hazelwood, 270 F.3d 1215 (9th Cir.
2001). The suit sought damages for the destruction of the fish supply. Use
Pierson v. Post and Eliff v. Texon to argue for the plaintiffs or the
defendants.

§5.4 Possession and the Presumption of Title

In the earlier cases, capture creates title to the property. But
possession, even without evidence of capture or how the possession arose,
may also create a presumption of legal title that will continue unless
rebutted. Why does the law create this presumption? What functions does
it serve? See the next case.

Willcox v. Stroup

467 F.3d 409 (4th Cir. 2006)

J. HARVIE WILKINSON III, Circuit Judge.
[Plaintiff Thomas Law Willcox found 444 documents from the
administrations of two governors of South Carolina during the Civil War
in a shopping bag in a closet at his late stepmother’s home. The documents
concern Confederate military reports, correspondence, and telegrams
between various Confederate generals, officers, servicemen, and
government officials, and related materials and have an appraised value of
$2.4 million. Willcox allowed the papers to be microfilmed for the state
archives. When he tried to sell the papers, Rodger Stroup, director of the
South Carolina Department of Archives and History, obtained a temporary
restraining order preventing the sale. Willcox then sued Stroup and the
State of South Carolina for a declaratory judgment that he owned the
papers.]
The papers seem to have come into Willcox’s family through his great-
great-uncle, Confederate Major General Evander McIver Law, who most
likely came into possession of them during the February 1865 attack on the
South Carolina capital by Union General William Tecumseh Sherman. On
February 15, 1865, in anticipation of imminent attack, Governor A.G.
Magrath declared martial law in Columbia and appointed General Law the
Provost Marshal of the city. On February 16, 1865, a large number of State
archives and records were removed from Columbia for safekeeping. On

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February 17, 1865, General Law was relieved of his duties as Provost
Marshal, and General Sherman took control of Columbia. The parties
submit no direct evidence of how General Law came into possession of the
papers, nor is there any suggestion that he did so illegally.
On February 16, 1896, General Law wrote a letter to a New York book
dealer regarding the sale of some letters which, both parties agree, appear
to belong to the collection at issue here. By the 1940s, Mrs. Annie J.
Storm, the granddaughter of General Law, was in possession of the papers
and attempted to sell them to both the University of North Carolina at
Chapel Hill (“UNC”) and the South Caroliniana Library of the University
of South Carolina. Mrs. Storm described the documents as “original State
House papers entrusted to [her] grandfather at the time of the surrender.”
No sale resulted, but the papers were placed on microfilm at the Southern
Historical Collection at UNC.
No evidence has been submitted of the papers’ movements between the
time of the Storm correspondence and plaintiff Willcox’s discovery more
than fifty years later. The point for present purposes is simply that, while
the precise route by which Civil War-era gubernatorial papers arrived in a
shopping bag in Thomas Law Willcox’s stepmother’s closet remains a
mystery, it appears that the papers have been in the possession of the Law
and Willcox families for over one hundred and forty years.
The exceptional nature of the papers in dispute — their early vintage,
their unknown history — presents issues distinct from those of the typical
personal property case. Without the benefit of clear chain of title, evidence
of original ownership, eyewitness testimony, and any number of
documentary aids usually helpful in the determination of ownership, the
court must utilize the legal tools that remain at its disposal. In this
situation, tenets of the common law that usually remain in the background
of ownership determinations come to the forefront, their logic and utility
revealed anew.
That possession is nine-tenths of the law is a truism hardly bearing
repetition. The importance of possession gave rise to the principle that
“[p]ossession of property is indicia of ownership, and a rebuttable
presumption exists that those in possession of property are rightly in
possession.” 73 C.J.S. Property §70 (2004). The common law has long
recognized that “actual possession is, prima facie, evidence of a legal title
in the possessor.” William Blackstone, 2 Commentaries *196. See, e.g.,
Edward Coke, 1 Commentary upon Littleton 6.b. (19th ed. 1832) (strong
presumption of ownership created by “continuall and quiet possession”);
Jeffries v. Great W. Ry. Co. (1856) 119 Eng. Rep. 680 (K.B.) (“[T]he
presumption of law is that the person who has possession has the

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property.”).
This presumption has been a feature of American law almost since its
inception. “Undoubtedly,” noted the Supreme Court, “if a person be found
in possession . . . it is prima facie evidence of his ownership.” Ricard v.
Williams, 20 U.S. 59, 105 (1822). Almost eighty years later, the Court
reaffirmed, “If there be no evidence to the contrary, proof of possession, at
least under a color of right, is sufficient proof of title.” Bradshaw v.
Ashley, 180 U.S. 59, 63 (1901). In this case, the possession of the Law and
Willcox families triggers the presumption of their ownership of the papers.
The unusual circumstances of this case provide a notable illustration of
why such a presumption exists in the first place.
First and foremost, the presumption operates to resolve otherwise
impenetrable difficulties. Where neither party can establish title by a
preponderance of the evidence, the presumption cuts the Gordian knot,
determining ownership in favor of the possessor. This case shows the need
for such a default rule. It presents questions the answers to which remain a
mystery. Little is known of the papers’ whereabouts, status, or movements
from their creation to their acquisition by General Law. There is no
evidence of how General Law acquired the papers. Not even the chain of
possession within the Law and Willcox families has yet been determined
with any certainty. In fact, in over one hundred and forty years of
existence, these papers have apparently surfaced in the historical record
only three times: in General Law’s 1896 correspondence, in Annie Storm’s
1940’s correspondence, and in the current litigation.
This case thus poses questions which we are ill equipped to answer.
Fortunately, however, the common law reveals its usefulness even in the
acknowledgment of its limitations. The presumption of ownership from
possession locates the parties’ burdens. Where the party not in possession
is able to establish superior title by satisfactory evidence, the presumption
gives way in favor of this evidence. But where no such evidence is
produced — where, as here, the events at issue are impossible to
reconstruct — the presumption recognizes and averts the possibility of a
court’s presiding over a historical goose chase.
Second, the presumption of ownership in the possessor promotes
stability. The presumption of ownership from possession is one of an array
of legal principles designed to this end. The presumption means that,
absent proof to the contrary, settled distributions and expectations will
continue undisturbed. Even where evidence overcomes the presumption,
other principles work to protect settled expectations, including the statute
of limitations, the doctrine of adverse possession, and equitable defenses
such as laches, staleness, abandonment, and waiver.

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 Such principles, working in concert, favor status-quo distributions over
great upsets in property rights. At the most basic level, this fosters “the
policy of protecting the public peace against violence and disorder.” See
Sabariego v. Maverick, 124 U.S. 261, 297 (1888). In contemporary
commercial society, it protects the expectations of those in possession,
thus encouraging them to make improvements that increase social wealth.
See, e.g., Richard A. Posner, Economic Analysis of Law 80-84 (6th ed.
2003); Thomas W. Merrill & Henry E. Smith, What Happened to Property
in Law and Economics?, 111 Yale L.J. 357, 398 (2001) (“[T]he refined
problems of concern in advanced economies exist at the apex of a
pyramid, the base of which consists of the security of property rights.”).
Without rules such as the presumption of ownership, whether public or
private, such valuable goals would give way to uncertainty.
In this case, the resulting confusion is not difficult to imagine. If the
State were not required to defeat the presumption in order to gain title, a
whole system of archival practice could be thrown into question. The State
could claim ownership of other papers of Governors Pickens and Bonham
held by the Library of Congress and Duke University, as well as papers of
other South Carolina governors currently at institutions other than the State
Archives. The result would be immense litigation over papers held by
private owners, universities, historical societies, and federal depositories. It
would upset settled archival arrangements and the expectations of
institutions and historical scholars alike. Disregard of possession as
presumptive evidence of ownership would throw the whole of this
important area into turmoil.
Finally, while it has never been the practice of federal courts to ignore
the law in favor of equitable considerations, it is worth noting that the
employment of the presumption in this case in no way frustrates the public
interest. Here, private possession does not shut the papers off from access
by scholars or, indeed, by the interested public. They have been available
for study for decades on microfilm at the University of North Carolina at
Chapel Hill, and through the permission of plaintiff Willcox the South
Carolina Department of Archives and History now also has a copy on
microfilm. The papers are thus freely available for perusal and study
regardless of who owns the originals. And, of course, if the State values
possession of the original documents, it may acquire them on the open
market.
In short, the common law, through the presumption of ownership in the
possessor, resolves otherwise insoluble historical puzzles in favor of
longstanding distributions and long-held expectations. Such a rule both
protects the private interests of longtime possessors and increases social

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utility. Of course, this presumption will not always cut in one direction. In
many instances, the State will possess the papers, and it will then be
entitled to the strong presumption that the private party claims here. In this
case, however, where the Law and Willcox families have been in
possession for well over a century, the presumption favors plaintiff
Willcox.
Having recognized the presumption in favor of Willcox’s ownership,
the court must consider whether the State has rebutted this presumption. In
this case, the State has been unable to provide such evidence. There is no
documentary evidence of the State’s title, nor is there evidence of its
recent possession. While there is no suggestion that the Law and Willcox
families are bona fide purchasers, since no purchase was involved, there is
also no indication that they acquired the papers in bad faith. In any case,
the State’s burden may not be met by challenging the sufficiency of the
possessor’s title but only by proving the superior strength of its claim.
Given the insufficient factual evidence, the State’s remaining argument
for ownership is that, under the law at the time of the documents’ creation
(1860-64) or their acquisition by General Law (1865), they were public
property. South Carolina law of the relevant time period provides no basis
for the State’s claim of ownership.
[T]he practice in South Carolina accords with common law practice
more generally. Presidential papers, for example, were considered private
property from the time of George Washington, who following his second
term removed his papers to Mount Vernon and bequeathed them in his will
to his nephew, Supreme Court Justice Bushrod Washington. See Nixon v.
United States, 978 F.2d 1269, 1278 (D.C. Cir. 1992). Jefferson, Madison,
and Monroe also bequeathed their papers as private property by will. See
id. When Congress first provided public funding for presidential libraries,
such libraries depended upon former presidents to deposit their papers
voluntarily. See Presidential Libraries Act of 1955, Pub. L. No. 84-373, 69
Stat. 695 (codified as amended at 44 U.S.C. §2112 (2000)).
For Congress to change this private ownership regime required a law
prospectively granting the United States “complete ownership, possession,
and control” of official presidential records. See Presidential Records Act
of 1978, 44 U.S.C. §2201 et seq. (implementing process for archiving
records and making them publicly available as soon as possible, subject to
exceptions for confidential and privileged materials). A previous law, the
Presidential Records and Materials Preservation Act of 1974, Pub. L. 93-
526, 88 Stat. 1695, which exerted federal control over former President
Nixon’s papers in the wake of the Watergate scandal, was determined to
have effected a per se taking of President Nixon’s property interest in his

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papers. See Nixon, 978 F.2d at 1284.
We conclude that the State has failed to establish that South Carolina
law at the relevant time treated gubernatorial papers as public property.
This conclusion leaves the State with no basis upon which to rebut the
strong presumption of possession in the Law and Willcox families and no
basis upon which to claim title superior to that of plaintiff Willcox.

§6 RELATIVITY OF TITLE
Property does not just concern things, it concerns relationships among
people with respect to things. Blackstone famously wrote that property
conveys rights against “any other individual in the universe.” This image
conveys an important insight: unlike most contract rights, many property
rights are not simply good against those we have entered into agreement
with, but against a wide array of perfect strangers. See Thomas W. Merrill
& Henry E. Smith, The Property/Contract Interface, 101 Colum. L. Rev.
773, 780-790 (2001). But it hides an important truth as well: property
rights are often relative, good against some under certain circumstances,
but not against others. Rights to exclude, for example, do not hold in the
face of emergency; it is not trespass to crash your plane on the land of
another. See Chapter 1, §1.3. More important here, finding lost property or
possessing land, even without official title to the property, will create
rights against subsequent possessors, but not against the title owner. This
concept, illustrated in materials below, is called relativity of title.

§6.1 Finders
The law of finders is a common illustration of the relativity of title. As
dramatically illustrated in the cases below, who is entitled to keep found
property depends on whether the conflict is with the original owner or
possessor of the property, a subsequent possessor, or the owner of the land
on which the property is found, and on whether the property is considered
lost, mislaid, or abandoned.

Armory v. Delamirie

93 Eng. Rep. 664 (K.B. 1722)

Sir JOHN PRATT, C.J.

Terms:

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 Trover was an action for damages for wrongful interference with personal
property. Why did the chimney sweeper’s boy not sue in replevin, which was
an action for return of the property?

The plaintiff being a chimney sweeper’s boy found a jewel and carried
it to the defendant’s shop (who was a goldsmith) to know what it was, and
delivered it into the hands of the apprentice, who under pretence of
weighing it, took out the stones, and calling to the master to let him know
it came to three halfpence, the master offered the boy the money, who
refused to take it, and insisted to have the thing again; whereupon the
apprentice delivered him back the socket without the stones. And now in
trover against the master these points were ruled:
That the finder of a jewel, though he does not by such finding acquire
an absolute property or ownership, yet he has such a property as will
enable him to keep it against all but the rightful owner, and subsequently
may maintain trover.
That the action well lay against the master, who gives a credit to his
apprentice, and is answerable for his neglect.
As to the value of the jewel several of the trade were examined to
prove what a jewel of the finest water that would fit the socket would be
worth; and the Chief Justice directed the jury, that unless the defendant did
produce the jewel, and shew it not to be of the finest water, they should
presume the strongest case against him, and make the value of the best
jewels the measure of their damages: which they accordingly did.

Notes and Questions

1. Conflicts between finders and subsequent possessors. Armory v.
Delamirie illustrates the basic rule: finders will generally prevail against
all subsequent possessors of property. What justifies the rule? Is it
intended to reward the finder? But the chimney sweep did not go down the
chimney in hopes of finding a “jewel of the finest water,” any more than
most of us walk down the street in hopes of finding a stray hundred dollar
bill. What behaviors, by the finder or others, does the rule encourage or
discourage?
2. Conflicts between finders and “rightful owners.” “Finders
keepers, losers weepers,” may be the law on the playground, but it is not
the law anywhere else. Instead, conflicts between finders and original
owners will be decided according to whether the property is considered
lost, mislaid, or abandoned. Property is lost when the owner accidentally
misplaced it; it is mislaid when the owner intentionally left it somewhere

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— and then forgets where she put it; it is abandoned when the owner
forms an intent to relinquish all rights in the property. Property that has
been lost or mislaid may subsequently be abandoned if the owner intends
to give up any claim to the property. Finders will lose against original
owners of lost or mislaid property; but will win against original owners of
abandoned property since the original owner relinquished her rights to it.
Are rights against finders confined to “rightful owners” as Armory v.
Delamirie states? Imagine that our chimney sweep forgets the bag with the
jewel in it in the fireplace at his next job — can the maid who finds it
while sweeping the grate claim it from him? No. The doctrine is not
confined to those who have “true” title, but rather those who have better
title. Even thieves of personal property may prevail against those who
wrongfully take it from them. One decision held that a man who had taken
$3,000 from his cousin’s bank account to purchase a car fraudulently using
his cousin’s name could sue the car dealership for return of the stolen
down payment, stating “the well-settled common-law rule that a thief in
possession of stolen goods has an ownership interest superior to the world
at large, save one with a better claim to the property.” Payne v. TK
Autowholesalers, 911 A.2d 747, 751 (Conn. App. 2006) (citations
omitted).
3. Conflicts between the finder and the owner of the premises
where the property was found. What happens if a person finds a lost,
mislaid, or abandoned object on someone else’s property? In a dispute
between the landowner and the finder, the landowner will win if the finder
was trespassing at the time she found the object.
If the finder is on the property with the landowner’s permission, the
courts are wildly divided. If an object is found in a private home, it is
ordinarily awarded to the homeowner, but if the object is found in a place
open to the public, some courts grant ownership to the finder and others to
the landowner. Many courts distinguish between lost and mislaid property,
awarding lost property to the finder and mislaid property to the owner of
the premises, considering the landowner to have been unknowingly
entrusted with the property by the person that mislaid it. The rule has been
criticized for making much rest on determinations of the unknown owner’s
intent, and on perverse incentives it may create for finders. In Benjamin v.
Lindner Aviation, a mechanic found $18,000 in old bills carefully rolled up
and hidden in the wing of the plane, and turned it in to the police in hopes
of claiming it if the owner did not appear, or recovering a statutory finders’
fee. The court, however, found that the money was mislaid, and not lost,
and therefore belonged to the bank that had repossessed the plane, and was

260
not covered by the finders’ fee statute. 534 N.W.2d 400 (Iowa 1995); see
also Terry v. Lock Hospitality, Inc., 37 S.W.3d 202 (Ark. 2001) (motel
owners, rather than renovators, were entitled to $38,000 in old currency
found by renovators in the ceiling tiles). But see In re Seizure of $82,000,
119 F. Supp. 2d 1013 (W.D. Mo. 2000) ($82,000 found in gas tank of car
seized in drug bust was not mislaid but abandoned, as owners likely chose
not to claim it for fear of prosecution). Which rule, one that awarded the
money to the finder or to the bank, is more likely to generate return of the
money to the true owner? Why were these finds deemed mislaid rather
than lost or abandoned?
If personal property is found embedded in the soil, courts ordinarily
award the property — whether lost, mislaid, or abandoned — to the
landowner rather than the finder, in the absence of agreement or statute to
the contrary, on the ground that it is, in effect, part of the real property. See
United States v. Shivers, 96 F.3d 120 (5th Cir. 1996) (old metal tokens
found at an old mill site in Angelina National Forest belonged to the
United States, not the coin collector who found them); Klein v.
Unidentified Wrecked and Abandoned Sailing Vessel, 758 F.2d 511 (11th
Cir. 1985) (holding that eighteenth-century shipwreck found in Biscayne
National Park belonged to United States, rather than diver who found it).
An exception to this principle applies in courts that adopt the doctrine of
treasure trove, which is gold or silver (and some courts say paper money)
buried or concealed in “antiquity” or at least “so long as to indicate that the
owner is probably dead or unknown.” Corliss v. Wenner, 34 P.3d 1100,
1104 (Idaho 2001) (refusing to adopt doctrine). In England, ownership of
treasure trove was historically given to the Crown, while in the United
States ownership was given to the finder rather than the owner of the land,
as long as the finder was not trespassing at the time it was found.
4. Restating the rule. The court in Armory v. Delamirie states that a
finder gains “such a property as will enable him to keep it against all but
the rightful owner.” Is this an accurate statement of the doctrine? How
would you rephrase it?
5. Finders statutes. Many states have legislation concerning lost
property. These laws seek to get rid of the distinction between lost,
mislaid, and abandoned property. They generally require the finder to
report the find to the police and generally award the property to the finder
if it is not claimed after a reasonable period, often requiring the true owner
to pay some percentage of the object’s value as a reward to the finder. See,
e.g., Fla. Stat. §§705.102-705.104 (awarding lost or abandoned property to
finder after 90 days if true owner unidentified); Del. Code tit. 11, §8307(c)

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(lost money is returned to finder, if, after reasonable efforts, police are
unable to locate owner). But see Del. Code tit. 11, §8307(a) (property other
than money that comes to the police is sold after one year for police
benefit). These statutes, however, are little understood and haphazardly
implemented, and only a tiny fraction of lost property is turned in to the
police or claimed there. In contrast, Japan has extremely high rates of
return of lost property via the police. One author explains this phenomenon
as a result of well-known policies, including a guaranteed reward from the
true owner, effective institutions for implementation, and criminalizing
failure to report found property. Mark D. West, Losers: Recovering Lost
Property in Japan and the United States, 37 Law & Socy. Rev. 369
(2003).

Charrier v. Bell

496 So. 2d 601 (La. Ct. App. 1986)

ELVEN PONDER, Judge, retired.
Plaintiff is a former Corrections Officer at the Louisiana State
Penitentiary in Angola, Louisiana, who describes himself as an “amateur
archeologist.” After researching colonial maps, records and texts, he
concluded that Trudeau Plantation, near Angola, was the possible site of
an ancient village of the Tunica Indians. He alleges that in 1967 he
obtained the permission of Mr. Frank Hoshman, Sr., who he believed was
the owner of Trudeau Plantation, to survey the property with a metal
detector for possible burial locations. After locating and excavating
approximately 30 to 40 burial plots lying in a circular pattern, plaintiff
notified Mr. Hoshman that he had located the Tunica village. Although the
evidence is contradictory, plaintiff contends that it was at that time that
Mr. Hoshman first advised that he was the caretaker, not the owner, of the
property.

Quick Review:
If the Tunica-Biloxi Tribe had not intervened, who should have won the suit
under the rules of finders, Charrier or the owners of the Trudeau Plantation?

Plaintiff continued to excavate the area for the next three years until he
had located and excavated approximately 150 burial sites containing
beads, European ceramics, stoneware, glass bottles; iron kettles, vessels
and skillets; knives, muskets, gunflints, balls and shots; crucifixes, rings

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and bracelets; and native pottery. The excavated artifacts are estimated to
weigh two to two and one-half tons.
In search of a buyer for the collection, plaintiff talked to Dr. Robert S.
Neitzel of Louisiana State University, who, in turn, informed Dr. Jeffrey
D. Brain of Harvard University. Dr. Brain, who was involved in a survey
of archeology along the lower Mississippi River, viewed the artifacts and
began discussions of their sale to the Peabody Museum of Harvard
University. The discussions resulted in the lease of the artifacts to the
Museum, where they were inventoried, catalogued and displayed.
Plaintiff initially informed Dr. Neitzel and Dr. Brain that he had found
the artifacts in a cave in Mississippi, so as to conceal their source; later he
did disclose the actual site of the find to Dr. Brain, who had expressed his
concern over the title of the artifacts. Dr. Brain then obtained permission
from the landowners to do further site testing and confirmed that it was the
true source of the artifacts.
Confronted with the inability to sell the collection because he could not
prove ownership, plaintiff filed suit against the six nonresident landowners
of Trudeau Plantation, requesting declaratory relief confirming that he was
the owner of the artifacts. Alternatively, plaintiff requested that he be
awarded compensation under the theory of unjust enrichment for his time
and expenses.
The State of Louisiana intervened in the proceeding on numerous
grounds, including its duty to protect its citizens in the absence of the
lawful heirs of the artifacts. In 1978, the State purchased Trudeau
Plantation and the artifacts from the six landowners and agreed to defend,
indemnify and hold the prior owners harmless from any and all actions.
In 1981 the Tunica and Biloxi Indians were recognized as an American
Indian Tribe by the Bureau of Indian Affairs of the Department of the
Interior.
The trial judge held that the Tunica-Biloxi Tribe is the lawful owner of
the artifacts, finding that plaintiff was not entitled to the artifacts under La.
Civ. Code art. 3423 as it read prior to amendment by Act No. 187 of 1982,
which required discovery “by chance.” The judge also found that plaintiff
had no claim to the artifacts on the basis of abandonment under La. Civ.
Code art. 3421, as it read prior to the amendment by Act No. 187 of 1982,
because the legal concept of abandonment does not extend to burial goods.
The trial court also denied relief under the theory of unjust enrichment,
finding that any impoverishment claimed by plaintiff was a result of his
attempts “for his own gain” and that his presence and actions on the
property of a third party placed him in a “precarious position, if not in
legal bad faith.”

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 The issues before this court are the adequacy of proof that the Tunica-
Biloxi Indians are descendants of the inhabitants of Trudeau, the
ownership of the artifacts, and the applicability of the theory of unjust
enrichment.
Plaintiff first argues that the evidence that the members of the Tunica-
Biloxi Indians of Louisiana, Inc., are legal descendants of the inhabitants
of Trudeau Plantation was insufficient to entitle them to the artifacts.
The fact that members of other tribes are intermixed with the Tunicas
does not negate or diminish the Tunicas’ relationship to the historical tribe.
Despite the fact that the Tunicas have not produced a perfect “chain of
title” back to those buried at Trudeau Plantation, the tribe is an
accumulation of the descendants of former Tunica Indians and has
adequately satisfied the proof of descent.
Plaintiff next argues that the Indians abandoned the artifacts when they
moved from Trudeau Plantation, and the artifacts became res nullius until
found and reduced to possession by plaintiff who then became the owner.
Plaintiff contends that he has obtained ownership of the property
through occupancy, which is a “mode of acquiring property by which a
thing which belongs to nobody, becomes the property of the person who
took possession of it, with the intention of acquiring a right of ownership
upon it.” La. Civ. Code art. 3412.
One of the five methods of acquiring property by occupancy is “By
finding (that is, by discovering precious stones on the sea shore, or things
abandoned, or a treasure).” La. Civ. Code art. 3414. Plaintiff contends that
the artifacts were abandoned by the Tunicas and that by finding them he
became the owner.
[T]he fact that the descendants or fellow tribesmen of the deceased
Tunica Indians resolved, for some customary, religious or spiritual belief,
to bury certain items along with the bodies of the deceased, does not result
in a conclusion that the goods were abandoned. While the relinquishment
of immediate possession may have been proved, an objective viewing of
the circumstances and intent of the relinquishment does not result in a
finding of abandonment. Objects may be buried with a decedent for any
number of reasons. The relinquishment of possession normally serves
some spiritual, moral, or religious purpose of the descendant/owner, but is
not intended as a means of relinquishing ownership to a stranger.
Plaintiff’s argument carried to its logical conclusion would render a grave
subject to despoliation either immediately after interment or definitely
after removal of the descendants of the deceased from the neighborhood of
the cemetery.
Although plaintiff has referred to the artifacts as res nullius, under

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French law, the source of Louisiana’s occupancy law, that term refers
specifically to such things as wild game and fish, which are originally
without an owner. The term res derelictae refers to “things voluntarily
abandoned by their owner with the intention to have them go to the first
person taking possession.” P. Esmein, Aubry & Rau, Droit Civil Francais,
Vol. II, §168, at 46 (7th ed. 1966). Some examples of res derelictae given
by Aubry and Rau include things left on public ways, in the cities or to be
removed by garbage collectors.
The artifacts fall into the category of res derelictae, if subject to
abandonment. The intent to abandon res derelictae must include the intent
to let the first person who comes along acquire them. Obviously, such is
not the case with burial goods.
French sources have generally held that human remains and burial
goods located in cemeteries or burial grounds are not “treasure” under
article 716 of the French Civil Code and thereby not subject to occupancy
upon discovery. The reasoning has been that any contrary decision would
lead to and promote commercial speculation and despoilment of burial
grounds. The French commentator Demolombe noted the special treatment
that should be given to burial goods, stating that such objects “have not
been placed underground with the same intention which informs the
deposit of what is called treasure, which in the latter case is, for a
temporary period. Rather, they are an emplacement for a perpetual
residence therein.” 13 C. Demolombe, Cours de Code Napoleon §37, at
45-46 (2d ed. 1862).
The same reasoning that the French have used to treat burial goods
applies in determining if such items can be abandoned. The intent in
interring objects with the deceased is that they will remain there
perpetually, and not that they are available for someone to recover and
possess as owner.
For these reasons, we do not uphold the transfer of ownership to some
unrelated third party who uncovers burial goods. The trial court concluded
that La. Civ. Code art. 3421 was not intended to require that objects buried
with the dead were abandoned or that objects could be acquired by
obtaining possession over the objections of the descendants. We agree
with this conclusion.
Plaintiff next argues that he is entitled to recover a sum of money to
compensate his services and expenses on the basis of an actio de in rem
verso.
The five criteria of such a claim de in rem verso are: (1) there must be
an enrichment, (2) there must be an impoverishment, (3) there must be a
connection between the enrichment and resulting impoverishment, (4)

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there must be an absence of justification or cause for the enrichment and
impoverishment, and (5) there must be no other remedy at law available to
plaintiff.
We first question whether there has been an enrichment. While the
nonresident landowners were “enriched” by the sale of the property to the
state, the ultimate owners of the artifacts presented substantial evidence
that the excavation caused substantial upset over the ruin of “ancestrial
burial grounds,” rather than any enrichment.
Even if the Indians have been enriched, plaintiff has failed to prove
that he has sustained the type [of] impoverishment for which de in rem
verso may be used. His alleged loss resulted from the hours he spent
excavating the artifacts, the greater portion of which activity was done at a
time when plaintiff knew he was on property without the consent of the
landowner. While contradictory testimony was presented regarding
whether plaintiff initially had permission to go on the property, and
whether that permission was adequate, by his own admission, plaintiff was
informed by Hoshman that he did not own the property before the
cessation of the excavating. Plaintiff’s knowledge is further evidenced by
his attempts to keep the location of his work secret; he did not identify
Trudeau Plantation as the location of the find for almost five years after his
discovery and he failed to seek out the landowners of the property until it
was required for sale negotiations, although he removed two and one half
tons of artifacts from their property. Plaintiff further acknowledges that he
knew that the Tunica Indians might object to his excavations.
The impoverishment element in French law is met only when the
factual circumstances show that it was not a result of the plaintiff’s own
fault or negligence or was not undertaken at his own risk. Obviously the
intent is to avoid awarding one who has helped another through his own
negligence or fault or through action taken at his own risk. Plaintiff was
acting possibly out of his own negligence, but more probably knowingly
and at his own risk. Under these circumstances, plaintiff has not proven the
type of impoverishment necessary for a claim of unjust enrichment.
Additionally, plaintiff has failed to show that any enrichment was
unjustified, entitling him to an action to recover from the enriched party.
An enrichment will be unjustified “only if no legal justification for it
exists.” Any enrichment received by the Tribe was justified.
For these reasons the judgment of the trial court is affirmed at
appellant’s costs.

Notes and Questions

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 1. Aftermath. The 1989 return of the artifacts to the Tunica-Biloxi
Tribe should have been a joyous homecoming. Instead it was a shock.
Harvard had transferred the collection to the State of Louisiana in 1981.
Rather than preserving the centuries-old ceramics in a climate-controlled
setting, the state had stored them carelessly in cardboard boxes, even
keeping them in historic cabins behind the old French Quarter. The tribe
was told it would cost $1.5 to 2 million to restore the collection. Patching
together grants and donations, the tribe purchased two refrigerated trucks
and slowly began the process. Profits from the tribe’s Grand Casino
Avoyelles, opened in 1991, funded completion of the restoration. See
Jefferson Hennessy, The Legend of the Tunica Treasure, May 7, 2005,
available at http://jeffersonhennessy.blogspot.com/2005/05/legend-of-
tunica-treasure.html. Today, the goods are displayed in a museum in the
Tunica-Biloxi Cultural and Educational Resources Center. The center is
designed to resemble a sixteenth-century Tunica burial mound.
2. Native American Graves Protection and Repatriation Act of
1990. The casual pillaging of Tunica graves was one of many stories that
contributed to passage of the Native American Graves Protection and
Repatriation Act of 1990 (NAGPRA), discussed further in Chapter 3, §7.2.
Although criminal and common law protections in all states punish grave
desecration, many states limit such protections to clearly bounded
cemeteries, or restrict standing to enforce the protection to a limited set of
relatives. See, e.g., Hairston v. General Pipeline Construction, Inc., 704
S.E.2d 663 (W. Va. 2010) (common law only protected “clearly marked”
cemeteries and only relatives designated by state intestacy statutes could
enforce rights); Danny R. Veilleux, Liability for Desecration of Graves
and Tombstones, 77 A.L.R.4th 108 (1990). While public sentiment
generally condemns grave desecration, such sentiments only protected
some burial grounds. Cities filled in and paved over slave burial grounds
with little hesitation. Digging up and collecting bones and burial goods
from Native American graves was almost a national pastime, avidly
engaged in by Thomas Jefferson among many others. NAGPRA seeks to
correct the gaps in law and morality that left Native American graves
unprotected.
NAGPRA prevents removal or disturbance of Native human remains
and burial goods from federal or tribal land without tribal consent. 25
U.S.C. §3002. It also requires federal agencies and museums receiving
federal funds to repatriate such objects to the lineal descendants of the
Native individuals or, if the descendants cannot be identified, to the tribe
with a connection to the objects. 25 U.S.C. §§3002-3005. NAGPRA’s

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prohibition on grave disturbance only applies on federal and tribal land.
Many states also now have laws that prohibit knowing disturbance of
Native burial grounds, but these laws vary widely.
3. Cultural property. The claims of the Tunica-Biloxi bear
resemblance to demands for return of culturally important artifacts by
nations across the world. Casual acquisition of such objects by foreign
collectors — whether sarcophagi from Egypt or Khmer statues in
Cambodia — has long been the norm. The international and domestic laws
governing such claims are discussed in Chapter 3, §6.1.

Problems
1. Revisit the facts of Armory v. Delamirie. What if the owner of the
building in whose chimney the jewel was found asserts a claim against the
chimney sweep’s boy? Who should win? Should the answer depend on
whether the jewel was lost, mislaid, or abandoned, and if so, which
category does the jewel fall in? Now assume that the chimney sweep who
employed the boy claims the jewel. Who should win?
2. In nineteenth-century Stamford, Connecticut, an enterprising
individual, recognizing the value of the manure left behind by horses on
the public street, hired two workers to scrape it into large piles one
evening, intending to take it to fertilize his own land. The next day, before
he could remove the piles, another person notices them and, unable to find
their owner, took them away himself. In a contest over the manure
between the individual that first scraped up the piles and the individual that
took it away, who should win? What alternative arguments could you
make? See Haslem v. Lockwood, 37 Conn. 500 (1871). What if the local
hackney cab company, which can show that it owns half of the horses that
walk along the street, intervenes to claim half the manure? What if the
Borough of Stamford claims it as well?

§6.2 Real Property

Relativity of title does not apply just with respect to the relatively
unique category of found property, but to land as well. What interests does
the doctrine serve in the context of land?

Christy v. Scott

55 U.S. 282 (1852)

Mr. Justice BENJAMIN CURTIS delivered the opinion of the court.

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 The plaintiff in error filed a petition, in which he avers, that on the 1st
day of June, 1839, he was seised in his demesne as of fee of three tracts of
land, described in the petition by metes and bounds, and that the
defendant, with force of arms, ejected him

Terms:
The claim that the plaintiff was seised in his demesne as of fee meant that he
had actual possession and ownership of a fee simple estate, as opposed to
ownership without possession, or possession without full ownership.

therefrom, and has thenceforward kept him out of possession thereof; and
he prays judgment for damages and costs, and for the lands described. The
defendant filed [a] substantive defence. The plaintiff demurred. There was
no joinder in demurrer by the defendant, but the District Court treated the
demurrers as raising issues in law, and gave judgment thereon for the
defendant. The plaintiff has brought the record here by a writ of error.
Upon this record, questions of great difficulty, and understood to affect
the titles to large quantities of land, have been elaborately argued at the
bar. These questions involve and depend upon the interpretation of the
Colonization Laws of the Republic of Mexico, and their practical
administration; the relative rights and powers of the central government,
and of the State of Coahuila and Texas, in reference to the public domain;
the modes of declaring and vindicating those rights, and exercising those
powers under the constitution of the Mexican Republic; the effect of the
separation of the State of Coahuila and Texas from Mexico, by the
revolution of 1836, upon titles made by the State authorities before the
revolution, and alleged to be defective for want of the sanction of the
central government; as well as several important laws of the Republic of
Texas, framed for the protection of the public domain, and for the repose
of titles in that country.
It is impossible that the court should approach an adjudication of a
case, involving elements so new and difficult, without much anxiety, lest
they should have failed entirely to comprehend and fitly to apply them.
And it is obvious, that before it is possible to do so, all the facts
constituting the title of each party, and essential to a complete view of the
case, and especially the documentary evidences of those titles, should be
placed before us, in a determinate form.
This record is far from being sufficient in these substantial, and,
indeed, necessary particulars. The petition avers a seisin in fee, on a
particular day, and an ouster by the defendant. The defendant shows no

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title in himself to the land demanded, but asserts that the plaintiff claims
title by a pretended grant, made on the 20th day of September, 1835; that
the land was within the twenty frontier leagues bordering on the United
States; that the approbation of the executive of the national government of
Mexico was not given; and, in other pleas, avers other facts, to show that if
any such grant had been made it would not have been valid.
According to the settled principles of the common law, this is not a
defence to the action. The plaintiff says he was seised in fee, and the
defendant ejected him from the possession. The defendant, not denying
this, answers, that if the plaintiff had any paper title, it was under a certain
grant which was not valid. He shows no title whatever in himself. But a
mere intruder cannot enter on a person actually seised, and eject him, and
then question his title, or set up an outstanding title in another. The maxim
that the plaintiff must recover on the strength of his own title, and not on
the weakness of the defendant’s, is applicable to all actions for the
recovery of property. But if the plaintiff had actual prior possession of the
land, this is strong enough to enable him to recover it from a mere
trespasser, who entered without any title.
Assuming what we do not decide, that [plaintiff’s] title is not good as
against the State of Texas, still it is not a defence, because no title in the
defendant is shown. If the plaintiff, as his petition avers, was actually
seised, and the defendant being a mere intruder, ejected him, it was an
unlawful act, and the action is maintainable, notwithstanding the State of
Texas may have the true title, or may have granted it to another.
For these reasons, we are of opinion the demurrer to each of these
pleas must be sustained, the judgment of the District Court reversed, and
the cause remanded.

Notes and Questions

Christy v. Scott involved complicated questions of whose laws — the
Republic of Mexico after independence from Spain in 1824, the Mexican
state of Coahuila and Texas, or the Republic of Texas after its 1836 revolt
against Mexico — should govern acquisition of property in Texas once the
United States acquired the land, and how those laws should be interpreted.
The Supreme Court avoided deciding these questions by following the
principle of relativity of title: one who does not have legal title to the land
may still protect her rights against a later intruder. What justifies the
doctrine? A Kentucky case adopting this principle explained it as follows:

[S]urely it is not accordant with the principles of justice, that he who

wrongfully ousts a previous possession, should be permitted to defend his

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 wrongful possession against the claim of restitution merely by showing that a
stranger, and not the previous possessor whom he had ousted, was entitled to
the possession. The law protects a peaceable possession, against all except
him who has the actual right to the possession, and no other can rightfully
disturb or intrude upon it. [I]f the claimant . . . attempt to gain the possession
by entering upon, and ousting, the existing peaceable possession, he does not
thereby acquire a rightful or a peaceable possession. The law does not protect
him against the prior possessor.

Sowder v. McMillan’s Heirs, 4 Dana 456, 34 Ky. 456 (Ky. App. 1836).

Problems
1. Two law students rent an apartment under a one-year lease. The
lease contains a “no subletting” clause preventing the tenants from
granting possession of any part of the premises to another person during
the lease term. Two months into the school year, one of the roommates has
to return to her home in another state to take care of her sick mother. The
remaining roommate, Anne, cannot afford to pay the rent by herself. She
decides, therefore, to violate the terms of the lease by asking a new
roommate, Barbara, to move in. Barbara makes an oral contract with Anne
to pay half of the rent for the rest of the year.
Barbara moves in but has unpleasant quarrels with Anne. After a few
weeks, Anne finds a friend, Carol, to take Barbara’s place. Anne tells
Barbara it is not working out and she will have to move out. Barbara
refuses to leave. One day while Barbara is not there, Anne changes the
lock on the door of the apartment and carries Barbara’s belongings to a
storage area in the basement of the building. Carol moves in. Barbara sues
Anne and Carol, and asks the court to order Carol to vacate the premises
and allow Barbara to return. Anne and Carol defend by claiming that
Barbara never had a legal right to be in the apartment to begin with. You
are the judge charged with deciding the case. What would you do?
2. In Florida, Mark Guerette identified 20 abandoned foreclosed homes
designated as “public nuisances” by the municipalities because of lack of
maintenance. Catherine Skipp & Damien Cave, At Legal Fringe, Empty
Houses Go to the Needy, N.Y. Times, Nov. 8, 2010. He begins paying
taxes on the properties, fixes them up, and rents them to homeless families
for a small charge, explaining to them what he has done. He is arrested and
charged with fraud. Has Guerette provided anything of value to the
families by letting them live there?

§6.3 Transfer of Stolen Property

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 Suppose O leaves his car with A to be repaired and then A sells the
property to B, an innocent party who does not know that A was not entitled
to sell it, before O can sue to get it back. A then absconds to a foreign
jurisdiction. O sues B to get his car back. Although O would have had the
right to get the car back from A, does O have the right to get the car back
from B? The law resolves this conflict between two innocent persons by
sometimes vesting title in the original “true owner” and sometimes
granting title to the innocent or “bona fide” purchaser. This result again
illustrates the concept of the relativity of title — O may have title as
against A, but not as against B.
You can convey to someone else only what you own. If someone does
not own Radio City Music Hall but attempts to sell it to you by granting
you a deed, you get exactly what your “grantor” had — nothing. Similarly,
if I steal your personal property and then resell it to an innocent purchaser
who has no knowledge that the property is stolen (a “bona fide
purchaser”), the innocent buyer generally is out of luck. A thief ordinarily
has no right to transfer title to a third party. In Autocephalous Greek-
Orthodox Church of Cyprus v. Goldberg & Feldman Fine Arts, Inc., 717
F. Supp. 1374 (S.D. Ind. 1989), valuable Christian mosaics were stolen
from a church on the island of Cyprus after it was invaded by Turkey.
Years later, they wound up, through a series of transactions, in the hands
of defendant art dealers. The court held that “a thief never obtains title to
stolen items, and one can pass no greater title than one has. Therefore, one
who obtains stolen items from a thief never obtains title to or right to
possession of the item.” Id. at 1398. The thief “cannot pass any title to any
subsequent transferees, including subsequent purchasers” even if they are
bona fide purchasers who have no notice of the theft. Id.5 See also Ray
Andrews Brown, The Law of Personal Property §9.4, at 194 (3d ed. 1975).
When an owner voluntarily entrusts another with possession of her
property, the law sometimes gives the grantee the power to transfer title to
a bona fide purchaser. When a possessor has the power to transfer title to a
bona fide purchaser, we say the possessor has “voidable title”; although
the true owner has the right to recover property from someone to whom
she entrusted the property, the law may give that possessor the power to
divest the true owner of title by transferring title to a bona fide purchaser.
For example, in Carlsen v. Rivera, 382 So. 2d 825 (Fla. Dist. Ct. App.
1980), Coradino Rivera, owner of a Canadian car rental agency, leased a
car to James McEnroe, who forged a title to the car in the name of a
business he owned and sold it to a third party who obtained a facially valid
title certificate in Florida. The car was then sold again to a fourth party,
who finally sold it to defendant Carlsen. Rivera sued Carlsen to get his car

272
back. The court applied the Florida version of the Uniform Commercial
Code, U.C.C. §2-403(2), which provides that a bona fide purchaser will
prevail over the true owner when the true owner has entrusted the property
to a merchant who regularly deals in such goods. Fla. Stat. §672.403.
Similarly, if an owner is induced to sell his property by fraud or duress, the
seller may recover the property from the buyer unless the buyer has
subsequently transferred the property to a bona fide purchaser. U.C.C. §2-
403(1). On the other hand, when a thief takes property away from an
owner, such that the initial transfer of possession is involuntary, neither the
thief nor subsequent purchasers are entitled to keep title as against the true
owner from whom the property was stolen even if those later possessors
are bona fide purchasers. Candela v. Port Motors, Inc., 617 N.Y.S.2d 49
(App. Div. 1994).
What justifies a rule of law that prevents the true owner of stolen
property from recovering it from a bona fide purchaser just because the
thief who wrongfully arranged for the sale “deals in goods of that kind”?

Problem
Plaintiff lent his car to a friend. The friend turns out not to be such a
true friend, forges a title to the car, and sells it to a bona fide purchaser.
Since the friend is not a merchant, the common law rule, rather than the
Uniform Commercial Code, applies, enabling the plaintiff to recover the
car from the bona fide purchaser on the grounds that a thief cannot transfer
good title. Defendant argues that the common law should be changed to
protect the rights of bona fide purchasers to obtain title to property even
when the true owner did not entrust the property to a merchant.
a. What arguments can you make for the defendant’s proposed rule
of law? What can you say on the plaintiff’s behalf? In answering these
questions, consider whether it makes sense to distinguish merchants
from other persons who wrongfully transfer title to stolen goods. How
should the court rule?
b. Assume now that the car was stolen from the plaintiff’s driveway
rather than entrusted to a false friend. Does this make any difference in
the analysis?

§7 PROPERTY FORMATION IN EVERYDAY

LIFE
Enforceable rights to places, objects, and resources are not simply a
creature of law. Individuals frequently claim such rights in daily life.

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Although parking on public streets is usually first come first served, for
example, after a big snowstorm it is not uncommon to see individuals
blocking off the places they have dug out with chairs and traffic cones.
Most people will respect the claim to the parking space, at least for a
reasonable time. Sociologist Erving Goffman discusses a similar
phenomenon in his book Asylums, which considers the behavior of mental
patients and other residents of what he called “total institutions,”
institutions that become worlds in themselves.

Erving Goffman, Asylums: Essays on the Social Situation of Mental

Patients and Other Inmates

18-21, 243-253 (1967)

The admission procedure can be characterized as a leaving off and a
taking on, with the midpoint marked by physical nakedness. Leaving off of
course entails a dispossession of property, important because persons
invest self feelings in their possessions. Perhaps the most significant of
these possessions is not physical at all, one’s full name; whatever one is
thereafter called, loss of one’s name can be a great curtailment of the self.
Once the inmate is stripped of his possessions, at least some
replacements must be made by the establishment, but these take the form
of standard issue uniform in character and uniformly distributed. These
substitute possessions are clearly marked as really belonging to the
institution and in some cases are recalled at regular intervals to be, as it
were, disinfected of identifications. With objects that can be used up — for
example, pencils — the inmate may be required to return the remnants
before obtaining a reissue. Failure to provide inmates with individual
lockers and periodic searches and confiscations of accumulated personal
property reinforce property dispossession. Religious orders have
appreciated the implications for self of such separation from belongings.
Inmates may be required to change their cells once a year so as not to
become attached to them. The Benedictine Rule is explicit:

For their bedding let a mattress, a blanket, a coverlet, and a pillow suffice.
These beds must be frequently inspected by the Abbot, because of private
property which may be found therein. If anyone be discovered to have what
he has not received from the Abbot, let him be most severely punished. And
in order that this vice of private ownership may be completely rooted out, let
all things that are necessary be supplied by the Abbot: that is, cowl, tunic,
stockings, shoes, girdle, knife, pen, needle, handkerchief, and tablets; so that
all plea of necessity may be taken away. And let the Abbot always consider

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 that passage in the Acts of the Apostles: “Distribution was made to each
according as anyone had need.”

One set of the individual’s possessions has a special relation to self.

The individual ordinarily expects to exert some control over the guise in
which he appears before others. For this he needs cosmetic and clothing,
supplies, tools for applying, arranging, and repairing them, and an
accessible, secure place to store these supplies and tools — in short, the
individual will need an “identity kit” for the management of his personal
front. He will also need access to decoration specialists such as barbers
and clothiers.
On admission to a total institution, however, the individual is likely to
be stripped of his usual appearance and of the equipment and services by
which he maintains it, thus suffering a personal defacement. The impact of
this substitution is described in a report on imprisoned prostitutes:

First, there is the shower officer who forces them to undress, takes their own
clothes away, sees to it that they take showers and get their prison clothes —
one pair of black oxfords with Cuban heels, two pairs of much-mended ankle
socks, three cotton dresses, two cotton slips, two pairs of panties, and a
couple of bras. Practically all the bras are flat and useless. No corsets or
girdles are issued.
There is not a sadder sight than some of the obese prisoners who, if
nothing else, have been managing to keep themselves looking decent on the
outside, confronted by the first sight of themselves in prison issue.

There remains private claim on space, where the individual develops

some comforts, control, and tacit rights that he shares with no other
patients except by his own invitation. I shall speak here of personal
territory. A continuum is involved, with a veritable home or nest at one
extreme, and at the other a mere location or refuge site in which the
individual feels as protected and satisfied as is possible in the setting.
In mental hospitals and similar institutions the basic kind of personal
territory is, perhaps, the private sleeping room, officially available to
around five or ten per cent of the ward population. In Central Hospital
such a room was sometimes given in exchange for doing ward work. Once
obtained, a private room could be stocked with objects that could lend
comfort, pleasure, and control to the patient’s life. Pin-up pictures, a radio,
a box of paper-back detective stories, a bag of fruit, coffee-making
equipment, matches, shaving equipment — these were some of the objects,
many of them illicit, that were introduced by patients.
Patients who had been on a given ward for several months tended to

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develop personal territories in the day room, at least to the degree that
some inmates developed favorite sitting or standing places and would
make some effort to dislodge anybody who usurped them. Thus, on one
continued treatment ward, one elderly patient in contact was by mutual
consent accorded a free-standing radiator; by spreading paper on top, he
managed to be able to sit on it, and sit on it he usually did. Behind the
radiator he kept some of his personal effects, which further marked off the
area as his place. A few feet from him, in a corner of the room, a working
patient had what amounted to his “office,” this being the place where staff
knew they could find him when he was wanted. He had sat so long in this
corner that there was a soiled dent in the plaster wall where his head
usually came to rest. On the same ward, another patient laid claim to a
chair that was directly in front of the TV set; although a few patients
would contest this place, he generally could sustain his claim upon it.
Territory formation on wards has a special relation to mental disorder.
In many civilian situations an equalitarian rule such as “first come, first
served” prevails, and some disguise conceals another organizing principle,
“strongest takes what he wants.” This last rule operated to some extent on
bad wards, just as the first rule did on good wards. Another dimension
must be introduced, however. The alignment to ward life that many back-
ward patients took, for whatever voluntary reason or from whatever
involuntary cause, led them to remain silent and unprotesting and to move
away from any commotion involving themselves. Such a person could be
dislodged from a seat or place regardless of his size or strength. Hence, on
the bad wards, a special pecking order of a sort occurred, with vocal
patients in good contact taking favorite chairs and benches from those not
in contact. This was carried to a point where one patient might force a
mute one off a footrest, leaving the vocal patient with a chair and a
footrest, and the mute patient with nothing at all — a difference that is not
negligible considering the fact that except for breaks at mealtime some
patients spent the whole of the day on these wards doing nothing but
sitting or standing in one place.
Perhaps the minimum space that was built into a personal territory was
that provided by a patient’s blanket. In some wards, a few patients would
carry their blankets around with them during the day and, in an act thought
to be highly regressive, each would curl up on the floor with his blanket
completely covering him; within this covered space each had some margin
of control.
As may be expected, a personal territory can develop within a free
place or group territory. For example, in the recreation room of a chronic
male service one of the two large wooden armchairs favorably situated

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close to the light and the radiator was regularly taken by an elderly
respected patient, both patients and staff recognizing his right to it.
In some cases, an assignment provided a personal territory. For
example, the working patients who looked after their ward’s clothing and
supply room were allowed to stay in this room when no chores were to be
done; and there they could sit or lie on the floor away from the alterations
of commotion and pall in the day room.
In everyday life, legitimate possessions employed in primary
adjustments are typically stored, when not in use, in special places of
safekeeping which can be gotten to at will. When patients entered Central
Hospital, especially if they were excited or depressed on admission, they
were denied a private, accessible place to store things. If people were
selfless, or were required to be selfless, there would of course be a logic to
having no private storage place. But all have some self. Given the
curtailment implied by loss of places of safekeeping, it is understandable
that patients in Central Hospital developed places of their own.
It seemed characteristic of hospital life that the most common form of
stash was one that could be carried on one’s person wherever one went.
One such device for female patients was a large handbag; a parallel
technique for a man was a jacket with commodious pockets, worn even in
the hottest weather. While these containers are quite usual ones in the
wider community, there was a special burden placed upon them in the
hospital: books, writing materials, washcloths, fruit, small valuables,
scarves, playing cards, soap, shaving equipment (on the part of men),
containers of salt, pepper, and sugar, bottles of milk — these were some of
the objects sometimes carried in this manner. So common was this practice
that one of the most reliable symbols of patient status in the hospital was
bulging pockets. Another portable storage device was a shopping bag lined
with another shopping bag. (When partly full, this frequently employed
stash also served as a cushion and back rest.) Among men, a small stash
was sometimes created out of a long sock: by knotting the open end and
twisting this end around his belt, the patient could let a kind of moneybag
inconspicuously hang down inside his trouser leg. Individual variations of
these portable containers were also found. One young engineering
graduate fashioned a purse out of a discarded oilcloth, the purse being
stitched into separate, well-measured compartments for comb, toothbrush,
cards, writing paper, pencil, soap, small face cloth, toilet paper — the
whole attached by a concealed clip to the underside of his belt. The same
patient had also sewn an extra pocket on the inside of his jacket to carry a
book. Another male patient, an avid newspaper reader, invariably wore a
suit jacket, apparently to conceal his newspapers, which he carried folded

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over his belt. Still another made effective use of a cleaned-out tobacco
pouch for transporting food; whole fruit, unpeeled, could easily be put in
one’s pocket to be taken back to the ward from the cafeteria, but cooked
meat was better carried in a grease-proof stash.

Notes and Questions

1. Functions of property. Why do total institutions strip inmates of
their property? What are some of the most important kinds of property that
inmates lose on entering the institution? What does the excerpt reveal
about the various functions or roles of property?
2. “Property” formation. What are the various ways that inmates seek
to replace some of the property that they have lost? What makes other
inmates and staff members recognize these rights? What characteristics do
these rights share with property as you understand it?
3. Personhood and property. Goffman writes, “If people were
selfless . . . there would of course be a logic to having no private storage
place.” But because “all have some self” they needed to create private
stashes. What does this mean? Is that really why people create stashes?
Scholars have argued that one justification for property rights is the
importance of property to people’s sense of self and their identity. See
Margaret Jane Radin, Property and Personhood, 34 Stan. L. Rev. 957
(1982). Professor Radin argues that the legal system can distinguish
between property that is “bound up with the holder,” such as a wedding
ring or a home, and more fungible property that is held “for purely
instrumental reasons.” Id. at 959-960. Just as rewarding labor and
recognizing possession influence the texture of property rights, the legal
system might likewise provide greater protection for property that is more
constitutive of people’s identity. Do you agree? What concerns might this
justification for property rights raise?
4. Property formation in your life. Goffman pioneered sociological
research through the close study of everyday interactions. What aspects of
property formation do you see in your life? Consider your regular seat in
your Property classroom. Do you have some kind of property right in it?
What would be the sources of your claim?
5. Property and homelessness. Like Goffman’s mental patients,
homeless people lack a private place to store things. The City of Los
Angeles has lost several lawsuits challenging its practice of seizing and
destroying the belongings of homeless people on city sidewalks. In Lavan
v. City of Los Angeles, 797 F. Supp. 2d 1005 (C.D. Cal. 2011), the court

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rejected claims that the contents of unattended shopping carts and other
belongings were “abandoned,” and found that it was unconstitutional to
destroy them without providing notice and an opportunity to be heard.
Several years before, neighborhood business owners had organized a
warehouse for homeless people to securely store their belongings, but
many individuals were unable to manage its simple rules:

Everything from toasters to typewriters is piled high on a Skid Row

sidewalk under the watchful eye of a woman who calls herself Mercedes
Benz.
The sidewalk is public property, but the possessions are hers and her
neighbors, setting up a conflict between the homeless and a city trying to
bring order where chaos reigns. Since a federal judge ordered the city four
months ago to stop seizing property from Skid Row streets, sidewalks
already teeming with people are now crammed with stuff.
For Benz, who’s been homeless for three years, keeping track of her
belongings, along with her health and legal problems, has been
overwhelming.
Benz, who said she receives disability for Agent Orange exposure, lost all
her belongings in a street sweep earlier this year while she used the bathroom
at a mission, but acknowledged she was warned the day before by a police
officer to remove her stuff. “I just couldn’t think carefully enough as to the
next step,” she said.
The loss of court papers, clothes and other items was devastating. “I came
out and thought I was on the wrong street. You know, what I did? I actually
cried,” she said. “I became lost outside all over again.”

Christina Hoag, LA Struggles to Cope with Possessions of Homeless,

Associated Press, Oct. 29, 2011.

1. Harriet A. Jacobs, Incidents in the Life of a Slave Girl: Written by Herself 201
(Harvard Univ. Press 1987) (1861).
2. According to the by-laws of the Associated Press no one can be elected a
member without the affirmative vote of at least four-fifths of all the members of
the corporation or the vote of the directors.
3. As a capstone to the recent scholarship on Pierson, in 2008, Professor Angela
Fernandez uncovered the original trial record of the case, long lost because it was
catalogued under an alternative spelling of Jesse Pierson’s name, Peirson rather
than Pierson. The New York County Clerk’s Division of Old Records had just
begun cataloging its records under the second parties’ name as well, so a search for
Post turned up the case. Angela Fernandez, The Lost Record of Pierson v. Post, the
Famous Fox Case, 27 Law & Hist. Rev. 149, 156-157 (2009).

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 4. It has been suggested that the ball might sell for something in excess of
$1,000,000.
5. A non-owner may be able to obtain title by adverse possession. See Chapter 5.

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PART TWO

WHAT CAN BE OWNED?

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CHAPTER 3

Intellectual and Cultural Property

§1 INTRODUCTION
§1.1 Intangible Property
Traditionally, the most important property rights concerned tangible
objects — most notably, land. Wealth is increasingly embodied in less
tangible resources, such as financial assets. The least tangible thing
imaginable is an idea. Can one own an idea? Ideas are free for public use,
but the law grants some expressions of ideas, as well as some inventions
and commercial marks, the status of limited property rights. Intellectual
property law regulates control over the products of intellectual effort. It is
one of the fastest growing areas of property law and of legal practice.
The core subjects of intellectual property law — copyrights and patents
— are governed by federal statutes. The U.S. Constitution authorizes
Congress to “promote the progress of science and useful arts, by securing
for limited times to authors and inventors the exclusive right to their
respective writings and discoveries.” U.S. Const. art. I, §8, cl. 8. Pursuant
to this clause, Congress has passed legislation protecting both copyrights
and patents. Copyright law grants exclusive rights in literary and artistic
works, including books, poetry, song, dance, dramatic works, computer
programs, movies, sculpture, and paintings. Patent law grants exclusive
rights in inventions, including processes, machines, and compositions of
matter.
A third major area of intellectual property law is trademark law.
Trademark law grants exclusive rights in symbols that indicate the source
of goods or services. Unlike copyright and patent law, trademark law
originated in state common law; federal legislation generally supplements,
but does not displace, the common law in these areas. Trademark law grew
out of the law of unfair competition and misappropriation, which prohibits
companies from using information obtained from competitors in ways that
unfairly appropriate the products of their competitors’ efforts.
State common law also protects other forms of valuable information,
such as “trade secrets” and “publicity rights.” Limited protection has also
emerged for “moral rights” that give artists the ability to prevent their

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works from being mutilated or misrepresented by subsequent owners.
Cultural property is closely related to intellectual property and, as its name
suggests, provides legal protection for certain important aspects of culture,
such as antiquities and Native American funerary objects.

§1.2 Theories of Intellectual Property

Intellectual property law is beset by internal tensions. Once disclosed,
ideas are generally not subject to ownership. We must be free to use ideas,
our own and others’, in order to engage in all human activity. Too much
private property in ideas would limit our autonomy and block desirable
economic activity by creating insuperable transaction costs. At the same
time, exclusive control over certain intellectual products enhances the
autonomy of authors and inventors. Property rights can also protect the
ability of creators to get credit for their works and create economic
incentives to spur intellectual inquiry. Determining when the products of
human effort should be subject to the creator’s control and when they
should become the common property of humankind is the core problem of
intellectual property law.
Intellectual property scholars have justified intellectual property rights
using many of the same theories we have already seen in the context of
tangible property. See Chapter 2. The three dominant theories at work in
intellectual property discussions are (1) utilitarian/economic theories; (2)
Lockean natural rights theories; and (3) Hegelian/personhood theories. See
Robert Merges, Peter S. Menell & Mark A. Lemley, Intellectual Property
in the New Technological Age 2-22 (6th ed. 2012); see also Robert P.
Merges, Justifying Intellectual Property (2010).
Utilitarian/economic theories. Utilitarian and economic theories of
intellectual property, like Harold Demsetz’s theory of property and Garrett
Hardin’s discussion of the “tragedy of the commons,” focus on the
problem of externalities. Both of those discussions, which focused on
tangible resources, emphasized negative externalities (costs not included in
the resource-user’s cost-benefit analysis) that tended to lead the user to
overconsume. See Chapter 2, §3.2. In contrast, within intellectual property
discussions, the focus is on the uncompensated positive externalities
produced by creative or inventive activities.

Terms:
Nonrivalrous consumption occurs when consumption of a good by one person
does not interfere with or impair consumption of the same good by someone

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 else.

Public goods are resources that are consumed nonrivalrously and

from which it is impossible to exclude others. Just as the behavioral
assumptions of economic theory predict that people will engage in too
much of the harm-producing activities, such as consumption of open-
access commons, when those harms are shared with others, the same
assumptions predict that people will decline to engage in activities, such as
the creation of public goods, when the activities themselves are costly and
the benefits of those activities are shared with others. Because others
cannot be prevented from freely enjoying the benefits of public goods,
self-interested actors have an incentive to sit back and take a free ride on
the (costly) productive behavior of others rather than bear the costs of
engaging in producing public goods themselves. If everyone adopts the
same strategy, public goods will not be produced. To overcome this free-
rider problem, economists favor taking affirmative steps to encourage the
production of public goods. Where creating mechanisms to facilitate the
prevention of free riding is costly or undesirable, government provision is
a common solution. Classic examples of government-provided public
goods are national defense or the network of public roads.
Innovation often has the features of a public good. It is costly to
produce, both in terms of time and resources, but once an innovative idea
is produced and disseminated, it is difficult (in the absence of some
collective action) to prevent others from copying it. Because copyists do
not have to pay for the (sunk) costs of innovation, they can profitably sell
the innovative product for close to its marginal cost of production (the cost
of producing an additional unit of the good, excluding sunk costs, such as
the cost of innovation). Where innovation is costly and copying is cheap
and easy, economic theory predicts that innovation will tend to be
underproduced in the absence of some mechanism to empower actors to
recoup their investment in innovation. One such mechanism is to create a
legal monopoly that enables the innovator to prohibit others from copying
her invention. This is the most common utilitarian explanation for the
institution of intellectual property in the domains of copyright and patent
law. See Richard A. Posner, The Economic Analysis of Law §§11.2, 11.5
(9th ed. 2014). 1 Is government provision another possibility? What would
it look like as a tool for overcoming the free-rider problem in the
innovation context?
It is important to understand the limits of this utilitarian argument for
intellectual property. It does not rely on the notion that creators are

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morally entitled to capture the benefits they create. As in the tangible
property context, utilitarian arguments for intellectual property are
forward-looking and based on incentives to act in ways that enhance social
welfare; they are not based on notions of individual desert. Where copying
is not easy, or where innovators can recapture the value of their investment
through the market advantages of being the first mover, the utilitarian
argument does not offer much support for intellectual property rights.
Indeed, where innovators can recover the costs of their innovation, the
existence of copyists can be socially beneficial, since they help to
propagate the innovation and foster competition. Their presence may even
help to generate more innovation, as creators seek to stay one step ahead of
the copyists. This is what seems to happen in the fashion industry. Fashion
designs are not protected by intellectual property in the United States, and
copying is rampant. But this does not seem to have harmed the industry,
with its rapid cycle of innovation and its robust market in knock-off
designs. See Kal Raustiala & Christopher Sprigman, The Piracy Paradox:
Innovation and Intellectual Property in Fashion Design, 92 Va. L. Rev.
1688 (2006).

CONTEXT

In their 2006 article, The Piracy Paradox, Kal Raustiala and Christopher
Sprigman describe how the lack of IP protection for fashion actually increases
the rate of innovation in the industry:
The fashion cycle has long been familiar. What is less commonly appreciated is the role
of IP law in fostering the cycle. We argue that fashion’s low-IP regime is paradoxically
advantageous for the industry. IP rules providing for free appropriation of fashion designs
accelerate the diffusion of designs and styles. We call this process “induced
obsolescence.” If copying were illegal, the fashion cycle would occur very slowly.
Instead, the absence of protection for creative designs and the regime of free design
appropriation speeds diffusion and induces more rapid obsolescence of fashion designs.
As Miucci Prada put it recently, “We let others copy us. And when they do, we drop it.”
The fashion cycle is driven faster, in other words, by widespread design copying, because
copying erodes the positional qualities of fashion goods. Designers in turn respond to this
obsolescence with new designs. In short, piracy paradoxically benefits designers by
inducing more rapid turnover and additional sales.
Might the same dynamic arise in other property contexts where owners are
confronted with positive externalities?

The utilitarian argument does not assert that all positive externalities
must be internalized. After all, as Demsetz observed, the creation of
intellectual property rights, like the creation of property rights more

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generally, generates costs of its own. First, since all innovation must rely
upon the storehouse of prior knowledge, increasing the cost of using that
prior knowledge (e.g., by protecting at least some of it as intellectual
property) drives up the cost of innovation for creators. This suggests that,
applying the assumptions of economic theory, the interaction between
intellectual property protection and the speed of innovation will be
complex. The creation of intellectual property rights that are too robust
might even have the perverse effect of deterring innovation. Where too
many people have intellectual property rights over inputs necessary to
create a useful product, transaction costs can make it extremely expensive
to gather the permissions necessary to bring the product to market.
Michael Heller has called this situation — high transaction costs generated
by a large number of property-based veto rights — the “tragedy of the
anticommons.” Michael A. Heller, The Tragedy of the Anticommons, 111
Harv. L. Rev. 621 (1998).
Another cost of creating intellectual property is that preventing free
riders from competing with innovators in the marketplace (by granting the
inventor a monopoly) drives up the price of the invention for consumers.
Monopoly pricing will usually result in reduced consumption of the
invention by consumers willing to pay more than the marginal cost of
producing the good. Economists refer to this forgone consumption as
“deadweight loss.” Finally, because intellectual property protects its
owners from competition, the creation of intellectual property encourages
those who wish to escape from competition to lobby for the creation of
intellectual property even where it will not be socially beneficial. This kind
of behavior — what economists call “rent seeking” — is wasteful in its
own right. See Mark A. Lemley, Property, Intellectual Property, and Free
Riding, 83 Tex. L. Rev. 1031, 1064 (2005). How to calibrate intellectual
property rights to optimize the balance of the various costs and benefits of
intellectual property is a difficult problem that is the subject of a great deal
of debate among courts, politicians, interest groups, and scholars.
Lockean theories. As we saw in Chapter 2, John Locke’s theory of
property builds from twin premises of self-ownership and the original
common endowment of the world’s resources to the conclusion that people
should be entitled to the products of their own labor, except where doing
so would make others worse off by failing to leave them “enough and as
good” of the common resources. See John Locke, Second Treatise of
Government, ch. V (1698). Although Locke did not have much to say
about the ownership of ideas, contemporary scholars have argued that his
theory applies with special force in the context of intellectual production.

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Innovative ideas, the argument goes, are the products of the inventor’s
(intellectual) labor, and because they constitute something genuinely new,
their protection as intellectual property cannot be thought to make anyone
else worse off by taking anything out of the original common endowment.
See Lawrence C. Becker, Deserving to Own Intellectual Property, 68 Chi.-
Kent L. Rev. 609 (1993); Justin Hughes, The Philosophy of Intellectual
Property, 77 Geo. L.J. 287 (1988).
As with utilitarian theories of intellectual property, however, Lockean
theories suffer from tensions of their own. The most intractable problems
for Lockean theories concern the difficulty of disentangling an innovator’s
contribution to an invention from the contribution of the intellectual “raw
materials” supplied by prior knowledge. Rewarding an innovator with an
exclusive right to her creation requires some way of defining that creation
so to give the innovator her due while acknowledging that almost all
individual creation draws on the work of others. Consider the challenge of
defining with any precision the contribution of a writer who pens a novel
that draws on prior tropes but also pushes the boundaries of literature in
new directions.
Finally, note that the focus of the Lockean theory is on the relationship
between the innovator and her creation. It simply asks whether the creation
comes from the innovator’s productive labor. Thus, it would seem to
justify protecting intellectual property rights for all independent creators,
even those who are not the first to discover an invention. Although
copyright protects such independent creation, American patent law
traditionally has not.
Hegelian/personhood theories. Hegelian personhood theory, which
we also first encountered in Chapter 2, §7, has also been influential in
discussions of intellectual property, particularly copyright and publicity
rights. The idea is that through the creative process, the inventor or
creator’s very identity becomes bound up with the invention or creation.
This bond between the creator and her creation gives rise to an entitlement
to control the dissemination and use of the created work. The theory seems
to have the most intuitive appeal when applied to highly individualized
acts of creation — the inventor toiling away in her basement, or the artist
or author at work in her studio. For discussions of personhood theories of
intellectual property, see Hughes, supra, at 350-353; Linda J. Lacey, Of
Bread and Roses and Copyrights, 1989 Duke L.J. 1532; Neil Netanel,
Copyright Alienability Restrictions and the Enhancement of Author
Autonomy: A Normative Evaluation, 24 Rutgers L.J. 347 (1993). Again,
personhood theory seems to generate its own tensions for intellectual

287
property rights. The same ambiguities surrounding intellectual borrowing
that bedevil Lockean theories apply in the personhood context. Moreover,
the identity of others besides the original creator can become tied up with
an intellectual creation. To take an extreme example, fans can become
“consumed” by their identification with works created by another person.
See Christopher S. Yoo, Copyright and Personhood Revisited (Sept. 28,
2012), working paper, electronic copy available at
http://ssrn.com/abstract=2160441.

Notes and Questions

1. Tangible and intangible property theories. How readily do the
theories of tangible property apply to the problems posed by intellectual
property? Are the complications posed by intellectual property different in
kind from those that arise in the context of tangible property? Which
theory or theories do you find most convincing? Least convincing? Does it
matter whether we consider intellectual property as a kind of “property”
or, instead, as a kind of regulation? See, e.g., Mark A. Lemley, Property,
Intellectual Property, and Free Riding, 83 Tex. L. Rev. 1031 (2005)
(arguing that treating intellectual property as a kind of property lends itself
to a counterproductive kind of intellectual property maximalism).
2. What motivates creation? Are economic theorists of intellectual
property right to assume (as they typically do) that people uniformly need
extrinsic incentives, such as the opportunity to profit, in order to engage in
creative labor? Are there specific contexts where people are more or less
likely to require those incentives? How would you describe those
contexts? For an argument that production of cultural and informational
products in the Internet age is often undertaken for reasons other than the
desire for pecuniary gain — and so may not respond to incentives in the
ways predicted by economic theory — see Yochai Benkler, The Wealth of
Networks (2006).

§2 UNFAIR COMPETITION AND

MISAPPROPRIATION
See Chapter 2, §3 Labor and Investment, at pages ♦♦♦-♦♦♦.

§3 TRADEMARK LAW
A trademark is a name, symbol, or type of packaging that identifies the
producer of a good or service. Unlike copyright and patent law, trademark

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law is primarily based on state common law, not federal statute. The patent
and copyright clause of the U.S. Constitution authorizes Congress to
provide protection for original works of authorship and inventions. U.S.
Const. art. I, §8, cl. 8. The Supreme Court struck down the first trademark
laws, passed by Congress in 1870 and 1876, because they applied without
regard to originality or novelty, crucial requirements for copyrights and
patents. United States v. Steffens (The Trade-Mark Cases), 100 U.S. 82
(1879). Congress does, however, have the power to regulate interstate
commerce. U.S. Const. art. I, §8, cl. 3. Because the Court considered
trademarks to be a form of property within the purview of state regulation,
Congress responded by passing statutes in 1881 and 1905 that addressed
the interstate use of trademarks. The current federal trademark act, called
the Lanham Act, 15 U.S.C. §§1051-1127, provides for the registration of
trademarks created by state law, along with some rights that may
supplement or displace state law.

Terms:
Abandonment is a term of art in trademark law and does not always mean the
same thing as it does in other contexts. As with tangible property, mere nonuse
of a trademark does not constitute abandonment. Intent to abandon is also
required. But failure to use a trademark for an extended period will, by itself,
constitute evidence of intent to abandon the mark. The Lanham Act treats
nonuse for two years as prima facie evidence of abandonment. See 15 U.S.C.
§1127.

Trademark law gives the owner of the “mark” the exclusive right to
use it in connection with the sale of a particular good or service in a
particular area. This protects consumers from the confusion resulting from
different companies using the same or similar names. See Jordache
Enterprises, Inc. v. Levi Strauss & Co., 841 F. Supp. 506 (S.D.N.Y. 1993)
(holding that “Jordache Basics 101” may be confusingly similar to “Levi’s
501” jeans). However, trademark law does not give consumers a legal
claim. Only a company that is using the mark may sue to prevent
competitors from appropriating the goodwill associated with its mark.
Trademark law grows out of state unfair competition law that prohibits
“palming off” one’s products as those of another. It therefore protects the
goodwill associated with a particular company or product line from unfair
competition.
Unlike copyright and patents, trademarks garner protection only if they
are used in commerce to sell goods or services. Failure to use a mark for a

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long time may constitute abandonment of it. The first to use the mark in
connection with a business establishes the mark and will prevail over a
later user. The trademark’s value, of course, is much more than just ease of
identification. Once customers develop loyalty to a brand name, the
trademark itself has substantial value. A name can become associated with
quality, and this goodwill is a substantial property interest. For this reason,
a trademark infringement will be found if confusion may result from a
competitor’s later use of a mark.
Words that describe goods generally (generic names) cannot be
trademarked both because they are unlikely to signal a particular maker
and because competitors are likely to need to use those words to sell their
goods. Names that began by representing particular companies may
become generic over time if people start using the trade name to mean the
product itself, such as Scotch tape or Kleenex tissues. See America Online
v. AT&T Corp., 243 F.3d 812 (4th Cir. 2001) (“instant messaging” and
“you have mail” cannot be trademarked because they are generic terms;
however, “Buddy List” may not be generic in the eyes of the public).
The Lanham Act provides notice of trademarks by allowing them to be
registered with the federal Patent and Trademark Office. 15 U.S.C. §1072.
Those wishing to register a mark must assert that they are currently using
the mark in connection with a business or that they intend to do so shortly;
use must commence within 24 months at the latest. Like the recording
system for deeds, see Chapter 12, §5, registration places the whole world
on actual or constructive notice of existing trademarks. Later users of a
mark cannot claim to have used it in good faith or without knowledge of
its prior use. A trademark may not be registered if it was in prior use by
another (unless that use has been abandoned) or if there is a likelihood of
confusion.

Qualitex Co. v. Jacobson Products Co.

514 U.S. 159 (1995)

Justice STEPHEN BREYER delivered the opinion of the Court.
The question in this case is whether the Trademark Act of 1946
(Lanham Act), 15 U.S.C. §§1051-1127, permits the registration of a
trademark that consists, purely and simply, of a color. We conclude that,
sometimes, a color will meet ordinary legal trademark requirements. And,
when it does so, no special legal rule prevents color alone from serving as
a trademark.
The case before us grows out of petitioner Qualitex Company’s use
(since the 1950’s) of a special shade of green-gold color on the pads that it

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makes and sells to dry cleaning firms for use on dry cleaning presses. In
1989, respondent Jacobson Products (a Qualitex rival) began to sell its
own press pads to dry cleaning firms; and it colored those pads a similar
green-gold. In 1991, Qualitex registered the special green-gold color on
press pads with the Patent and Trademark Office as a trademark. Qualitex
subsequently added a trademark infringement count, 15 U.S.C. §1114(1),
to an unfair competition claim, §1125(a), in a lawsuit it had already filed
challenging Jacobson’s use of the green-gold color.
The Lanham Act gives a seller or producer the exclusive right to
“register” a trademark, 15 U.S.C. §1052, and to prevent his or her
competitors from using that trademark, §1114(1). Both the language of the
Act and the basic underlying principles of trademark law would seem to
include color within the universe of things that can qualify as a trademark.
The language of the Lanham Act describes that universe in the broadest of
terms. It says that trademarks “include any word, name, symbol, or device,
or any combination thereof.” §1127. Since human beings might use as a
“symbol” or “device” almost anything at all that is capable of carrying
meaning, this language, read literally, is not restrictive. The courts and the
Patent and Trademark Office have authorized for use as a mark a particular
shape (of a Coca-Cola bottle), a particular sound (of NBC’s three chimes),
and even a particular scent (of plumeria blossoms on sewing thread). If a
shape, a sound, and a fragrance can act as symbols why, one might ask,
can a color not do the same?
A color is also capable of satisfying the more important part of the
statutory definition of a trademark, which requires that a person “use” or
“intend to use” the mark “to identify and distinguish his or her goods,
including a unique product, from those manufactured or sold by others and
to indicate the source of the goods, even if that source is unknown.” 15
U.S.C. §1127.
True, a product’s color is unlike “fanciful,” “arbitrary,” or “suggestive”
words or designs, which almost automatically tell a customer that they
refer to a brand. The imaginary word “Suntost,” or the words “Suntost
Marmalade,” on a jar of orange jam immediately would signal a brand or a
product “source”; the jam’s orange color does not do so. But, over time,
customers may come to treat a particular color on a product or its
packaging (say, a color that in context seems unusual, such as pink on a
firm’s insulating material or red on the head of a large industrial bolt) as
signifying a brand. And, if so, that color would have come to identify and
distinguish the goods — i.e., “to indicate” their “source” — much in the
way that descriptive words on a product (say, “Trim” on nail clippers or
“Car-Freshner” on deodorizer) can come to indicate a product’s origin. In

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this circumstance, trademark law says that the word (e.g., “Trim”),
although not inherently distinctive, has developed “secondary meaning.”
See Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844,
851, n.11 (1982) (“Secondary meaning” is acquired when “in the minds of
the public, the primary significance of a product feature . . . is to identify
the source of the product rather than the product itself”).
We cannot find in the basic objectives of trademark law any obvious
theoretical objection to the use of color alone as a trademark, where that
color has attained “secondary meaning” and therefore identifies and
distinguishes a particular brand (and thus indicates its “source”). In
principle, trademark law, by preventing others from copying a source-
identifying mark, “reduce[s] the customer’s costs of shopping and making
purchasing decisions,” 1 J. McCarthy, McCarthy on Trademarks and
Unfair Competition §2.01[2], pp. 2-3 (3d ed. 1994), for it quickly and
easily assures a potential customer that this item — the item with this mark
— is made by the same producer as other similarly marked items that he or
she liked (or disliked) in the past. At the same time, the law helps assure a
producer that it (and not an imitating competitor) will reap the financial,
reputation-related rewards associated with a desirable product. The law
thereby “encourage[s] the production of quality products,” and
simultaneously discourages those who hope to sell inferior products by
capitalizing on a consumer’s inability quickly to evaluate the quality of an
item offered for sale. It is the source-distinguishing ability of a mark —
not its ontological status as color, shape, fragrance, word, or sign — that
permits it to serve these basic purposes. And, for that reason, it is difficult
to find, in basic trademark objectives, a reason to disqualify absolutely the
use of a color as a mark.
Neither can we find a principled objection to the use of color as a mark
in the important “functionality” doctrine of trademark law. The
functionality doctrine prevents trademark law, which seeks to promote
competition by protecting a firm’s reputation, from instead inhibiting
legitimate competition by allowing a producer to control a useful product
feature. It is the province of patent law, not trademark law, to encourage
invention by granting inventors a monopoly over new product designs or
functions for a limited time, 35 U.S.C. §§154, 173, after which
competitors are free to use the innovation. If a product’s functional
features could be used as trademarks, however, a monopoly over such
features could be obtained without regard to whether they qualify as
patents and could be extended forever (because trademarks may be
renewed in perpetuity). . . . This Court consequently has explained that, “in
general terms, a product feature is functional,” and cannot serve as a

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trademark, “if it is essential to the use or purpose of the article or if it
affects the cost or quality of the article,” that is, if exclusive use of the
feature would put competitors at a significant non-reputation-related
disadvantage. Inwood Laboratories, Inc., supra, at 850, n.10. Although
sometimes color plays an important role (unrelated to source
identification) in making a product more desirable, sometimes it does not.
And, this latter fact — the fact that sometimes color is not essential to a
product’s use or purpose and does not affect cost or quality — indicates
that the doctrine of “functionality” does not create an absolute bar to the
use of color alone as a mark.
It would seem, then, that color alone, at least sometimes, can meet the
basic legal requirements for use as a trademark. It can act as a symbol that
distinguishes a firm’s goods and identifies their source, without serving
any other significant function. Indeed, the District Court, in this case,
entered findings . . . that show Qualitex’s green-gold press pad color has
met these requirements. The green-gold color acts as a symbol. Having
developed secondary meaning (for customers identified the green-gold
color as Qualitex’s), it identifies the press pads’ source. And, the green-
gold color serves no other function. Accordingly, unless there is some
special reason that convincingly militates against the use of color alone as
a trademark, trademark law would protect Qualitex’s use of the green-gold
color on its press pads.
Respondent Jacobson Products says that there are . . . special reasons
why the law should forbid the use of color alone as a trademark. We shall
explain, in turn, why we, ultimately, find them unpersuasive.
First, Jacobson says that, if the law permits the use of color as a
trademark, it will produce uncertainty and unresolvable court disputes
about what shades of a color a competitor may lawfully use. Because
lighting (morning sun, twilight mist) will affect perceptions of protected
color, competitors and courts will suffer from “shade confusion” as they
try to decide whether use of a similar color on a similar product does, or
does not, confuse customers and thereby infringe a trademark. Jacobson
adds that the “shade confusion” problem is “more difficult” and “far
different from” the “determination of the similarity of words or symbols.”
We do not believe, however, that color, in this respect, is special.
Courts traditionally decide quite difficult questions about whether two
words or phrases or symbols are sufficiently similar, in context, to confuse
buyers. They have had to compare, for example, such words as
“Bonamine” and “Dramamine” (motion-sickness remedies); “Huggies”
and “Dougies” (diapers); “Cheracol” and “Syrocol” (cough syrup);
“Cyclone” and “Tornado” (wire fences); and “Mattres” and “1-800-

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Mattres” (mattress franchisor telephone numbers).
Second, Jacobson argues, as have others, that colors are in limited
supply. Jacobson claims that, if one of many competitors can appropriate a
particular color for use as a trademark, and each competitor then tries to do
the same, the supply of colors will soon be depleted. . . . [I]n the context of
a particular product, only some colors are usable. By the time one discards
colors that, say, for reasons of customer appeal, are not usable, and adds
the shades that competitors cannot use lest they risk infringing a similar,
registered shade, then one is left with only a handful of possible colors.
And, under these circumstances, to permit one, or a few, producers to use
colors as trademarks will “deplete” the supply of usable colors to the point
where a competitor’s inability to find a suitable color will put that
competitor at a significant disadvantage.
This argument is unpersuasive, however, largely because it relies on an
occasional problem to justify a blanket prohibition. When a color serves as
a mark, normally alternative colors will likely be available for similar use
by others. Moreover, if that is not so — if a “color depletion” or “color
scarcity” problem does arise — the trademark doctrine of “functionality”
normally would seem available to prevent the anticompetitive
consequences that Jacobson’s argument posits, thereby minimizing that
argument’s practical force.
The functionality doctrine . . . forbids the use of a product’s feature as
a trademark where doing so will put a competitor at a significant
disadvantage because the feature is “essential to the use or purpose of the
article” or “affects [its] cost or quality.” The functionality doctrine thus
protects competitors against a disadvantage (unrelated to recognition or
reputation) that trademark protection might otherwise impose, namely
their inability reasonably to replicate important non-reputation-related
product features.

Notes and Questions

1. Dilution. In 1996, the Lanham Act was amended to protect owners
of “famous marks” against “dilution of the distinctive quality of the mark”
by giving them the right to obtain injunctive relief against competing uses
even in the absence of consumer confusion. 15 U.S.C. §1125(c) (codifying
the Federal Trademark Dilution Act of 1995, Pub. L. No. 104-374, §3
(1996)). The statute explicitly allows use of a mark in “comparative
commercial advertising.” Id. §1125(c)(4)(A). State antidilution laws
continue to apply to “nonfamous” marks.
A mark may be diluted either because of tarnishment or blurring.

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Tarnishment occurs if a company sells inferior quality products. For
example, the Singer name is commercially associated with sewing
machines. If a business starts selling Singer vacuum cleaners, and they are
of inferior quality, the Singer name might come to be associated with
shoddy products and the value of the Singer name associated with sewing
machines might decrease.
Blurring occurs when a distinctive mark begins to lose its association
with a particular company. For example, Pepperidge Farm obtained an
injunction ordering Nabisco to stop selling goldfish-shaped cheddar
cheese-flavored crackers because this particular product was strongly
associated with Pepperidge Farm, and sale of similar products by Nabisco
would dilute the distinctive quality of Pepperidge Farm’s mark. Nabisco,
Inc. v. PF Brands, Inc., 191 F.3d 208 (2d Cir. 1999).
One issue is whether injunctive relief should be granted in the absence
of proof of actual economic harm. Some courts allowed relief based solely
on the possibility of blurring while others held that dilution could be
established only by showing actual economic harm resulting from the
competing product. Congress answered this question in 2006 by amending
the Federal Trademark Dilution Act to provide for relief when a mark is
“likely to cause dilution.” 15 U.S.C. §1125(c)(1).
2. Cybersquatting and gripe web sites. In the early years of the
Internet, some people obtained web site domain names for the sole purpose
of selling them to existing trademark holders, a practice that came to be
known as “cybersquatting.” Often no confusion resulted from this because
anyone accessing the web site would know immediately that it was not
owned by the company in question. However, in the spirit of the Federal
Trademark Dilution Act of 1995, Congress passed the Anticybersquatting
Consumer Protection Act (ACPA), 15 U.S.C. §1125(d), in 1999. This law
prohibits anyone from registering or using a domain name “with bad faith
intent to profit from another’s trademark.” Anyone who obtains a domain
name with the intent of selling it to the relevant company or somehow
profiting from the traffic the famous trademark name generates would
almost certainly violate the act. See, e.g., PETA v. Doughney, 263 F.3d 359
(4th Cir. 2001) (registration of the domain name “peta.org” allegedly on
behalf of a fictional “People Eating Tasty Animals” violates the ACPA
where used in bad faith to attempt to extract payment from the
organization People for the Ethical Treatment of Animals); Virtual Works,
Inc. v. Volkswagen of America, Inc., 238 F.3d 264 (4th Cir. 2001)
(www.vw.net domain name violates ACPA when registered by Virtual
Works, Inc. because the company intended to profit from the name

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recognition attached to the common abbreviation for Volkswagen). Is
“cybersquatting” any different than strategically buying a piece of land
that another person is trying to acquire (say, as part of an effort to
assemble a larger parcel) in order to profit by selling it to them? Why do
you think Congress intervened in these disputes between “cybersquatters”
and trademark owners? Is the law aptly named?
Disagreements have arisen among courts about gripe web sites that
intend to criticize a company by using its name or its name plus a
disparaging word such as “sucks.” Although it has been argued that this is
a noncommercial use outside the scope of the ACPA and that the first
amendment protects such usages, one court has granted relief on behalf of
a trademark owner against such a site when the site sought to “get even”
with the trademark owner. Morrison & Foerster v. Wick, 94 F. Supp. 2d
1125 (D. Colo. 2000). Most courts, however, have held that use of a
company’s trademarked name in a web site address violates neither the
ACPA nor the Lanham Act when the name is not used for commercial
purposes or in a manner that would confuse potential customers. See, e.g.,
Lamparello v. Falwell, 420 F.3d 309 (4th Cir. 2005) (web site using the
misspelled domain name fallwell.com and dedicated to criticizing Jerry
Falwell’s views on homosexuality did not constitute infringement or
cybersquatting); Aviva USA Corp. v. Vazirani, 902 F. Supp. 2d 1246 (D.
Ariz. 2012); see also Bosley Medical Institute, Inc. v. Kremer, 403 F.3d
672 (9th Cir. 2005). Nevertheless, such uses may still violate the ACPA if
they are done “with bad faith intent to profit” from the trademarked name.

Problems
1. Section 2(a) of the Lanham Act, 15 U.S.C. §1052(a), prohibits the
PTO from registering a trademark if it “[c]onsists of or comprises
immoral, deceptive, or scandalous matter; or matter which may disparage
or falsely suggest a connection with persons, living or dead, institutions,
beliefs, or national symbols, or bring them into contempt or disrepute.”
Does the term “Redskins” fall within this prohibition? Does the first
amendment’s protection for free speech protect the trademark owner’s
right to use the name?
2. Christian Louboutin produces high-end footwear. Louboutin’s shoes
nearly always feature a bright-red lacquered outsole, usually accompanied
by an upper portion of the shoe with a different color. In 2008, Louboutin
received a trademark for the red sole. In 2011, Yves Saint Laurent (YSL)
released a series of monochrome shoes using various colors, including red.
Louboutin sues, arguing that YSL’s use of red soles infringed on

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Louboutin’s trademark. YSL argues, among other things, that color is
functional in fashion and that, as a result, Qualitex should not be
controlling. Does the functionality of color vary by industry? Who should
prevail in this case? See Christian Louboutin S.A. v. Yves Saint Laurent
America Holding, Inc., 696 F.3d 206 (2d Cir. 2012) (holding that a single
color trademark is permissible in the fashion industry and that Louboutin’s
red sole had become a distinctive symbol for the brand but only when
accompanied by an upper portion of a different color).

§4 COPYRIGHT LAW
§4.1 Original Works of Authorship
Copyright law is regulated by a federal statute that substantially
preempts state law on the subject. 17 U.S.C. §101 et seq. The Copyright
Act grants owners of “original works of authorship” that are fixed in a
“tangible medium of expression,” §102, exclusive rights to copy,
distribute, perform, or display those works publicly and to make derivative
works from them, §106. Ideas and facts cannot be copyrighted; only
original expressions of ideas can be protected by copyright law. Authors
own what they create unless they performed “work for hire”; such works
are owned by the author’s employer. §201(b). Copyright protection lasts
for the life of the author plus 70 years, after which time the work becomes
part of the public domain. With respect to works for hire, the copyright
lasts for 95 years from the date of first publication or 120 years from the
date of creation, whichever expires first. §302(c). Copyright protection is
created automatically, with no need by the author or creator to take any
affirmative steps, although authors need to register their copyrights before
suing for infringement.

A. The Copyright Act

Copyright Act of 1976

17 U.S.C. §§102, 106, 107

§102. Subject matter of copyright: In general

(a) Copyright protection subsists, in accordance with this title, in
original works of authorship fixed in any tangible medium of expression,
now known or later developed, from which they can be perceived,
reproduced, or otherwise communicated, either directly or with the aid of a

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machine or device. Works of authorship include the following categories:
(1) literary works;
(2) musical works, including any accompanying words;
(3) dramatic works, including any accompanying music;
(4) pantomimes and choreographic works;
(5) pictorial, graphic, and sculptural works;
(6) motion pictures and other audiovisual works;
(7) sound recordings; and
(8) architectural works.
(b) In no case does copyright protection for an original work of
authorship extend to any idea, procedure, process, system, method of
operation, concept, principle, or discovery, regardless of the form in which
it is described, explained, illustrated, or embodied in such work.

§106. Exclusive rights in copyrighted works

Subject to sections 107 through 122, the owner of copyright under this
title has the exclusive rights to do and to authorize any of the following:
(1) to reproduce the copyrighted work in copies or phonorecords;
(2) to prepare derivative works based upon the copyrighted work;
(3) to distribute copies or phonorecords of the copyrighted work to
the public by sale or other transfer of ownership, or by rental, lease, or
lending;
(4) in the case of literary, musical, dramatic, and choreographic
works, pantomimes, and motion pictures and other audiovisual works,
to perform the copyrighted work publicly;
(5) in the case of literary, musical, dramatic, and choreographic
works, pantomimes, and pictorial, graphic, or sculptural works,
including the individual images of a motion picture or other
audiovisual work, to display the copyrighted work publicly; and
(6) in the case of sound recordings, to perform the copyrighted work
publicly by means of a digital audio transmission.

§107. Limitations on exclusive rights: Fair use

Notwithstanding the provisions of sections 106 . . . , the fair use of a
copyrighted work, including such use by reproduction in copies or
phonorecords or by any other means specified by that section, for purposes
such as criticism, comment, news reporting, teaching (including multiple
copies for classroom use), scholarship, or research, is not an infringement
of copyright. In determining whether the use made of a work in any
particular case is a fair use the factors to be considered shall include —

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 (1) the purpose and character of the use, including whether such use
is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to
the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the
copyrighted work.
The fact that a work is unpublished shall not itself bar a finding of fair
use if such finding is made upon consideration of all the above factors.

B. “Original” Works

Only “original” works of “authorship” are protected under the

Copyright Act. The following case considers what this means.

Feist Publications, Inc. v. Rural Telephone Service Co.

499 U.S. 340 (1991)

Justice SANDRA DAY O’CONNOR delivered the opinion of the Court.
This case requires us to clarify the extent of copyright protection
available to telephone directory white pages.
Rural Telephone Service Company, Inc., is a certified public utility
that provides telephone service to several communities in northwest
Kansas. It is subject to a state regulation that requires all telephone
companies operating in Kansas to issue annually an updated telephone
directory. Accordingly, as a condition of its monopoly franchise, Rural
publishes a typical telephone directory, consisting of white pages and
yellow pages. The white pages list in alphabetical order the names of
Rural’s subscribers, together with their towns and telephone numbers. The
yellow pages list Rural’s business subscribers alphabetically by category
and feature classified advertisements of various sizes. Rural distributes its
directory free of charge to its subscribers, but earns revenue by selling
yellow pages advertisements.
Feist Publications, Inc., is a publishing company that specializes in
area-wide telephone directories. Unlike a typical directory, which covers
only a particular calling area, Feist’s area-wide directories cover a much
larger geographical range, reducing the need to call directory assistance or
consult multiple directories. The Feist directory that is the subject of this
litigation covers 11 different telephone service areas in 15 counties and
contains 46,878 white pages listings — compared to Rural’s

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approximately 7,700 listings. Like Rural’s directory, Feist’s is distributed
free of charge and includes both white pages and yellow pages. Feist and
Rural compete vigorously for yellow pages advertising.
As the sole provider of telephone service in its service area, Rural
obtains subscriber information quite easily. Persons desiring telephone
service must apply to Rural and provide their names and addresses; Rural
then assigns them a telephone number. Feist is not a telephone company,
let alone one with monopoly status, and therefore lacks independent access
to any subscriber information. To obtain white pages listings for its area-
wide directory, Feist approached each of the 11 telephone companies
operating in northwest Kansas and offered to pay for the right to use its
white pages listings.
Of the 11 telephone companies, only Rural refused to license its
listings to Feist. Rural’s refusal created a problem for Feist, as omitting
these listings would have left a gaping hole in its area-wide directory,
rendering it less attractive to potential yellow pages advertisers. . . .
Unable to license Rural’s white pages listings, Feist used them without
Rural’s consent. Feist began by removing several thousand listings that fell
outside the geographic range of its area-wide directory, then hired
personnel to investigate the 4,935 that remained. These employees verified
the data reported by Rural and sought to obtain additional information. As
a result, a typical Feist listing includes the individual’s street address; most
of Rural’s listings do not. Notwithstanding these additions, however, 1,309
of the 46,878 listings in Feist’s 1983 directory were identical to listings in
Rural’s 1982-1983 white pages. Four of these were fictitious listings that
Rural had inserted into its directory to detect copying.
Rural sued for copyright infringement in the District Court for the
District of Kansas taking the position that Feist, in compiling its own
directory, could not use the information contained in Rural’s white pages.
Rural asserted that Feist’s employees were obliged to travel door-to-door
or conduct a telephone survey to discover the same information for
themselves. Feist responded that such efforts were economically
impractical and, in any event, unnecessary because the information copied
was beyond the scope of copyright protection.
This case concerns the interaction of two well-established propositions.
The first is that facts are not copyrightable; the other, that compilations of
facts generally are.
There is an undeniable tension between these two propositions. Many
compilations consist of nothing but raw data — i.e., wholly factual
information not accompanied by any original written expression. . . . The
key to resolving the tension lies in understanding why facts are not

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copyrightable. The sine qua non of copyright is originality. To qualify for
copyright protection, a work must be original to the author. Original, as the
term is used in copyright, means only that the work was independently
created by the author (as opposed to copied from other works), and that it
possesses at least some minimal degree of creativity. Originality does not
signify novelty; a work may be original even though it closely resembles
other works so long as the similarity is fortuitous, not the result of
copying. To illustrate, assume that two poets, each ignorant of the other,
compose identical poems. Neither work is novel, yet both are original and,
hence, copyrightable.
Originality is a constitutional requirement. The source of Congress’
power to enact copyright laws is Article I, §8, cl. 8, of the Constitution,
which authorizes Congress to “secure for limited Times to Authors . . . the
exclusive Right to their respective Writings.” In two decisions from the
late 19th century — The Trade-Mark Cases, 100 U.S. 82 (1879); and
Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53 (1884) — this
Court defined the crucial terms “authors” and “writings.” In so doing, the
Court made it unmistakably clear that these terms presuppose a degree of
originality.
It is this bedrock principle of copyright that mandates the law’s
seemingly disparate treatment of facts and factual compilations. “No one
may claim originality as to facts.” This is because facts do not owe their
origin to an act of authorship. The distinction is one between creation and
discovery: The first person to find and report a particular fact has not
created the fact; he or she has merely discovered its existence.
Factual compilations, on the other hand, may possess the requisite
originality. The compilation author typically chooses which facts to
include, in what order to place them, and how to arrange the collected data
so that they may be used effectively by readers. These choices as to
selection and arrangement, so long as they are made independently by the
compiler and entail a minimal degree of creativity, are sufficiently original
that Congress may protect such compilations through the copyright laws.
Thus, even a directory that contains absolutely no protectible written
expression, only facts, meets the constitutional minimum for copyright
protection if it features an original selection or arrangement.
This protection is subject to an important limitation. The mere fact that
a work is copyrighted does not mean that every element of the work may
be protected. Originality remains the sine qua non of copyright;
accordingly, copyright protection may extend only to those components of
a work that are original to the author. Thus, if the compilation author
clothes facts with an original collocation of words, he or she may be able

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to claim a copyright in this written expression. Others may copy the
underlying facts from the publication, but not the precise words used to
present them. Where the compilation author adds no written expression but
rather lets the facts speak for themselves, the expressive element is more
elusive. The only conceivable expression is the manner in which the
compiler has selected and arranged the facts. Thus, if the selection and
arrangement are original, these elements of the work are eligible for
copyright protection. No matter how original the format, however, the
facts themselves do not become original through association.
This inevitably means that the copyright in a factual compilation is
thin. Notwithstanding a valid copyright, a subsequent compiler remains
free to use the facts contained in another’s publication to aid in preparing a
competing work, so long as the competing work does not feature the same
selection and arrangement.
It may seem unfair that much of the fruit of the compiler’s labor may
be used by others without compensation. As Justice Brennan has correctly
observed, however, this is not “some unforeseen byproduct of a statutory
scheme.” Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S.
539, 589 (1985) (dissenting opinion). It is, rather, “the essence of
copyright,” and a constitutional requirement. The primary objective of
copyright is not to reward the labor of authors, but “to promote the
Progress of Science and useful Arts.” Art. I, §8, cl. 8. To this end,
copyright assures authors the right to their original expression, but
encourages others to build freely upon the ideas and information conveyed
by a work. This principle, known as the idea/expression or fact/expression
dichotomy, applies to all works of authorship. As applied to a factual
compilation, assuming the absence of original written expression, only the
compiler’s selection and arrangement may be protected; the raw facts may
be copied at will. This result is neither unfair nor unfortunate. It is the
means by which copyright advances the progress of science and art.
In enacting the Copyright Act of 1976, 17 U.S.C. §101 et seq.,
Congress [reaffirmed the view that copyright law protects only original
works rather than the “sweat of the brow” by dropping] reference to “all
the writings of an author” and replac[ing] it with the phrase “original
works of authorship.” 17 U.S.C. §102(a). . . . [The 1976 Copyright Act
made clear] that compilations [are] not copyrightable per se. . . . The
definition of “compilation” is found in §101 of the 1976 Act. It defines a
“compilation” in the copyright sense as “a work formed by the collection
and assembling of preexisting materials or of data that are selected,
coordinated, or arranged in such a way that the resulting work as a whole
constitutes an original work of authorship” (emphasis added).

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 The purpose of the statutory definition is to emphasize that collections
of facts are not copyrightable per se. [A] compilation, like any other work,
is copyrightable only if it satisfies the originality requirement (“an original
work of authorship”). Although §102 states plainly that the originality
requirement applies to all works, the point was emphasized with regard to
compilations to ensure that courts would not repeat the mistake of the
[courts that had protected the “sweat of the brow” in the absence of
originality].
In summary, the 1976 revisions to the Copyright Act leave no doubt
that originality, not “sweat of the brow,” is the touchstone of copyright
protection in directories and other fact-based works. . . . The revisions
explain with painstaking clarity that copyright requires originality,
§102(a); that facts are never original, §102(b); that the copyright in a
compilation does not extend to the facts it contains, §103(b); and that a
compilation is copyrightable only to the extent that it features an original
selection, coordination, or arrangement, §101.
The question is whether . . . Feist, by taking 1,309 names, towns, and
telephone numbers from Rural’s white pages, cop[ied] anything that was
“original” to Rural[.] Certainly, the raw data does not satisfy the
originality requirement. Rather, these bits of information are
uncopyrightable facts.
The question that remains is whether Rural selected, coordinated, or
arranged these uncopyrightable facts in an original way. The selection,
coordination, and arrangement of Rural’s white pages do not satisfy the
minimum constitutional standards for copyright protection. In preparing its
white pages, Rural simply takes the data provided by its subscribers and
lists it alphabetically by surname. The end product is a garden-variety
white pages directory, devoid of even the slightest trace of creativity.
Rural’s selection of listings could not be more obvious: It publishes the
most basic information — name, town, and telephone number — about
each person who applies to it for telephone service. This is “selection” of a
sort, but it lacks the modicum of creativity necessary to transform mere
selection into copyrightable expression. Rural expended sufficient effort to
make the white pages directory useful, but insufficient creativity to make it
original.
Nor can Rural claim originality in its coordination and arrangement of
facts. The white pages do nothing more than list Rural’s subscribers in
alphabetical order. This arrangement may, technically speaking, owe its
origin to Rural [b]ut there is nothing remotely creative about arranging
names alphabetically in a white pages directory. It is not only unoriginal, it
is practically inevitable. This time-honored tradition does not possess the

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minimal creative spark required by the Copyright Act and the Constitution.
We conclude that the names, towns, and telephone numbers copied by
Feist were not original to Rural and therefore were not protected by the
copyright in Rural’s combined white and yellow pages directory. . . .
Because Rural’s white pages lack the requisite originality, Feist’s use of
the listings cannot constitute infringement. This decision should not be
construed as demeaning Rural’s efforts in compiling its directory, but
rather as making clear that copyright rewards originality, not effort. As this
Court noted more than a century ago, “ ‘great praise may be due to the
plaintiffs for their industry and enterprise in publishing this paper, yet the
law does not contemplate their being rewarded in this way.’ ” Baker v.
Selden, 101 U.S. 99, 105 (1880).

Notes and Questions

1. Infringement and contributory infringement. A person is liable
for infringing a copyright when she “violates any of the exclusive rights of
the copyright owner as provided by sections 106 through 121.” See 17
U.S.C. §501(a). A person can be liable for contributory infringement
when “with the knowledge of the infringing activity [by others, she]
induces, causes, or materially contributes” to it. Gershwin Publishing
Corp. v. Columbia Artists Management, 443 F.2d 1159, 1162 (2d Cir.
1971). When video cassette recorders (VCRs) first became available to
home consumers in the 1970s, movie studios feared they would lead to
widespread copyright piracy. Two studios sued Sony, a manufacturer of
VCRs, alleging that Sony was liable for the infringing activities of VCR
users. The Supreme Court held that a device maker is not liable for
contributory infringement where its product is “capable of substantial non-
infringing uses.” Sony Corp. v. Universal City Studios, 464 U.S. 417, 442
(1984). Because the VCR is capable of substantial noninfringing uses, the
Court reasoned, Sony was not liable just because some people put its
product to infringing uses. See id. In Metro-Goldwyn Mayer Studios, Inc.
v. Grokster, Ltd., 545 U.S. 913 (2005), the Court considered a lawsuit by a
group of copyright owners (including movie studios, recording companies,
songwriters, and others) against Grokster, Inc. and StreamCast Networks,
Inc., distributors of software products that allowed computer users to share
electronic files (including copyrighted content) through networks in which
users’ computers communicate directly with one another. A unanimous
Supreme Court held that, even though such peer-to-peer file-sharing
software might be capable of substantial noninfringing uses, the device
makers could not take advantage of the Court’s holding in Sony since they

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distributed their products with the purpose of affirmatively promoting
infringing uses. The Court pointed to numerous statements by Grokster
and StreamCast in marketing materials suggestive of an intent to facilitate
the sharing of copyrighted content. Would the holding in Grokster apply to
a company marketing a similar product that did not make such statements?
Are web sites, such as YouTube, that permit users to post and share
their own content, liable for contributory infringement if users post
infringing content? In 1998, Congress enacted the Digital Millennium
Copyright Act (DMCA) that aimed to curb copyright infringement over the
Internet. Title II of the DMCA (separately titled the Online Copyright
Infringement Liability Limitation Act (OCILLA)), included a series of safe
harbors insulating on-line service providers, storage providers, and
location tools (such as search engines) from liability for users’ copyright
infringement. See 17 U.S.C. §512(a)-(d). The statute imposes a complex
system of criteria for determining who is covered by the safe harbors, with
web sites that serve as mere passive conduits of user content enjoying
protection, provided they do not know of the infringement and are
sufficiently responsive when notified of the presence of infringing content
on their servers. The precise dimensions of these safe harbors, however,
are a matter of continuing litigation. See Capitol Records, LLC v. Vimeo,
LLC, 826 F.3d 78 (2d Cir. 2016); UMG Recordings v. Shelter Capital
Partners LLC, 718 F.3d 1006 (9th Cir. 2013); Columbia Pictures Industry,
Inc. v. Fung, 710 F.3d 1020 (9th Cir. 2013); Viacom International, Inc. v.
YouTube, 676 F.3d 19 (2d Cir. 2012).

CONTEXT

Copyright lasts for a long time. It was not always this way. As recently as
1976, copyright lasted only 28 years, with an option to renew the copyright for
an additional 28 years if the creator took the affirmative step of registering for
the extension. Consider the example of the famous “Happy Birthday” song.
Rights to the song, which was written in the late nineteenth century by sisters
Patty and Mildred Hill, passed through various entities over the years, ending
up in the hands of Warner Music Group in 1998. Warner has aggressively
policed its copyright in the song, demanding significant licensing fees for the
rights to use of the song in films and on television. The result was that, while
the song has long been ubiquitous in public life, it was far less frequently sung
on the big or small screen. For many years, Warner collected at least $2 million
a year in licensing fees for the song. See Bernard Vaughan, “Happy Birthday to
You” Belongs to Us All, Lawsuit Says, Reuters, June 13, 2013. Warner Music’s
entitlement to the song has not gone unchallenged, however. In a recent article,

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 Professor Robert Brauneis said he could find no evidence of an actual
copyright for the lyrics of “Happy Birthday to You” sung to the usual tune. See
Robert Brauneis, Copyright and the World’s Most Popular Song, 56 J.
Copyright Socy. of the U.S.A. 335 (2009). In 2014, Warner’s rights became the
subject of a legal challenge brought by a singer/songwriter, Rupa Marya. In
2015, a federal trial court granted Marya summary judgment. See Marya v.
Warner/Chappell Music, Inc., 131 F. Supp. 3d 975 (M.D. Cal. 2015). The
parties subsequently settled the case, with Warner agreeing to pay millions of
dollars to compensate former licensees. Why do you think it took so long for
someone to mount a lawsuit challenging Warner’s entitlement to licensing
fees?

2. Copying in the digital age. One of the core exclusive rights

protected by copyright law is the right “to reproduce the copyrighted work
in copies.” See 17 U.S.C. §106. Section 101 defines “copies” as “material
objects . . . in which a work is fixed by any method now known or later
developed” and it defines “fixed” as a form that is “sufficiently permanent
or stable to permit it to be perceived, reproduced, or otherwise
communicated for a period of more than a transitory duration.” In the age
of cassette tapes and paper books, a copy was easy enough to recognize.
But what about today, when music and literature are frequently consumed
in digital form? What does it mean to make a copy of a digital music file?
What if, every time you play the song on your computer, the computer
copies the digital file from your hard drive into the computer’s working
memory? Is that file in the working memory a copy of the song? See MAI
Systems Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993)
(transferring program from a computer’s hard drive to its RAM, where it
becomes perceptible to users until the computer is turned off, creates a
copy of the program within the meaning of 17 U.S.C. §101); but see
Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008)
(reading MAI Systems narrowly and holding that the transfer of a digital
video file into a “buffer” where it was only present for a fleeting period of
time did not create a copy within the meaning of §101); CoStar Group,
Inc. v. LoopNet, Inc., 373 F.3d 544 (4th Cir. 2004) (transitory copies made
by conduits of information, such as Internet service providers, are not
copies).
3. Copyfraud and orphan works. Copyright’s long duration and
automatic application to qualifying works generate a number of problems.
Assertions of copyright over long-existing works have at least prima facie
credibility. And yet the expense of determining the facts of the matter —

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or the statutory damages imposed for simply ignoring what turns out to be
a meritorious demand — can easily exceed the price demanded by the
person asserting the copyright. This mix of costs and benefits creates the
potential for what Jason Mazzone has dubbed “copyfraud,” the bad faith or
fraudulent assertion of copyright in order to extract unmerited licensing
fees. See Jason Mazzone, Copyfraud and Other Abuses of Intellectual
Property Law (2011).
A second problem arises from the fact that most works subject to
copyright protection do not enjoy much commercial success. Since most
works generate almost no revenue for their owners, most owners have no
interest in policing their works’ use by others. And yet those works remain
subject to (automatic) copyright protection. Tracking down the owner of
the copyright many years after the work’s creation can be a difficult task,
particularly after the original creator has died and the copyright has passed
to the creator’s heirs, who may not even be aware that they own the
copyright. But using the work in certain ways without the current
copyright owner’s express permission could subject the user to significant
inconvenience, not to mention costly statutory penalties, should an
unhappy owner eventually surface. The existence of orphan works (works
that are subject to copyright but lack an easily identifiable owner) has been
an obstacle to efforts to build comprehensive digital libraries, such as
Google’s plan to create a text-searchable database of millions of books.
After Google announced its plans, a group of authors and publishers sued
Google and several libraries participating in Google’s digitization project,
alleging that the creation of repositories of digital copies of books
currently covered by copyright violates the rights of copyright owners,
including the owners of orphan works. In late 2013, the district court
concluded that Google’s digitization was a transformative “fair use” and
granted Google’s motion for summary judgment. In doing so it noted that
Google’s project was likely to enhance the value of the copyrighted works
included in the database. See Authors Guild, Inc. v. Google Inc., 954 F.
Supp. 2d 282 (S.D.N.Y. 2013), aff’d 804 F.3d 202 (2d Cir. 2015).

§4.2 Fair Use

Suntrust Bank v. Houghton Mifflin Co.

268 F.3d 1257 (11th Cir. 2001)

STANLEY F. BIRCH, JR., Circuit Judge:
In this opinion, we decide whether publication of The Wind Done Gone

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(“TWDG”), a fictional work admittedly based on Margaret Mitchell’s
Gone with the Wind (“GWTW”), should be enjoined from publication
based on alleged copyright violations. The district court granted a
preliminary injunction against publication of TWDG. . . . We vacate the
injunction and remand for consideration of the remaining claims.

I. Background
SunTrust is the trustee of the Mitchell Trust, which holds the copyright
in GWTW. Since its publication in 1936, GWTW has become one of the
best-selling books in the world, second in sales only to the Bible. The
Mitchell Trust has actively managed the copyright, authorizing derivative
works and a variety of commercial items. It has entered into a contract
authorizing, under specified conditions, a second sequel to GWTW to be
published by St. Martin’s Press. The Mitchell Trust maintains the
copyright in all of the derivative works as well.
Alice Randall, the author of TWDG, persuasively claims that her novel
is a critique of GWTW’s depiction of slavery and the Civil-War era
American South. To this end, she appropriated the characters, plot and
major scenes from GWTW into the first half of TWDG.
After discovering the similarities between the books, SunTrust asked
Houghton Mifflin to refrain from publication or distribution of TWDG, but
Houghton Mifflin refused the request. Subsequently, SunTrust filed an
action alleging copyright infringement, violation of the Lanham Act, and
deceptive trade practices, and immediately filed a motion for a temporary
restraining order and a preliminary injunction.

II. Discussion
Our primary focus at this stage of the case is on the appropriateness of
the injunctive relief granted by the district court. In our analysis, we must
evaluate the merits of SunTrust’s copyright infringement claim, including
Houghton Mifflin’s affirmative defense of fair use. As we assess the fair-
use defense, we examine to what extent a critic may use a work to
communicate her criticism of the work without infringing the copyright in
that work. To approach these issues in the proper framework, we should
initially review the history of the Constitution’s Copyright Clause and
understand its relationship to the First Amendment.

A. History and Development of the Copyright Clause

The Copyright Clause finds its roots in England, where, in 1710, the
Statute of Anne “was designed to destroy the booksellers’ monopoly of the

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book trade and to prevent its recurrence.” L. Ray Patterson, Understanding
the Copyright Clause, 47 J. Copyright Soc’y USA 365, 379 (2000). This
Parliamentary statute assigned copyright in books to authors, added a
requirement that only a new work could be copyrighted, and limited the
duration, which had been perpetual, to two fourteen-year terms. It is clear
that the goal of the Statute of Anne was to encourage creativity and ensure
that the public would have free access to information by putting an end to
“the continued use of copyright as a device of censorship.” Patterson at
379. The Framers of the U.S. Constitution relied on this statute when
drafting the Copyright Clause of our Constitution, which reads, “The
Congress shall have Power . . . to promote the Progress of Science . . . by
securing for limited Times to Authors . . . the exclusive Right to their
respective Writings. . . .” U.S. Const. art. 1, §8, cl. 8. Congress directly
transferred the principles from the Statute of Anne into the copyright law
of the United States in 1783, first through a recommendation to the states
to enact similar copyright laws, and then in 1790, with the passage of the
first American federal copyright statute.
The Copyright Clause was intended “to be the engine of free
expression.” Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S.
539, 558 (1985). To that end, copyright laws have been enacted to achieve
the three main goals: the promotion of learning, the protection of the
public domain, and the granting of an exclusive right to the author.

1. Promotion of Learning
In the United States, copyright has always been used to promote
learning by guarding against censorship. Throughout the nineteenth
century, the copyright in literature was limited to the right “to publish and
vend books.” Patterson, at 383. The term “copy” was interpreted literally;
an author had the right only to prevent others from copying and selling her
particular literary work. This limited right ensured that a maximum
number of new works would be created and published. It was not until the
1909 Act, which codified the concept of a derivative work, that an author’s
right to protect his original work against imitation was established.
As a further protection of the public interest, until 1976, statutory
copyright law required that a work be published before an author was
entitled to a copyright in that work. Therefore, in order to have the sole
right of publication for the statutory period, the author was first required to
make the work available to the public. In 1976, copyright was extended to
include any work “fixed in any tangible medium of expression” in order to
adapt the law to technological advances. Copyright Act of 1976, 17 U.S.C.

309
§102(a). Thus, the publication requirement was removed, but the fair use
right was codified to maintain the constitutionally mandated balance to
ensure that the public has access to knowledge.
The Copyright Act promotes public access to knowledge because it
provides an economic incentive for authors to publish books and
disseminate ideas to the public. Without the limited monopoly, authors
would have little economic incentive to create and publish their work.
Therefore, by providing this incentive, the copyright law promotes the
public access to new ideas and concepts.

2. Protection of the Public Domain

The second goal of the Copyright Clause is to ensure that works enter
the public domain after an author’s rights, exclusive, but limited, have
expired. Parallel to the patent regime, the limited time period of the
copyright serves the dual purpose of ensuring that the work will enter the
public domain and ensuring that the author has received “a fair return for
[her] labors.” Harper & Row, 471 U.S. at 5463. This limited grant “is
intended to motivate the creative activity of authors . . . by the provision of
a special reward, and to allow the public access to the products of their
genius after the limited period of exclusive control has expired.” Sony
Corp. of America v. Univ. City Studios, Inc., 464 U.S. 417, 429 (1984).
The public is protected in two ways: the grant of a copyright encourages
authors to create new works, . . . and the limitation ensures that the works
will eventually enter the public domain, which protects the public’s right
of access and use.

3. Exclusive Rights of the Author

Finally, the Copyright Clause grants the author limited exclusive rights
in order to encourage the creation of original works. Before our copyright
jurisprudence developed, there were two separate theories of copyright in
England — the natural law copyright, which was the right of first
publication, and the statutory copyright, which was the right of continued
publication. The natural law copyright, which is not a part of our system,
implied an ownership in the work itself, and thus was preferred by the
booksellers and publishers striving to maintain their monopoly over
literature as well as by the Crown to silence “seditious” writings. Even
after passage of the Statute of Anne, the publishers and booksellers
resisted the loss of their monopoly in the courts for more than sixty years.
Finally, in 1774, the House of Lords ruled that the natural law copyright,
that is, the ownership of the work itself, expires upon publication of the

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book, when the statutory copyright attaches.
This bifurcated system was carried over into our copyright law. As of
the 1909 Act, an author had “state common law protection [that] persisted
until the moment of general publication.” Estate of Martin Luther King, Jr.
v. CBS, Inc., 194 F.3d 1211, 1214 (11th Cir. 1999). After the work was
published, the author was entitled to federal statutory copyright protection
if she had complied with certain federal requirements (i.e. publication with
notice). If not, the work was released into the public domain. The system
illustrates that the author’s ownership is in the copyright, and not in the
work itself, for if the author had an ownership interest in the work itself,
she would not lose that right if she published the book without complying
with federal statutory copyright requirements. Compliance with the
copyright law results in the guarantee of copyright to the author for a
limited time, but the author never owns the work itself.
This has an important impact on modern interpretation of copyright, as
it emphasizes the distinction between ownership of the work, which an
author does not possess, and ownership of the copyright, which an author
enjoys for a limited time. In a society oriented toward property ownership,
it is not surprising to find many that erroneously equate the work with the
copyright in the work and conclude that if one owns the copyright, they
must also own the work.

B. The Union of Copyright and the First Amendment

The Copyright Clause and the First Amendment,2 while intuitively in
conflict, were drafted to work together to prevent censorship; copyright
laws were enacted in part to prevent private censorship and the First
Amendment was enacted to prevent public censorship. There are
“conflicting interests that must be accommodated in drawing a definitional
balance” between the Copyright Clause and the First Amendment. 1
Melville B. Nimmer & David Nimmer, Nimmer on Copyright §1.10[B][1]
(2001). In establishing this balance “on the copyright side, economic
encouragement for creators must be preserved and the privacy of
unpublished works recognized. Freedom of speech[, on the other hand,]
requires the preservation of a meaningful public or democratic dialogue, as
well as the uses of speech as a safety valve against violent acts, and as an
end in itself.” Id.
In copyright law, the balance between the First Amendment and
copyright is preserved, in part, by the idea/expression dichotomy and the
doctrine of fair use.

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 1. The Idea/Expression Dichotomy
Copyright cannot protect an idea, only the expression of that idea. The
result is that “copyright assures authors the right to their original
expression, but encourages others to build freely upon the ideas and
information conveyed by the work.” Feist Publications, Inc. v. Rural Tel.
Serv. Co., 499 U.S. 340, 349-350 (1991). It is partly through this
idea/expression dichotomy that copyright law embodies the First
Amendment’s underlying goal of encouraging open debate and the free
exchange of ideas. Holding an infringer liable in copyright for copying the
expression of another author’s ideas does not impede First Amendment
goals because the public purpose has been served — the public already has
access to the idea or the concepts. A new author may use or discuss the
idea, but must do so using her own original expression.

2. Fair Use
First Amendment privileges are also preserved through the doctrine of
fair use.3 Until codification of the fair-use doctrine in the 1976 Act, fair
use was a judge-made right developed to preserve the constitutionality of
copyright legislation by protecting First Amendment values. Had fair use
not been recognized as a right under the 1976 Act, the statutory
abandonment of publication as a condition of copyright that had existed
for over 200 years would have jeopardized the constitutionality of the new
Act because there would be no statutory guarantee that new ideas, or new
expressions of old ideas, would be accessible to the public. Included in the
definition of fair use are “purposes such as criticism, comment, news
reporting, teaching . . . , scholarship, or research.” §107. The exceptions
carved out for these purposes are at the heart of fair use’s protection of the
First Amendment, as they allow later authors to use a previous author’s
copyright to introduce new ideas or concepts to the public. Therefore,
within the limits of the fair-use test, any use of a copyright is permitted to
fulfill one of the important purposes listed in the statute.
Because of the First Amendment principles built into copyright law
through the idea/expression dichotomy and the doctrine of fair use, courts
often need not entertain related First Amendment arguments in a copyright
case.
The case before us calls for an analysis of whether a preliminary
injunction was properly granted against an alleged infringer who, relying
largely on the doctrine of fair use, made use of another’s copyright for
comment and criticism. As discussed herein, copyright does not immunize
a work from comment and criticism. Therefore, the narrower question in

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this case is to what extent a critic may use the protected elements of an
original work of authorship to communicate her criticism without
infringing the copyright in that work. As will be discussed below, this
becomes essentially an analysis of the fair use factors. As we turn to the
analysis required in this case, we must remain cognizant of the First
Amendment protections interwoven into copyright law.

C. Appropriateness of Injunctive Relief

SunTrust is not entitled to relief in the form of a preliminary injunction
unless it has proved each of the following four elements: “(1) a substantial
likelihood of success on the merits, (2) a substantial threat of irreparable
injury if the injunction were not granted, (3) that the threatened injury to
the plaintiff outweighs the harm an injunction may cause the defendant,
and (4) that granting the injunction would not disserve the public interest.”
Am. Red Cross v. Palm Beach Blood Bank, Inc., 143 F.3d 1407, 1410
(11th Cir. 1998).

1. Substantial Likelihood of Success on the Merits

a. Prima Facie Copyright Infringement

The first step in evaluating the likelihood that SunTrust will succeed
on merits is to determine whether it has established the prima facie
elements of a copyright infringement claim: (1) that SunTrust owns a valid
copyright in GWTW and (2) that Randall copied original elements of
GWTW in TWDG.
The first element, SunTrust’s ownership of a valid copyright in
GWTW, is not disputed. Houghton Mifflin does assert, however, that
SunTrust did not establish the second element of infringement, that
TWDG appropriates copyright-protected expression from GWTW. In
order to prove copying, SunTrust was required to show a “substantial
similarity” between the two works such that “an average lay observer
would recognize the alleged copy as having been appropriated from the
copyrighted work.” Not all copying of a work is actionable, however, for .
. . “no author may copyright facts or ideas. The copyright is limited to
those aspects of the work-termed ‘expression’ that display the stamp of the
author’s originality.” Harper & Row, 471 U.S. at 547. Thus, we are
concerned with substantial similarities between TWDG and GWTW only
to the extent that they involve the copying of original, protected
expression.
There is no bright line that separates the protectable expression from

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the nonprotectable idea in a work of fiction. . . . At one end of the
spectrum, scenes a faire — the stock scenes and hackneyed character types
that “naturally flow from a common theme” — are considered “ideas,” and
therefore are not copyrightable. But as plots become more intricately
detailed and characters become more idiosyncratic, they at some point
cross the line into “expression” and are protected by copyright.
Our own review of the two works reveals substantial use of GWTW.
TWDG appropriates numerous characters, settings, and plot twists from
GWTW. For example, Scarlett O’Hara, Rhett Butler, Bonnie Butler,
Melanie Wilkes, Ashley Wilkes, Gerald O’Hara, Ellen O’Hara, Mammy,
Pork, Dilcey, Prissy, Belle Watling, Carreen O’Hara, Stuart and Brenton
Tarleton, Jeems, Philippe, and Aunt Pittypat, all characters in GWTW,
appear in TWDG. Many of these characters are renamed in TWDG:
Scarlett becomes “Other,” Rhett Butler becomes “R.B.,” Pork becomes
“Garlic,” Prissy becomes “Miss Priss,” Philippe becomes “Feleepe,” Aunt
Pittypat becomes “Aunt Pattypit,” etc. In several instances, Randall
renamed characters using Mitchell’s descriptions of those characters in
GWTW: Ashley becomes “Dreamy Gentleman,” Melanie becomes “Mealy
Mouth,” Gerald becomes “Planter.” The fictional settings from GWTW
receive a similarly transparent renaming in TWDG: Tara becomes “Tata,”
Twelve Oaks Plantation becomes “Twelve Slaves Strong as Trees.”
TWDG copies, often in wholesale fashion, the descriptions and histories of
these fictional characters and places from GWTW, as well as their
relationships and interactions with one another. TWDG appropriates or
otherwise explicitly references many aspects of GWTW’s plot as well,
such as the scenes in which Scarlett kills a Union soldier and the scene in
which Rhett stays in the room with his dead daughter Bonnie, burning
candles. After carefully comparing the two works, we agree with the
district court that, particularly in its first half, TWDG is largely “an
encapsulation of [GWTW] [that] exploits its copyrighted characters, story
lines, and settings as the palette for the new story.”

b. Fair Use
Randall’s appropriation of elements of GWTW in TWDG may
nevertheless not constitute infringement of SunTrust’s copyright if the
taking is protected as a “fair use.” The codification of the fair-use doctrine
in the Copyright Act provides:

Notwithstanding the provisions of sections 106 and 106A, the fair use of a
copyrighted work . . . for purposes such as criticism, comment, news
reporting, teaching (including multiple copies for classroom use),

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 scholarship, or research, is not an infringement of copyright. In determining
whether the use made of a work in any particular case is a fair use the factors
to be considered shall include —
(1) the purpose and character of the use, including whether such use is of a
commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the
copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the
copyrighted work.

§107. In assessing whether a use of a copyright is a fair use under the

statute, we bear in mind that the examples of possible fair uses given are
illustrative rather than exclusive, and that “all [of the four factors] are to be
explored, and the results weighed together in light of the purposes of
copyright.” Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 557-578
(1994). [O]ne of the most important purposes to consider is the free flow
of ideas — particularly criticism and commentary.
Houghton Mifflin argues that TWDG is entitled to fair-use protection
as a parody of GWTW. In Campbell, the Supreme Court held that parody,
although not specifically listed in §107, is a form of comment and
criticism that may constitute a fair use of the copyrighted work being
parodied. Parody, which is directed toward a particular literary or artistic
work, is distinguishable from satire, which more broadly addresses the
institutions and mores of a slice of society. Thus, “parody needs to mimic
an original to make its point, and so has some claim to use the creation of
its victim’s . . . imagination, whereas satire can stand on its own two feet
and so requires justification for the very act of borrowing.”
Before considering a claimed fair-use defense based on parody,
however, the Supreme Court has required that we ensure that “a parodic
character may reasonably be perceived” in the allegedly infringing work.
The Supreme Court’s definition of parody in Campbell, however, is
somewhat vague. On the one hand, the Court suggests that the aim of
parody is “comic effect or ridicule,” but it then proceeds to discuss parody
more expansively in terms of its “commentary” on the original. In light of
the admonition in Campbell that courts should not judge the quality of the
work or the success of the attempted humor in discerning its parodic
character, we choose to take the broader view. For purposes of our fair-use
analysis, we will treat a work as a parody if its aim is to comment upon or
criticize a prior work by appropriating elements of the original in creating
a new artistic, as opposed to scholarly or journalistic, work. Under this

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definition, the parodic character of TWDG is clear. TWDG is not a general
commentary upon the Civil-War-era American South, but a specific
criticism of and rejoinder to the depiction of slavery and the relationships
between blacks and whites in GWTW. The fact that Randall chose to
convey her criticisms of GWTW through a work of fiction, which she
contends is a more powerful vehicle for her message than a scholarly
article, does not, in and of itself, deprive TWDG of fair-use protection. We
therefore proceed to an analysis of the four fair-use factors.

i. Purpose and Character of the Work

The first factor in the fair-use analysis, the purpose and character of the
allegedly infringing work, has several facets. The first is whether TWDG
serves a commercial purpose or nonprofit educational purpose. §107(1).
Despite whatever educational function TWDG may be able to lay claim to,
it is undoubtedly a commercial product. . . . The fact that TWDG was
published for profit is the first factor weighing against a finding of fair use.
However, TWDG’s for-profit status is strongly overshadowed and
outweighed in view of its highly transformative use of GWTC’s
copyrighted elements. “The more transformative the new work, the less
will be the significance of other factors, like commercialism, that may
weigh against a finding of fair use.” Campbell, 510 U.S. at 579. “The goal
of copyright, to promote science and the arts, is generally furthered by the
creation of transformative works.” Id. A work’s transformative value is of
special import in the realm of parody, since a parody’s aim is, by nature, to
transform an earlier work.
The second factor in the “purpose and character” analysis relevant to
this case is to what extent TWDG’s use of copyrighted elements of
GWTW can be said to be “transformative.” The inquiry is “whether the
new work merely supersedes the objects of the original creation, or instead
adds something new, with a further purpose or different character, altering
the first with new expression, meaning, or message.” Campbell, 510 U.S.
at 579. The issue of transformation is a double-edged sword in this case.
On the one hand, the story of Cynara and her perception of the events in
TWDG certainly adds new “expression, meaning, [and] message” to
GWTW. From another perspective, however, TWDG’s success as a pure
work of fiction depends heavily on copyrighted elements appropriated
from GWTW to carry its own plot forward.
However, as noted above, TWDG is more than an abstract, pure
fictional work. It is principally and purposefully a critical statement that
seeks to rebut and destroy the perspective, judgments, and mythology of
GWTW. Randall’s literary goal is to explode the romantic, idealized

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portrait of the antebellum South during and after the Civil War. In the
world of GWTW, the white characters comprise a noble aristocracy whose
idyllic existence is upset only by the intrusion of Yankee soldiers, and,
eventually, by the liberation of the black slaves. Through her characters as
well as through direct narration, Mitchell describes how both blacks and
whites were purportedly better off in the days of slavery: “The more I see
of emancipation the more criminal I think it is. It’s just ruined the darkies,”
says Scarlett O’Hara. Free blacks are described as “creatures of small
intelligence . . . like monkeys or small children turned loose among
treasured objects whose value is beyond their comprehension, they ran
wild — either from perverse pleasure in destruction or simply because of
their ignorance.” Blacks elected to the legislature are described as
spending “most of their time eating goobers and easing their unaccustomed
feet into and out of new shoes.”
As the district court noted: “The earlier work is a third-person epic,
whereas the new work is told in the first-person as an intimate diary of the
life of Cynara. Thematically, the new work provides a different viewpoint
of the antebellum world.” While told from a different perspective, more
critically, the story is transformed into a very different tale, albeit much
more abbreviated. Cynara’s very language is a departure from Mitchell’s
original prose; she acts as the voice of Randall’s inversion of GWTW. She
is the vehicle of parody; she is its means — not its end. It is clear within
the first fifty pages of Cynara’s fictional diary that Randall’s work flips
GWTW’s traditional race roles, portrays powerful whites as stupid or
feckless, and generally sets out to demystify GWTW and strip the
romanticism from Mitchell’s specific account of this period of our history.
Approximately the last half of TWDG tells a completely new story that,
although involving characters based on GWTW characters, features plot
elements found nowhere within the covers of GWTW.
Where Randall refers directly to Mitchell’s plot and characters, she
does so in service of her general attack on GWTW. In GWTW, Scarlett
O’Hara often expresses disgust with and condescension towards blacks; in
TWDG, Other, Scarlett’s counterpart, is herself of mixed descent. In
GWTW, Ashley Wilkes is the initial object of Scarlett’s affection; in
TWDG, he is homosexual. In GWTW, Rhett Butler does not consort with
black female characters and is portrayed as the captain of his own destiny.
In TWDG, Cynara ends her affair with Rhett’s counterpart, R., to begin a
relationship with a black Congressman; R. ends up a washed out former
cad. In TWDG, nearly every black character is given some redeeming
quality — whether depth, wit, cunning, beauty, strength, or courage — that
their GWTW analogues lacked.

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 In light of this, we find it difficult to conclude that Randall simply tried
to “avoid the drudgery in working up something fresh.” Campbell, 510
U.S. at 580. It is hard to imagine how Randall could have specifically
criticized GWTW without depending heavily upon copyrighted elements
of that book. A parody is a work that seeks to comment upon or criticize
another work by appropriating elements of the original. “Parody needs to
mimic an original to make its point, and so has some claim to use the
creation of its victim’s (or collective victims’) imagination.” Campbell,
510 U.S. at 580-581. Thus, Randall has fully employed those conscripted
elements from GWTW to make war against it. Her work, TWDG, reflects
transformative value because it “can provide social benefit, by shedding
light on an earlier work, and, in the process, creating a new one.”
Campbell, 510 U.S. at 579.
While “transformative use is not absolutely necessary for a finding of
fair use, . . . the more transformative the new work, the less will be the
significance of other factors.” Id. In the case of TWDG, consideration of
this factor certainly militates in favor of a finding of fair use, and, informs
our analysis of the other factors, particularly the fourth, as discussed
below.

ii. Nature of the Copyrighted Work

The second factor, the nature of the copyrighted work, recognizes that
there is a hierarchy of copyright protection in which original, creative
works are afforded greater protection than derivative works or factual
compilations. GWTW is undoubtedly entitled to the greatest degree of
protection as an original work of fiction. This factor is given little weight
in parody cases, however, “since parodies almost invariably copy publicly
known, expressive works.” Campbell, 510 U.S. at 586.

iii. Amount and Substantiality of the Portion Used

The third fair-use factor is “the amount and substantiality of the
portion used in relation to the copyrighted work as a whole.” §107(3). It is
at this point that parody presents uniquely difficult problems for courts in
the fair-use context, for “parody’s humor, or in any event its comment,
necessarily springs from recognizable allusion to its object through
distorted imitation. . . . When parody takes aim at a particular original
work, the parody must be able to ‘conjure up’ at least enough of that
original to make the object of its critical wit recognizable.” Campbell, 510
U.S. at 588. Once enough has been taken to “conjure up” the original in
the minds of the readership, any further taking must specifically serve the
new work’s parodic aims.

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 GWTW is one of the most famous, popular, and enduring American
novels ever written. Given the fame of the work and its primary characters,
SunTrust argues that very little reference is required to conjure up GWTW.
As we have already indicated in our discussion of substantial similarity,
TWDG appropriates a substantial portion of the protected elements of
GWTW. Houghton Mifflin argues that TWDG takes nothing from GWTW
that does not serve a parodic purpose, the crux of the argument being that a
large number of characters had to be taken from GWTW because each
represents a different ideal or stereotype that requires commentary, and
that the work as a whole could not be adequately commented upon without
revisiting substantial portions of the plot, including its most famous
scenes.
There are numerous instances in which TWDG appropriates elements
of GWTW and then transforms them for the purpose of commentary.
TWDG uses several of GWTW’s most famous lines, but vests them with a
completely new significance. For example, the final lines of GWTW,
“Tomorrow, I’ll think of some way to get him back. After all, tomorrow is
another day,” are transformed in TWDG into “For all those we love for
whom tomorrow will not be another day, we send the sweet prayer of
resting in peace.”
On the other hand, however, we are told that not all of TWDG’s
takings from GWTW are clearly justified as commentary. We have already
determined that TWDG is a parody, but not every parody is a fair use.
SunTrust contends that TWDG, at least at the margins, takes more of the
protected elements of GWTW than was necessary to serve a parodic
function.
For example, in a sworn declaration to the district court, Randall stated
that she needed to reference the scene from GWTW in which Jeems is
given to the Tarleton twins as a birthday present because she considers it
“perhaps the single most repellent paragraph in Margaret Mitchell’s novel:
a black child given to two white children as a birthday present . . . as if the
buying and selling of children thus had no moral significance.” Clearly,
such a scene is fair game for criticism. However, in this instance, SunTrust
argues that TWDG goes beyond commentary on the occurrence itself,
appropriating such nonrelevant details as the fact that the twins had red
hair and were killed at Gettysburg. There are several other scenes from
GWTW, such as the incident in which Scarlett threw a vase at Ashley
while Rhett was hidden on the couch, that are retold or alluded to without
serving any apparent parodic purpose. Similar taking of the descriptions of
characters and the minor details of their histories and interactions that
arguably are not essential to the parodic purpose of the work recur

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throughout. . . . But we must determine whether the use is fair. In doing so,
we are reminded that literary relevance is a highly subjective analysis ill-
suited for judicial inquiry. Thus we are presented with conflicting and
opposing arguments relative to the amount taken and whether it was too
much or a necessary amount.
The Supreme Court in Campbell did not require that parodists take the
bare minimum amount of copyright material necessary to conjure up the
original work. Parody “must be able to conjure up at least enough of [the]
original to make the object of its critical wit recognizable.” Campbell, 510
U.S. at 588.
A use does not necessarily become infringing the moment it does more
than simply conjure up another work. Rather, “once enough has been taken
to assure identification, how much more is reasonable will depend, say [1]
on the extent to which the [work’s] overriding purpose and character is to
parody the original or, in contrast [2] the likelihood that the parody may
serve as a market substitute for the original.” Campbell, 510 U.S. at 588.
As to the first point, it is manifest that TWDG’s raison d’etre is to parody
GWTW. The second point indicates that any material we suspect is
“extraneous” to the parody is unlawful only if it negatively effects the
potential market for or value of the original copyright. Based upon this
record at this juncture, we cannot determine in any conclusive way
whether “ ‘the quantity and value of the materials used’ are reasonable in
relation to the purpose of the copying.” Id. at 586.

iv. Effect on the Market Value of the Original

The final fair-use factor requires us to consider the effect that the
publication of TWDG will have on the market for or value of SunTrust’s
copyright in GWTW, including the potential harm it may cause to the
market for derivative works based on GWTW. . . . “The only harm to
derivatives that need concern us . . . is the harm of market substitution. The
fact that a parody may impair the market for derivative uses by the very
effectiveness of its critical commentary is no more relevant under
copyright that the like threat to the original market.” Campbell, 510 U.S. at
593.
As for the potential market, SunTrust proffered evidence in the district
court of the value of its copyright in GWTW. Several derivative works of
GWTW have been authorized, including the famous movie of the same
name and a book titled Scarlett: The Sequel. GWTW and the derivative
works based upon it have generated millions of dollars for the copyright
holders. SunTrust has negotiated an agreement with

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 CONTEXT

In the Woody Allen film Midnight in Paris, the main character, Gil Pender,
quotes a line from William Faulkner’s book, Requiem for a Nun. In the book,
the attorney Gavin Stevens at one point says: “The past is never dead. In fact
it’s not even past.” In the film, Pender says: “The past is not dead. Actually, it’s
not even past. You know who said that? Faulkner, and he was right. I met him
too. I ran into him at a dinner party.” The owner of the Faulkner literary rights
sued Sony Picture Classics, the studio behind Midnight in Paris, for copyright
infringement. The federal district court granted Sony’s motion to dismiss,
holding that the film’s quotation constituted fair use. “How Hollywood’s
flattering and artful use of literary allusion is a point of litigation, not
celebration, is beyond this court’s comprehension. The court, in its appreciation
for both William Faulkner as well as the homage paid him in Woody Allen’s
film, is more likely to suppose that the film indeed helped the plaintiff and the
market value of Requiem if it had any effect at all.” Faulkner Literary Rights,
LLC v. Sony Pictures Classics, 953 F. Supp. 2d 701 (N.D. Miss. 2013).

St. Martin’s Press permitting it to produce another derivative work based

on GWTW, a privilege for which St. Martin’s paid “well into seven
figures.” Part of this agreement was that SunTrust would not authorize any
other derivative works prior to the publication of St. Martin’s book.
An examination of the record, with its limited development as to
relevant market harm due to the preliminary injunction status of the case,
discloses that SunTrust focuses on the value of GWTW and its derivatives,
but fails to address and offers little evidence or argument to demonstrate
that TWDG would supplant demand for SunTrust’s licensed derivatives.
However, the Supreme Court and other appeals courts have made clear
that, particularly in cases of parody, evidence of harm to the potential
market for or value of the original copyright is crucial to a fair use
determination. . . .
In contrast, the evidence proffered in support of the fair use defense
specifically and correctly focused on market substitution and demonstrates
why Randall’s book is unlikely to displace sales of GWTW. Thus, we
conclude, based on the current record, that SunTrust’s evidence falls far
short of establishing that TWDG or others like it will act as market
substitutes for GWTW or will significantly harm its derivatives.
Accordingly, the fourth fair use factor weighs in favor of TWDG.

c. Summary of the Merits

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 We reject the district court’s conclusion that SunTrust has established
its likelihood of success on the merits. To the contrary, based upon our
analysis of the fair use factors we find, at this juncture, TWDG is entitled
to a fair-use defense.

Problems
1. Research articles. In American Geophysical Union v. Texaco Inc.,
60 F.3d 913 (2d Cir. 1994), the Second Circuit found that Texaco had not
engaged in a fair use when it photocopied articles in scientific journals for
use by its 400 to 500 research scientists. The scientists would review
copies of journals and arrange to photocopy whole articles to be placed in
file drawers until needed. The court determined that, although scholars
generally are not paid for the articles they produce in scholarly journals,
the journals themselves lost income they would have garnered had Texaco
negotiated licensing fees with the journal publishers or purchased enough
copies for use by its scientists who wanted to archive copies. Although the
court considered Texaco’s for-profit nature to be relevant, it did not view
this fact alone to be determinative of the outcome of the case. Universities
and law schools routinely arrange to photocopy or scan scholarly articles
for both archival and current use by faculty members. Does this constitute
a fair use?
2. Space shifting. If you have a music file on your computer’s hard
drive, downloading it to your iPhone requires making a new digital file for
storage on the device. This is plainly making a copy of the song within the
meaning of the Copyright Act. Is such space shifting copyright
infringement or protected fair use? See Recording Industry Associates of
America v. Diamond Multimedia System, 180 F.3d 1072, 1079 (9th Cir.
1999) (finding space shifting among a single user’s multiple devices to
constitute a form of copying that is protected as fair use).
3. Fan fiction. Many fans of particular books, movies, or television
shows like to write stories involving the characters and/or the worlds
created by the authors of those works. Some of these works are parodies,
but many are more a form of homage to the original work. This work is
sometimes published on the Internet and shared among amateurs. A major
center of this work is http://www.fanfiction.net, a web site that publishes
this fiction and, like so many web sites, contains advertisements for
products. Copyright extends to “derivative works,” 17 U.S.C. §§103, 106,
which are defined as “work based upon one or more preexisting works,
such as a translation, musical arrangement, dramatization, fictionalization,
motion picture version, sound recording, art reproduction, abridgment,

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condensation, or any other form in which a work may be recast,
transformed, or adapted,” id. §101. Fan fiction may be a derivative work
and may well violate the Copyright Act. But see Litchfield v. Spielberg,
736 F.2d 1352 (9th Cir. 1984) (a work is not derivative unless the amount
of copying from the original is substantial). Some authors vigilantly police
such uses while others are happy to have their fans imagine new stories
involving the worlds and characters they created.
a. When these derivative works are published on a web site like
Fanfiction.net, do they constitute a fair use of the copyrighted work?
See Aaron Schwabach, The Harry Potter Lexicon and the World of
Fandom: Fan Fiction, Outsider Works, and Copyright, 70 U. Pitt. L.
Rev. 387 (2009) (exploring this question); Rebecca Tushnet, Using
Law and Identity to Script Cultural Production: Legal Fictions:
Copyright, Fan Fiction, and a New Common Law, 17 Loy. L.A. Ent.
L.J. 651 (1997) (arguing that fan fiction should be legally protected as
fair use).
b. In 2000, a fan of the Harry Potter series, Steven Vander Ark,
created an on-line encyclopedia about the Harry Potter books, called
The Harry Potter Lexicon, http://www.hp-lexicon.org. Although J.K.
Rowling was a fan of the web site, when Vander Ark made plans to
publish the encyclopedia in book form, as an A-to-Z guide to the
creatures, characters, objects, events, and places that exist in the world
of Harry Potter, she sued to enjoin the publication because she was
planning to publish her own encyclopedia about the series. The court
found the encyclopedia to violate Rowling’s copyright because it
copied so much of the original works. “Most of the Lexicon’s 2,437
entries contain direct quotations or paraphrases, plot details, or
summaries of scenes from one or more of the Harry Potter novels.
Although hundreds of pages or thousands of fictional facts may amount
to only a fraction of the seven-book series, this quantum of copying is
sufficient to support a finding of substantial similarity where the copied
expression is entirely the product of the original author’s imagination
and creation.” Warner Bros. Entertainment, Inc. & J.K. Rowling v.
RDR Books, 575 F. Supp. 2d 513, 535 (S.D.N.Y. 2008). The court
found the encyclopedia not to be a derivative work because it does not
“retell the story of Harry Potter, but instead gives the copyrighted
material another purpose,” and thus does not “represent the original
works of authorship.” Id. at 539. However, the court found the
encyclopedia not to constitute a fair use. Although the “purpose and
character” of the encyclopedia were “transformative,” the “commercial
nature” of the intended publication counted heavily against finding a

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 fair use, and it often copied more than necessary for its informative
purposes and thus “appropriates too much of Rowling’s creative work
for its purposes as a reference guide.” Id. at 553. Did the court decide
the case correctly? When is an encyclopedia like the Harry Potter
Lexicon a legitimate “fair use”?

§4.3 Moral Rights

In many European countries, artists have the right to prevent the
mutilation or alteration of their artworks after the works have been sold.
This legally protected interest is called moral right, or droit moral.
Artworks protected by moral rights are effectively encumbered by a
covenant, which “runs with” the artwork when it is sold, creating an
obligation on the part of the owner not to mutilate the artwork so as to
destroy the artist’s vision. Such rights are generally inalienable; they
interpret the interest in preserving the artist’s vision as a collective good
that benefits the community and that cannot be traded away.
Until recently, moral rights were not recognized in the United States.
See, e.g., Vargas v. Esquire, 164 F.2d 522 (7th Cir. 1947); Crimi v.
Rutger’s Presbyterian Church, 89 N.Y.S.2d 813 (Sup. Ct. 1949). In 1979,
however, California passed the California Art Preservation Act, Cal. Civ.
Code §§987-989, which permits injunctive relief, damages, and attorneys’
fees for intentional or threatened mutilation or alteration of an artist’s
work. A bill was passed in New York in 1983 prohibiting alterations that
would harm the artist’s reputation. New York Artists’ Authorship Rights
Act, N.Y. Arts & Cult. Aff. Law §14.03(1). Moral rights legislation has
been passed in at least nine states. See, e.g., Conn. Gen. Stat. §42-116;
Mass. Gen. Laws ch. 231, §85S; Pa. Stat. tit. 73, §§2101-2110; R.I. Gen.
Laws §5-62-2(e); 3 M. Nimmer & D. Nimmer, Nimmer on Copyright
§8D.02[A] (2011).
In 1990, Congress passed the Visual Artists Rights Act (VARA), 17
U.S.C. §§101, 106a, and 113, granting living artists rights to protect
“works of visual art” unless the works are “made for hire,” id. §101(B), or
are “applied art,” meaning “ornamentation or decoration that is affixed to
otherwise utilitarian objects,” Carter v. Helmsley-Spear, Inc., 71 F.3d 77,
84-85 (2d Cir. 1995). The statute grants the artist the right to prevent “any
intentional distortion, mutilation, or other modification of [the] work
which would be prejudicial to his or her honor or reputation,” 17 U.S.C.
§106a(a)(3)(A), and to prevent any intentional or grossly negligent
destruction of a work of “recognized stature,” id. §106a(a)(3)(B). Owners
of buildings can remove works of art, such as murals, floor mosaics, or

324
architectural components, if they can do so without destroying or
mutilating them, so long as they make a good faith effort to notify the
artist. Id. §113(d)(2). The artist’s right to prevent mutilation of the work
that is part of a building is lost if the artist fails to remove the work or pay
for its removal. If the artwork cannot be removed without destroying it, the
artist who has not waived her right to do so may have the power to prevent
destruction of the work and therefore may have the extraordinary power to
control whether the building is renovated, destroyed, or redeveloped.
Building developers ordinarily require artists to waive their rights to
prevent destruction of the work when they are embedded in a building
such that they cannot be removed without destroying them. Note that only
works of “recognized stature” are protected from destruction. Cf. Phillips
v. Pembroke Real Estate, Inc., 288 F. Supp. 2d 89 (D. Mass. 2003)
(VARA does not prevent removal of sculptures from a public park, even
though they were specifically designed for that terrain and location, and
the artist thought separation from the setting would destroy the artistic
integrity of the sculptures); Phillips v. Pembroke Real Estate, Inc., 819
N.E.2d 579 (Mass. 2004) (same result under Massachusetts Art
Preservation Act, Mass. Gen. Laws ch. 231, §85S).

§5 PATENT LAW
Patent law grants inventors of processes, machines, and compositions
of matter a monopoly over their inventions for up to 20 years. 35 U.S.C.
§101 et seq. Unlike copyrights, which exist from the moment a work is
first fixed into a tangible form, patents are granted by a government
agency, the Patent and Trademark Office (PTO), after application by the
inventor. The patent will be granted only if five requirements are met: (1)
the subject matter of the invention must be patentable, i.e., a “machine,”
method of “manufacture,” or “composition of matter,” 35 U.S.C. §101;
and the invention must be (2) novel, 35 U.S.C. §102; (3) nonobvious, 35
U.S.C. §103; (4) useful, 35 U.S.C §101; and (5) fully and particularly
described, 35 U.S.C. §112.

§5.1 Patentability

Association for Molecular Pathology v.

Myriad Genetics, Inc.

133 S. Ct. 2107 (2013)

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Justice CLARENCE THOMAS delivered the opinion of the Court.

I.
The human genome consists of approximately 22,000 genes packed
into 23 pairs of chromosomes. Each gene is encoded as DNA, which takes
the shape of the familiar “double helix” that Doctors James Watson and
Francis Crick first described in 1953. Each “cross-bar” in the DNA helix
consists of two chemically joined nucleotides. The possible nucleotides are
adenine (A), thymine (T), cytosine (C), and guanine (G), each of which
binds naturally with another nucleotide: A pairs with T; C pairs with G.
The nucleotide cross-bars are chemically connected to a sugar-phosphate
backbone that forms the outside framework of the DNA helix. Sequences
of DNA nucleotides contain the information necessary to create strings of
amino acids, which in turn are used in the body to build proteins. Only
some DNA nucleotides, however, code for amino acids; these nucleotides
are known as “exons.” Nucleotides that do not code for amino acids, in
contrast, are known as “introns.”
Creation of proteins from DNA involves two principal steps, known as
transcription and translation. In transcription, the bonds between DNA
nucleotides separate, and the DNA helix unwinds into two single strands.
A single strand is used as a template to create a complementary ribonucleic
acid (RNA) strand. The nucleotides on the DNA strand pair naturally with
their counterparts, with the exception that RNA uses the nucleotide base
uracil (U) instead of thymine (T). Transcription results in a single strand
RNA molecule, known as pre-RNA, whose nucleotides form an inverse
image of the DNA strand from which it was created. Pre-RNA still
contains nucleotides corresponding to both the exons and introns in the
DNA molecule. The pre-RNA is then naturally “spliced” by the physical
removal of the introns. The resulting product is a strand of RNA that
contains nucleotides corresponding only to the exons from the original
DNA strand. The exons-only strand is known as messenger RNA
(mRNA), which creates amino acids through translation. In translation,
cellular structures known as ribosomes read each set of three nucleotides,
known as codons, in the mRNA. Each codon either tells the ribosomes
which of the 20 possible amino acids to synthesize or provides a stop
signal that ends amino acid production.
DNA’s informational sequences and the processes that create mRNA,
amino acids, and proteins occur naturally within cells. Scientists can,
however, extract DNA from cells using well known laboratory methods.
These methods allow scientists to isolate specific segments of DNA — for

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instance, a particular gene or part of a gene — which can then be further
studied, manipulated, or used. It is also possible to create DNA
synthetically through processes similarly well known in the field of
genetics. One such method begins with an mRNA molecule and uses the
natural bonding properties of nucleotides to create a new, synthetic DNA
molecule. The result is the inverse of the mRNA’s inverse image of the
original DNA, with one important distinction: Because the natural creation
of mRNA involves splicing that removes introns, the synthetic DNA
created from mRNA also contains only the exon sequences. This synthetic
DNA created in the laboratory from mRNA is known as complementary
DNA (cDNA).
This case involves patents filed by Myriad. Myriad discovered the
precise location and sequence of what are now known as the BRCA1 and
BRCA2 genes. Mutations in these genes can dramatically increase an
individual’s risk of developing breast and ovarian cancer. The average
American woman has a 12- to 13-percent risk of developing breast cancer,
but for women with certain genetic mutations, the risk can range between
50 and 80 percent for breast cancer and between 20 and 50 percent for
ovarian cancer. Before Myriad’s discovery of the BRCA1 and BRCA2
genes, scientists knew that heredity played a role in establishing a
woman’s risk of developing breast and ovarian cancer, but they did not
know which genes were associated with those cancers.
Myriad identified the exact location of the BRCA1 and BRCA2 genes
on chromosomes 17 and 13. That information, in turn, enabled Myriad to
develop medical tests that are useful for detecting mutations in a patient’s
BRCA1 and BRCA2 genes and thereby assessing whether the patient has
an increased risk of cancer.
Once it found the location and sequence of the BRCA1 and BRCA2
genes, Myriad sought and obtained a number of patents. Myriad’s patents
would, if valid, give it the exclusive right to isolate an individual’s BRCA1
and BRCA2 genes (or any strand of 15 or more nucleotides within the
genes) by breaking the covalent bonds that connect the DNA to the rest of
the individual’s genome. The patents would also give Myriad the exclusive
right to synthetically create BRCA cDNA. In Myriad’s view, manipulating
BRCA DNA in either of these fashions triggers its “right to exclude others
from making” its patented composition of matter under the Patent Act. 35
U.S.C. §154(a)(1); see also §271(a) (“[W]hoever without authority makes .
. . any patented invention . . . infringes the patent”).
But isolation is necessary to conduct genetic testing, and Myriad was
not the only entity to offer BRCA testing after it discovered the genes. The
University of Pennsylvania’s Genetic Diagnostic Laboratory (GDL) and

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others provided genetic testing services to women. Petitioner Dr. Harry
Ostrer, then a researcher at New York University School of Medicine,
routinely sent his patients’ DNA samples to GDL for testing. After
learning of GDL’s testing and Ostrer’s activities, Myriad sent letters to
them asserting that the genetic testing infringed Myriad’s patents. In
response, GDL agreed to stop testing and informed Ostrer that it would no
longer accept patient samples. Myriad also filed patent infringement suits
against other entities that performed BRCA testing, resulting in settlements
in which the defendants agreed to cease all allegedly infringing activity.
Myriad, thus, solidified its position as the only entity providing BRCA
testing.
Some years later, petitioner Ostrer, along with medical patients,
advocacy groups, and other doctors, filed this lawsuit seeking a declaration
that Myriad’s patents are invalid under 35 U.S.C. §101.

II
Section 101 of the Patent Act provides:

“Whoever invents or discovers any new and useful . . . composition of

matter, or any new and useful improvement thereof, may obtain a patent
therefor, subject to the conditions and requirements of this title.” 35 U.S.C.
§101.

We have “long held that this provision contains an important implicit

exception[:] Laws of nature, natural phenomena, and abstract ideas are not
patentable.” Mayo, 566 U.S., at ___ (slip op., at 1) (internal quotation
marks and brackets omitted). Rather, “ ‘they are the basic tools of
scientific and technological work’ ” that lie beyond the domain of patent
protection. Id., at ___ (slip op., at 2). As the Court has explained, without
this exception, there would be considerable danger that the grant of patents
would “tie up” the use of such tools and thereby “inhibit future innovation
premised upon them.” Id., at ___ (slip op., at 17). This would be at odds
with the very point of patents, which exist to promote creation. Diamond v.
Chakrabarty, 447 U.S. 303 (1980) (Products of nature are not created, and
“ ‘manifestations . . . of nature [are] free to all men and reserved
exclusively to none’ ”).
The rule against patents on naturally occurring things is not without
limits, however, for “all inventions at some level embody, use, reflect, rest
upon, or apply laws of nature, natural phenomena, or abstract ideas,” and
“too broad an interpretation of this exclusionary principle could eviscerate
patent law.” 566 U.S., at ___ (slip op., at 2). As we have recognized

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before, patent protection strikes a delicate balance between creating
“incentives that lead to creation, invention, and discovery” and
“imped[ing] the flow of information that might permit, indeed spur,
invention.” Id., at ___ (slip op., at 23). We must apply this well-established
standard to determine whether Myriad’s patents claim any “new and useful
. . . composition of matter,” §101, or instead claim naturally occurring
phenomena.
It is undisputed that Myriad did not create or alter any of the genetic
information encoded in the BRCA1 and BRCA2 genes. The location and
order of the nucleotides existed in nature before Myriad found them. Nor
did Myriad create or alter the genetic structure of DNA. Instead, Myriad’s
principal contribution was uncovering the precise location and genetic
sequence of the BRCA1 and BRCA2 genes within chromosomes 17 and
13. The question is whether this renders the genes patentable.
Myriad recognizes that our decision in Chakrabarty is central to this
inquiry. In Chakrabarty, scientists added four plasmids to a bacterium,
which enabled it to break down various components of crude oil. The
Court held that the modified bacterium was patentable. It explained that
the patent claim was “not to a hitherto unknown natural phenomenon, but
to a nonnaturally occurring manufacture or composition of matter — a
product of human ingenuity ‘having a distinctive name, character [and]
use.’ ” The Chakrabarty bacterium was new “with markedly different
characteristics from any found in nature,” 447 U.S., at 310, due to the
additional plasmids and resultant “capacity for degrading oil.” In this case,
by contrast, Myriad did not create anything. To be sure, it found an
important and useful gene, but separating that gene from its surrounding
genetic material is not an act of invention.
Groundbreaking, innovative, or even brilliant discovery does not by
itself satisfy the §101 inquiry. In Funk Brothers Seed Co. v. Kalo
Inoculant Co., 333 U.S. 127 (1948), this Court considered a composition
patent that claimed a mixture of naturally occurring strains of bacteria that
helped leguminous plants take nitrogen from the air and fix it in the soil.
Id., at 128-129. The ability of the bacteria to fix nitrogen was well known,
and farmers commonly “inoculated” their crops with them to improve soil
nitrogen levels. But farmers could not use the same inoculant for all crops,
both because plants use different bacteria and because certain bacteria
inhibit each other. Id., at 129-130. Upon learning that several nitrogen-
fixing bacteria did not inhibit each other, however, the patent applicant
combined them into a single inoculant and obtained a patent. Id., at 130.
The Court held that the composition was not patent eligible because the
patent holder did not alter the bacteria in any way. Id., at 132 (“There is no

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way in which we could call [the bacteria mixture a product of invention]
unless we borrowed invention from the discovery of the natural principle
itself”). His patent claim thus fell squarely within the law of nature
exception. So do Myriad’s. Myriad found the location of the BRCA1 and
BRCA2 genes, but that discovery, by itself, does not render the BRCA
genes “new . . . composition[s] of matter,” §101, that are patent eligible.
Many of Myriad’s patent descriptions simply detail the “iterative
process” of discovery by which Myriad narrowed the possible locations for
the gene sequences that it sought.4 Myriad seeks to import these extensive
research efforts into the §101 patent-eligibility inquiry. But extensive
effort alone is insufficient to satisfy the demands of §101.
Nor are Myriad’s claims saved by the fact that isolating DNA from the
human genome severs chemical bonds and thereby creates a nonnaturally
occurring molecule. Myriad’s claims are simply not expressed in terms of
chemical composition, nor do they rely in any way on the chemical
changes that result from the isolation of a particular section of DNA.
Instead, the claims understandably focus on the genetic information
encoded in the BRCA1 and BRCA2 genes. If the patents depended upon
the creation of a unique molecule, then a would-be infringer could
arguably avoid at least Myriad’s patent claims on entire genes by isolating
a DNA sequence that included both the BRCA1 or BRCA2 gene and one
additional nucleotide pair. Such a molecule would not be chemically
identical to the molecule “invented” by Myriad. But Myriad obviously
would resist that outcome because its claim is concerned primarily with
the information contained in the genetic sequence, not with the specific
chemical composition of a particular molecule.

CONTEXT

Immediately after the Supreme Court’s decision in Myriad, several companies

announced plans to offer their own BRCA tests at prices substantially lower
than Myriad’s $4,040. One company, Gene by Gene, Ltd., offered tests priced
at $995. Myriad responded by suing the companies under patent claims that
had not been at issue in the Supreme Court litigation. Some commentators saw
the move as a delaying tactic that might allow Myriad to enjoy a few more
months of monopoly pricing.

cDNA does not present the same obstacles to patentability as naturally

occurring, isolated DNA segments. As already explained, creation of a
cDNA sequence from mRNA results in an exons-only molecule that is not

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naturally occurring. Petitioners concede that cDNA differs from natural
DNA in that “the non-coding regions have been removed.” They
nevertheless argue that cDNA is not patent eligible because “[t]he
nucleotide sequence of cDNA is dictated by nature, not by the lab
technician.” That may be so, but the lab technician unquestionably creates
something new when cDNA is made. cDNA retains the naturally occurring
exons of DNA, but it is distinct from the DNA from which it was derived.
As a result, cDNA is not a “product of nature” and is patent eligible under
§101, except insofar as very short series of DNA may have no intervening
introns to remove when creating cDNA. In that situation, a short strand of
cDNA may be indistinguishable from natural DNA.5

III
It is important to note what is not implicated by this decision. First,
there are no method claims before this Court. Had Myriad created an
innovative method of manipulating genes while searching for the BRCA1
and BRCA2 genes, it could possibly have sought a method patent. But the
processes used by Myriad to isolate DNA were well understood by
geneticists at the time of Myriad’s patents “were well understood, widely
used, and fairly uniform insofar as any scientist engaged in the search for a
gene would likely have utilized a similar approach,” 702 F. Supp. 2d, at
202-203, and are not at issue in this case.
Similarly, this case does not involve patents on new applications of
knowledge about the BRCA1 and BRCA2 genes. Judge Bryson aptly
noted that, “[a]s the first party with knowledge of the [BRCA1 and
BRCA2] sequences, Myriad was in an excellent position to claim
applications of that knowledge. Many of its unchallenged claims are
limited to such applications.” 689 F.3d, at 1349.
Nor do we consider the patentability of DNA in which the order of the
naturally occurring nucleotides has been altered. Scientific alteration of the
genetic code presents a different inquiry, and we express no opinion about
the application of §101 to such endeavors. We merely hold that genes and
the information they encode are not patent eligible under §101 simply
because they have been isolated from the surrounding genetic material.

Juicy Whip, Inc. v. Orange Bang, Inc.

185 F.3d 1364 (Fed. Cir. 1999)

WILLIAM C. BRYSON, Circuit Judge.
The district court in this case held a patent invalid for lack of utility on

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the ground that the patented invention was designed to deceive customers
by imitating another product and thereby increasing sales of a particular
good. We reverse and remand.

I
Juicy Whip, Inc., is the assignee of United States Patent No. 5,575,405,
which is entitled “Post-Mix Beverage Dispenser With an Associated
Simulated Display of Beverage.” A “post-mix” beverage dispenser stores
beverage syrup concentrate and water in separate locations until the
beverage is ready to be dispensed. The syrup and water are mixed together
immediately before the beverage is dispensed, which is usually after the
consumer requests the beverage. In contrast, in a “pre-mix” beverage
dispenser, the syrup concentrate and water are pre-mixed and the beverage
is stored in a display reservoir bowl until it is ready to be dispensed. The
display bowl is said to stimulate impulse buying by providing the
consumer with a visual beverage display. A pre-mix display bowl,
however, has a limited capacity and is subject to contamination by
bacteria. It therefore must be refilled and cleaned frequently.
The invention claimed in the ’405 patent is a post-mix beverage
dispenser that is designed to look like a pre-mix beverage dispenser. The
claims require the post-mix dispenser to have a transparent bowl that is
filled with a fluid that simulates the appearance of the dispensed beverage
and is resistant to bacterial growth. The claims also require that the
dispenser create the visual impression that the bowl is the principal source
of the dispensed beverage, although in fact the beverage is mixed
immediately before it is dispensed, as in conventional post-mix dispensers.
Juicy Whip sued defendants Orange Bang, Inc., and Unique Beverage
Dispensers, Inc., (collectively, “Orange Bang”) in the United States
District Court for the Central District of California, alleging that they were
infringing the claims of the ’405 patent. Orange Bang moved for summary
judgment of invalidity, and the district court granted Orange Bang’s
motion on the ground that the invention lacked utility and thus was
unpatentable under 35 U.S.C. §101.

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 The court concluded that the invention lacked utility because its
purpose was to increase sales by deception, i.e., through imitation of
another product. The court explained that the purpose of the invention “is
to create an illusion, whereby customers believe that the fluid contained in
the bowl is the actual beverage that they are receiving, when of course it is
not.” Although the court acknowledged Juicy Whip’s argument that the
invention provides an accurate representation of the dispensed beverage
for the consumer’s benefit while eliminating the need for retailers to clean
their display bowls, the court concluded that those claimed reasons for the
patent’s utility “are not independent of its deceptive purpose, and are thus
insufficient to raise a disputed factual issue to present to a jury.” The court
further held that the invention lacked utility because it “improves the prior
art only to the extent that it increases the salability of beverages dispensed
from post-mix dispensers”; an invention lacks utility, the court stated, if it
confers no benefit to the public other than the opportunity for making a
product more salable. Finally, the court ruled that the invention lacked
utility because it “is merely an imitation of the pre-mix dispenser,” and
thus does not constitute a new and useful machine.

II
Section 101 of the Patent Act of 1952, 35 U.S.C. §101, provides that
“[w]hoever invents or discovers any new and useful process, machine,

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manufacture, or composition of matter, or any new and useful
improvement thereof,” may obtain a patent on the invention or discovery.
The threshold of utility is not high: An invention is “useful” under section
101 if it is capable of providing some identifiable benefit. See Brooktree
Corp. v. Advanced Micro Devices, Inc., 977 F.2d 1555, 1571 (Fed. Cir.
1992) (“To violate §101 the claimed device must be totally incapable of
achieving a useful result”); Fuller v. Berger, 120 F. 274, 275 (7th Cir.
1903) (test for utility is whether invention “is incapable of serving any
beneficial end”).
To be sure, since Justice Story’s opinion in Lowell v. Lewis, 15 F. Cas.
1018 (C.C.D. Mass. 1817), it has been stated that inventions that are
“injurious to the well-being, good policy, or sound morals of society” are
unpatentable. As examples of such inventions, Justice Story listed “a new
invention to poison people, or to promote debauchery, or to facilitate
private assassination.” Id. at 1019. Courts have continued to recite Justice
Story’s formulation, but the principle that inventions are invalid if they are
principally designed to serve immoral or illegal purposes has not been
applied broadly in recent years. For example, years ago courts invalidated
patents on gambling devices on the ground that they were immoral, but
that is no longer the law.
In holding the patent in this case invalid for lack of utility, the district
court relied on two Second Circuit cases dating from the early years of this
century, Rickard v. Du Bon, 103 F. 868 (2d Cir. 1900), and Scott &
Williams v. Aristo Hosiery Co., 7 F.2d 1003 (2d Cir. 1925). In the Rickard
case, the court held invalid a patent on a process for treating tobacco plants
to make their leaves appear spotted. At the time of the invention, according
to the court, cigar smokers considered cigars with spotted wrappers to be
of superior quality, and the invention was designed to make unspotted
tobacco leaves appear to be of the spotted — and thus more desirable —
type. The court noted that the invention did not promote the burning
quality of the leaf or improve its quality in any way; “the only effect, if not
the only object, of such treatment, is to spot the tobacco, and counterfeit
the leaf spotted by natural causes.” 103 F. at 869.
The Aristo Hosiery case concerned a patent claiming a seamless
stocking with a structure on the back of the stocking that imitated a
seamed stocking. The imitation was commercially useful because at the
time of the invention many consumers regarded seams in stockings as an
indication of higher quality. The court noted that the imitation seam did
not “change or improve the structure or the utility of the article,” and that
the record in the case justified the conclusion that true seamed stockings
were superior to the seamless stockings that were the subject of the patent.

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See Aristo Hosiery, 7 F.2d at 1004. “At best,” the court stated, “the
seamless stocking has imitation marks for the purposes of deception, and
the idea prevails that with such imitation the article is more salable.” Id.
That was not enough, the court concluded, to render the invention
patentable.
We decline to follow Rickard and Aristo Hosiery, as we do not regard
them as representing the correct view of the doctrine of utility under the
Patent Act of 1952. The fact that one product can be altered to make it
look like another is in itself a specific benefit sufficient to satisfy the
statutory requirement of utility.
It is not at all unusual for a product to be designed to appear to viewers
to be something it is not. For example, cubic zirconium is designed to
simulate a diamond, imitation gold leaf is designed to imitate real gold
leaf, synthetic fabrics are designed to simulate expensive natural fabrics,
and imitation leather is designed to look like real leather. In each case, the
invention of the product or process that makes such imitation possible has
“utility” within the meaning of the patent statute, and indeed there are
numerous patents directed toward making one product imitate another.
See, e.g., U.S. Pat. No. 5,762,968 (method for producing imitation grill
marks on food without using heat); U.S. Pat. No. 5,899,038 (laminated
flooring imitating wood); U.S. Pat. No. 5,571,545 (imitation hamburger).
Much of the value of such products resides in the fact that they appear to
be something they are not. Thus, in this case the claimed post-mix
dispenser meets the statutory requirement of utility by embodying the
features of a post-mix dispenser while imitating the visual appearance of a
pre-mix dispenser.
The fact that customers may believe they are receiving fluid directly
from the display tank does not deprive the invention of utility. Orange
Bang has not argued that it is unlawful to display a representation of the
beverage in the manner that fluid is displayed in the reservoir of the
invention, even though the fluid is not what the customer will actually
receive. Moreover, even if the use of a reservoir containing fluid that is not
dispensed is considered deceptive, that is not by itself sufficient to render
the invention unpatentable. The requirement of “utility” in patent law is
not a directive to the Patent and Trademark Office or the courts to serve as
arbiters of deceptive trade practices. Other agencies, such as the Federal
Trade Commission and the Food and Drug Administration, are assigned
the task of protecting consumers from fraud and deception in the sale of
food products.
Of course, Congress is free to declare particular types of inventions
unpatentable for a variety of reasons, including deceptiveness. Cf. 42

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U.S.C. §2181(a) (exempting from patent protection inventions useful
solely in connection with special nuclear material or atomic weapons).
Until such time as Congress does so, however, we find no basis in section
101 to hold that inventions can be ruled unpatentable for lack of utility
simply because they have the capacity to fool some members of the public.
The district court therefore erred in holding that the invention of the ’405
patent lacks utility because it deceives the public through imitation in a
manner that is designed to increase product sales.

Notes and Questions

1. Patents in living things. As the Court reaffirmed in Myriad, it is
possible to obtain a patent in living things, such as bacteria or plant
varieties. The key is that the organism not be naturally occurring. It must
instead be the product of human manipulation and satisfy the general
requirements of patentability. See Diamond v. Chakrabarty, 447 U.S. 303
(1980) (allowing a patent in genetically modified bacteria).
2. Natural phenomena, laws of nature, and abstract ideas. Why
should the question whether a substance (or organism) is naturally
occurring be decisive for the question of patentability? In addition to
naturally occurring substances (“natural phenomena”), abstract principles
and laws of nature are also not patentable, even when discovering them
requires the investment of substantial resources and effort. See Mayo
Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289
(2012). Does the distinction make sense for a Lockean theory of
intellectual property? A utilitarian theory? A Hegelian theory? Which
principles, if any, do these exclusions from patentability all share? In
Mayo, the Court invalidated a patent that claimed a method for measuring
certain metabolites in a patient’s bloodstream in order to determine the
appropriate dosage of certain drugs. See 132 S. Ct. at 1294-1296. The
Court held that the methods claimed under the patent were “well known in
the art” and that the process amounted to “nothing significantly more than
an instruction to doctors to apply the applicable laws when treating their
patients.” Id. at 1298. The Court has described its decision in Mayo as
setting out a two-step test for determining whether a claimed patent falls
within the “natural phenomenon, laws of nature, and abstract ideas”
exclusion. See Alice Corp. Pty. v. CLS Bank International, 134 S. Ct.
2347, 2355 (2014). In the first step, the Court “determine[s] whether the
claims at issue are directed to one of those patent-ineligible concepts.” Id.
If so, in step two, the Court asks, “What else is there in the claims before
us?” Id. This second step is, in the Court’s words, a search for an

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“inventive concept” that separates the claimed patent from the non-
patentable natural phenomenon, law of nature, or abstract idea. Id.
3. Deceptive patents. Are you convinced by the Federal Circuit’s
reasoning in Juicy Whip? If you were the lawyer for Orange Bang, how
would you distinguish the examples of cubic zirconium, imitation gold
leaf, and synthetic fabrics? Is the sole purpose of those products to fool
consumers? Might a consumer, informed of the nature of those products,
nonetheless have reasons for wanting to purchase them? Do the products
in Rickard and Aristo Hosiery have more in common with the Juicy Whip
machine in being aimed solely at fooling consumers? Is the shift away
from Justice Story’s moral approach to utility a salutary one? Is it the
proper role of the PTO to evaluate whether an invention promotes “sound
morals”? Is it a proper role for Congress?
4. Business methods. Until recently, it was not possible to patent a
“business method” because most business and financial innovations were
either considered not to be “novel” or to be unpatentable because they did
not involve physical processes. However, after the Federal Circuit decided
that business methods are patentable, State Street Bank & Trust Co. v.
Signature Financial Group, 149 F.3d 1368 (Fed. Cir. 1998), the Patent
Office has issued hundreds of patents covering methods of doing business.
What constitutes a “novel” and “nonobvious” business method is hard
to sort out. For example, in Amazon.com, Inc. v. Barnesandnoble.com,
Inc., 73 F. Supp. 2d 1228 (W.D. Wash. 1999), rev’d, 239 F.3d 1343 (Fed.
Cir. 2001), Amazon.com sued Barnesandnoble.com alleging infringement
of Amazon.com’s patent for a “one-click” method for placing purchase
orders over the Internet. This method allowed users to place personal
information with the company that it could access on later visits to allow
the buyer to complete a purchase by one computer mouse click on a “buy”
button. Defendant argued that the patent was invalid because the invention
of this method was neither novel nor nonobvious. The trial court granted
plaintiff a preliminary injunction ordering defendant to cease using a
similar one-click method on its web site without plaintiff’s consent. The
Ninth Circuit reversed, finding that several prior methods of Internet
purchasing did anticipate the one-click method, making it neither novel
nor nonobvious. The court therefore denied a preliminary injunction and
remanded the case to the trial court.
The difficulty of applying the criteria of patentability to business
methods, the vagueness of many business methods patents, and questions
about whether businesses really need the incentive of a patent in order to
generate innovative business models has led to a great deal of

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dissatisfaction with business methods patents. See, e.g., David S. Olson,
Taking the Utilitarian Basis for Patent Law Seriously, 82 Temp. L. Rev.
181, 227-236 (2009). In Bilski v. Kappos, 561 U.S. 593 (2010), the
Supreme Court considered an appeal from a patent applicant whom the
PTO had denied a patent for a method of hedging risk in the field of
commodities trading in energy markets. The PTO had rejected the
application based on the lack of patentable subject matter under §101 of
the Patent Act. The Federal Circuit heard the applicant’s appeal en banc
and affirmed the PTO’s rejection of the application. In its decision, the
Federal Circuit appeared to try to hem in the business methods patent
category by holding that a process would only be patentable if it (1) is tied
to a particular machine or apparatus, or (2) if it transforms a particular
article into a different state or thing. See In re Bilski, 545 F.3d 943, 959-
960 (Fed. Cir. 2008). The U.S. Supreme Court rejected the Federal
Circuit’s exclusive “machine-or-transformation” test, concluding that it
constituted an improper attempt to cabin the broad language defining the
subject matter scope of patentability under §101. “Congress took this
permissive approach to patent eligibility to ensure that ingenuity should
receive a liberal encouragement.” 561 U.S. at 601(internal quotation marks
omitted). Only the longstanding (though judicially created) prohibitions on
patenting “laws of nature, physical phenomena, and abstract ideas”
properly limit the broad reach of §101. See id. Nevertheless, the Court
affirmed the denial of the patent application, holding that it represented an
impermissible effort to patent the abstract idea of hedging. In a sweeping
and exhaustively researched opinion concurring in the judgment, Justice
Stevens recounted the history and policy of patent law and argued that
business methods should not be patentable at all. “The[] many costs of
business method patents not only may stifle innovation,” he argued, “but
they are also likely to stifle competition.” Id. at 656 (Stevens, J.,
concurring in the judgment).

§5.2 Patent Remedies

eBay Inc. v. MercExchange, L.L.C.

547 U.S. 388 (2006)

Justice CLARENCE THOMAS delivered the opinion of the Court.
Petitioner eBay operates a popular Internet Web site that allows private
sellers to list goods they wish to sell, either through an auction or at a fixed
price. Petitioner Half.com, now a wholly owned subsidiary of eBay,

338
operates a similar Web site. Respondent MercExchange, L.L.C., holds a
number of patents, including a business method patent for an electronic
market designed to facilitate the sale of goods between private individuals
by establishing a central authority to promote trust among participants. See
U.S. Patent No. 5,845,265. MercExchange sought to license its patent to
eBay and Half.com, as it had previously done with other companies, but
the parties failed to reach an agreement. MercExchange subsequently filed
a patent infringement suit against eBay and Half.com in the United States
District Court for the Eastern District of Virginia. A jury found that
MercExchange’s patent was valid, that eBay and Half.com had infringed
that patent, and that an award of damages was appropriate.
Following the jury verdict, the District Court denied MercExchange’s
motion for permanent injunctive relief. 275 F. Supp. 2d 695 (2003). The
Court of Appeals for the Federal Circuit reversed, applying its “general
rule that courts will issue permanent injunctions against patent
infringement absent exceptional circumstances.” 401 F.3d 1323, 1339
(2005). We granted certiorari to determine the appropriateness of this
general rule. 546 U.S. 1029 (2005).
According to well-established principles of equity, a plaintiff seeking a
permanent injunction must satisfy a four-factor test before a court may
grant such relief. A plaintiff must demonstrate: (1) that it has suffered an
irreparable injury; (2) that remedies available at law, such as monetary
damages, are inadequate to compensate for that injury; (3) that,
considering the balance of hardships between the plaintiff and defendant, a
remedy in equity is warranted; and (4) that the public interest would not be
disserved by a permanent injunction. See, e.g., Weinberger v. Romero-
Barcelo, 456 U.S. 305, 311-313 (1982); Amoco Production Co. v.
Gambell, 480 U.S. 531, 542 (1987). The decision to grant or deny
permanent injunctive relief is an act of equitable discretion by the district
court, reviewable on appeal for abuse of discretion. See, e.g., Romero-
Barcelo, 456 U.S., at 320.
These familiar principles apply with equal force to disputes arising
under the Patent Act. As this Court has long recognized, “a major
departure from the long tradition of equity practice should not be lightly
implied.” Id. Nothing in the Patent Act indicates that Congress intended
such a departure. To the contrary, the Patent Act expressly provides that
injunctions “may” issue “in accordance with the principles of equity.” 35
U.S.C. §283.
To be sure, the Patent Act also declares that “patents shall have the
attributes of personal property,” §261, including “the right to exclude
others from making, using, offering for sale, or selling the invention,”

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§154(a)(1). According to the Court of Appeals, this statutory right to
exclude alone justifies its general rule in favor of permanent injunctive
relief. 401 F.3d, at 1338. But the creation of a right is distinct from the
provision of remedies for violations of that right. Indeed, the Patent Act
itself indicates that patents shall have the attributes of personal property
“[s]ubject to the provisions of this title,” 35 U.S.C. §261, including,
presumably, the provision that injunctive relief “may” issue only “in
accordance with the principles of equity,” §283.
This approach is consistent with our treatment of injunctions under the
Copyright Act. Like a patent owner, a copyright holder possesses “the
right to exclude others from using his property.” Fox Film Corp. v. Doyal,
286 U.S. 123, 127 (1932); see also id. at 127-128 (“A copyright, like a
patent, is at once the equivalent given by the public for benefits bestowed
by the genius and meditations and skill of individuals and the incentive to
further efforts for the same important objects” (internal quotation marks
omitted)). Like the Patent Act, the Copyright Act provides that courts
“may” grant injunctive relief “on such terms as it may deem reasonable to
prevent or restrain infringement of a copyright.” 17 U.S.C. §502(a). And
as in our decision today, this Court has consistently rejected invitations to
replace traditional equitable considerations with a rule that an injunction
automatically follows a determination that a copyright has been infringed.
Neither the District Court nor the Court of Appeals below fairly
applied these traditional equitable principles in deciding respondent’s
motion for a permanent injunction. Although the District Court recited the
traditional four-factor test, 275 F. Supp. 2d, at 711, it appeared to adopt
certain expansive principles suggesting that injunctive relief could not
issue in a broad swath of cases. Most notably, it concluded that a
“plaintiff’s willingness to license its patents” and “its lack of commercial
activity in practicing the patents” would be sufficient to establish that the
patent holder would not suffer irreparable harm if an injunction did not
issue. Id., at 712. But traditional equitable principles do not permit such
broad classifications. The court’s categorical rule is also in tension with
Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S. 405, 422-
430 (1908), which rejected the contention that a court of equity has no
jurisdiction to grant injunctive relief to a patent holder who has
unreasonably declined to use the patent.
In reversing the District Court, the Court of Appeals departed in the
opposite direction from the four-factor test. The court articulated a
“general rule,” unique to patent disputes, “that a permanent injunction will
issue once infringement and validity have been adjudged.” 401 F.3d, at
1338. Just as the District Court erred in its categorical denial of injunctive

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relief, the Court of Appeals erred in its categorical grant of such relief.
Because we conclude that neither court below correctly applied the
traditional four-factor framework that governs the award of injunctive
relief, we vacate the judgment of the Court of Appeals, so that the District
Court may apply that framework in the first instance.

Chief Justice JOHN ROBERTS, with whom Justice ANTONIN SCALIA and
Justice RUTH BADER GINSBURG join, concurring.
I agree with the Court’s holding that “the decision whether to grant or
deny injunctive relief rests within the equitable discretion of the district
courts, and that such discretion must be exercised consistent with
traditional principles of equity, in patent disputes no less than in other
cases governed by such standards,” ante, and I join the opinion of the
Court. That opinion rightly rests on the proposition that “a major departure
from the long tradition of equity practice should not be lightly implied.”
Weinberger v. Romero-Barcelo, 456 U.S. 305, 320 (1982).
From at least the early 19th century, courts have granted injunctive
relief upon a finding of infringement in the vast majority of patent cases.
This “long tradition of equity practice” is not surprising, given the
difficulty of protecting a right to exclude through monetary remedies that
allow an infringer to use an invention against the patentee’s wishes — a
difficulty that often implicates the first two factors of the traditional four-
factor test. This historical practice, as the Court holds, does not entitle a
patentee to a permanent injunction or justify a general rule that such
injunctions should issue. At the same time, there is a difference between
exercising equitable discretion pursuant to the established four-factor test
and writing on an entirely clean slate. “Discretion is not whim, and
limiting discretion according to legal standards helps promote the basic
principle of justice that like cases should be decided alike.” Martin v.
Franklin Capital Corp., 546 U.S. 132, 139 (2005). When it comes to
discerning and applying those standards, in this area as others, “a page of
history is worth a volume of logic.” New York Trust Co. v. Eisner, 256
U.S. 345, 349 (1921) (opinion for the Court by Holmes, J.).

Justice ANTHONY KENNEDY, with whom Justice JOHN PAUL STEVENS,

Justice DAVID SOUTER, and Justice STEPHEN BREYER join, concurring.
The Court is correct, in my view, to hold that courts should apply the
well-established, four-factor test — without resort to categorical rules —
in deciding whether to grant injunctive relief in patent cases. The Chief
Justice is also correct that history may be instructive in applying this test.
The traditional practice of issuing injunctions against patent infringers,

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however, does not seem to rest on “the difficulty of protecting a right to
exclude through monetary remedies that allow an infringer to use an
invention against the patentee’s wishes.” Both the terms of the Patent Act
and the traditional view of injunctive relief accept that the existence of a
right to exclude does not dictate the remedy for a violation of that right. To
the extent earlier cases establish a pattern of granting an injunction against
patent infringers almost as a matter of course, this pattern simply illustrates
the result of the four-factor test in the contexts then prevalent. The lesson
of the historical practice, therefore, is most helpful and instructive when
the circumstances of a case bear substantial parallels to litigation the courts
have confronted before.
In cases now arising trial courts should bear in mind that in many
instances the nature of the patent being enforced and the economic
function of the patent holder present considerations quite unlike earlier
cases. An industry has developed in which firms use patents not as a basis
for producing and selling goods but, instead, primarily for obtaining
licensing fees. For these firms, an injunction, and the potentially serious
sanctions arising from its violation, can be employed as a bargaining tool
to charge exorbitant fees to companies that seek to buy licenses to practice
the patent. When the patented invention is but a small component of the
product the companies seek to produce and the threat of an injunction is
employed simply for undue leverage in negotiations, legal damages may
well be sufficient to compensate for the infringement and an injunction
may not serve the public interest. In addition injunctive relief may have
different consequences for the burgeoning number of patents over business
methods, which were not of much economic and legal significance in
earlier times. The potential vagueness and suspect validity of some of
these patents may affect the calculus under the four-factor test.
The equitable discretion over injunctions, granted by the Patent Act, is
well suited to allow courts to adapt to the rapid technological and legal
developments in the patent system.

Notes and Questions

1. Injunctions and property. Is there a connection between the value
(to owners) of the right to exclude and the presumptive availability of
injunctive relief? Does it matter what kind of property we are considering
(e.g., whether it is valuable to its owner primarily because of the income it
might generate or whether instead it has some noncommercial value to the
owner)? What was Chief Justice Roberts trying to accomplish with his
separate opinion?

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 2. Patent trolls. Justice Kennedy laments that “[a]n industry has
developed in which firms use patents not as a basis for producing and
selling goods but, instead, primarily for obtaining licensing fees.” Patent
trolls (also referred to somewhat more respectfully as “patent assertion
entities”) make money by purchasing patents, waiting for industries to
develop around the technology arguably covered by the patent, and then
approaching industry participants to demand licensing fees in exchange for
a promise not to sue for patent infringement. See Mark A. Lemley, Are
Universities Patent Trolls?, 18 Fordham Intell. Prop. Media & Ent. L.J.
611, 613 (2008). Justice Kennedy connects the rise of the patent assertion
industry with the easy availability of injunctive relief. How might the test
the Supreme Court articulated for injunctions in eBay alter the balance of
negotiating power between patent owners and potential infringers? See
Rebecca A. Hand, eBay v. MercExchange: Looking at the Cause and
Effect of a Shift in the Standard for Issuing Patent Injunctions, 25 Cardozo
Arts & Ent. L.J. 461 (2007).

§6 PUBLICITY RIGHTS
Martin Luther King, Jr. Center for Social Change v.
American Heritage Products

296 S.E.2d 697 (Ga. 1982)

HAROLD N. HILL, JR., Presiding Justice:
The plaintiffs are the Martin Luther King, Jr. Center for Social Change
(the Center),6 Coretta Scott King, as administratrix of Dr. King’s estate,
and Motown Record Corporation, the assignee of the rights to several of
Dr. King’s copyrighted speeches. Defendant James F. Bolen is the sole
proprietor of a business known as B & S Sales, which manufactures and
sells various plastic products as funeral accessories. Defendant James E.
Bolen, the son of James F. Bolen, developed the concept of marketing a
plastic bust of Dr. Martin Luther King, Jr., and formed a company, B & S
Enterprises, to sell the busts, which would be manufactured by B & S
Sales. B & S Enterprises was later incorporated under the name of
American Heritage Products, Inc.
Although Bolen sought the endorsement and participation of the
Martin Luther King, Jr. Center for Social Change, Inc., in the marketing of
the bust, the Center refused Bolen’s offer. Bolen pursued the idea,
nevertheless, hiring an artist to prepare a mold and an agent to handle the
promotion of the product. Defendant took out two half-page

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advertisements in the November and December 1980 issues of Ebony
magazine, which purported to offer the bust as “an exclusive memorial”
and “an opportunity to support the Martin Luther King, Jr. Center for
Social Change.” The advertisement stated that “a contribution from your
order goes to the King Center for Social Change.” Out of the $29.95
purchase price, defendant Bolen testified he set aside 3% or $.90, as a
contribution to the Center. The advertisement also offered “free” with the
purchase of the bust a booklet about the life of Dr. King entitled “A
Tribute to Dr. Martin Luther King, Jr.”
In addition to the two advertisements in Ebony, defendant published a
brochure or pamphlet which was inserted in 80,000 copies of newspapers
across the country. The brochure reiterated what was stated in the
magazine advertisements, and also contained photographs of Dr. King and
excerpts from his copyrighted speeches. The brochure promised that each
“memorial” (bust) is accompanied by a Certificate of Appreciation
“testifying that a contribution has been made to the Martin Luther King, Jr.
Center for Social Change.”
On November 21, 1980, and December 19, 1980, the plaintiffs
demanded that the Bolens cease and desist from further advertisements and
sales of the bust, and on December 31, 1980, the plaintiffs filed a
complaint in the United States District Court for the Northern District of
Georgia. . . . The motion for an injunction sought (1) an end to the use of
the Center’s name in advertising and marketing the busts, (2) restraint of
any further copyright infringement and (3) an end to the manufacture and
sale of the plastic busts. The defendants agreed to discontinue the use of
the Center’s name in further promotion. Therefore, the court granted this
part of the injunction. The district court found that the defendants had
infringed the King copyrights and enjoined all further use of the
copyrighted material.
In ruling on the third request for injunction, the court confronted the
plaintiffs’ claim that the manufacture and sale of the busts violated Dr.
King’s right of publicity which had passed to his heirs upon Dr. King’s
death. The defendants contended that no such right existed, and hence, an
injunction should not issue.
[T]he Eleventh Circuit Court of Appeals has certified the following
questions:

(1) Is the “right of publicity” recognized in Georgia as a right distinct

from the right of privacy?
(2) If the answer to question (1) is affirmative, does the “right to
publicity” survive the death of its owner? Specifically, is the right

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 inheritable and devisable?
(3) If the answer to question (2) is also affirmative, must the owner
have commercially exploited the right before it can survive his
death?
(4) Assuming the affirmative answers to questions (1), (2) and (3),
what is the guideline to be followed in defining commercial
exploitation and what are the evidentiary prerequisites to a showing
of commercial exploitation?

The right of publicity may be defined as a celebrity’s right to the

exclusive use of his or her name and likeness. The right is most often
asserted by or on behalf of professional athletes, comedians, actors and
actresses, and other entertainers. This case involves none of those
occupations. As is known to all, from 1955 until he was assassinated on
April 4, 1968, Dr. King, a Baptist minister by profession, was the foremost
leader of the civil rights movement in the United States. He was awarded
the Nobel Prize for Peace in 1964. Although not a public official, Dr. King
was a public figure, and we deal in this opinion with public figures who
are neither public officials nor entertainers. Within this framework, we
turn to the questions posed.
1. Is the “right of publicity” recognized in Georgia as a right distinct
from the right of privacy?
Georgia has long recognized the right of privacy. In Pavesich v. New
England Life Ins. Co., 50 S.E. 68 (Ga. 1905), the picture of an artist was
used without his consent in a newspaper advertisement of the insurance
company. Analyzing the right of privacy, this court held: “The publication
of a picture of a person, without his consent, as a part of an advertisement,
for the purpose of exploiting the publisher’s business, is a violation of the
right of privacy of the person whose picture is reproduced, and entitles him
to recover without proof of special damage.” If the right to privacy had not
been recognized, advertisers could use photographs of private citizens to
promote sales and the professional modeling business would not be what it
is today.
In the course of its opinion the Pavesich court said several things
pertinent here. It noted that the commentators on ancient law recognized
the right of personal liberty, including the right to exhibit oneself before
the public at proper times and places and in a proper manner. As a
corollary, the court recognized that the right of personal liberty included
the right of a person not to be exhibited before the public, saying: “The
right to withdraw from the public gaze at such times as a person may see
fit, when his presence in public is not demanded by any rule of law is also

345
embraced within the right of personal liberty. Publicity in one instance and
privacy in the other is each guaranteed. If personal liberty embraces the
right of publicity, it no less embraces the correlative right of privacy; and
this is no new idea in Georgia law.” (Emphasis supplied.)
Recognizing the possibility of a conflict between the right of privacy
and the freedoms of speech and press, this court said: “There is in the
publication of one’s picture for advertising purposes not the slightest
semblance of an expression of an idea, a thought, or an opinion, within the
meaning of the constitutional provision which guarantees to a person the
right to publish his sentiments on any subject.” The defendants in the case
now before us make no claim under these freedoms and we find no
violation thereof.
Observing in dicta that the right of privacy in general does not survive
the death of the person whose privacy is invaded, the Pavesich court said:
“While the right of privacy is personal, and may die with the person, we do
not desire to be understood as assenting to the proposition that the relatives
of the deceased can not, in a proper case, protect the memory of their
kinsman, not only from defamation, but also from an invasion into the
affairs of his private life after his death. This question is not now involved,
but we do not wish anything said to be understood as committing us in any
way to the doctrine that against the consent of relatives the private affairs
of a deceased person may be published and his picture or statue exhibited.”
50 S.E. at 76.
Finding that Pavesich, although an artist, was not recognized as a
public figure, the court said: “It is not necessary in this case to hold, nor
are we prepared to do so, that the mere fact that a man has become what is
called a public character, either by aspiring to public office, or by holding
public office, or by exercising a profession which places him before the
public, or by engaging in a business which has necessarily a public nature,
gives to everyone the right to print and circulate his picture.” 50 S.E. at 79-
80. Thus, although recognizing the right of privacy, the Pavesich court left
open the question facing us involving the likeness of a public figure.
On the other hand, in Waters v. Fleetwood, 91 S.E.2d 344 (Ga. 1956),
it was held that the mother of a 14-year-old murder victim could not
recover for invasion of the mother’s privacy from a newspaper that
published and sold separately photographs of her daughter’s body taken
after it was removed from a river. There the court found that publication
and reproduction for sale of a photograph incident to a matter of public
interest or to a public investigation could not be a violation of anyone’s
right of privacy.
The right to publicity is not absolute. In Hicks v. Casablanca Records,

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464 F. Supp. 426 (S.D.N.Y. 1978), the court held that a fictional novel and
movie concerning an unexplained eleven-day disappearance by Agatha
Christie, author of numerous mystery novels, were permissible under the
first amendment. On the other hand, in Zacchini v. Scripps-Howard
Broadcasting Co., 433 U.S. 562 (1977), a television station broadcast on
its news program plaintiff’s 15-second “human cannonball” flight filmed
at a local fair. The Supreme Court held that freedom of the press does not
authorize the media to broadcast a performer’s entire act without his
consent, just as the media could not televise a stage play, prize fight or
baseball game without consent. Quoting from Kalven, Privacy in Tort Law
— Were Warren and Brandeis Wrong?, 31 Law & Contemp. Prob. 326,
332 (1966), the Court said: “The rationale for [protecting the right of
publicity] is the straight-forward one of preventing unjust enrichment by
the theft of good will. No social purpose is served by having the defendant
get free some aspect of the plaintiff that would have market value and for
which he would normally pay.”

CONTEXT

After the Lugosi case, California’s legislature overruled the decision. In 1984,
it enacted a statute making publicity rights in that state descendible and
transferable for 70 years after the celebrity’s death. See Cal. Civ. Code
§3344.1. Courts initially held that the statute did not apply to celebrities who
died before it went into effect, a group that included celebrities like Marilyn
Monroe, whose publicity rights still had significant commercial value. See, e.g.,
Shaw Family Archives Ltd. v. CMG Worldwide, Inc., 486 F. Supp. 2d 309
(S.D.N.Y. 2007). Soon thereafter, the California legislature went back to the
drawing board and amended the statute to retroactively cover celebrities who
died before 1985. See Cal. Civ. Code 3344.1(b).

[T]he courts in Georgia have recognized the rights of private citizens,

as well as entertainers, not to have their names and photographs used for
the financial gain of the user without their consent, where such use is not
authorized as an exercise of freedom of the press. We know of no reason
why a public figure prominent in religion and civil rights should be
entitled to less protection than an exotic dancer or a movie actress.
Therefore, we hold that the appropriation of another’s name and likeness,
whether such likeness be a photograph or sculpture, without consent and
for the financial gain of the appropriator is a tort in Georgia, whether the
person whose name and likeness is used is a private citizen, entertainer, or

347
as here a public figure who is not a public official.
. . . We conclude that while private citizens have the right of privacy,
public figures have a similar right of publicity, and that the measure of
damages to a public figure for violation of his or her right of publicity is
the value of the appropriation to the user. As thus understood the first
certified question is answered in the affirmative.
2. Does the “right of publicity” survive the death of its owner (i.e., is
the right inheritable and devisable)?
The right of publicity is assignable during the life of the celebrity, for
without this characteristic, full commercial exploitation of one’s name and
likeness is practically impossible. That is, without assignability the right of
publicity could hardly be called a “right.”
The courts that have considered the problem are not . . . unanimous. . .
. In Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215 (2d Cir. 1978),7 Elvis
Presley had assigned his right of publicity to Boxcar Enterprises, which
assigned that right to Factors after Presley’s death. Defendant Pro Arts
published a poster of Presley entitled “In Memory.” In affirming the grant
of injunction against Pro Arts, the Second Circuit Court of Appeals said:

The identification of this exclusive right belonging to Boxcar as a

transferable property right compels the conclusion that the right survives
Presley’s death. The death of Presley, who was merely the beneficiary of an
income interest in Boxcar’s exclusive right, should not in itself extinguish
Boxcar’s property right. Instead, the income interest, continually produced
from Boxcar’s exclusive right of commercial exploitation, should inure to
Presley’s estate at death like any other intangible property right. To hold that
the right did not survive Presley’s death, would be to grant competitors of
Factors, such as Pro Arts, a windfall in the form of profits from the use of
Presley’s name and likeness. At the same time, the exclusive right purchased
by Factors and the financial benefits accruing to the celebrity’s heirs would
be rendered virtually worthless.

In Lugosi v. Universal Pictures, 603 P.2d 425 (Cal. 1979), the

Supreme Court of California, in a 4 to 3 decision, declared that the right of
publicity expires upon the death of the celebrity and is not descendible.
Bela Lugosi appeared as Dracula in Universal Picture’s movie by that
name. Universal had acquired the movie rights to the novel by Bram
Stoker. Lugosi’s contract with Universal gave it the right to exploit
Lugosi’s name and likeness in connection with the movie. The majority of
the court held that Lugosi’s heirs could not prevent Universal’s continued
exploitation of Lugosi’s portrayal of Count Dracula after his death. The
court did not decide whether Universal could prevent unauthorized third

348
parties from exploitation of Lugosi’s appearance as Dracula after Lugosi’s
death.
In Memphis Development Foundation v. Factors Etc., Inc., 616 F.2d
956 (6th Cir. 1980), Factors, which had won its case against Pro Arts in
New York (see above), lost against the Memphis Development Foundation
under the Court of Appeals for the Sixth Circuit’s interpretation of
Tennessee law. There, the Foundation, a non-profit corporation, planned to
erect a statue of Elvis Presley in Memphis and solicited contributions to do
so. Donors of $25 or more received a small replica of the proposed statue.
The Sixth Circuit reversed the grant of an injunction favoring Factors,
holding that a celebrity’s right of publicity was not inheritable even where
that right had been exploited during the celebrity’s life.8 The court
reasoned that although recognition of the right of publicity during life
serves to encourage effort and inspire creative endeavors, making the right
inheritable would not.
For the reasons which follow we hold that the right of publicity
survives the death of its owner and is inheritable and devisable.
Recognition of the right of publicity rewards and thereby encourages effort
and creativity. If the right of publicity dies with the celebrity, the economic
value of the right of publicity during life would be diminished because the
celebrity’s untimely death would seriously impair, if not destroy, the value
of the right of continued commercial use. Conversely, those who would
profit from the fame of a celebrity after his or her death for their own
benefit and without authorization have failed to establish their claim that
they should be the beneficiaries of the celebrity’s death. Finally, the trend
since the early common law has been to recognize survivability,
notwithstanding the legal problems which may thereby arise. We therefore
answer question 2 in the affirmative.
3. Must the owner of the right of publicity have commercially
exploited that right before it can survive?
Exploitation is understood to mean commercial use by the celebrity
other than the activity which made him or her famous, e.g., an inter vivos
transfer of the right to the use of one’s name and likeness. The cases which
have considered this issue . . . involved entertainers. The net result of
following them would be to say that celebrities and public figures have the
right of publicity during their lifetimes (as others have the right of
privacy), but only those who contract for bubble gum cards, posters and
tee shirts have a descendible right of publicity upon their deaths. That we
should single out for protection after death those entertainers and athletes
who exploit their personae during life, and deny protection after death to
those who enjoy public acclamation but did not exploit themselves during

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life, puts a premium on exploitation. Having found that there are valid
reasons for recognizing the right of publicity during life, we find no reason
to protect after death only those who took commercial advantage of their
fame.
Perhaps this case more than others brings the point into focus. A well-
known minister may avoid exploiting his prominence during life because
to do otherwise would impair his ministry. Should his election not to take
commercial advantage of his position during life ipso facto result in
permitting others to exploit his name and likeness after his death? In our
view, a person who avoids exploitation during life is entitled to have his
image protected against exploitation after death just as much if not more
than a person who exploited his image during life.
Without doubt, Dr. King could have exploited his name and likeness
during his lifetime. That this opportunity was not appealing to him does
not mean that others have the right to use his name and likeness in ways he
himself chose not to do. Nor does it strip his family and estate of the right
to control, preserve and extend his status and memory and to prevent
unauthorized exploitation thereof by others. Here, they seek to prevent the
exploitation of his likeness in a manner they consider unflattering and
unfitting. We cannot deny them this right merely because Dr. King chose
not to exploit or commercialize himself during his lifetime.
Question 3 is answered in the negative, and therefore we need not
answer question 4.

CHARLES L. WELTNER, Justice, concurring specially.

[I]n proclaiming this new “right of publicity,” we have created an
open-ended and ill-defined force which jeopardizes a right of unquestioned
authenticity — free speech. It should be noted that our own constitutional
provision, Art. I, Sec. I, Par. IV, Constitution of Georgia, traces its lineage
to the first Constitution of our State, in 1777, antedating the First
Amendment by fourteen years. Its language is plain and all-encompassing:
“No law shall ever be passed to curtail, or restrain the liberty of speech, or
of the press; any person may speak, write and publish his sentiments, on
all subjects, being responsible for the abuse of that liberty.”
But the majority says that the fabrication and commercial distribution
of a likeness of Dr. King is not “speech,” thereby removing the inquiry
from the ambit of First Amendment or Free Speech inquiries. To this
conclusion I most vigorously dissent. When our Constitution declares that
anyone may “speak, write and publish his sentiments, on all subjects” it
does not confine that freedom exclusively to verbal expression. Art. I, Sec.
I, Par. IV, Constitution of Georgia. Human intercourse is such that oft

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times the most powerful of expressions involve no words at all, e.g., Jesus
before Pilate; Thoreau in the Concord jail; King on the bridge at Selma.
Do not the statues of the Confederate soldiers which inhabit so many
of our courthouse squares express the sentiments of those who raised
them? Are not the busts of former chief justices, stationed within the
rotunda of this very courthouse, expressions of sentiments of gratitude and
approval? Is not the portrait of Dr. King which hangs in our Capitol an
expression of sentiment? Manifestly so. If, then, a two-dimensional
likeness in oil and canvas is an expression of sentiment, how can it be said
that a three-dimensional likeness in plastic is not?
But, says the majority, our new right to publicity is violated only in
cases involving financial gain. Did the sculptors of our Confederate
soldiers, and of our chief justices, labor without gain? Was Dr. King’s
portraitist unpaid for his work? If “financial gain” is to be the watershed of
violation vel non of this new-found right, it cannot withstand scrutiny. It is
rare, indeed, that any expression of sentiment beyond casual conversation
is not somehow connected, directly or indirectly, to “financial gain.” For
example, a school child wins a $25 prize for the best essay on Dr. King’s
life. Is this “financial gain”? Must the child then account for the winnings?
The essay, because of its worth, is reprinted in a commercial publication.
Must the publisher account? The publication is sold on the newsstand.
Must the vendor account?
The majority will say “free speech.” Very well. The same child wins a
$25 prize in the school art fair. His creation — a bust of Dr. King. Must he
account? The local newspaper prints a photograph of the child and of his
creation. Must it account? The school commissions replicas of the bust to
raise money for its library. Must it account? UNICEF reproduces the bust
on its Christmas cards. Must it account? Finally, a purely commercial
venture undertakes to market replicas of the bust under circumstances
similar to those of this case. Must it account?
Obviously, the answers to the above questions will vary, and properly
so, because the circumstances posited are vastly different. The dividing
line, however, cannot be fixed upon the presence or absence of “financial
gain.” Rather, it must be grounded in the community’s judgment of what,
ex aequo et bono, is unconscionable.
Were it otherwise, this “right of publicity,” fully extended, would
eliminate scholarly research, historical analysis, and public comment,
because food and shelter, and the financial gain it takes to provide them,
are still essentials of human existence. Were it otherwise, no newspaper
might identify any person or any incident of his life without accounting to
him for violation of his “right to publicity.” Were it otherwise, no author

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might refer to any event in history wherein his reference is identifiable to
any individual (or his heirs!) without accounting for his royalties.
Each lawful restraint [on speech] finds its legitimacy, then, not because
it is laid against some immutable rule (like the weights and measures of
the Bureau of Standards) but because it is perceived that it would be
irresponsible to the interest of the community — to the extent of being
unconscionable — that such conduct go unrestrained. The doctrine of
unjust enrichment finds its genesis in such a reckoning. It can be applied to
just such a matter as that before us. Were we to do so, we could avoid
entering the quagmire of combining considerations of “right of privacy,”
“right of publicity,” and considerations of inter vivos exploitation. We
would also retain our constitutional right of free speech uncluttered and
uncompromised by these new impediments of indeterminate application.
And we could sanction relief in this case — where relief is plainly
appropriate.

Notes and Questions

1. Imitators. A recent version of the right of publicity has been used to
challenge advertisements that imitate artists as a way to appropriate their
image. The singer and actress Bette Midler brought a lawsuit against
Young & Rubicam, an advertising agency that had hired one of her former
backup singers to imitate Midler’s rendition of her 1973 hit “Do You Want
to Dance?” to promote Ford Motor Co.’s Mercury Sable car. Midler
claimed that the agency had stolen her voice. The U.S. Court of Appeals
for the Ninth Circuit agreed, holding that “when a distinctive voice of a
professional singer is widely known and deliberately imitated in order to
sell a product, the sellers have appropriated what is not theirs and have
committed a tort in California.” Midler v. Ford Motor Co., 849 F.2d 460,
463 (9th Cir. 1988). Accord, Waits v. Frito-Lay, Inc., 978 F.2d 1093 (9th
Cir. 1992) (singer Tom Waits obtains $375,000 in compensatory damages
and $2 million in punitive damages against company that imitated his
distinctive voice and singing style in a radio commercial).
Does prohibition of imitation go too far? In White v. Samsung
Electronics America, Inc., 971 F.2d 1395 (9th Cir. 1992), the court held
that a copyright violation might well be established when a company used
a robot in advertising that was intended to evoke images of Vanna White
and the game show in which she became famous. Samsung was clearly
using her image to sell its products without her consent in a way that might
have created confusion as to whether White had agreed to allow her image
to be used by the company. However, in a dissent to a decision denying a

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petition for rehearing, 989 F.2d 1512, 1513 (9th Cir. 1993), Judge
Kozinski criticized the ruling.

Saddam Hussein wants to keep advertisers from using his picture in

unflattering contexts. Clint Eastwood doesn’t want tabloids to write about
him. Rudolf Valentino’s heirs want to control his film biography. The Girl
Scouts don’t want their image soiled by association with certain activities.
George Lucas wants to keep Strategic Defense Initiative fans from calling it
“Star Wars.” Pepsico doesn’t want singers to use the word “Pepsi” in their
songs. Guy Lombardo wants an exclusive property right to ads that show big
bands playing on New Year’s Eve. Uri Geller thinks he should be paid for
ads showing psychics bending metal through telekinesis. Paul Prudhomme,
that household name, thinks the same about ads featuring corpulent bearded
chefs. And scads of copyright holders see purple when their creations are
made fun of.
Something very dangerous is going on here. Private property, including
intellectual property, is essential to our way of life. It provides an incentive
for investment and innovation; it stimulates the flourishing of our culture; it
protects the moral entitlements of people to the fruits of their labors. But
reducing too much to private property can be bad medicine. Private land, for
instance, is far more useful if separated from other private land by public
streets, roads and highways. Public parks, utility rights-of-way and sewers
reduce the amount of land in private hands, but vastly enhance the value of
the property that remains.
So too it is with intellectual property. Overprotecting intellectual property
is as harmful as underprotecting it. Creativity is impossible without a rich
public domain. Nothing today, likely nothing since we tamed fire, is
genuinely new: Culture, like science and technology, grows by accretion,
each new creator building on the works of those who came before.
Overprotection stifles the very creative forces it’s supposed to nurture.
The panel’s opinion is a classic case of overprotection. Concerned about
what it sees as a wrong done to Vanna White, the panel majority erects a
property right of remarkable and dangerous breadth: Under the majority’s
opinion, it’s now a tort for advertisers to remind the public of a celebrity. Not
to use a celebrity’s name, voice, signature or likeness; not to imply the
celebrity endorses a product; but simply to evoke the celebrity’s image in the
public’s mind. This Orwellian notion withdraws far more from the public
domain than prudence and common sense allow. It conflicts with the
Copyright Act and the Copyright Clause. It raises serious First Amendment
problems. It’s bad law, and it deserves a long, hard second look.

The Ninth Circuit found a likely violation of publicity rights when

licensed airport Cheers bars used animatronic robots that resembled two
characters from the Cheers television show. Although the actors had no

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right to prevent dissemination of the show itself, they had the right to
prevent use of their images to sell products related to the show. Wendt v.
Host International, 125 F.3d 806 (9th Cir. 1997) (applying California law).
Does this distinction make sense?
2. Free speech. Does the right of publicity interfere with the right of
free speech? See Parks v. La Face Records, 329 F.3d 437 (6th Cir. 2003)
(grappling with the conflict between free speech rights and property rights
in one’s name); Comedy III Productions, Inc. v. Gary Saderup, Inc., 21
P.3d 797 (Cal. 2001) (balancing publicity rights against the first
amendment rights of an artist who sold lithographic print and silkscreened
t-shirt reproductions of his drawings of the Three Stooges). After
playwright Susan Ross wrote a play based on the life of the singer Janis
Joplin, she was sued by Joplin’s family and Manny Fox, a New York
producer who owns the rights to make a film and play based on Joplin’s
life, on the ground that Ross had wrongly appropriated the plaintiffs’ right
of publicity in Joplin’s image without obtaining the consent of Joplin’s
estate. The family claimed “the exclusive right to exploit stage
productions, theatrical films and television productions based on the life
and times of Janis Joplin.” Judge Coughenour held that the play was a
protected form of expression under the first amendment and that Joplin’s
family could not control artistic expressions based on her life. Joplin
Enterprises v. Allen, 795 F. Supp. 349 (W.D. Wash. 1992). See also ETW
Corp. v. Jireh Publishing, Inc., 332 F.3d 915 (6th Cir. 2003) (first
amendment prevents assertion of publicity right against an artist who
painted Tiger Woods’s victory at 1997 Master Tournament); Matthews v.
Wozencraft, 15 F.3d 432 (5th Cir. 1994) (despite publicity right, defendant
is entitled to produce a fictionalized biography without plaintiff’s consent).
Do you agree with the majority or dissenting opinions in the Martin Luther
King case?
3. Lanham Act. Section 43(a) of the federal Lanham Act, 15 U.S.C.
§1125, may support a publicity rights claim because it creates a civil claim
against any person who identifies his product so to deceive consumers as
to the association of the product’s producer with another person or to cause
consumers to falsely believe that other person has sponsored or approved
of the product. See ETW Corp. v. Jireh Publishing, Inc., 332 F.3d 915, 924
(6th Cir. 2003) (“The elements of a Lanham Act false endorsement claim
are similar to the elements of a right of publicity claim under Ohio law.”
(citing Bruce P. Keller, The Right of Publicity: Past, Present, and Future,
1207 PLI Corp. Law and Prac. Handbook 159, 170 (October 2000))). In
contrast, to show infringement of the common law right of publicity, the

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claimant need not show a possibility of confusion; all that is required is
unauthorized use. Cf. Tyne v. Time Warner Entertainment Co., 901 So. 2d
802 (Fla. 2005) (state statute prohibiting use of a person’s name or
likeness for “commercial purposes” does not apply to a movie like The
Perfect Storm that dramatizes real events and persons and does not directly
promote a good or service).
4. Cultural icons. The images of famous people become part of
popular culture — a common asset of the community. Absolute protection
of someone’s image would prevent others from commenting on or
referring to the image without permission from the owner. At the same
time, commercial exploitation of someone’s image may harm an individual
by associating her with a product with which she does not want to be
associated. Such exploitation could also limit a celebrity’s ability to derive
commercial benefit from her own popularity. Should it make a difference
if someone is simply trying to make money from a person’s image — for
example, using her to sell a product — or using her image in an artistic or
literary fashion? Compare Groucho Marx Productions, Inc. v. Day &
Night Co., 689 F.2d 317 (2d Cir. 1982) (right of publicity does not survive
the death of the owner; producers of a play mimicking the Marx Brothers
could not be held liable to his heirs), with John W. Carson v. Here’s
Johnny Portable Toilets, Inc., 698 F.2d 831 (6th Cir. 1983) (holding that
defendant could not imitate Ed McMahon’s introduction of Johnny Carson
— “Here’s Johnny!” — to sell its portable toilets). See also Cal. Civ. Code
§§3344, 3344.1; Fla. Stat. §540.08; Tenn. Code §§47-25-1101 to 47-25-
1108 (protecting the right of publicity).
5. Titles. In Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989), dancer
and film star Ginger Rogers sued filmmaker Federico Fellini for using her
name in a movie called Ginger and Fred. That movie was about two
cabaret dancers who became known to their fans as Fred and Ginger
because they imitated Fred Astaire and Ginger Rogers in their act. The
court held that the use of a title is protected by the first amendment unless
it has “no artistic relevance” to the underlying work, or if there is artistic
relevance, that the title “explicitly misleads as to the source of the content
of the work.” Id. at 999. Applying this test, the court concluded that use of
Ginger Rogers’s name in the title was protected by the first amendment
and thus barred claims based on either publicity rights or the Lanham Act.
In contrast, the court in Parks v. La Face Records, 329 F.3d 437 (6th Cir.
2003), granted civil rights leader Rosa Parks the right to go forward with
publicity rights and Lanham Act claims against the band OutKast and
record producer LaFace Records for using her name as the title for a song.

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The district court had concluded that the title was artistically relevant to
the song lyrics because the lyrics contain the phrase “Everybody move to
the back of the bus” — a phrase obviously related to Parks. The Sixth
Circuit reversed, holding that a jury could conclude that the song was not
about Rosa Parks in any way. The “back of the bus” phrase was used to
suggest that competitors to OutKast should get back and let OutKast get
out front. This use starkly contrasts, for example, with the song “Rosa,
Rosa” by blues artist Otis Taylor, which is clearly a tribute to Rosa Parks.
Were the Rogers and Parks cases correctly decided?
6. Trade secrets. In addition to publicity rights, another important area
for state law protection of information is the law of “trade secrets.” Trade
secrets are tools or practices or processes or formulas (they can be virtually
anything) that are not generally known and that confer a commercial
advantage on their possessor. See Restatement (First) of Torts §757. As
long as the information remains secret (i.e., not general knowledge) and as
long as the rightful holder of the trade secret takes reasonable steps to keep
the information secret, state law typically protects the information against
misappropriation (defined as acquisition of the information by improper
means) by third parties. See Uniform Trade Secrets Act §§1, 2. Violations
of trade secret rights are subject to both injunctive relief and damages. See
id. §§3, 4. Like trademark, this legal protection endures as long as the
trade conditions above continue to hold. Famous trade secrets include the
“eleven herbs and spices” in Kentucky Fried Chicken’s “Original Recipe”
and the formula for Coca Cola. Why might a business prefer patent
protection for information conceivably covered by trade secret? Why
might it prefer trade secret law? Can it protect the same information with
both?

Problems
Do companies have a free speech right to the commercial use of the
name of a famous person who has been dead more than 100 years?
Although some states refuse to extend the right of publicity after death, see
N.Y. Civ. Rights §50, most states, like Georgia, do recognize such rights
and sometimes provide time limits, see Cal. Civ. Code §3344.1 (70 years
after death); Tenn. Code §47-25-1104 (10 years after death if not
exploited; if commercially exploited, the rights ends 2 years after the use
ceases); Tex. Prob. Code §§26.001-26.002 (50 years after death).
A surviving relative of Tasunke Witko (known in English as Crazy
Horse) sought to prevent a beer company from selling “Crazy Horse Malt
Liquor” on the ground that the law of the Rosebud Sioux Nation

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recognized a form of publicity right that was descendible and still in
existence more than a century after the death of Crazy Horse. Crazy Horse
was a spiritual leader of the Sioux people and opposed the use of liquor in
any form. The Rosebud Sioux Trial Court strongly suggested that tribal
law would recognize such a right but found no jurisdiction in tribal court
because the beer was not sold on the reservation. Although the Rosebud
Sioux Supreme Court reversed on the jurisdictional finding, a subsequent
ruling by a federal judge held that the trial court had no jurisdiction over
the claim. In the Matter of the Estate of Tasunke Witko v. G. Heileman
Brewing Co. (Civ. No. 93-204) (Rosebud Sioux Tr. Ct., Oct. 25, 1994),
rev’d (Rosebud Sioux Sup. Ct., May 1, 1996), judgment vacated by
Hornell Brewing Co. v. Rosebud Sioux Tribal Court, 133 F.3d 1087 (8th
Cir. 1998).
1. Suppose a suit is brought in state court in a state where the beer is
sold seeking an injunction against the use of Crazy Horse’s name in
connection with the sale of liquor. Assume that the state in which suit is
brought recognizes publicity rights but does not allow them to be inherited,
at least where the individual did not take advantage of commercial use of
the name during his lifetime. Plaintiff claims that publicity rights are a
form of personal property and that the law of the domicile of a person at
the time of death ordinarily applies to determine who inherits such
property at death. Because Crazy Horse was domiciled on the Rosebud
Sioux Reservation at his death, Rosebud law should apply to govern the
case. Defendant beer company argues that such cases concern the
regulation of business enterprises, and the law of the place where goods
are sold should control the case. Which law should apply?
2. Assume now that the court has decided to apply its own law (the law
of the place of sale) and is asked by plaintiff to allow publicity rights to be
inherited whether or not they were exploited during life, citing Martin
Luther King, Jr. Defendant argues that publicity rights should not be
inherited. Alternatively, if they are inherited, they should lapse at some
point after death — certainly after 100 years have passed. How should this
issue be resolved?
3. Defendant now argues that it has a first amendment free speech right
to use the name of a deceased public figure to sell its product. Argue both
sides of this legal issue. How should it be resolved?

§7 CULTURAL PROPERTY

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 §7.1 The International Market in Cultural Property

United States v. Schultz

178 F. Supp. 2d 445 (S.D.N.Y. 2002)

JED S. RAKOFF, District Judge.
The marvelous artifacts of ancient Egypt, so wondrous in their beauty
and in what they teach of the advent of civilization, inevitably invite the
attention, not just of scholars and aesthetes, but of tomb-robbers,
smugglers, black-marketeers, and assorted thieves. Every pharaoh, it
seems, has a price on his head (at least if the head is cast in stone); and if
the price is right, a head-hunter will be found to sever the head from its
lawful owner. So, at least, is the theory of the instant indictment, which
alleges, in effect, that the defendant and one or more co-conspirators
arranged to steal highly valuable ancient Egyptian artifacts — including a
million-dollar head of Amenhotep III — and “fence” them in New York.
This, says the indictment, makes the defendant guilty of conspiracy to
violate section 2315 of Title 18, United States Code, which provides, in
pertinent part, that “[w]hoever receives, possesses, conceals, stores,
barters, sells, or disposes of any goods, wares, or merchandise . . . which
have crossed a State or United States boundary after being stolen . . .
knowing the same to have been stolen . . . [is guilty of a crime].”
The defendant has pleaded not guilty and is presumed innocent. For
purposes of this pre-trial motion [to dismiss his indictment], however, he
assumes the facts as stated in the indictment and maintains that the
indictment nonetheless fails to state a conspiracy to violate section 2315
because it presupposes, wrongly in his view, that someone who conspires
to smuggle ancient artifacts out of Egypt is thereby guilty of, among other
things, dealing in stolen goods, by virtue of Egyptian Law 117. That law
provides that, as of 1983, all Egyptian “antiquities” — that is, objects over
a century old having archeological or historical importance (Law 117, Art.
1) — “are considered to be public property,” that is, property of the state.
The defendant principally argues: (i) that Law 117, despite its assertion of
state ownership, is really more in the nature of a licensing and export
regulation, the violation of which does not constitute theft of property in
the sense covered by section 2315; [and] (ii) that, assuming Law 117 really
does work an expropriation of property by Egypt, the special kind of
property thereby vested in that foreign state does not give rise to interests
entitled to protection under United States law.
The primary problem with defendant’s first argument — that Law 117

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is really regulatory in nature — is the language of the law itself, which
unequivocally asserts state ownership of all antiquities (Art. 6), requires
their recording by the state (Art. 26), prohibits (with certain practical
exceptions) private ownership, possession, or disposal of such antiquities
(Arts. 6-8), and requires anyone finding or discovering a new antiquity to
promptly notify the Antiquities Authority (Arts. 23-24), which, in the case
of movable antiquities, then takes physical possession and stores the
antiquities in the museums and storage facilities of the Authority (Art. 28).
Thus, so far as Egyptian antiquities are concerned, Law 117 on its face
vests with the state most, and perhaps all, the rights ordinarily associated
with ownership of property, including title, possession, and right to
transfer. This, on its face, is far more than a licensing scheme or export
regulation.
To be sure, Law 117 qualifies certain aspects of state ownership where
obvious practicalities so require. For example, while every newly-
discovered but immovable antiquity is still deemed state owned,
nonetheless “where the find is located on private property, the Authority
shall decide within three months whether to remove the find, to initiate
measures for expropriating the land upon which it is located, or to leave
the antiquity in its place and register it in accordance with the provisions
of this law.” (Art. 23). Similarly, pre-1983 owners or possessors of
antiquities, though now required to register their antiquities with the state
if they have not already done so, may in certain circumstances maintain
possession or even dispose of their antiquities, but only with permission of
the Authority. See, e.g., Arts. 7, 8, 9, 13. These adjustments to physical
and historical circumstances only serve to confirm, however, that the
statute’s primary purpose is to transfer ownership to the state to the extent
reasonably practicable.
Despite the plain language of Law 117, however, defendant argues
that, in practice, even those antiquities discovered after 1983 have been
left in the hands of their discoverers or other private transferees and that
the law in operation really works more like a licensing or export regulation
than like a transfer of property. But when, in response to these and other
defense assertions, the Court convened an evidentiary hearing, pursuant to
Rule 26.1 of the Federal Rules of Criminal Procedure, the defendant was
unable to adduce any material, let alone persuasive evidence to support
this contention. The most he could offer in this respect was the opinion of
Professor Abou El Fadl, a professor of Islamic and Middle Eastern law at
UCLA Law School, to the effect that nothing in Law 117 definitively
prevents the Antiquities Authority from leaving physical possession of
even an antiquity discovered after 1983 in the hands of a private finder, so

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long as the private finder promptly notifies the Authority of his find.
In response to this purely hypothetical opinion, the Government
presented, among much else, the testimony of Dr. Gaballa Ali Gaballa,
Secretary General to the Supreme Council of Antiquities, that in fact the
state takes immediate physical custody of newly discovered antiquities,
sometimes by the tens of thousands. Another Government witness,
General Ali Sobky, Director of Criminal Investigations for the Antiquities
Police (which employs more than 400 police officers), testified that his
department regularly investigates and prosecutes dozens of serious
violations of Law 117, of which relatively few are for smuggling and most
are for trafficking within Egypt (including unlawfully possessing and
disposing of state-owned antiquities). General Sobky also testified that
even in the case where someone is acquitted of stealing a newly discovered
antiquity, the antiquity is confiscated by the state as the lawful owner.
It is clear, therefore, that Law 117, far from being a disguised licensing
scheme or export regulation, is precisely what it purports to be: a transfer
of ownership of Egyptian antiquities to the state, effective 1983.
As for defendant’s second argument — to the effect that American law
does not, or should not, recognize the kind of “special” property interest
created by “patrimony” laws like Law 117 — it should first be noted that
section 2315, which expressly refers to foreign commerce, has consistently
“been applied to thefts in foreign countries and subsequent transportation
into the United States,” United States v. McClain, 545 F.2d 988, 994 (5th
Cir. 1977) (citing cases): an implicit recognition of the interest of the
United States in deterring its residents from dealing in the spoils of foreign
thefts. In effectuating this policy, why should it make any difference that a
foreign nation, in order to safeguard its precious cultural heritage, has
chosen to assume ownership of those objects in its domain that have
historical or archeological importance, rather than leaving them in private
hands?9 If an American conspired to steal the Liberty Bell and sell it to a
foreign collector of artifacts, there is no question he could be prosecuted
under section 2315. Mutatis mutandis, the same is true when, as here
alleged, a United States resident conspires to steal Egypt’s antiquities.
To be sure, even if the Government proves the defendant knew he was
importing antiquities that were smuggled out of Egypt — an act that may
not be inherently violative of United States law and policy — there may
still be a jury question as to whether he knew he was dealing in stolen
goods, an essential element of a section 2315 violation. But the indictment
alleges he possessed such knowledge, and the Government asserts that it
will prove, inter alia, that the defendant knew that at least two of the items
he conspired to import had been stolen from the Antiquities Police. This is

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more than sufficient for purposes of the present motion.
While defendant raises still other arguments in support of his motion to
dismiss the indictment, the Court finds them sufficiently meritless as not to
warrant discussion here.
Accordingly, the Court, confirming its Order of December 27, 2001,
hereby denies defendant’s motion to dismiss the indictment.

Notes and Questions

1. Legal protection of cultural property. In 1970, the United Nations
approved the Convention on the Means of Prohibiting and Preventing the
Illicit Import, Export and Transfer of Ownership of Cultural Property,
Nov. 14, 1970, 823 U.N.T.S. 231, 232-234. The law has spurred adoption
of rules to prevent import and export of cultural property, and efforts to
enforce older national laws prohibiting removal of artifacts. Museum
guidelines promulgated in 2008, for example, discourage acquisition of
any cultural artifacts without proof of removal from their country of origin
before 1970, or removal with the consent of the country after that year. In
a 2009 article in the Yale Law Journal,10 Kristen Carpenter, Sonia Katyal,
and Angela Riley observe that the growing tendency to speak about
cultural heritage in property terms has sparked something of a backlash:

In a recent New York Times column, Edward Rothstein complained that

cultural property laws had engendered “a new form of protection,
philistinism triumphing in the name of enlightened ideas.” Legal scholars in
particular — including those who typically align themselves with progressive
causes — strongly criticize indigenous peoples’ efforts to assert ownership
and autonomy over their tangible and intangible traditional resources,
arguing that culture is and must remain part of an entitlement-free commons.
In one recent article, for example, Naomi Mezey contends that “the idea of
property has so colonized the idea of culture that there is not much culture
left in cultural property.” For Mezey, the notion of indigenous cultural
property raises the likelihood that once indigenous peoples obtain title to
cultural property, they will use it to exclude others — a practice that would
inevitably limit the free flow of culture.

Carpenter, Katyal, and Riley defend the use of the language of property as
a tool for protecting indigenous cultural heritage. Building on the
personhood theory of property elaborated by Margaret Jane Radin, they
develop “a model of property and peoplehood, and in so doing articulate[]
a justification for group-oriented legal claims to indigenous cultural
property.” “Peoplehood,” they argue, “dictates that certain lands,

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resources, and expressions are entitled to legal protection as cultural
property because they are integral to the group identity and cultural
survival of indigenous peoples.”
2. Cultural patrimony versus cultural internationalism. In recent
years, there have been a number of high profile cases in which museums
have returned antiquities and other cultural property to their places of
origin. In 2007, for example, after lengthy negotiations, Yale University
returned hundreds of Incan stone, metal, and ceramic artifacts to Peru.
That same year, the Getty Museum in Los Angeles returned 40 items to
Italy. Among them was the Morgantina Venus, which the museum had
purchased in 1988 for $18 million. When the Getty acquired it, the statue
was an “orphan,” meaning that no one knew exactly where it came from
and whether it had been looted from Italy. The Getty therefore knew it was
taking a risk when it purchased the statue. In 2006, the museum adopted
stricter acquisition policies in response to criticism that it was not
complying with international norms.
Perhaps the longest running, and certainly among the highest profile,
conflicts over cultural property involves sculptures removed by Thomas
Bruce, 7th Earl of Elgin, from the Parthenon in Athens and sold to the
British Museum in 1816, where they are still displayed as the “Elgin
Marbles.” Since 1983, the Greek government has been seeking the return
of these sculptures, which the British Museum has resisted. Professor John
Henry Merryman, in an article called Thinking About the Elgin Marbles,
83 Mich. L. Rev. 1881 (1985), notes that international law in 1801, when
Elgin removed the Marbles, appears to have validated the transfer, as Elgin
obtained permission from officials of the Ottoman Empire, which had
ruled Greece for nearly four centuries at that point. That permission,
however, did not resolve the question whether the British were somehow
morally obligated to return the Marbles. Professor Merryman describes the
argument for their return as cultural nationalism:

The most obvious argument is that the Marbles belong in Greece because
they are Greek. They were created in Greece by Greek artists for the civic
and religious purposes of the Athens of that time. The appealing implication
is that, being in this sense Greek, they belong among Greeks, in the place
(the Acropolis of Athens) for which they were made. This argument, which I
will call the argument from cultural nationalism, requires careful
examination, since it is basic to the Greek position and because arguments
like it are frequently made by other governments calling for the return of
cultural property (and is strongly implied in their use of the term
“repatriation”).

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 In its truest and best sense, cultural nationalism is based on the relation
between cultural property and cultural definition. For a full life and a secure
identity, people need exposure to their history, much of which is represented
or illustrated by objects. Such artifacts are important to cultural definition
and expression, to shared identity and community. They tell people who they
are and where they come from. A people deprived of its artifacts is culturally
impoverished.
The difficulty comes in relating the notion of cultural deprivation to the
physical location of the Marbles. By their removal to London and exposure
in the British Museum, they have brought admiration and respect for the
Greek achievement. Still, the argument for possession as an aspect of cultural
nationalism has an instinctive appeal.
The final component of the nationalism argument is political: the belief
that the presence of the Marbles in England, or in any place other than
Greece, is an offense to Greeks and to the Greek nation. The weight one
gives to this kind of argument for the return of the Marbles depends to a
large extent on one’s attitude toward political nationalism itself. [I]f one sees
it as at best a dubious good, with large elements of superstition and
prejudice, with an unsavory record as the religion of the state, and as a source
of international economic, social, political, and armed conflict, then the
nationalist argument becomes an uncomfortable one to sustain.

Merryman dismisses this argument for several reasons: “it expresses

values not clearly entitled to respect (political nationalism),” “it is founded
on sentiment and mysticism rather than reason,” and “it is a two-edged
argument that is equally available to the British.” Merryman calls the
argument on the other side cultural internationalism:

The Hague Convention for the Protection of Cultural Property in the Event
of Armed Conflict of May 14, 1954, states in its preamble that “cultural
property belonging to any people whatsoever” is “the cultural heritage of all
mankind.” [I]f the legal and moral arguments are treated as evenly balanced,
and if the argument from nationalism is also inconclusive, are there
considerations from the point of view of cultural internationalism (which the
Hague Convention language expresses) that indicate the proper way to
allocate the Marbles?
Preservation takes priority for obvious reasons. [I]f one compares the
record of care for works on the Acropolis and in the British Museum since
1816, it is clear where the greater danger has lain. The sculptural reliefs
remaining on the Parthenon and the Caryatids on the Erechtheion have all
been badly eroded by exposure to a variety of hazards, including the smog of
Athens. The Marbles in the British Museum have fared much better. Under
present conditions, the preservation concern favors leaving the Marbles in
the British Museum.

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 The other international interest is distributional; a concern for an
appropriate international distribution of the common cultural heritage, so that
all of mankind has a reasonable opportunity for access to its own and other
people’s cultural achievements. There is a tendency for works of art to flow
from the poor to the wealthy nations, and one can imagine the unpleasant
extreme of a Third World denuded of cultural property in order to stock the
museums and the private collections of a few wealthy nations.
It is true that Greek antiquities can be found in major museums and private
collections throughout the world and that some of the greatest Greek
antiquities are found abroad. But it is difficult to argue that Greece itself is in
this sense impoverished. One of the reasons people go to Greece is to enjoy
its wealth of antiquities. [I]t seems difficult to argue convincingly for the
return of the Marbles to Athens on distributional grounds. If we focus instead
on the question of access, there seems little reason to suppose that the
Marbles would be more accessible to the world’s peoples in Athens than they
are in London.

Which side in this debate do you find more convincing?

3. Which law? In Schultz, the United States District Court applies the
law of Egypt in determining that removal of antiquities from Egypt, if
proven to have occurred as alleged by the government, constituted “theft”
and therefore made the defendant liable for prosecution in the United
States for importing antiquities into the United States. Is that appropriate?
What interest does the United States have in enforcing Egyptian law
governing antiquities?
In his discussion of the legality of the Marbles’ removal, Merryman
applies international law at the time of their removal, a time during which
the Greek people were under the rule of Ottoman Empire. Is that the right
law to apply? Or should we evaluate the legality of the Marbles’ removal
in terms of contemporary international law?

§7.2 Native American Cultural Property

Wana the Bear v. Community Construction, Inc.

180 Cal. Rptr. 423 (Ct. App. 1982)

Map: Stockton, California

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COLEMAN BLEASE, Associate Justice.
Plaintiff Wana the Bear, a direct descendant of the Bear People Lodge
of the Miwok Indians, seeks reversal of a judgment that the Native
American burial ground under development by defendant Community
Construction, Inc., is not a cemetery entitled to protection under the
California cemetery law.
This case comes to us shrouded in the history of an ancient Indian
people whose remains, bulldozed from their resting place, stir the anguish
of their descendants. But there is no succor for these profound sensitivities
in the law to which plaintiff appeals, the sepulchral confines of the
California cemetery law.
On August 6, 1979, a final subdivision map was approved by the
Stockton City Council and defendant went about excavating the subject
property in the course of developing a residential tract. In the fall of 1979,
defendant uncovered human remains on the property. Defendant continued
developing the property, disinterring the remains of over 200 human
beings. The burial ground had been used by the Miwok Indians until they
were driven out of the area between 1850 and 1870. The site is known to
be a burial ground and has been the subject of numerous archeological
studies. The site still contains the remains of six or more persons. Plaintiff,
a descendant of the Bear People Lodge of the Miwok Indians and related
to some or all of the persons whose remains lie there, brought suit to
enjoin further excavation and other “desecration” of the property on July 1,
1980.
The central issue in this case is whether the burial ground achieved a
protectable status as a public cemetery under the 1872 cemetery law by
virtue of its prior status as a public grave yard. We hold that it did not.
Plaintiff seeks enforcement by injunction of Health and Safety Code
section 7052, which makes criminal the disinterment of human remains
without authority of law. He argues that the section protects a cemetery, as
defined by Health and Safety Code section 8100: “Six or more human
bodies being buried at one place constitute the place a cemetery.” He
alleges, and we take it as true, that six or more human bodies are buried on
the burial site. In order to escape the problem that the burial site does not
comply with either of the two methods of creating a public cemetery,
dedication or prescriptive use, plaintiff argues that section 8100, by virtue
of its derivation from the 1854 cemetery law, applies to burial sites created
prior to 1873 which, he claims, became public cemeteries, by the law of
1854, without dedication or prescriptive use.
The 1854 law made punishable the mutilation of any public grave yard

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and the disinterment of any deceased person in any grave yard. It defined a
public grave yard as follows: “Where the bodies of six or more persons are
buried, it is . . . a public grave yard.” In 1872, this statute was replaced by
chapter V of the new Political Code. It enacted the two means for creating
a public cemetery, dedication and prescriptive use. Section 3106 of the
Political Code read essentially as Health and Safety Code section 8100
does now: “Six or more human bodies being buried at one place
constitutes the place a cemetery.” Section 3105 vested title to lands “used
as a public cemetery or graveyard, situated in or near to any city, town, or
village, and used by the inhabitants thereof continuously, without
interruption, as a burial-ground for five years” in the inhabitants and
prohibited use of the lands “for any other purpose than a public cemetery.”
Section 3107 delineated the manner of dedicating public lands to
“cemetery” or burial purposes. When the Health and Safety Code was
created in 1939, these provisions were carried over into the present law.
Plaintiff claims that the presence of six or more bodies at the burial site
in the period between 1854 and the time when the Miwoks were driven out
(sometime between 1850 and 1870) rendered the burial ground a “public
grave yard,” indelibly impressing it with such character. But the 1854 law
was not incorporated into the 1872 and subsequent law as claimed by
plaintiff. The 1872 law did not simply reenact section 4 of the 1854 act
(making a place where six bodies were buried a “public grave yard”). It
added a prescriptive use condition, vesting title of the grave yard in the
city or village using it only when the land was “used as a public cemetery .
. . continuously, without interruption, as a burial-ground for five years.” It
further declared that “[n]o part of (the code was) retroactive unless
expressly so declared.” The Miwoks were no longer using the burial
ground in 1873, when chapter V of the Political Code replaced the 1854
law; therefore, the burial ground was not made a cemetery by the operation
of new section 3106.
Plaintiff finally makes a claim that public policy protects places where
the dead are buried. There is indeed such a policy, but it is codified in the
statutes governing the disposition of human remains. But they also
establish the limits of the policy chosen by the Legislature. The legislative
judgment is binding on us in the absence of a supervening constitutional
right and none has been claimed.
The judgment is affirmed.

Notes and Questions

1. What’s at stake. In his 1989 novel, Talking God, Tony Hillerman

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describes a dispute concerning control over American Indian human
remains held by a national museum. The museum’s public relations
director defends keeping the remains because they are “a potentially
important source of anthropological information” and because the “public
has the right to expect authenticity and not to be shown mere
reproductions.” One morning, she finds a package on her desk. When she
opens it, she sees arm and leg bones with a note explaining that “[y]ou
won’t bury the bones of our ancestors because you say the public has the
right to expect authenticity in the museum when it comes to look at
skeletons. Therefore I am sending you a couple of authentic skeletons of
ancestors [from] the cemetery in the woods behind the Episcopal Church
of Saint Luke.” The note goes on: “[T]o make sure they would be perfectly
authentic, I chose two whose identities you can personally confirm
yourself.” The note concludes by explaining that the remains in the box are
those of her grandparents. Tony Hillerman, Talking God 1-6 (1989).
2. Reburial of American Indian human remains found on private
property. Wana the Bear was partly overturned by California legislation
expressly protecting American Indian burial sites. Cal. Govt. Code
§6254(r); Cal. Health & Safety Code §7050.5; Cal. Pub. Res. Code
§§5097.94, 5097.98, 5097.99. The legislation requires property owners
who discover American Indian human remains on their property to notify
public officials and to negotiate with representatives of the affected tribe
for reburial of the remains and associated objects. See People v. Van Horn,
267 Cal. Rptr. 804 (Ct. App. 1990) (upholding the constitutionality of the
statute and requiring an archaeologist to return two objects found in a site
he excavated on private land while making a survey for the city of Vista,
California, which was in the process of determining whether to buy the
land); Thomas Boyd, Disputes Regarding the Possession of Native
American Religious and Cultural Objects and Human Remains: A
Discussion of the Applicable Law and Proposed Legislation, 55 Mo. L.
Rev. 883 (1990); Walter Echo-Hawk, Museum Rights vs. Indian Rights:
Guidelines for Assessing Competing Legal Interests in Native Cultural
Resources, 14 N.Y.U. Rev. L. & Soc. Change 437 (1986).
At least 13 states have passed legislation to protect all unmarked
graves, including American Indian burial sites on private land owned by
non-Indians. See, e.g., Ala. Code §§41-3-1 to 41-3-6; Idaho Code §§27-
501 to 27-504; Ill. Stat. ch. 20, §§3440/1 to 3440/16; Neb. Stat. §§12-1202
to 12-1212; Okla. Stat. tit. 21, §§1168-1168.6, tit. 53, §361; Wash. Rev.
Code §§27.44.020 to 27.44.901, 27.53.060, 68.60.040 et seq.
It is well settled that the descendants of persons who are buried in a

367
recognized cemetery may acquire an implied easement of access to the
land where their ancestors are buried. They also may be entitled to an
injunction preventing the owner of the land from defacing the graves or
interfering with the “reverential character” of the graves. Bogner v.
Villiger, 796 N.E.2d 679 (Ill. App. Ct. 2003). Accord, Mallock v. Southern
Memorial Park, Inc., 561 So. 2d 330 (Fla. Dist. Ct. App. 1990) (discussing
a Florida statute that creates such rights); Sanford v. Vinal, 552 N.E.2d 579
(Mass. App. Ct. 1990) (discussing abandonment of such an easement).
3. American Indian human remains and funerary objects found on
federal and tribal land. The Native American Graves Protection and
Repatriation Act (NAGPRA), 25 U.S.C. §§3001-3013, 18 U.S.C. §1170,
provides that American Indian and Native Hawaiian human remains and
funerary objects placed with the body upon burial that are found on tribal
or federal lands after the effective date of the statute belong to the lineal
descendants of the person buried with the items. If such descendants
cannot be found, the items belong to the tribe on whose tribal land they
were found or to the tribe having the closest cultural affiliation with them.
25 U.S.C. §3002(a).
4. Return of human remains held by museums. As of 1991, the
Smithsonian Institution and other institutions in the United States held tens
of thousands of human remains of American Indians; the number may
have been as high as 300,000. Margaret B. Bowman, The Reburial of
Native American Skeletal Remains: Approaches to the Resolution of a
Conflict, 13 Harv. Envtl. L. Rev. 147, 149 (1989). In addition to regulating
human remains and funerary objects found on tribal and federal lands,
NAGPRA provides that human remains and cultural items held by federal
agencies and museums receiving federal funds shall be turned over to
lineal descendants or to the appropriate American Indian tribe or Native
Hawaiian organization. 25 U.S.C. §3005(a). The statute makes an
exception to this rule when “the items are indispensable for completion of
a specific scientific study, the outcome of which would be of major benefit
to the United States.” 25 U.S.C. §3005(b). Such items shall be returned
within 90 days of the completion of the scientific study. Although the
Smithsonian Institution is expressly excluded from coverage by the statute,
25 U.S.C. §3001(4) and (8), it is required to return those remains by the
National Museum of the Indian Act, 20 U.S.C. §§80q to 80q-15. This
statute requires the Smithsonian to return “any Indian human remains . . .
identified by a preponderance of the evidence as those of a particular
individual or as those of an individual culturally affiliated with a particular
Indian tribe, . . . upon the request of the descendants of such individual or

368
of the Indian tribe.” 20 U.S.C. §80q-9(c). It therefore allows the museum
to retain any human remains for study that cannot be proven to have a
connection to an identifiable tribe. As between the museum and American
Indian nations, who has a stronger claim to the unidentified human
remains held by the Smithsonian?
5. Native American artifacts. Under NAGPRA, sacred objects “needed
by traditional Native American religious leaders for the practice of
traditional Native American religions by their present day adherents” (25
U.S.C. §3001(3)(C)) and “objects of cultural patrimony” that have
“ongoing historical, traditional or cultural importance central to the Native
American group or culture” discovered on federal or tribal lands after the
effective date of the law belong to the tribe on whose land they are found
or to the tribe having the closest affiliation with the objects. 25 U.S.C.
§3002(a). This provision of NAGPRA does not apply to items found on
private or state land. As to sacred items or objects of cultural patrimony
discovered prior to the effective date of the law and now in the hands of
federal agencies or museums that receive federal funding, those objects
must be returned (upon request) to tribes that can successfully establish a
cultural affiliation with them. See 25 U.S.C. §3005. The agency or
museum will not have to return the item if it can establish that it acquired
the item from someone authorized to convey them or that the items are
essential to important scientific research. See id. If the latter exception
applies, the agency or museum must return the item when the research is
completed. See id.; see also 43 C.F.R. §10.10.

Problems
1. A museum subject to NAGPRA has been asked to return its human
remains. The museum argues that the remains are needed for a scientific
study to extract DNA material from the bones for the purpose of
genetically tracing which tribes evolved from other tribes and where their
ancestors originated. It is hoped that the study will teach a great deal about
migration patterns and the prehistory of America.
a. Is this study “specific,” as required by §3005(b)?
b. Is it “of major benefit to the United States,” as required by
§3005(b)? Is other information needed to answer this question?
2. In the 1800s, J.S. Emerson took a number of Native Hawaiian
artifacts from a cave on the Big Island. He put labels with his name on the
items and sold several of them to the Bishop Museum in Honolulu and the
Peabody Essex Museum in Massachusetts. In 2003, those items were
repatriated from the museums and reburied in the cave. It is not clear

369
whether the items were repatriated pursuant to NAGPRA — that is,
whether they were affiliated with any Native Hawaiian organization. In
2004, Daniel Taylor, the owner of an antiquities store in Hawai`i, learned
of the objects’ reburial through a friend. He found the cave, which is on
state land, pushed aside a stone that had been placed in front of the
entrance, and found the artifacts, some of which still had Emerson’s labels
affixed to them. Taylor took about 157 artifacts valued at between
$800,000 and $1.2 million and tried to sell them. A grand jury in Hawai`i
indicted Taylor for first-degree theft, a class B felony. To be guilty of theft
under Hawai`i law, a defendant must intend to “obtain or exert control
over the property of another.” Taylor moved for the dismissal of his
indictment, arguing that the state did not present the grand jury with
evidence sufficient to establish that the property he took was “the property
of another.” Does NAGPRA answer the question of who owns the items
Taylor took? Does state property law? What is the relevance, if any, of the
law of Native Hawaiians who claim an affiliation with the items? See State
v. Taylor, 269 P.2d 740 (Haw. 2011).
3. In a famous case, human remains more than 9,000 years old were
found on federal land in Washington State. When the Army Corps of
Engineers sought to return the remains of the “Kennewick man” to a group
of Columbia River tribes, a group of scientists objected on the ground that
the physiological features of the Kennewick man meant that he was
Caucasian rather than Indian, that he could not be a lineal ancestor of the
tribes in the area, and that examination of the remains was essential for
scientific purposes. They were very eager to study the remains for
scientific purposes because the presence of a Caucasian in the area at that
time would change anthropologists’ views of human biological and social
history. The tribes contended that his genetic makeup was irrelevant and
that if he had died in that spot 9,000 years ago, then he was on tribal land
and within the jurisdiction of the tribe, and it would violate their religious
beliefs not to rebury his remains. They also claimed a right to rebury him
and a religious claim to prevent him from being prodded by scientists. The
Ninth Circuit sided with the scientists on the ground that the Kennewick
man was not a Native American and that the tribes could not prove they
were related to him. The statute defines “Native American” as “relating to,
a tribe, people, or culture that is indigenous to the United States,” 25
U.S.C. §3001(9) (emphasis added), and the court determined that the use
of the present tense implied that to take control of the remains, the tribe
must prove they are related to a currently existing tribe or culture rather
than asserting a relation between a past tribe or culture. Given his age, it

370
was impossible to do that, and the tribes lost because they could not meet
that burden. Bonnichsen v. United States Department of Army, 367 F.3d
864 (9th Cir. 2004). See Rebecca Tsosie, Privileging Claims to the Past:
Ancient Human Remains and Contemporary Cultural Values, 31 Ariz. St.
L.J. 583 (1999). Did the court interpret the statute correctly? Did it do the
right thing? The secretary of the interior has promulgated rules under
NAGPRA that regulate the disposition of Native American human remains
that cannot be associated with a particular current federally recognized
tribe by requiring repatriation to the tribe on whose land the remains were
found. 43 C.F.R. §10.11.
4. The California legislation adopted after Wana the Bear required
reburial of human remains on other land. Suppose the Miwok Indians had
argued before the California legislature that the bodies of their ancestors
had to remain where they were found because moving the bodies would
disturb their souls. The Miwoks further argued that the ground where the
ancestors were found was holy land. They therefore sought legislation that
would prohibit removal and reburial of human remains from ground
deemed to be holy by the tribe most closely affiliated with the persons
whose remains were found.
a. What arguments could you make in favor of the legislation?
b. What arguments could you make against it?
c. What is the right thing to do?

1. Trademark law, which aims to prevent consumer confusion about the origin of
goods, relies on different utilitarian arguments having to do with the need to ensure
the integrity of markets. See Merges, Menell & Lemley, supra, at 11.
2. “Congress shall make no law . . . abridging the freedom of speech . . .” U.S.
Const. amend. I.
3. §107 (“Fair use of a copyrighted work . . . for purposes such as criticism [or]
comment . . . is not an infringement of copyright.”).
4. Myriad first identified groups of relatives with a history of breast cancer
(some of whom also had developed ovarian cancer); because these individuals
were related, scientists knew that it was more likely that their diseases were the
result of genetic predisposition rather than other factors. Myriad compared sections
of their chromosomes, looking for shared genetic abnormalities not found in the
general population. It was that process which eventually enabled Myriad to
determine where in the genetic sequence the BRCA1 and BRCA2 genes reside.
5. We express no opinion whether cDNA satisfies the other statutory
requirements of patentability. See, e.g., 35 U.S.C. §§102, 103, and 112.
6. The Center is a nonprofit corporation that seeks to promote the ideals of Dr.

371
King.
7. But see Pirone v. MacMillan, 894 F.2d 579 (2d Cir. 1990) (holding that
publicity rights are solely based on statutory law in New York and that the right of
publicity was not descendible). — EDS.
8. The Second Circuit has now accepted the Sixth Circuit’s interpretation of
Tennessee law. Factors Etc., Inc. v. Pro Arts, Inc., 652 F.2d 278 (2d Cir. 1981).
9. Egyptian law, like United States law, requires just compensation for takings.
Accordingly, Law 117 expressly provides for full compensation to those who
owned Egyptian antiquities prior to the state’s assumption of ownership in 1983 or,
even thereafter, to those whose land the state chooses to take by eminent domain in
order to preserve the immovable antiquities upon it. Furthermore, even those
persons who discover antiquities after 1983 and are therefore on notice of the
state’s ownership qualify, in the discretion of the Antiquities Authority, for
financial rewards for their efforts.
10. Kristen A. Carpenter, Sonia K. Katyal & Angela R. Riley, In Defense of
Property, 118 Yale L.J. 1022 (2009).

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CHAPTER 4

Human Beings and Human Bodies

§1 PROPERTY RIGHTS IN HUMAN BEINGS

What limits should the legal system impose on the conversion of
human interests into exchangeable property rights? Does it make sense to
use the vocabulary of property and market exchange to describe interests
in human bodies and in people themselves? Is anything lost by using the
imagery of property to evaluate these kinds of issues? Should there be a
presumption that all interests are exchangeable? In recent years, law and
economics scholars have used market and property images to analyze
almost every imaginable legal problem. See Richard Posner, Economic
Analysis of Law (9th ed. 2014). Professor Margaret Jane Radin has argued
that the use of market rhetoric to analyze all legal issues has the effect of
wrongfully “commodifying” human experience by conceptualizing all
human relationships in terms of market exchange. She argues that certain
types of property interests are so crucial to individual dignity, self-
fulfillment, the ability to form essential human relationships, and the
ability to participate as a member of political society, that they should be
treated as personal rights rather than as exchangeable interests in a market.
Margaret Jane Radin, Market-Inalienability, 100 Harv. L. Rev. 1849
(1987).
Market rhetoric is extremely useful, but it may be inappropriate in
some cases. The materials in this chapter explore this issue by addressing a
variety of interests in controlling people and human bodies, including the
issues of slavery, children, body parts and human genes, and frozen
embryos.

§2 SLAVERY
Dred Scott v. Sanford

60 U.S. 393 (1857)

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Mr. Chief Justice ROGER B. TANEY delivered the opinion of the court.
[Dred Scott, once a slave but now claiming to be a citizen of the State
of Missouri, sued John Sanford,1 a citizen of New York, to obtain his
freedom. Scott based federal jurisdiction on diversity of citizenship
between the parties, raising the question in the court’s mind whether Scott
was in fact a citizen of Missouri. In 1834, Scott’s former owner had taken
him from Missouri, a slave state, to Illinois, a free state, where they lived
for two years before moving to Minnesota, then part of the Louisiana
Territory, before returning to Missouri in 1838. Scott was then sold to
Sanford. Slavery was illegal in Illinois under state law and in Minnesota
under the federal statute called the Missouri Compromise Act of March 6,
1820, 3 Stat. 545. Sanford argued that Scott was not a citizen of Missouri
and hence could not bring a lawsuit in federal court based on diversity of
citizenship. Scott claimed to be both a Missouri citizen and a free man,
based on his having obtained freedom by domicile for a long period in a
state and a territory that did not recognize the status of slavery for its
domiciliaries. Sanford claimed that neither Illinois nor the Missouri
Compromise could constitutionally act to deprive him of his property
interest in Scott when they returned to a state that recognized property
interests in slaves.]

I
The plaintiff in error, who was also the plaintiff in the court below,
was, with his wife and children, held as slaves by the defendant, in the
State of Missouri; and he brought this action in the Circuit Court of the
United States for that district, to assert the title of himself and his family to
freedom.
[The first question concerned whether the court had jurisdiction to hear
the case. Such jurisdiction existed in federal court over suits between
“Citizens of different States,” U.S. Const. art. III, §2, cl. 1. Plaintiff Dred
Scott claimed that he was a citizen of Missouri and defendant Sanford a
citizen of New York. The issue that had to be decided was whether the
plaintiff was a “citizen” as defined in the Constitution.]
The question simply is this: Can a negro, whose ancestors were
imported into this country, and sold as slaves, become a member of the
political community formed and brought into existence by the Constitution
of the United States, and as such become entitled to all the rights, and
privileges, and immunities, guarantied by that instrument to the citizen?
One of which rights is the privilege of suing in a court of the United States
in the cases specified in the Constitution.

374
 It will be observed, that the plea applies to that class of persons only
whose ancestors were negroes of the African race, and imported into this
country, and sold and held as slaves. The only matter in issue . . . is,
whether the descendants of such slaves, when they shall be emancipated,
or who are born of parents who had become free before their birth, are
citizens of a State, in the sense in which the word “citizen” is used in the
Constitution of the United States.
The words “people of the United States” and “citizens” are
synonymous terms, and mean the same thing. They both describe the
political body who, according to our republican institutions, form the
sovereignty, and who hold the power and conduct the Government through
their representatives. They are what we familiarly call the “sovereign
people,” and every citizen is one of this people, and a constituent member
of this sovereignty. The question before us is, whether the class of persons
described in the plea in abatement compose a portion of this people, and
are constituent members of this sovereignty? We think they are not, and
that they are not included, and were not intended to be included, under the
word “citizens” in the Constitution, and can therefore claim none of the
rights and privileges which that instrument provides for and secures to
citizens of the United States. On the contrary, they were at that time
considered as a subordinate and inferior class of beings, who had been
subjugated by the dominant race, and, whether emancipated or not, yet
remained subject to their authority, and had no rights or privileges but such
as those who held the power and the Government might choose to grant
them.
[W]e must not confound the rights of citizenship which a State may
confer within its own limits, and the rights of citizenship as a member of
the Union. [P]revious to the adoption of the Constitution of the United
States, every State had the undoubted right to confer on whomsoever it
pleased the character of citizen, and to endow him with all its rights. But
this character of course was confined to the boundaries of the State, and
gave him no rights or privileges in other States beyond those secured to
him by the laws of nations and the comity of States.
It is very clear, therefore, that no State can, by any act or law of its
own, passed since the adoption of the Constitution, introduce a new
member into the political community created by the Constitution of the
United States. It cannot make him a member of this community by making
him a member of its own. And for the same reason it cannot introduce any
person, or description of persons, who were not intended to be embraced in
this new political family, which the Constitution brought into existence,
but were intended to be excluded from it.

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 The question then arises, whether the provisions of the Constitution, in
relation to the personal rights and privileges to which the citizen of a State
should be entitled, embraced the negro African race, at that time in this
country, or who might afterwards be imported, who had then or should
afterwards be made free in any State; and to put it in the power of a single
State to make him a citizen of the United States, and endue him with the
full rights of citizenship in every other State without their consent? Does
the Constitution of the United States act upon him whenever he shall be
made free under the laws of a State, and raised there to the rank of a
citizen, and immediately clothe him with all the privileges of a citizen in
every other State, and in its own courts?
The court thinks the affirmative of these propositions cannot be
maintained.
In the opinion of the court, the legislation and histories of the times,
and the language used in the Declaration of Independence, show, that
neither the class of persons who had been imported as slaves, nor their
descendants, whether they had become free or not, were then
acknowledged as a part of the people, nor intended to be included in the
general words used in that memorable instrument.
[African Americans] had for more than a century before been regarded
as beings of an inferior order, and altogether unfit to associate with the
white race, either in social or political relations; and so far inferior, that
they had no rights which the white man was bound to respect; and that the
negro might justly and lawfully be reduced to slavery for his benefit. He
was bought and sold, and treated as an ordinary article of merchandise and
traffic, whenever a profit could be made by it. This opinion was at that
time fixed and universal in the civilized portion of the white race. It was
regarded as an axiom in morals as well as in politics, which no one thought
of disputing, or supposed to be open to dispute; and men in every grade
and position in society daily and habitually acted upon it in their private
pursuits, as well as in matters of public concern, without doubting for a
moment the correctness of this opinion.
The language of the Declaration of Independence . . . would seem to
embrace the whole human family, and if they were used in a similar
instrument at this day would be so understood. But it is too clear for
dispute, that the enslaved African race were not intended to be included,
and formed no part of the people who framed and adopted this declaration;
for if the language, as understood in that day, would embrace them, the
conduct of the distinguished men who framed the Declaration of
Independence would have been utterly and flagrantly inconsistent with the
principles they asserted; and instead of the sympathy of mankind, to which

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they so confidently appealed, they would have deserved and received
universal rebuke and reprobation.
Yet the men who framed this declaration were great men — high in
literary acquirements — high in their sense of honor, and incapable of
asserting principles inconsistent with those on which they were acting.
They perfectly understood the meaning of the language they used, and how
it would be understood by others; and they knew that it would not in any
part of the civilized world be supposed to embrace the negro race, which,
by common consent, had been excluded from civilized Governments and
the family of nations, and doomed to slavery. They spoke and acted
according to the then established doctrines and principles, and in the
ordinary language of the day, and no one misunderstood them. The
unhappy black race were separated from the white by indelible marks, and
laws long before established, and were never thought of or spoken of
except as property, and when the claims of the owner or the profit of the
trader were supposed to need protection.
This state of public opinion had undergone no change when the
Constitution was adopted.
[T]here are two clauses in the Constitution which point directly and
specifically to the negro race as a separate class of persons, and show
clearly that they were not regarded as a portion of the people or citizens of
the Government then formed.
One of these clauses reserves to each of the thirteen States the right to
import slaves until the year 1808, if it thinks proper. And the importation
which it thus sanctions was unquestionably of persons of the race of which
we are speaking, as the traffic in slaves in the United States had always
been confined to them. And by the other provision the States pledge
themselves to each other to maintain the right of property of the master, by
delivering up to him any slave who may have escaped from his service,
and be found within their respective territories. By the first above-
mentioned clause, therefore, the right to purchase and hold this property is
directly sanctioned and authorized for twenty years by the people who
framed the Constitution. And by the second, they pledge themselves to
maintain and uphold the right of the master in the manner specified, as
long as the Government they then formed should endure. And these two
provisions show, conclusively, that neither the description of persons
therein referred to, nor their descendants, were embraced in any of the
other provisions of the Constitution; for certainly these two clauses were
not intended to confer on them or their posterity the blessings of liberty, or
any of the personal rights so carefully provided for the citizen.
And upon a full and careful consideration of the subject, the court is of

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opinion, that, upon the facts stated in the plea in abatement, Dred Scott
was not a citizen of Missouri within the meaning of the Constitution of the
United States, and not entitled to sue in its courts.

II
The act of Congress, upon which the plaintiff relies, declares that
slavery and involuntary servitude, except as a punishment for crime, shall
be forever prohibited in all that part of the territory ceded by France, under
the name of Louisiana, which lies north of thirty-six degrees thirty minutes
north latitude, and not included within the limits of Missouri. And the
difficulty which meets us at the threshold of this part of the inquiry is,
whether Congress was authorized to pass this law under any of the powers
granted to it by the Constitution; for if the authority is not given by that
instrument, it is the duty of this court to declare it void and inoperative,
and incapable of conferring freedom upon any one who is held as a slave
under the laws of any one of the States.
[The] power of Congress over the person or property of a citizen can
never be a mere discretionary power under our Constitution and form of
Government. The powers of the Government and the rights and privileges
of the citizen are regulated and plainly defined by the Constitution itself.
[An] act of Congress which deprives a citizen of the United States of
his liberty or property, merely because he came himself or brought his
property into a particular Territory of the United States, and who had
committed no offence against the laws, could hardly be dignified with the
name of due process of law.
[The] right of property in a slave is distinctly and expressly affirmed in
the Constitution. The right to traffic in it, like an ordinary article of
merchandise and property, was guarantied to the citizens of the United
States, in every State that might desire it, for twenty years. And the
Government in express terms is pledged to protect it in all future time, if
the slave escapes from his owner. This is done in plain words — too plain
to be misunderstood. And no word can be found in the Constitution which
gives Congress a greater power over slave property, or which entitles
property of that kind to less protection than property of any other
description. The only power conferred is the power coupled with the duty
of guarding and protecting the owner in his rights.
Upon these considerations, it is the opinion of the court that the act of
Congress which prohibited a citizen from holding and owning property of
this kind in the territory of the United States north of the line therein
mentioned, is not warranted by the Constitution, and is therefore void; and

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that neither Dred Scott himself, nor any of his family, were made free by
being carried into this territory; even if they had been carried there by the
owner, with the intention of becoming a permanent resident.
[The Court then answered Scott’s contention that his sojourn in Illinois
and Minnesota had rendered him free by holding that his status was to be
determined by Missouri law, his current domicile, and that under Missouri
law, he remained a slave.]

Notes and Questions

1. Dred Scott as constitutional interpretation. Dred Scott was only
the second decision in U.S. history (the first being Marbury v. Madison, 5
U.S. 137 (1803)) in which the Supreme Court held an act of Congress
unconstitutional. Dred Scott is known for invalidating the Missouri
Compromise, which had outlawed slavery in the territories, and for Chief
Justice Taney’s conclusion that African Americans were not “citizens” as
defined in the federal Constitution.
What were Chief Justice Taney’s reasons for his conclusion? Did these
arguments apply to free African Americans, who were not descended from
slaves? Was citizenship tied to free status or merely to race? Chief Justice
Taney argues that the language of equality and freedom in the Declaration
of Independence could not have been intended to include African
Americans because then “the conduct of the distinguished men who
framed the Declaration of Independence would have been utterly and
flagrantly inconsistent with the principles they asserted.” What follows
from this inconsistency?
Chief Justice Taney emphasizes the constitutional clauses that
explicitly recognize and protect slavery: the right to import slaves until
1808 and the fugitive slave clause, requiring all states to return slaves to
their masters. Those clauses state:

The Migration or Importation of Such Persons as any of the States now

existing shall think proper to admit, shall not be prohibited by the Congress
prior to the Year one thousand eight hundred and eight, but a Tax or duty
may be imposed on such Importation, not exceeding ten dollars for each
Person. [U.S. Const. art. I, §9, cl. 1.]
No Person held to Service of Labour in one State, under the Laws thereof,
escaping into another, shall, in Consequence of any Law or Regulation
therein, be discharged from such Service or Labour, but shall be delivered up
on Claim of the Party to whom such Service or Labour may be due. [U.S.
Const. art. IV, §2, cl. 3.]

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 What arguments could Chief Justice Taney have made to interpret the
Constitution — despite these clauses — to conclude that African
Americans were in fact “citizens” as defined in the Constitution?
2. The morality of slavery and the duty of the law. When a pirate
ship captured three vessels (one each from the United States, Spain, and
Portugal) off the coast of Africa and took Africans from each ship, and one
of those vessels was later captured off the coast of the United States with
many of the captured Africans aboard, the Supreme Court had to
determine whether to treat the captured Africans as slaves and return them
to their “owners” or to treat them as free persons. Because the United
States had outlawed the slave trade (but not slavery) in 1808, the Court in
The Antelope, 23 U.S. 66 (1825), ruled that the persons taken from the
American ship should be freed. No owner claimed the Africans aboard the
Portuguese ship, so they were freed as well. But the Court ordered the
persons aboard the Spanish ship to be returned to their owners if they
could prove their claims of title.
Chief Justice John Marshall explained that this was a case “in which
the sacred rights of liberty and of property come in conflict with each
other.” Id. at 114. Quoting John Locke, Marshall easily concluded that
slavery violated natural law. “That it is contrary to the law of nature will
scarcely be denied. That every man has a natural right to the fruits of his
own labour, is generally admitted; and that no other person can rightfully
deprive him of those fruits, and appropriate them against his will, seems to
be the necessary result of this admission.” Id. at 120. However, the slave
trade had long been engaged in by the “Christian and civilized nations of
world” and “claimed all the sanction which could be derived from long
usage, and general acquiescence.” Id. at 115. The Court thus concluded
that the slave trade was not contrary to the law of nations. Given a conflict
between natural law and the positive law adopted by the nations of the
world, the Court held that the positive law must prevail. “Slavery, then,
has its origin in force; but as the world has agreed that it is a legitimate
result of force, the state of things which is thus produced by general
consent, cannot be pronounced unlawful.” Id. at 121. Marshall explained,
id. at 121-122:

Whatever might be the answer of a moralist to this question, a jurist must

search for its legal solution, in those principles of action which are
sanctioned by the usages, the national acts, and the general assent, of that
portion of the world of which he considers himself as a part, and to whose
law the appeal is made. If we resort to this standard as the test of
international law, the question, as has already been observed, is decided in

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 favour of the legality of the trade. Both Europe and America embarked in it;
and for nearly two centuries, it was carried on without opposition, and
without censure. A jurist could not say, that a practice thus supported was
illegal, and that those engaged in it might be punished, either personally, or
by deprivation of property.

Recall that Marshall had similarly concluded in 1823 in reference to

colonial claims of title over Indian lands that “[c]onquest gives a title
which the Courts of the conqueror cannot deny, whatever the private and
speculative opinions of individuals may be, respecting the original justice
of the claim which has been successfully asserted.” Johnson v. M’Intosh,
21 U.S. 543 (1823).
Did the Supreme Court do the right thing in The Antelope? What is the
judge’s appropriate role if a judge believes that the law violates
fundamental norms of justice? See Robert M. Cover, Justice Accused:
Antislavery and the Judicial Process (1975) (criticizing antislavery judges
who felt bound by “the law” to return slaves to their purported masters).

§3 CHILDREN
In the Matter of Baby M

537 A.2d 1227 (N.J. 1988)

ROBERT N. WILENTZ, C.J.
In February 1985, William Stern and Mary Beth Whitehead entered
into a surrogacy contract. It recited that Stern’s wife, Elizabeth, was
infertile, that they wanted a child, and that Mrs. Whitehead was willing to
provide that child as the mother with Mr. Stern as the father.
The contract provided that through artificial insemination using Mr.
Stern’s sperm, Mrs. Whitehead would become pregnant, carry the child to
term, bear it, deliver it to the Sterns, and thereafter do whatever was
necessary to terminate her maternal rights so that Mrs. Stern could
thereafter adopt the child. Mrs. Whitehead’s husband, Richard, was also a
party to the contract; Mrs. Stern was not. Although Mrs. Stern was not a
party to the surrogacy agreement, the contract gave her sole custody of the
child in the event of Mr. Stern’s death. Mrs. Stern’s status as a nonparty to
the surrogate parenting agreement presumably was to avoid the application
of the baby-selling statute to this arrangement. N.J. Stat. §9:3-54.2
Mr. Stern, on his part, agreed to attempt the artificial insemination and
to pay Mrs. Whitehead $10,000 after the child’s birth, on its delivery to

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him. In a separate contract, Mr. Stern agreed to pay $7,500 to the
Infertility Center of New York (“ICNY”).
[The Sterns entered the arrangement because Mrs. Stern learned that
she might have multiple sclerosis and feared that pregnancy] might
precipitate blindness, paraplegia, or other forms of debilitation. Based on
the perceived risk, the Sterns decided to forego having their own children.
The decision had special significance for Mr. Stern. Most of his family had
been destroyed in the Holocaust. As the family’s only survivor, he very
much wanted to continue his bloodline.
Initially the Sterns considered adoption, but were discouraged by the
substantial delay apparently involved and by the potential problem they
saw arising from their age and their differing religious backgrounds. They
were most eager for some other means to start a family.
Mrs. Whitehead’s [willingness to act as a “surrogate mother”]
apparently resulted from her sympathy with family members and others
who could have no children (she stated that she wanted to give another
couple the “gift of life”); she also wanted the $10,000 to help her family.
Mrs. Whitehead realized, almost from the moment of birth, that she
could not part with this child. She had felt a bond with it even during
pregnancy. Some indication of the attachment was conveyed to the Sterns
at the hospital when they told Mrs. Whitehead what they were going to
name the baby. She apparently broke into tears and indicated that she did
not know if she could give up the child. She talked about how the baby
looked like her other daughter, and made it clear that she was experiencing
great difficulty with the decision.
Nonetheless, Mrs. Whitehead was, for the moment, true to her word.
Despite powerful inclinations to the contrary, she turned her child over to
the Sterns on March 30 at the Whiteheads’ home.
Later in the evening of March 30, Mrs. Whitehead became deeply
disturbed, disconsolate, stricken with unbearable sadness. She had to have
her child. She could not eat, sleep, or concentrate on anything other than
her need for her baby. The next day she went to the Sterns’ home and told
them how much she was suffering.
The depth of Mrs. Whitehead’s despair surprised and frightened the
Sterns. She told them that she could not live without her baby, that she
must have her, even if only for one week, that thereafter she would
surrender her child. The Sterns, concerned that Mrs. Whitehead might
indeed commit suicide, not wanting under any circumstances to risk that,
and in any event believing that Mrs. Whitehead would keep her word,
turned the child over to her. It was not until four months later, after a series
of attempts to regain possession of the child, that Melissa was returned to

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the Sterns, having been forcibly removed from the home where she was
then living with Mr. and Mrs. Whitehead, the home in Florida owned by
Mary Beth Whitehead’s parents.
The struggle over Baby M began when it became apparent that Mrs.
Whitehead could not return the child to Mr. Stern. Due to Mrs.
Whitehead’s refusal to relinquish the baby, Mr. Stern filed a complaint
seeking enforcement of the surrogacy contract. . . . [The court issued an ex
parte order to Mrs. Whitehead to hand the child over to the Sterns. When
the Sterns appeared at the Whiteheads’ house with the process server and
the police to enforce the order,] Mr. Whitehead fled with the child, who
had been handed to him through a window while those who came to
enforce the order were thrown off balance by a dispute over the child’s
current name.
Eventually the Sterns discovered where the Whiteheads were staying,
commenced supplementary proceedings in Florida, and obtained an order
requiring the Whiteheads to turn over the child. Police in Florida enforced
the order, forcibly removing the child from her grandparents’ home. She
was soon thereafter brought to New Jersey and turned over to the Sterns.
[Trial Court Judge Sorkow] held that the surrogacy contract was valid;
ordered that Mrs. Whitehead’s parental rights be terminated and that sole
custody of the child be granted to Mr. Stern; and, after hearing brief
testimony from Mrs. Stern, immediately entered an order allowing the
adoption of Melissa by Mrs. Stern, all in accordance with the surrogacy
contract.

II. Invalidity and Unenforceability of Surrogacy Contract

We have concluded that this surrogacy contract is invalid. Our
conclusion has two bases: direct conflict with existing statutes and conflict
with the public policies of this State, as expressed in its statutory and
decisional law.

A. Conflict with Statutory Provisions

The surrogacy contract conflicts with: (1) laws prohibiting the use of
money in connection with adoptions; (2) laws requiring proof of parental
unfitness or abandonment before termination of parental rights is ordered
or an adoption is granted; and (3) laws that make surrender of custody and
consent to adoption revocable in private placement adoptions.
(1) Our law prohibits paying or accepting money in connection with
any placement of a child for adoption. N.J. Stat. §9:3-54a. Violation is a
high misdemeanor. N.J. Stat. §9:3-54c. Excepted are fees of an approved

383
agency (which must be a non-profit entity, N.J. Stat. §9:3-38a) and certain
expenses in connection with childbirth. N.J. Stat. §9:3-54b.7.
Mr. Stern knew he was paying for the adoption of a child; Mrs.
Whitehead knew she was accepting money so that a child might be
adopted; the Infertility Center knew that it was being paid for assisting in
the adoption of a child. The actions of all three worked to frustrate the
goals of the statute.
The evils inherent in baby-bartering are loathsome for a myriad of
reasons. The child is sold without regard for whether the purchasers will
be suitable parents. The natural mother does not receive the benefit of
counseling and guidance to assist her in making a decision that may affect
her for a lifetime. In fact, the monetary incentive to sell her child may,
depending on her financial circumstances, make her decision less
voluntary.
Baby-selling potentially results in the exploitation of all parties
involved. Conversely, adoption statutes seek to further humanitarian goals,
foremost among them the best interests of the child. The negative
consequences of baby-buying are potentially present in the surrogacy
context, especially the potential for placing and adopting a child without
regard to the interest of the child or the natural mother.
(2) The termination of Mrs. Whitehead’s parental rights, called for by
the surrogacy contract and actually ordered by the court, fails to comply
with the stringent requirements of New Jersey law. Our law, recognizing
the finality of any termination of parental rights, provides for such
termination only where there has been a voluntary surrender of a child to
an approved agency or to the Division of Youth and Family Services
(“DYFS”), accompanied by a formal document acknowledging
termination of parental rights, N.J. Stat. §§9:2-16, -17; N.J. Stat. §9:3-41;
N.J. Stat. §30:4C-23, or where there has been a showing of parental
abandonment or unfitness.
In this case a termination of parental rights was obtained not by
proving the statutory prerequisites but by claiming the benefit of
contractual provisions. [A] contractual agreement to abandon one’s
parental rights, or not to contest a termination action, will not be enforced
in our courts. The Legislature would not have so carefully, so consistently,
and so substantially restricted termination of parental rights if it had
intended to allow termination to be achieved by one short sentence in a
contract.
Since the termination was invalid, it follows, as noted above, that
adoption of Melissa by Mrs. Stern could not properly be granted.
(3) The provision in the surrogacy contract stating that Mary Beth

384
Whitehead agrees to “surrender custody . . . and terminate all parental
rights” contains no clause giving her a right to rescind. It is intended to be
an irrevocable consent to surrender the child for adoption — in other
words, an irrevocable commitment by Mrs. Whitehead to turn Baby M
over to the Sterns and thereafter to allow termination of her parental rights.
[New Jersey statutes provide that no surrender of the custody of a child
shall be valid unless the surrender is made to a state agency, is in writing
and conforms to particular requirements, declares the person’s desire to
relinquish custody, acknowledges termination of parental rights to the state
agency, and acknowledges full understanding of the effect of the
surrender. N.J. Stat. §§9:2-14, 9:2-16, 9:2-17.]
It is clear that the Legislature so carefully circumscribed all aspects of
a consent to surrender custody — its form and substance, its manner of
execution, and the agency or agencies to which it may be made — in order
to provide the basis for irrevocability. It seems most unlikely that the
Legislature intended that a consent not complying with these requirements
would also be irrevocable, especially where, as here, that consent falls
radically short of compliance.
These strict prerequisites to irrevocability constitute a recognition of
the most serious consequences that flow from such consents: termination
of parental rights, the permanent separation of parent from child, and the
ultimate adoption of the child. Because of those consequences, the
Legislature severely limited the circumstances under which such consent
would be irrevocable. The legislative goal is furthered by regulations
requiring approved agencies, prior to accepting irrevocable consents, to
provide advice and counseling to women, making it more likely that they
fully understand and appreciate the consequences of their acts. N.J.
Admin. Code tit. 10 §121A-5.4(c).
The provision in the surrogacy contract, agreed to before conception,
requiring the natural mother to surrender custody of the child without any
right of revocation is one more indication of the essential nature of this
transaction: the creation of a contractual system of termination and
adoption designed to circumvent our statutes.

B. Public Policy Considerations

The surrogacy contract’s invalidity, resulting from its direct conflict
with the above statutory provisions, is further underlined when its goals
and means are measured against New Jersey’s public policy. The
contract’s basic premise, that the natural parents can decide in advance of
birth which one is to have custody of the child, bears no relationship to the

385
settled law that the child’s best interests shall determine custody.
The surrogacy contract violates the policy of this State that the rights
of natural parents are equal concerning their child, the father’s right no
greater than the mother’s. “The parent and child relationship extends
equally to every child and to every parent, regardless of the marital status
of the parents.” N.J. Stat. §9:17-40. . . . The whole purpose and effect of
the surrogacy contract was to give the father the exclusive right to the
child by destroying the rights of the mother.
The only legal advice Mary Beth Whitehead received regarding the
surrogacy contract was provided in connection with the contract that she
previously entered into with another couple. Mrs. Whitehead’s lawyer was
referred to her by the Infertility Center, with which he had an agreement to
act as counsel for surrogate candidates. His services consisted of spending
one hour going through the contract with the Whiteheads, section by
section, and answering their questions. Mrs. Whitehead received no further
legal advice prior to signing the contract with the Sterns.
Under the contract, the natural mother is irrevocably committed before
she knows the strength of her bond with her child. She never makes a
totally voluntary, informed decision, for quite clearly any decision prior to
the baby’s birth is, in the most important sense, uninformed, and any
decision after that, compelled by a pre-existing contractual commitment,
the threat of a lawsuit, and the inducement of a $10,000 payment, is less
than totally voluntary. Her interests are of little concern to those who
controlled this transaction.
Worst of all, however, is the contract’s total disregard of the best
interests of the child. There is not the slightest suggestion that any inquiry
will be made at any time to determine the fitness of the Sterns as custodial
parents, of Mrs. Stern as an adoptive parent, their superiority to Mrs.
Whitehead, or the effect on the child of not living with her natural mother.
This is the sale of a child, or, at the very least, the sale of a mother’s
right to her child, the only mitigating factor being that one of the
purchasers is the father. Almost every evil that prompted the prohibition
on the payment of money in connection with adoptions exists here.
The differences between an adoption and a surrogacy contract should
be noted, since it is asserted that the use of money in connection with
surrogacy does not pose the risks found where money buys an adoption.
First, and perhaps most important, all parties concede that it is unlikely
that surrogacy will survive without money. Despite the alleged selfless
motivation of surrogate mothers, if there is no payment, there will be no
surrogates, or very few. That conclusion contrasts with adoption; for
obvious reasons, there remains a steady supply, albeit insufficient, despite

386
the prohibitions against payment. The adoption itself, relieving the natural
mother of the financial burden of supporting an infant, is in some sense the
equivalent of payment.
Second, the use of money in adoptions does not produce the problem
— conception occurs, and usually the birth itself, before illicit funds are
offered. With surrogacy, the “problem,” if one views it as such, consisting
of the purchase of a woman’s procreative capacity, at the risk of her life, is
caused by and originates with the offer of money.
Third, with the law prohibiting the use of money in connection with
adoptions, the built-in financial pressure of the unwanted pregnancy and
the consequent support obligation do not lead the mother to the highest
paying, ill-suited, adoptive parents. She is just as well-off surrendering the
child to an approved agency. In surrogacy, the highest bidders will
presumably become the adoptive parents regardless of suitability, so long
as payment of money is permitted.
Fourth, the mother’s consent to surrender her child in adoptions is
revocable, even after surrender of the child, unless it be to an approved
agency, where by regulation there are protections against an ill-advised
surrender. In surrogacy, consent occurs so early that no amount of advice
would satisfy the potential mother’s need, yet the consent is irrevocable.
In the scheme contemplated by the surrogacy contract in this case, a
middleman, propelled by profit, promotes the sale. Whatever idealism may
have motivated any of the participants, the profit motive predominates,
permeates, and ultimately governs the transaction. The demand for
children is great and the supply small. The availability of contraception,
abortion, and the greater willingness of single mothers to bring up their
children has led to a shortage of babies offered for adoption. The situation
is ripe for the entry of the middleman who will bring some equilibrium
into the market by increasing the supply through the use of money.
Intimated, but disputed, is the assertion that surrogacy will be used for
the benefit of the rich at the expense of the poor. See, e.g., Margaret Jane
Radin, Market-Inalienability, 100 Harv. L. Rev. 1849, 1930 (1987). In
response it is noted that the Sterns are not rich and the Whiteheads not
poor. Nevertheless, it is clear to us that it is unlikely that surrogate mothers
will be as proportionately numerous among those women in the top twenty
percent income bracket as among those in the bottom twenty percent. Put
differently, we doubt that infertile couples in the low-income bracket will
find upper income surrogates.
The point is made that Mrs. Whitehead agreed to the surrogacy
arrangement, supposedly fully understanding the consequences. Putting
aside the issue of how compelling her need for money may have been, and

387
how significant her understanding of the consequences, we suggest that
her consent is irrelevant. There are, in a civilized society, some things that
money cannot buy. In America, we decided long ago that merely because
conduct purchased by money was “voluntary” did not mean that it was
good or beyond regulation and prohibition. Employers can no longer buy
labor at the lowest price they can bargain for, even though that labor is
“voluntary,” 29 U.S.C. §206 (1982), or buy women’s labor for less money
than paid to men for the same job, 29 U.S.C. §206(d), or purchase the
agreement of children to perform oppressive labor, 29 U.S.C. §212, or
purchase the agreement of workers to subject themselves to unsafe or
unhealthful working conditions, 29 U.S.C. §§651 to 678 (Occupational
Safety and Health Act of 1970). There are, in short, values that society
deems more important than granting to wealth whatever it can buy, be it
labor, love, or life. Whether this principle recommends prohibition of
surrogacy, which presumably sometimes results in great satisfaction to all
of the parties, is not for us to say. We note here only that, under existing
law, the fact that Mrs. Whitehead “agreed” to the arrangement is not
dispositive.
The surrogacy contract is based on principles that are directly contrary
to the objectives of our laws. It guarantees the separation of a child from
its mother; it looks to adoption regardless of suitability; it totally ignores
the child; it takes the child from the mother regardless of her wishes and
her maternal fitness; and it does all of this, it accomplishes all of its goals,
through the use of money.
Beyond that is the potential degradation of some women that may
result from this arrangement. In many cases, of course, surrogacy may
bring satisfaction, not only to the infertile couple, but to the surrogate
mother herself. The fact, however, that many women may not perceive
surrogacy negatively but rather see it as an opportunity does not diminish
its potential for devastation to other women.
In sum, the harmful consequences of this surrogacy arrangement
appear to us all too palpable. In New Jersey the surrogate mother’s
agreement to sell her child is void. Its irrevocability infects the entire
contract, as does the money that purports to buy it.

Notes and Questions

1. Baby-selling. The contract in Baby M raises a host of legal
questions. It is important to distinguish several issues. One question is
whether the arrangement constitutes a criminal act in violation of state law
prohibiting baby-selling. If it does, the mere fact of entering the

388
contractual arrangement may subject the parties to criminal penalties. A
second, and quite different, question is whether the contract is enforceable.
It may very well be that the legislature did not intend to impose criminal
penalties for surrogacy arrangements — such as those imposed on persons
who buy and sell drugs or controlled substances — but that these
agreements were unenforceable as a matter of contract law. As the law
currently stands, the states do not seem to be treating surrogacy as a crime
that would subject the parties to punishment by fine or imprisonment.
2. Enforcement of surrogacy agreements. The enforceability of
surrogacy contracts raises a series of issues.
a. Void or voidable? One possibility is that the courts could hold
the contract void as against public policy. This is what the Supreme
Court of New Jersey did in Baby M. Under this approach, the court
approaches the case as if there were no agreement; the standard rule for
settling a custody dispute is “the best interests of the child.” A second
possibility is to hold the contract voidable by the birth mother rather
than absolutely void. Under this approach, the birth mother — but not
the biological father — has the right to reject the contract. If she rejects
the contract, custody is determined by the best interests of the child. A
mother who was willing to hand over her child pursuant to the
surrogacy agreement would be able to do so and would be able to
obtain a court judgment ordering the contract parents to pay her the
money owed on the agreement.
b. Damages or specific performance? If the contract is
enforceable, then the appropriate remedy for breach must be
determined. One possibility is specific performance through an
injunction ordering the mother to hand over the child in accordance
with the contract terms. Such a result might comport with traditional
law in that specific performance is often ordered when an item being
sold is unique, such as land or artwork. Children are obviously unique,
but should they be considered items for sale? If specific performance is
denied, courts may enforce the contract by damages only.
3. Disagreement in the courts. Like the Supreme Court of New
Jersey, other state courts have refused to enforce surrogacy arrangements.
See Doe v. Kelley, 307 N.W.2d 438 (Mich. Ct. App. 1981) (interpreting
the Michigan Adoption Law to prohibit the exchange of money for
surrogacy); R.R. v. M.H., 689 N.E.2d 790 (Mass. 1998) (contract is void to
the extent that it provides compensation to surrogate beyond costs incurred
in pregnancy and surrogate’s consent to relinquish parental rights not valid
until time for effectively granting consent to adoption, four days after the

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child’s birth).
Other courts have held that surrogacy contracts are voidable rather than
void per se. The Supreme Court of Kentucky has held that the birth mother
in a surrogacy arrangement has the right to void the contract if she changes
her mind during pregnancy or immediately after birth. Surrogate
Parenting Associates v. Commonwealth ex rel. Armstrong, 704 S.W.2d
209 (Ky. 1986). See also Matter of Adoption of Baby Girl, L.J., 505
N.Y.S.2d 813 (Surr. Ct. 1986) (holding that surrogate parenting
agreements are not void but are voidable if they do not conform with state
adoption statutes).
The Supreme Court of California has held, in contrast, that surrogate
mother contracts are specifically enforceable, at least where both the egg
and sperm are donated by individuals other than the surrogate mother who
bears the child. Johnson v. Calvert, 851 P.2d 776 (Cal. 1993). More
broadly, however, the court held that “she who intended to procreate the
child — that is, she who intended to bring about the birth of a child that
she intended to raise as her own — is the natural mother under California
law,” suggesting that such contracts might be enforceable even if the egg
were that of the surrogate mother. Id. at 782; see also In re F.T.R., 833
N.W.2d 634 (Wis. 2013) (enforcing — in a case involving a surrogate who
was also the egg donor — custody provisions of surrogacy contract,
declining to enforce provisions of contract terminating surrogate’s parental
rights, and pleading with the Wisconsin state legislature to address the
issue of surrogacy); Doe v. Roe, 717 A.2d 706 (Conn. 1998) (enforcing
surrogacy contract over objections of surrogate who was not the egg
donor). Should surrogacy arrangements be enforced? If so, by specific
performance or by damages? If they should not be enforced, should they
be void or voidable? Does the increasing acceptance of same-sex marriage
have any bearing on the debate over surrogacy?
4. Surrogacy statutes. A number of states have adopted statutes
concerning surrogacy agreements. Some states criminalize the agreements,
particularly where they involve the payment of money. See, e.g., Mich.
Comp. Laws §722.859 (prohibiting surrogacy contracts and making it a
felony for anyone other than the participating parties to assist in the
formation of the contract); see also D.C. Code Ann. §§16-401 to -402;
N.Y. Dom. Rel. L. §§121-124 (providing civil penalties for commercial
surrogacy contracts); Wash. Rev. Code. §§26.26.101, .210-.260.
Numerous countries also ban the practice, including Australia, China, the
Czech Republic, Denmark, France, Germany, Italy, Mexico, Spain,
Switzerland, Taiwan, and Turkey. See Pamela Laufer-Ukeles, Mothering

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for Money: Regulating Commercial Intimacy, 88 Ind. L.J. 1223, 1225 n.11
(2013). Some statutes merely declare the contracts voidable. See, e.g.,
N.D. Code §13-18-05. Finally, other states permit the practice, but they
typically regulate it very tightly. See, e.g., Fla. Stat. §63.213 (permitting
surrogacy contracts but limiting surrogate to reimbursement for expenses,
including living expenses during pregnancy, and permitting surrogate to
void promise to give up custody during the 48 hours after birth); N.H. Stat.
§§168-B:1-32; Va. Code §20-156. For a comprehensive survey of state
surrogacy laws, see Darra L. Hofman, Mama’s Baby, Daddy’s Maybe, 35
Wm. Mitchell L. Rev. 449 (2009).
5. Policy considerations and gestational surrogacy. In Johnson,
supra, the majority opinion stated:

Anna [Johnson] and some commentators have expressed concern that

surrogacy contracts tend to exploit or dehumanize women, especially women
of lower economic status. Anna’s objections center around the psychological
harm she asserts may result from the gestator’s relinquishing the child to
whom she has given birth. Some have also cautioned that the practice of
surrogacy may encourage society to view children as commodities, subject to
trade at their parents’ will.

Terms:
Gestational surrogacy occurs when the surrogate carries a fetus to which she
has no genetic relationship (because the egg is from the intended mother or
donated by a third party). Today, 95 percent of surrogates are of the gestational
variety. See J. Herbie Difonzo & Ruth C. Stern, The Children of Baby M., 39
Cap. U. L. Rev. 345, 355 (2011). When the surrogate also provides the egg, the
arrangement is often referred to as traditional surrogacy.

We are unpersuaded that gestational surrogacy arrangements are so likely

to cause the untoward results Anna cites as to demand their invalidation on
public policy grounds. Although common sense suggests that women of
lesser means serve as surrogate mothers more often than do wealthy women,
there has been no proof that surrogacy contracts exploit poor women to any
greater degree than economic necessity in general exploits them by inducing
them to accept lower-paid or otherwise undesirable employment. We are
likewise unpersuaded by the claim that surrogacy will foster the attitude that
children are mere commodities; no evidence is offered to support it. The
limited data available seem to reflect an absence of significant adverse
effects of surrogacy on all participants.
The argument that a woman cannot knowingly and intelligently agree to

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 gestate and deliver a baby for intending parents carries overtones of the
reasoning that for centuries prevented women from attaining equal economic
rights and professional status under the law. To resurrect this view is both to
foreclose a personal and economic choice on the part of the surrogate
mother, and to deny intending parents what may be their only means of
procreating a child of their own genetic stock. Certainly in the present case it
cannot seriously be argued that Anna, a licensed vocational nurse who had
done well in school and who had previously borne a child, lacked the
intellectual wherewithal or life experience necessary to make an informed
decision to enter into the surrogacy contract.

851 P.2d at 785. However, Justice Joyce Kennard, the lone dissenting
judge and the only woman on the court at the time, argued that a pregnant
woman is “more than a mere container or breeding animal; she is a
conscious agent of creation no less than the genetic mother.” Id. at 797-
798. Justice Kennard would have granted custody based on the best
interests of the child.
Some analysts have supported the decision in Baby M. Martha A.
Field, Surrogate Motherhood: The Legal and Human Issues 151 (1990)
(arguing that either surrogate mother contracts should not be enforceable at
all or the surrogate mother should have a right to change her mind for
some time after the child is born); Patricia J. Williams, The Alchemy of
Race and Rights 217-219, 224-226 (1991) (arguing that enforcing a
contract signed at a discrete point of time may wind up “enslav[ing]” the
one who signed it by depriving a surrogate mother of the power to exit an
arrangement she comes to understand as extraordinarily harmful to her).
Others have argued that such contracts should be presumptively
enforceable. For example, Professor Pamela Laufer-Ukeles has offered a
qualified defense of surrogacy arrangements:

[T]he vast majority of surrogate mothers do not attest to bonding with the
babies they gestate to the extent that many predicted and was evident in the
case of Baby M. While most surrogates assert that parting with the baby is a
difficult separation, it does not appear to be as traumatic as expected. Indeed,
given the thousands of surrogacy contracts that are entered into each year, “
‘the lack of litigation is remarkable.’ ” When asked, surrogate mothers do not
generally indicate that the babies belong to them; rather, they feel they are
providing a meaningful and valuable service for the intended parents. While
this appears to be true for both gestational and traditional surrogates, it seems
especially true for gestational surrogates who do not have a genetic
connection to the fetus. Gestational surrogates report to heavily emphasize
genetics and consider the baby in the womb to be someone else’s based on
genetic affiliation. Whether or not one believes that genetic affiliation

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 between intended parents and the baby does or should make a significant
difference in the permissibility of surrogacy or in identifying legal
motherhood, studies suggest that the lack of genetic affiliation matters to
gestational surrogates (but apparently not to traditional surrogates) and
facilitates the process for them. . . .
Selling one’s gestational services seems to be . . . more personal, involved,
and implicating of bodily integrity than housekeeping, but not as potentially
harmful as agreeing to undergo unproven drug therapies for high levels of
compensation. Gestation is a condition, not an irreplaceable body part. And,
with modern medicine, gestation is no more dangerous than many other
activities that are legal. Still, it is a commitment of a bodily function, long-
term and involved, that does not mirror typical jobs. Thus, there is room to
be concerned about the autonomy of the surrogate without paternalistically
denying her right to engage in their services altogether.

Pamela Laufer-Ukeles, Mothering for Money: Regulating Commercial

Intimacy, 88 Ind. L.J. 1223, 1230-1231, 1249 (2013). Accord, Marjorie
Maguire Shultz, Reproductive Technology and Intent-Based Parenthood:
An Opportunity for Gender Neutrality, 1990 Wis. L. Rev. 297, 302-303;
Lori B. Andrews, Surrogate Motherhood: The Challenge for Feminists, 16
Law Med. & Health Care 72 (1988); Carmel Shalev, Birth Power: The
Case for Surrogacy (1989). Judge Richard Posner has argued that
surrogacy contracts should be specifically enforced because (a) they are
mutually beneficial to the parties; (b) they benefit the child because
without them the child would not have been born; (c) there is no evidence
that women, in general, misunderstand the distress they will feel at having
to give up the baby; (d) poor women are better off if they have the choice
to enter such agreements to make money; (e) women are competent to
make voluntary and informed choices and it is paternalistic to assume that
they are not competent to do so; and (f) commodification of the surrogacy
relation is unlikely to affect social norms or attitudes toward the sanctity of
human life. Richard Posner, The Ethics and Economics of Enforcing
Contracts of Surrogate Motherhood, 5 J. Contemp. Health L. & Poly. 21
(1989); see also Richard A. Epstein, Surrogacy: The Case for Full
Contractual Enforcement, 81 Va. L. Rev. 2377 (1995). For a recent
summary of the evolving debate, see Elizabeth Scott, Surrogacy and the
Politics of Commodification, 72 Law & Contemp. Probs. 109 (2009).
Should it make a difference for the law’s treatment of these
arrangements whether the surrogate is also the donor of the ovum used to
create the embryo or whether the contract involves so-called gestational
surrogacy? See A.G.R. v. D.R.H., Slip Op., Docket No. FD-09-1838-07
(N.J. Super. Ct. Hudson Cty., Dec. 23, 2009) (available at

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http://graphics8.nytimes.com/packages/pdf/national/20091231_SURROGATE.pdf
) (rejecting the argument that the Baby M decision applied only when the
surrogate is genetically related to the infant). Some of the states that permit
surrogacy do so only for gestational surrogates. See, e.g., 750 Ill. Comp.
Stat. 47/1-47/75; N.D.C.C. §14-18-08.

§4 FROZEN EMBRYOS
In vitro fertilization techniques can enable couples with fertility
problems to have children. Because the failure rate of the procedure is very
high, the practice is to attempt to fertilize a number of eggs, allow them to
begin dividing, and to implant some of the fertilized ova. Those that are
not used initially are preserved for later use if the current implantation fails
to result in a pregnancy. According to the U.S. Department of Health and
Human Services, there are more than 600,000 frozen embryos in the
United States. See Anna Stolley Persky, Deep Freeze, A.B.A. J., June
2016, at 47, 49. Disputes over the disposition of these fertilized ova have
generated a host of difficult legal issues.
Are preembryos persons or property? In Davis v. Davis, 842
S.W.2d 588 (Tenn. 1992), Mary Sue Davis and Junior Davis disagreed
over the use of seven of Mary Sue’s preserved ova, fertilized by Junior’s
sperm. After the couple divorced, Mary Sue sought to have some of these
frozen embryos implanted so that she could have a child. Junior objected.
In an opinion by Judge W. Dale Young, the trial court held that “life
begins at conception,” that “human embryos are not property” but
children, that it was in the best interests of those children to be available
for implantation, and that “custody” of the children should be awarded to
Mary Sue. Id. at 594. If this is correct, could Mary Sue Davis be
vulnerable to a charge of child neglect or reckless abandonment if she
chose not to implant the fertilized embryos?

Terms:
Courts variously characterize the fertilized ova as embryos, frozen embryos,
preembryos, and prezygotes. In this context, the terms are interchangeable,
although they may have different connotations and rhetorical effects.

The court of appeals reversed, noting that fetuses are not “persons” for
a variety of purposes under Tennessee law. For example, the state’s
wrongful death statute does not allow a wrongful death for a viable fetus

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that is not first born alive; moreover, abortions were lawful in the state
under a scheme that granted fetuses more protection as they developed.
Consequently, the court held that the parties “share an interest in the seven
fertilized ova” and therefore have the right to joint control with equal voice
over their disposition.
The Tennessee Supreme Court agreed with the court of appeals that
frozen embryos were not “persons” under Tennessee law, but did not
categorize them as “property” either, id. at 597:

[P]reembryos are not, strictly speaking, either “persons” or “property,” but

occupy an interim category that entitles them to special respect because of
their potential for human life. It follows that any interest that Mary Sue Davis
and Junior Davis have in the preembryos in this case is not a true property
interest. However, they do have an interest in the nature of ownership, to the
extent that they have decision-making authority concerning disposition of the
preembryos, within the scope of policy set by law.

In contrast, in Kass v. Kass, 1995 WL 110368 (N.Y. Sup. Ct. 1995), a

New York trial judge held that preembryos were “in the nature of a
property interest.” Id. at *1. However, the appellate division reversed on
contractual grounds, sidestepping the issue of whether embryos are
persons or property under New York law. 663 N.Y.S.2d 581, 585 (App.
Div. 1997), aff’d, 696 N.E.2d 174 (N.Y. 1998). Should preembryos be
categorized as persons, property, or something in between? Does
attempting this categorization even make sense? What is at stake in the
categorization decision?
Competing rights. Courts that have ruled on the matter usually
characterize disputes over preembryos as conflicts between the right of one
party to procreate and the right of the other party not to be forced to
become a parent against his or her will. The latter right usually trumps.
In Davis, the court of appeals reversed on rights grounds. “It would be
repugnant and offensive to constitutional principles to order Mary Sue to
implant these fertilized ova against her will. It would be equally repugnant
to order Junior to bear the psychological, if not the legal, consequences of
paternity against his will.” 1990 WL 130807, at *3 (Tenn. Ct. App. 1990).
Do you agree that it would be equally repugnant?
By the time Davis reached the Tennessee Supreme Court, Mary Sue
Davis (now Mary Sue Stowe) had remarried and no longer wanted to use
the preembryos herself but sought authority to donate them to a childless
couple. Her ex-husband, also now remarried, vehemently opposed such a
donation and preferred to see the preembryos destroyed. Agreeing with the

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appeals court’s resolution of the conflict between the right to procreate and
the right to avoid procreation, the court held that Junior Davis’s interest in
avoiding unwanted parenthood should prevail over Mary Sue Stowe’s
interest in donating the preembryos to avoid the burden of knowing that
the lengthy and invasive procedures she had undergone were futile. The
court further noted that the case would be closer if she were seeking to use
the preembryos herself, “but only if she could not achieve parenthood by
any other reasonable means.” The court concluded, 842 S.W.2d at 604:

Ordinarily, the party wishing to avoid procreation should prevail, assuming

that the other party has a reasonable possibility of achieving parenthood by
means other than use of the preembryos in question. If no other reasonable
alternatives exist, then the argument in favor of using the preembryos to
achieve pregnancy should be considered. However, if the party seeking
control of the preembryos intends merely to donate them to another couple,
the objecting party obviously has the greater interest and should prevail.

In J.B. v. M.B., 751 A.2d 613 (N.J. Super. Ct. App. Div. 2000), the ex-
husband in a divorce proceeding sought control of preembryos for the
purpose of impregnating a woman if he later developed a new relationship
or for donation to an infertile couple. The ex-wife objected and wanted the
preembryos destroyed. In ruling for the ex-wife, the court relied on a rights
analysis mirroring that in Davis, id. at 618-619:

In the present case, the wife’s right not to become a parent seemingly
conflicts with the husband’s right to procreate. The conflict, however, is
more apparent than real. Recognition and enforcement of the wife’s right
would not seriously impair the husband’s right to procreate. Though his right
to procreate using the wife’s egg would be terminated, he retains the capacity
to father children.
On the other hand, enforcing the husband’s right to procreate using the
embryos at issue in this case could result in the birth of the wife’s biological
child. Even if the wife were relieved of the financial and custodial
responsibility for her child, the fact that her biological child would exist in an
environment controlled by strangers is understandably unacceptable to the
wife.

On review, 783 A.2d 707 (N.J. 2001), the New Jersey Supreme Court
affirmed the lower court’s rights analysis, id. at 717:

M.B.’s right to procreate is not lost if he is denied an opportunity to use or

donate the preembryos. M.B. is already a father and is able to become a
father to additional children, whether through natural procreation or further

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 in vitro fertilization. In contrast, J.B.’s right not to procreate may be lost
through attempted use or through donation of the preembryos. Implantation,
if successful, would result in the birth of her biological child and could have
life-long emotional and psychological repercussions.

Unlike the courts in Davis and J.B., the trial court in Kass expressed a
different conception of the rights involved. Under this analysis, the woman
would always have control of the preembryos in a divorce proceeding
despite her husband’s objection, on the ground that once the eggs were
fertilized, the husband had no right to force the wife to stop the pregnancy,
id. at *3:

Just as an in vivo husband’s “right to avoid procreation” is waived and

ceases to exist after intercourse in a coital reproduction, such right should be
deemed waived and non-existent after his participation in an in vitro
program. Upon entering he knows, or should have known, that technology is
such that the possibility and probability of a delayed implantation are very
real. Absent some indication of a contrary intent, the agreement to
participate, if it does not expressly provide for such an eventuality, must be
deemed an agreement to permit a delayed implantation.

In reversing, the appellate division stated that the trial court

“committed a fundamental error in equating a prospective mother’s
decision whether to undergo implantation of prezygotes which are the
product of her participation in an [in vitro fertilization] procedure with a
pregnant woman’s right to exercise exclusive control over the fate of her
[]fetus.” 663 N.Y.S.2d 581, 585 (App. Div. 1997), aff’d, 696 N.E.2d 174
(N.Y. 1998).
Finally, while generally favoring the right not to procreate over the
right to procreate, some courts have carved out an exception in situations
where the frozen embryos would constitute the last opportunity for the
party to procreate. In Szafranski v. Dunston, 34 N.E.3d 1132 (Ill. App. Ct.
2015), for example, the Illinois Court of Appeals affirmed the trial court’s
grant of custody of frozen embryos to the plaintiff’s ex-girlfriend because,
among other things, the embryos represented her “last and only
opportunity to have a biological child with her own eggs.” Id. at 1137.
Does the embryo itself have any rights that courts should consider? In
recent cases, the Thomas More Society, an anti-abortion group, has filed
amicus briefs arguing that embryos are human lives and should be treated
as such. Accordingly, it argues, courts should decide custody in the same
way they would for any other child-custody case: by considering what
decision would be in the child’s best interests. See Persky, supra, at 53.

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Which rights analysis do you agree with? Can you think of an alternative
way to frame the issue?
Biological parenthood is central to the prevailing rights analysis
described above. For instance, in Litowitz v. Litowitz, 10 P.3d 1086 (Wash.
Ct. App.), rev’d, 48 P.3d 261 (Wash. 2000), Becky Litowitz could not
provide the eggs herself because of a hysterectomy. The couple hired a
third party to donate eggs, subsequently fertilized by David Litowitz’s
sperm. After a divorce, Becky sought to have the eggs implanted in a
surrogate to produce a child she would raise. However, the court awarded
control to David, who wanted to donate the eggs to an infertile couple in
another state. Because Becky’s own eggs had not been used to produce the
preembryos, the court reasoned that David’s disposing of the preembryos
as he wished would not infringe on her right not to procreate. Conversely,
the court ruled that Becky’s desired implantation of the preembryos in a
surrogate to produce a child Becky would raise would infringe on David’s
right not to procreate. Do you agree with this result? Is it fair to allow one
party to invoke his or her right not to procreate to prevent the other party
from using the preembryos to beget a child, and then donate the
preembryos to a couple in another state? Should the right not to procreate
govern only when the party invoking it actually seeks not to procreate,
rather than to procreate elsewhere? What rights should the woman who
donated the eggs have if she chooses to assert them? Note that the trial
court’s decision was reversed on appeal because the parties’ contract with
the agency provided for destruction of the preembryos if they were not
implanted within five years.
Contracts regarding preembryos. If the parties sign an agreement
regarding disposition of the preembryos in the event of a dispute, should
the agreement be enforced? Courts have generally held that the wishes of
the parties should be honored if ascertainable. See, e.g., Kass, 663
N.Y.S.2d at 590 (“where the parties have indicated their mutual intent
regarding the disposition of the pre-zygotes in the event of the occurrence
of a contingency that decision must be scrupulously honored”); In re
Marriage of Dahl, 194 P.3d 834 (Or. Ct. App. 2008) (treating right to
dispose of embryos as marital property and looking to prior agreement by
the couple regarding disposition of the embryos); In re Litowitz, 48 P.3d
261 (Wash. 2002) (enforcing contract between husband and wife that
fertilized embryos would be thawed out and destroyed if they were not
implanted within five years); Roman v. Roman, 193 S.W.3d 40 (Tex. Ct.
App. 2006) (enforcing an agreement to dispose of frozen embryos entered
into by a divorcing couple before they created the embryos and refusing to

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allow the wife to keep the embryos as part of the division of community
property).
Does it make sense to “scrupulously honor” the intent of the parties in
this context? Is the court truly refraining from interfering with the parties’
expressed wishes? Isn’t the court interfering with one party’s wishes no
matter how it decides?
In A.Z. v. B.Z., 725 N.E.2d 1051 (Mass. 2000), the Supreme Judicial
Court of Massachusetts held an agreement granting ultimate control of
fertilized ova to the wife unenforceable because it violated a public policy
against forcing a person to become a parent against his or her will. Accord,
In re Witten, 672 N.W.2d 768 (Iowa 2003). Should all contracts regarding
the disposition of preembryos be invalid? Or should they be enforced
when they do not result in one party becoming a parent against his or her
will?
Although a lower New Jersey court agreed with the Massachusetts
rule, J.B. v. M.B., 751 A.2d 613 (N.J. Super. Ct. App. Div. 2000), the
Supreme Court of New Jersey modified, announcing that the “better rule,
and the one we adopt, is to enforce agreements entered into at the time in
vitro fertilization is begun, subject to the right of either party to change his
or her mind about disposition up to the point of use or destruction of any
stored preembryos.” 783 A.2d at 719. How is this rule different from the
one promulgated in A.Z. v. B.Z.? Is the “right of either party to change his
or her mind” tantamount to a blanket invalidation of all contracts regarding
the disposition of preembryos?
As with surrogacy contracts, some states have stepped in with
legislation. A few states prohibit the sale of human embryos under any
circumstances. See Fla. Stat. §873.05; Ind. Stat. §35-46-5-3(a); La. Stat.
§122. Others single out the sale of embryos for research for legal
prohibition. See Conn. Stat. §19a-32d; Mass. Gen. Laws §111L-8. Why
might a state prohibit the sale of embryos for research but allow their sale
for other purposes? A number of states also have enacted statutes that
attempt to prevent disputes over preembryos. See, e.g., Cal. Health &
Safety Code §125315 (requiring fertility treatment providers to present
patients with a form setting forth options for the disposition of stored
embryos in the event of, for example, death or divorce); Tex. Fam. Code
§160.706; Fla. Stat. §742.17; N.H. Rev. Stat. §168-B:15.
Differing approaches or underlying unity? Since only a handful of
courts have spoken on the issue of in vitro fertilization disputes, the law in
most states remains uncertain. The few courts that have approached the
issue have done so in several different ways. In what ways do these

399
approaches conflict? Is the law in this area simply an unsettled mess?
Consider the fact that the result in all the cases is the same: none of the
courts have allowed preembryos to be implanted over the objection of a
party who wants the preembryos discarded. Are the courts using different
arguments to achieve the same result? Is there some underlying or hidden
reason for this uniform result? Or is the uniformity of result a coincidence?

§5 BODY PARTS
§5.1 Are Body Parts Property?

Moore v. Regents of the University of California

793 P.2d 479 (Cal. 1990)

EDWARD A. PANELLI, Justice.
The plaintiff is John Moore (Moore), who underwent treatment for
hairy-cell leukemia at the Medical Center of the University of California at
Los Angeles (UCLA Medical Center). The five defendants are: (1) Dr.
David W. Golde (Golde), a physician who attended Moore at UCLA
Medical Center; (2) the Regents of the University of California (Regents),
who own and operate the university; (3) Shirley G. Quan [(Quan)], a
researcher employed by the Regents; (4) Genetics Institute, Inc. (Genetics
Institute); and (5) Sandoz Pharmaceuticals Corporation and related entities
(collectively Sandoz).
Moore first visited UCLA Medical Center on October 5, 1976, shortly
after he learned that he had hairy-cell leukemia. After hospitalizing Moore
and “withdraw[ing] extensive amounts of blood, bone marrow aspirate,
and other bodily substances,” Golde confirmed that diagnosis. At this time
all defendants, including Golde, were aware that “certain blood products
and blood components were of great value in a number of commercial and
scientific efforts” and that access to a patient whose blood contained these
substances would provide “competitive, commercial, and scientific
advantages.”
On October 8, 1976, Golde recommended that Moore’s spleen be
removed. Golde informed Moore “that he had reason to fear for his life,
and that the proposed splenectomy operation . . . was necessary to slow
down the progress of his disease.” Based upon Golde’s representations,
Moore signed a written consent form authorizing the splenectomy.
Before the operation, Golde and Quan “formed the intent and made
arrangements to obtain portions of [Moore’s] spleen following its

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removal” and to take them to a separate research unit. Golde gave written
instructions to this effect on October 18 and 19, 1976. These research
activities “were not intended to have . . . any relation to [Moore’s] medical
. . . care.” However, neither Golde nor Quan informed Moore of their plans
to conduct this research or requested his permission. Surgeons at UCLA
Medical Center, whom the complaint does not name as defendants,
removed Moore’s spleen on October 20, 1976.
Moore returned to the UCLA Medical Center several times between
November 1976 and September 1983. He did so at Golde’s direction and
based upon representations “that such visits were necessary and required
for his health and well-being, and based upon the trust inherent in and by
virtue of the physician-patient relationship. . . .” On each of these visits
Golde withdrew additional samples of “blood, blood serum, skin, bone
marrow aspirate, and sperm.” On each occasion Moore travelled to the
UCLA Medical Center from his home in Seattle because he had been told
that the procedures were to be performed only there and only under
Golde’s direction.
[The court then quoted plaintiff’s complaint:] “In fact, [however,]
throughout the period of time that [Moore] was under [Golde’s] care and
treatment, . . . the defendants were actively involved in a number of
activities which they concealed from [Moore]. . . .” Specifically,
defendants were conducting research on Moore’s cells and planned to
“benefit financially and competitively . . . [by exploiting the cells] and
[their] exclusive access to [the cells] by virtue of [Golde’s] on-going
physician-patient relationship. . . .”
Sometime before August 1979, Golde established a cell line from
Moore’s T-lymphocytes. On January 30, 1981, the Regents applied for a
patent on the cell line, listing Golde and Quan as inventors. “[B]y virtue of
an established policy . . . , [the] Regents, Golde, and Quan would share in
any royalties or profits . . . arising out of [the] patent.” The patent issued
on March 20, 1984, naming Golde and Quan as the inventors of the cell
line and the Regents as the assignee of the patent. (U.S. Patent No.
4,438,032 (Mar. 20, 1984).)
The Regents’ patent also covers various methods for using the cell line
to produce lymphokines. Moore admits in his complaint that “the true
clinical potential of each of the lymphokines . . . [is] difficult to predict,
[but] . . . competing commercial firms in these relevant fields have
published reports in biotechnology industry periodicals predicting a
potential market of approximately 3.01 Billion Dollars by the year 1990
for a whole range of [such lymphokines]. . . .”
With the Regents’ assistance, Golde negotiated agreements for

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commercial development of the cell line and products to be derived from
it. Under an agreement with Genetics Institute, Golde “became a paid
consultant” and “acquired the rights to 75,000 shares of common stock.”
Genetics Institute also agreed to pay Golde and the Regents “at least
$330,000 over three years, including a pro-rata share of [Golde’s] salary
and fringe benefits, in exchange for . . . exclusive access to the materials
and research performed” on the cell line and products derived from it. On
June 4, 1982, Sandoz “was added to the agreement,” and compensation
payable to Golde and the Regents was increased by $110,000.
“[T]hroughout this period, . . . Quan spent as much as 70 [percent] of her
time working for [the] Regents on research” related to the cell line.

III. Discussion

A. Breach of Fiduciary Duty and Lack of Informed Consent

Moore repeatedly alleges that Golde failed to disclose the extent of his
research and economic interests in Moore’s cells before obtaining consent
to the medical procedures by which the cells were extracted. These
allegations, in our view, state a cause of action against Golde for invading
a legally protected interest of his patient. This cause of action can properly
be characterized either as the breach of a fiduciary duty to disclose facts
material to the patient’s consent or, alternatively, as the performance of
medical procedures without first having obtained the patient’s informed
consent.

B. Conversion
Moore also attempts to characterize the invasion of his rights as a
conversion — a tort that protects against interference with possessory and
ownership interests in personal property. He theorizes that he continued to
own his cells following their removal from his body, at least for the
purpose of directing their use, and that he never consented to their use in
potentially lucrative medical research. Thus, to complete Moore’s
argument, defendants’ unauthorized use of his cells constitutes a
conversion. As a result of the alleged conversion, Moore claims a
proprietary interest in each of the products that any of the defendants
might ever create from his cells or the patented cell line.

1. Moore’s Claim Under Existing Law

Since Moore clearly did not expect to retain possession of his cells
following their removal, to sue for their conversion he must have retained

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an ownership interest in them.
Moore relies, as did the Court of Appeal, primarily on decisions
addressing privacy rights. One line of cases involves unwanted publicity.
These opinions hold that every person has a proprietary interest in his own
likeness and that unauthorized, business use of a likeness is redressible as
a tort.
Moore . . . argues that “[i]f the courts have found a sufficient
proprietary interest in one’s persona, how could one not have a right in
one’s own genetic material, something far more profoundly the essence of
one’s human uniqueness than a name or a face?” However, . . . the goal
and result of defendants’ efforts has been to manufacture lymphokines.
Lymphokines, unlike a name or a face, have the same molecular structure
in every human being and the same, important functions in every human
being’s immune system. Moreover, the particular genetic material which is
responsible for the natural production of lymphokines, and which
defendants use to manufacture lymphokines in the laboratory, is also the
same in every person; it is no more unique to Moore than the number of
vertebrae in the spine or the chemical formula of hemoglobin.
[Moore also appeals to privacy cases holding that patients have the
right to refuse medical treatment because each person has a right to
determine what shall be done with his or her own body. However, we can
protect privacy and personal dignity by requiring disclosure under
fiduciary duty and informed consent doctrines, rather than] accepting the
extremely problematic conclusion that interference with those interests
amounts to a conversion of personal property.
The next consideration that makes Moore’s claim of ownership
problematic is California statutory law, which drastically limits a patient’s
control over excised cells [by regulating disposal of human tissues to
protect public health and safety. Cal. Health & Safety Code §§7001,
7054.4]. By restricting how excised cells may be used and requiring their
eventual destruction, the statute eliminates so many of the rights ordinarily
attached to property that one cannot simply assume that what is left
amounts to “property” or “ownership” for purposes of conversion law.
Finally, the subject matter of the Regents’ patent — the patented cell
line and the products derived from it — cannot be Moore’s property. This
is because the patented cell line is both factually and legally distinct from
the cells taken from Moore’s body. Federal law permits the patenting of
organisms that represent the product of “human ingenuity,” but not
naturally occurring organisms. Diamond v. Chakrabarty, 447 U.S. 303,
309-310 (1980). Human cell lines are patentable because “[l]ong-term
adaptation and growth of human tissues and cells in culture is difficult —

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often considered an art . . . ,” and the probability of success is low. It is this
inventive effort that patent law rewards, not the discovery of naturally
occurring raw materials. Thus, Moore’s allegations that he owns the cell
line and the products derived from it are inconsistent with the patent,
which constitutes an authoritative determination that the cell line is the
product of invention.

2. Should Conversion Liability Be Extended?

Of the relevant policy considerations, two are of overriding
importance. The first is protection of a competent patient’s right to make
autonomous medical decisions. . . . This policy weighs in favor of
providing a remedy to patients when physicians act with undisclosed
motives that may affect their professional judgment. The second important
policy consideration is that we not threaten with disabling civil liability
innocent parties who are engaged in socially useful activities, such as
researchers who have no reason to believe that their use of a particular cell
sample is, or may be, against a donor’s wishes.
Research on human cells plays a critical role in medical research. This
is so because researchers are increasingly able to isolate naturally
occurring, medically useful biological substances and to produce useful
quantities of such substances through genetic engineering. These efforts
are beginning to bear fruit. Products developed through biotechnology that
have already been approved for marketing in this country include
treatments and tests for leukemia, cancer, diabetes, dwarfism, hepatitis-B,
kidney transplant rejection, emphysema, osteoporosis, ulcers, anemia,
infertility, and gynecological tumors, to name but a few.
The extension of conversion law into this area will hinder research by
restricting access to the necessary raw materials. Thousands of human cell
lines already exist in tissue repositories, such as the American Type
Culture Collection and those operated by the National Institutes of Health
and the American Cancer Society. These repositories respond to tens of
thousands of requests for samples annually. Since the patent office
requires the holders of patents on cell lines to make samples available to
anyone, many patent holders place their cell lines in repositories to avoid
the administrative burden of responding to requests. At present, human cell
lines are routinely copied and distributed to other researchers for
experimental purposes, usually free of charge. This exchange of scientific
materials, which still is relatively free and efficient, will surely be
compromised if each cell sample becomes the potential subject matter of a
lawsuit.

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 To expand liability by extending conversion law into this area would
have a broad impact. The House Committee on Science and Technology of
the United States Congress found that “49 percent of the researchers at
medical institutions surveyed used human tissues or cells in their
research.” Many receive grants from the National Institutes of Health for
this work. In addition, “there are nearly 350 commercial biotechnology
firms in the United States actively engaged in biotechnology research and
commercial product development and approximately 25 to 30 percent
appear to be engaged in research to develop a human therapeutic or
diagnostic reagent. . . . Most, but not all, of the human therapeutic products
are derived from human tissues and cells, or human cell lines or cloned
genes.”
If the scientific users of human cells are to be held liable for failing to
investigate the consensual pedigree of their raw materials, we believe the
Legislature should make that decision. Complex policy choices affecting
all society are involved, and “[l]egislatures, in making such policy
decisions, have the ability to gather empirical evidence, solicit the advice
of experts, and hold hearings at which all interested parties present
evidence and express their views. . . .” Foley v. Interactive Data Corp.,
765 P.2d 373, 397 n.31 (Cal. 1988).
For these reasons, we hold that the allegations of Moore’s third
amended complaint state a cause of action for breach of fiduciary duty or
lack of informed consent, but not conversion.

ARMAND ARABIAN, Justice, concurring.

Plaintiff has asked us to recognize and enforce a right to sell one’s own
body tissue for profit. He entreats us to regard the human vessel — the
single most venerated and protected subject in any civilized society — as
equal with the basest commercial commodity. He urges us to commingle
the sacred with the profane. He asks much.
I share Justice Mosk’s sense of outrage [at defendants’ conduct], but I
cannot follow its path. His eloquent paean to the human spirit illuminates
the problem, not the solution. Does it uplift or degrade the “unique human
persona” to treat human tissue as a fungible article of commerce? Would it
advance or impede the human condition, spiritually or scientifically, by
delivering the majestic force of the law behind plaintiff’s claim? I do not
know the answers to these troubling questions, nor am I willing — like
Justice Mosk — to treat them simply as issues of “tort” law, susceptible of
judicial resolution.
Where then shall a complete resolution be found? Clearly the
Legislature, as the majority opinion suggests, is the proper deliberative

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forum.

ALLEN BROUSSARD, Justice, concurring and dissenting.

If defendants had informed plaintiff, prior to removal, of the possible
uses to which his body part could be put and plaintiff had authorized one
particular use, it is clear . . . that defendants would be liable for conversion
if they disregarded plaintiff’s decision and used the body part in an
unauthorized manner for their own economic benefit. Although in this case
defendants did not disregard a specific directive from plaintiff with regard
to the future use of his body part, the complaint alleges that, before the
body part was removed, defendants intentionally withheld material
information that they were under an obligation to disclose to plaintiff and
that was necessary for his exercise of control over the body part; the
complaint also alleges that defendants withheld such information in order
to appropriate the control over the future use of such body part for their
own economic benefit. If these allegations are true, defendants clearly
improperly interfered with plaintiff’s right in his body part at a time when
he had the authority to determine the future use of such part, thereby
misappropriating plaintiff’s right of control for their own advantage. Under
these circumstances, the complaint fully satisfies the established
requirements of a conversion cause of action.
[T]he majority’s fear that the availability of a conversion remedy will
restrict access to existing cell lines is unrealistic. In the vast majority of
instances the tissues and cells in existing repositories will not represent a
potential source of liability because they will have come from patients who
consented to their organ’s use for scientific purposes under circumstances
in which such consent was not tainted by a failure to disclose the known
valuable nature of the cells.
Furthermore, even in the rare instance — like the present case — in
which a conversion action might be successfully pursued, the potential
liability is not likely “to destroy the economic incentive to conduct
important medical research,” as the majority asserts. If, as the majority
suggests, the great bulk of the value of a cell line patent and derivative
products is attributable to the efforts of medical researchers and drug
companies, rather than to the “raw materials” taken from a patient, the
patient’s damages will be correspondingly limited, and innocent medical
researchers and drug manufacturers will retain the considerable economic
benefits resulting from their own work.
Justice Arabian’s concurring opinion suggests that the majority’s
conclusion is informed by the precept that it is immoral to sell human body
parts for profit. But the majority’s rejection of plaintiff’s conversion cause

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of action does not mean that body parts may not be bought or sold for
research or commercial purposes or that no private individual or entity
may benefit economically from the fortuitous value of plaintiff’s diseased
cells. Far from elevating these biological materials above the marketplace,
the majority’s holding simply bars plaintiff, the source of the cells, from
obtaining the benefit of the cells’ value, but permits defendants, who
allegedly obtained the cells from plaintiff by improper means, to retain and
exploit the full economic value of their ill-gotten gains free of their
ordinary common law liability for conversion.

STANLEY MOSK, Justice, dissenting.

[T]he concept of property is often said to refer to a “bundle of rights”
that may be exercised with respect to that object — principally the rights
to possess the property, to use the property, to exclude others from the
property, and to dispose of the property by sale or by gift. . . . But the same
bundle of rights does not attach to all forms of property. For a variety of
policy reasons, the law limits or even forbids the exercise of certain rights
over certain forms of property. For example, both law and contract may
limit the right of an owner of real property to use his parcel as he sees fit.
Owners of various forms of personal property may likewise be subject to
restrictions on the time, place, and manner of their use. Limitations on the
disposition of real property, while less common, may also be imposed.
Finally, some types of personal property may be sold but not given away,3
while others may be given away but not sold,4 and still others may neither
be given away nor sold.5
In each of the foregoing instances, the limitation or prohibition
diminishes the bundle of rights that would otherwise attach to the property,
yet what remains is still deemed in law to be a protectible property interest.
[Moore] at least had the right to do with his own tissue whatever the
defendants did with it: i.e., he could have contracted with researchers and
pharmaceutical companies to develop and exploit the vast commercial
potential of his tissue and its products. Defendants certainly believe that
their right to do the foregoing is not barred by section 7054.4 and is a
significant property right. . . . The Court of Appeal summed up the point
by observing that “Defendants’ position that plaintiff cannot own his
tissue, but that they can, is fraught with irony.” It is also legally untenable.
[Nor does the patent on the cell line preclude plaintiff’s property
claim.] To be sure, the patent granted defendants the exclusive right to
make, use, or sell the invention for a period of 17 years. But Moore does
not assert any such right for himself. Rather, he seeks to show that he is

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entitled, in fairness and equity, to some share in the profits that defendants
have made and will make from their commercial exploitation of the Mo
cell line. I do not question that the cell line is primarily the product of
defendants’ inventive effort. Yet likewise no one can question Moore’s
crucial contribution to the invention — an invention named, ironically,
after him: but for the cells of Moore’s body taken by defendants, there
would have been no Mo cell line.
[E]very individual has a legally protectible property interest in his own
body and its products. First, our society acknowledges a profound ethical
imperative to respect the human body as the physical and temporal
expression of the unique human persona. One manifestation of that respect
is our prohibition against direct abuse of the body by torture or other forms
of cruel or unusual punishment. Another is our prohibition against indirect
abuse of the body by its economic exploitation for the sole benefit of
another person. The most abhorrent form of such exploitation, of course,
was the institution of slavery. Lesser forms, such as indentured servitude
or even debtor’s prison, have also disappeared. Yet their specter haunts the
laboratories and boardrooms of today’s biotechnological research-
industrial complex. It arises wherever scientists or industrialists claim, as
defendants claim here, the right to appropriate and exploit a patient’s tissue
for their sole economic benefit — the right, in other words, to freely mine
or harvest valuable physical properties of the patient’s body: “. . . Such
research tends to treat the human body as a commodity — a means to a
profitable end. The dignity and sanctity with which we regard the human
whole, body as well as mind and soul, are absent when we allow
researchers to further their own interests without the patient’s participation
by using a patient’s cells as the basis for a marketable product.” Danforth,
Cells, Sales, & Royalties: The Patient’s Right to a Portion of the Profits, 6
Yale L. & Pol’y Rev. 179, 190 (1988).
A second policy consideration adds notions of equity to those of ethics.
Our society values fundamental fairness in dealings between its members,
and condemns the unjust enrichment of any member at the expense of
another. This is particularly true when, as here, the parties are not in equal
bargaining positions. We are repeatedly told that the commercial products
of the biotechnological revolution “hold the promise of tremendous
profit.” In the case at bar, for example, the complaint alleges that the
market for the kinds of proteins produced by the Mo cell line was
predicted to exceed $3 billion by 1990. These profits are currently shared
exclusively between the biotechnology industry and the universities that
support that industry.
There is, however, a third party to the biotechnology enterprise — the

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patient who is the source of the blood or tissue from which all these profits
are derived. While he may be a silent partner, his contribution to the
venture is absolutely crucial: . . . but for the cells of Moore’s body taken
by defendants there would have been no Mo cell line at all. Yet defendants
deny that Moore is entitled to any share whatever in the proceeds of this
cell line. This is both inequitable and immoral.

Notes and Questions

1. Relatives as owners of deceased family-members’ bodies and
body parts. In Brotherton v. Cleveland, 923 F.2d 477 (6th Cir. 1991),
plaintiff Deborah Brotherton alleged that defendants, in the course of
performing an autopsy, removed her deceased husband’s corneas for use
as anatomical gifts without her consent. The court noted that “Ohio Rev.
Code §2108.02(B), as part of the Uniform Anatomical Gift Act governing
gifts of organs and tissues for research or transplants, granted her the right
to control the disposal of Steven Brotherton’s body.” It held that “the
aggregate of rights granted by the state of Ohio to Deborah Brotherton
rises to the level of a ‘legitimate claim of entitlement’ in Steven
Brotherton’s body, including his corneas,” and that this was sufficient to
establish a property interest protected by the fourteenth amendment’s
prohibition on deprivations of property without due process of law. See
also Whaley v. County of Tuscola, 58 F.3d 1111 (6th Cir. 1991)
(recognizing a property interest in body parts and refusing to dismiss
lawsuits by relatives of deceased persons whose eyeballs and corneas had
been removed without permission by a pathology assistant at a county
hospital). Suppose these events had occurred in California. Would the
California Supreme Court reach the same result as the Sixth Circuit? Cf.
Perryman v. County of Los Angeles, 153 Cal. App. 4th 1189 (2007)
(relying on Moore and holding that the relatives of a murder victim did not
have a property interest in the victim’s body for the purposes of a claim
that the county coroner mishandled the remains), vacated and remanded
for reconsideration by 208 P.3d 622 (Cal. 2009). But see Newman v.
Sathyavaglswaran, 287 F.3d 786 (9th Cir. 2002) (assessing California law
and holding that parents had a constitutionally protected property interest
in deceased children’s corneas removed by county workers without their
consent).
2. Cell lines and the rights of descendants. In 1951, Henrietta Lacks
died of cervical cancer. Doctors removed some cells from her tumors and
used them to start a number of cell lines. In the decades since her death,
those cell lines have been used around the world in tens of thousands of

409
studies. Lacks’s surviving family members were not told about the use of
her cells, and did not even discover that the cells were in widespread use
until two decades later. Lacks’s entire genetic code was even sequenced
and published without the knowledge or approval of surviving family
members. In 2013, the family entered into an agreement with the National
Institutes of Health that would give family members a greater say over
how Lacks’s cells are used. See Carl Zimmer, A Family Consents to a
Medical Gift, 62 Years Later, N.Y. Times, Aug. 7, 2013. For more on the
story of Lacks’s case, see Rebecca Skloot’s 2010 book, The Immortal Life
of Henrietta Lacks. Should surviving family members be entitled to a share
of any profits earned from Lacks’s cell lines?
3. Informed consent. Suppose that before Moore’s operation Golde
had informed Moore of his intent to use Moore’s cells to create a cell line.
Would the case have come out the same way? If Golde and Moore had
signed a contract in which Golde agreed to pay Moore a percentage of the
earnings from the cell line, would such a contract be enforceable under the
majority’s analysis in Moore? If Golde did not commit the tort of
conversion (an unprivileged appropriation of Moore’s property), is Moore
free to treat his body parts or cells as property that he can sell for the use
of another?

Problem
A man who is sick with cancer deposits his sperm in a sperm bank for
the purpose of impregnating his fiancée through in vitro fertilization. He
dies before they are married and before the procedure can be completed,
having left a will bequeathing all his “personal property” to his two adult
children. The children claim the sperm are their property and want them to
be destroyed, while the fiancée wants to try to have a child using the
sperm. What should the court do? See Hecht v. Superior Court, 59 Cal.
Rptr. 2d 222, 226 (Ct. App. 1996) (wrestling with the question of whether
sperm should be treated as “property” and deciding in the negative).

§5.2 Markets in Body Parts

The National Organ Transplant Act, 42 U.S.C. §274e, makes it a
federal crime “to knowingly acquire, receive, or otherwise transfer any
human organ for valuable consideration for use in human transplantation if
the transfer affects interstate commerce.” It defines organs as “the human
(including fetal) kidney, liver, heart, lung, pancreas, bone marrow, cornea,
eye, bone, and skin or any subpart thereof and any other human organ (or

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any subpart thereof, including that derived from a fetus) specified by the
Secretary of Health and Human Services by regulation.” Id. Thus, blood is
not an “organ” and so can be donated in exchange for valuable
consideration. It is common for blood donors to receive cash and other
incentives in exchange for their donation. Is it reasonable for the law to
treat blood differently than other organs? Consider the following case.

Flynn v. Holder

684 F.3d 852 (9th Cir. 2012)

ANDREW KLEINFELD, Senior Circuit Judge:

I. Facts
The complaint challenges the constitutionality of the ban on
compensation for human organs in the National Organ Transplant Act, as
applied to bone marrow transplants.
Some plaintiffs are parents of sick children who have diseases such as
leukemia and a rare type of anemia, which can be fatal without bone
marrow transplants. Another plaintiff is a physician and medical school
professor, and an expert in bone marrow transplantation. He says that at
least one out of five of his patients dies because no matching bone marrow
donor can be found, and many others have complications when scarcity of
matching donors compels him to use imperfectly matched donors. One
plaintiff is a parent of mixed race children, for whom sufficiently matched
donors are especially scarce, because mixed race persons typically have
the rarest marrow cell types. One plaintiff is an African-American man
suffering from leukemia who received a bone marrow transplant from his
sister. She was an imperfect match and, though the transplant saved his
life, he continues to suffer from life-threatening and disabling
complications on account of the slight genetic mismatch.
Another plaintiff is a California nonprofit corporation that seeks to
operate a program incentivizing bone marrow donations. The corporation
proposes to offer $3,000 awards in the form of scholarships, housing
allowances, or gifts to charities selected by donors, initially to minority
and mixed race donors of bone marrow cells, who are likely to have the
rarest marrow cell type. The corporation, MoreMarrowDonors.org, alleges
that it cannot launch this program because the National Organ Transplant
Act criminalizes payment of compensation for organs, and classifies bone
marrow as an organ.
We generally use the word “marrow” to refer to the soft, fatty material

411
in the central cavities of big bones, what some people suck out of beef
bones. Bone marrow is the body’s blood manufacturing factory. Bone
marrow transplants enable sick patients, whose own blood cells need to be
killed to save their lives, to produce new blood cells. For example, patients
with leukemia, which is cancer of the blood or bone marrow, may need
chemotherapy or radiation to kill the cancer cells in their blood. The
treatments kill the white blood cells essential to their immune systems. The
patients will die if the killed cells are not quickly replaced with healthy
cells. And they cannot be replaced without the stem cells, which we
describe below, that can mature into white blood cells. These stem cells
can only be obtained through bone marrow transplants.
Until about twenty years ago, bone marrow was extracted from donors’
bones by “aspiration.” Long needles, thick enough to suck out the soft,
fatty marrow, were inserted into the cavities of the anesthetized donor’s
hip bones. These are large bones with big central cavities full of marrow.
Aspiration is a painful, unpleasant procedure for the donor. It requires
hospitalization and general or local anesthesia, and involves commensurate
risks.
Most blood stem cells stay in the bone marrow cavity and grow into
mature blood cells there, before passing into the blood vessels. But some
blood stem cells flow into and circulate in the bloodstream before they
mature. These are called “peripheral” blood stem cells, “peripheral”
meaning outside the central area of the body. [A] new bone marrow
donation technique, developed during the past twenty years, is called
“peripheral blood stem cell apheresis.” “Apheresis” means the removal or
separation of something. [W]ith no need for sedatives or anesthesia, a
needle is inserted into the donor’s vein. Blood is withdrawn from the vein
and filtered through an apheresis machine to extract the blood stem cells.
The remaining components of the blood are returned to the donor’s vein.
The blood stem cells extracted in the apheresis method are replaced by the
donor’s bone marrow in three to six weeks. Complications for the donor
are exceedingly rare.
The main difference between an ordinary blood donation and apheresis
is that instead of just filling up a plastic bag with whole blood, the donor
sits for some hours in a recliner while the blood passes through the
apheresis machine. When used to separate out and collect hematopoietic
stem cells from the donor’s bloodstream, apheresis is called “peripheral
blood stem cell apheresis” or a “bone marrow donation.”
All donations from another person, except for one’s identical twin,
produce at least some graft-versus-host disease in the recipient, but the
closer the genetic match, the less disease. Matching is easy in ordinary

412
blood transfusions, because there are only four basic blood types. But there
are millions of marrow cell types, so good matches are hard to find. The
more diverse the patient’s genetic heritage, the rarer the match. For
example, African-Americans have especially great difficulty finding a
compatible unrelated donor, as they tend to have a mix of African,
Caucasian, and Native-American genes, and fewer potential donors are
registered in the national civilian registry.
The establishment of this registry, the National Marrow Donor
Program, which is funded by the federal government to assist in finding
matches, was an important aspect of the statute at issue here. But even
with this registry, good matches often cannot be found. And even when a
good match is found in the registry, tracking down the potential donor
from what may be an outdated address may be impossible to accomplish in
time to save the patient’s life — assuming the potential donor is willing to
go through with the process when found.
The plaintiff nonprofit proposes to mitigate this matching problem by
using a financial incentive. The idea is that the financial incentive will
induce more potential donors to sign up, stay in touch so that they can be
located when necessary, and go through with the donations. The nonprofit
plans to focus its attention initially on minority and mixed race donors,
because their marrow cell types are rarer. The financial incentives would
be $3,000 in scholarships, housing allowances, or gifts to charities of the
donor’s choice, which the nonprofit acknowledges would be “valuable
consideration” under the statutory prohibition.
Plaintiffs argue that the National Organ Transplant Act, as applied to
the Equal Protection Clause.

II. Analysis
The core of plaintiffs’ argument is that there is no rational basis for
allowing compensation for blood, sperm, and egg donations, while
disallowing compensation for bone marrow donations, because bone
marrow donations can now be accomplished through apheresis without
removing marrow, and the donor’s body quickly regenerates the donated
stem cells. Since the distinction, they argue, is without a rational basis, it
violates the Equal Protection Clause, despite highly deferential “rational
basis” review.
The Attorney General responds that the statute plainly classifies “bone
marrow” as an organ for which compensation is prohibited, and that the
congressional determination is indeed rational. The statute makes it a
felony “to knowingly acquire, receive, or otherwise transfer any human

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organ for valuable consideration for use in human transplantation.” And it
defines the term “human organ” to include “bone marrow.” Ergo, the
statute expressly prohibits compensating bone marrow donors. According
to the government’s brief, Congress took the view that “human body parts
should not be viewed as commodities,” and had several policy reasons for
disallowing compensation to donors, which suffice to serve as a rational
basis for the prohibition.
Plaintiffs address their arguments largely to the peripheral blood stem
cell apheresis method of extracting hematopoietic stem cells, but their
complaint appears to challenge the prohibition on bone marrow transplants
regardless of method. They do not, in their complaint or their brief,
confine their challenge to transplants by means of apheresis. They
apparently propose to give compensated donors the choice between
aspiration and apheresis. To the extent that plaintiffs challenge the
constitutionality of the compensation ban on bone marrow donation by the
old aspiration method — where a long needle is inserted into the cavity of
the hip bone to extract the soft, fatty marrow — the challenge must fail.
The statute says that the term “human organ” includes “bone marrow.”
It is irrelevant that the legislative history indicates that Congress viewed
certain types of regenerable tissue, such as blood, as falling outside the
statutory definition of “human organ.” [T]he statute does not say that
compensation is permitted for organs or body parts that regenerate and
prohibited for those that do not. Nor is the statute consistent with such a
construction. The statute defines the liver “or any subpart thereof” as an
organ for which compensation is prohibited. The drafters doubtless knew
that a partial resection of a liver can yield a donation that will save the
recipient’s life, and that the donor’s liver will grow back. So the statute
does expressly prohibit compensation for at least one explicitly denoted
“human organ” that will regenerate.
As for whether the distinction between the organs or other body
substances for which compensation is permitted and those for which it is
prohibited has a rational basis, there are two classes of rational basis here:
policy concerns and philosophical concerns. The policy concerns are
obvious. Congress may have been concerned that if donors could be paid,
rich patients or the medical industry might induce poor people to sell their
organs, even when the transplant would create excessive medical risk,
pain, or disability for the donor. Or, looking from the other end, Congress
might have been concerned that every last cent could be extracted from
sick patients needful of transplants, by well-matched potential donors
making “your money or your life” offers. The existing commerce in organs
extracted by force or fraud by organ thieves might be stimulated by paying

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for donations. Compensation to donors might also degrade the quality of
the organ supply, by inducing potential donors to lie about their medical
histories in order to make their organs marketable. Plaintiffs argue that a
$3,000 housing subsidy, scholarship, or charitable donation is too small an
amount to create a risk of any of these evils, but for a lot of people that
could amount to three to six months’ rent.
Congress may have had philosophical as well as policy reasons for
prohibiting compensation. People tend to have an instinctive revulsion at
denial of bodily integrity, particularly removal of flesh from a human
being for use by another, and most particularly “commodification” of such
conduct, that is, the sale of one’s bodily tissue. While there is reportedly a
large international market for the buying and selling of human organs, in
the United States, such a market is criminal and the commerce is generally
seen as revolting. Leon Kass examines the philosophical issue of
commodification with his observation that nonprofit hospitals, donor
registries, and physicians are permitted to make a lot of money from organ
transplants, and the only people who get nothing are those whose organs
are donated:

[A]lthough we allow no commerce in organs, transplant surgeons and

hospitals are making handsome profits from the organ-trading business, and
even the not-for-profit transplant registries and procurement agencies glean
for their employees a middleman’s livelihood. Why . . . should everyone be
making money from this business except the person whose organ makes it
possible? Could it be that [the] real uneasiness [lies] with organ donation or
with transplantation itself, for if not, what would be objectionable about its
turning a profit?

Leon R. Kass, Life, Liberty and the Defense of Dignity: The Challenge for
Bioethics 177 (2002). Kass suggests that the revulsion for
commodification of human flesh is reflected in our language, see id. at
195: we call donors who are paid for their organs “donors” rather than
“sellers” or “vendors.” To account for why most of us are revolted by the
notion of a poor person selling a kidney to feed his family, Kass cites the
taboos we have against cannibalism, defilement of corpses, and
necrophilia. Id. at 183. Kass points to the idea of “psychophysical unity, a
position that regards a human being as largely, if not wholly, self-identical
with his enlivened body,” so that, as Kant put it, to “ ‘dispose of oneself as
a mere means to some end of one’s own liking is to degrade the humanity
in one’s person.’” Id. at 181-82, 185. In this view, “organ transplantation .
. . is — once we strip away the trappings of the sterile operating rooms and
their astonishing technologies — simply a noble form of cannibalism.” Id.

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at 185.
These reasons are in some respects vague, in some speculative, and in
some arguably misplaced. There are strong arguments for contrary views.
But these policy and philosophical choices are for Congress to make, not
us. The distinctions made by Congress must have a rational basis, but do
not need to fit perfectly with that rational basis, and the basis need merely
be rational, not persuasive to all. Here, Congress made a distinction
between body material that is compensable and body material that is not.
The distinction has a rational basis, so the prohibition on compensation for
bone marrow donations by the aspiration method does not violate the
Equal Protection Clause.

C. Bone Marrow Transplants by Apheresis

The focus, though, of plaintiffs’ arguments is compensation for “bone
marrow donations” by the peripheral blood stem cell apheresis method.
For this, we need not answer any constitutional question, because the
statute contains no prohibition. Such donations of cells drawn from blood
flowing through the veins may sometimes anachronistically be called
“bone marrow donations,” but none of the soft, fatty marrow is donated,
just cells found outside the marrow, outside the bones, flowing through the
veins.
Congress could not have had an intent to address the apheresis method
when it passed the statute, because the method did not exist at that time.
We must construe the words of the statute to see what they imply about
extraction of hematopoietic stem cells by this method. This issue has not
been addressed by any of our sister circuits.
Since payment for blood donations has long been common, the silence
in the National Organ Transplant Act on compensating blood donors is
loud. The statute says “human organ” is defined as a human “kidney, liver,
heart, lung, pancreas, bone marrow, cornea, eye, bone, and skin or any
subpart thereof and any other human organ . . . specified by the Secretary
of Health and Human Services by regulation.” 42 U.S.C. §274e(c)(1). The
government concedes that the common practice of compensating blood
donors is not prohibited by the statute.
The government argues that hematopoietic stem cells in the veins
should be treated as “bone marrow” because “bone marrow” is a statutory
organ, and the statute prohibits compensation not only for donation of an
organ, but also “any subpart thereof.” We reject this argument, because it
proves too much, and because it construes words to mean something
different from ordinary usage. If the government’s argument that what

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comes from the marrow is a subpart of the marrow were correct, then the
statute would prohibit compensating blood donors. The red and white
blood cells that flow through the veins come from the bone marrow, just
like hematopoietic stem cells. But the government implicitly concedes that
these red and white blood cells are not “subparts” of bone marrow under
the statute, because it explicitly concedes that the statute does not prohibit
compensation for blood donations.
As for ordinary usage, the bloodstream consists of plasma containing
red cells, white cells, platelets, stem cells that will mature into one of
these, and other material. We call this liquid as a whole “blood.” No one
calls it “bone marrow,” even though these cells come from the marrow.
There is no reason to think that Congress intended “bone marrow” to mean
something so different from ordinary usage.
Likewise, every blood draw includes some hematopoietic stem cells.
The word “subpart” refers to the organ from which the material is taken,
not the organ in which it was created. Taking part of the liver for a liver
donation would violate the statute because of the “subpart thereof”
language. But taking something from the blood that is created in the
marrow takes only a subpart of the blood.

III. Conclusion
It may be that “bone marrow transplant” is an anachronism that will
soon fade away, as peripheral blood stem cell apheresis replaces aspiration
as the transplant technique, much as “dial the phone” is fading away now
that telephones do not have dials. Or it may live on, as “brief” does, even
though “briefs” are now lengthy arguments rather than, as they used to be,
brief summaries of authorities. Either way, when the “peripheral blood
stem cell apheresis” method of “bone marrow transplantation” is used, it is
not a transfer of a “human organ” or a “subpart thereof” as defined by the
statute and regulation, so the statute does not criminalize compensating the
donor.

Notes and Questions

1. Markets in organs. Consider the following argument in favor of
allowing sales of at least some organs by Virginia Postrel:

Outlawing payments to donors is ostensibly a way to keep the system fair,

giving rich and poor an equally lousy chance of getting a kidney. But
wealthier people can already more easily register at distant centers with short
lists. They’re also more likely to have friends and relatives who can afford

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 the nonmedical expenses that living donation often entails, including time off
from work, child care, hotel rooms, or cross-country travel. (It is legal for
recipients or third parties to pay such expenses, but, unlike medical costs,
they are not covered by insurance.)
Patients with enough money and the right networks have yet another
option. They can go abroad, to countries where the authorities sanction or
ignore payments to living donors.
Such “transplant tourism” is growing. Laparoscopic surgery is a First
World luxury, as are desk jobs to which donors can safely return soon after
surgery. With few protections beyond the surgeon’s need to maintain a good
reputation among potential donors, kidney vendors may not receive the full
payments they’re promised. In China[,] organs may come not only from paid
living vendors but also from executed prisoners. Transplant tourism is, in
short, an ethical morass.
It is also a completely predictable byproduct of the current system, willed
into being by policy makers who ignore the plight of kidney patients and by
doctors who see above-board payments — and the protections of contract
and malpractice law that would go with them — as pollution. Living
donation is a low-risk procedure for the donor that offers life-changing
rewards for the recipient. Yet the donor is the only person involved in the
process who receives no compensation. To people who like to celebrate
living donors as heroes, payment seems terribly crass. But the vicarious thrill
of someone else’s altruism comes at a terrible cost.

Virginia Postrel, With Functioning Kidneys for All, The Atlantic, July 9,
2009. Who do you think has the stronger argument concerning organ
sales? How are the considerations the same as those at issue with
surrogacy and preembryos? How are they different?
2. The impact of markets. In defending the rationality of Congress’s
distinction between blood and organs, the court in Flynn notes that
“[c]ompensation to donors might also degrade the quality of the organ
supply, by inducing potential donors to lie about their medical histories in
order to make their organs marketable.” The court may have had in mind a
famous argument by Richard Titmuss that, because blood donation is
altruistic behavior, offering to pay for it discourages those motivated by
altruism from donating, leading to a degradation in both quantity and
quality of blood donated. See Richard Titmuss, The Gift Relationship
(1970).
Economists find this claim puzzling, because, in their view, offering a
financial incentive should attract those who would not donate absent the
incentive without changing the cost-benefit calculus of those who are
willing to donate without the incentive. But social scientists have found

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that monetary incentives can sometimes change the social meaning of a
civic or charitable act into a commercial one. This deprives altruists of the
benefit of acting for the sake of duty and may cause the incentive to
backfire. See, e.g., Uri Gneezy & Aldo Rustichini, A Fine Is a Price, 29 J.
Legal Stud. 1 (2000) (finding that the introduction of a fine for late pick-
ups at an Israeli daycare increased late pick-ups); Bruno S. Frey & Felix
Oberholzer-Gee, The Cost of Price Incentives: An Empirical Investigation
of Motivation Crowding Out, 87 Am. Econ. Rev. 746, 749-750 (1997).
The economist Fred Hirsch calls this transformation of social meaning the
“commercialization effect.” Michael Sandel, What Money Can’t Buy 120
(2012) (citing Fred Hirsch, The Social Limits to Growth (1976)).
For decades, the World Health Organization has affirmed Titmuss’s
views about the superior safety of donated blood, arguing that all blood
donation should be uncompensated. See World Health Organization,
Towards 100% Voluntary Blood Donation (2010) (available at
http://www.who.int/bloodsafety/publications/9789241599696_eng.pdf).
But recent empirical studies have tended to contradict Titmuss. According
to a recent summary of the research in the journal Science, the availability
of incentives for blood donation increases both the overall quantity and
quality of donated blood. See Nicola Lacetera et al., Economic Rewards to
Motivate Blood Donations, 340 Science 927 (May 24, 2013); see also
Lorenz Goette & Alois Stutzer, Blood Donations and Incentives, IZA
Working Paper 3580, July 2008 (available for download at
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1158977). Others
have found differences in how men and women respond to incentives, with
women displaying a greater “crowding out” effect. See Carl Mellstrom &
Magnus Johannesson, Crowding Out in Blood Donation, 6 J. Eur. Econ.
Assn. 845 (2010). Does this argument about crowding out relate to the
distinction between blood and organs? If Titmuss was wrong, might there
still be reasons to oppose the sale of organs?

CONTEXT

Since the first paired donation in 2000, the number has steadily grown,
reaching 554 in 2014. See National Kidney Foundation, 2014 Donor Profile,
https://www.kidney.org/news/newsroom/factsheets/Organ-Donation-and-
Transplantation-Stats.

3. Paired donations. Under the National Organ Transplant Act, 42

U.S.C. §274e, it is legal to make a gift of an organ to a specific individual.

419
It is also legal to engage in a “paired donation.” In a paired donation, the
first donor is incompatible with the person to whom she wants to donate
her organ but is compatible with another person who has a willing donor
who is compatible with the first donor’s recipient. The statute exempts
from its coverage an agreement between the two donor/recipient pairs to
swap organs (giving the second donor’s organ to the first recipient and the
first donor’s organ to the second recipient). The law also allows for several
pairs of donors and recipients to link together in a daisy chain of “paired
donations” in order to move organs from donors to compatible recipients.
Sometimes, chains can grow to include dozens of donors and recipients.
See, e.g., Byron Pitts et al., Donating a Kidney to a Complete Stranger in
Order to Save a Loved One, http://abcnews.go.com/Health/donating-
kidney-complete-stranger-order-save-loved/story?id=30288400
(describing a chain of paired donations that grew to include 34 recipients).
Although paired donations began in 2000, Congress amended the law in
2007 to make it clear that they are legal. Do you see why the express
exemption for paired donations was necessary?

1. The case report misspells Sanford’s name as Sandford. — EDS.

2. This statute has been repealed, 1993 N.J. Laws ch. 345, §20. See Lisa J.
Trembly, Untangling the Adoption Web: New Jersey’s Move to Legitimize
Independent Adoptions, 18 Seton Hall Legis. J. 371 (1993). — EDS.
3. A person contemplating bankruptcy may sell his property at its “reasonably
equivalent value,” but he may not make a gift of the same property. (See 11 U.S.C.
§548(a).)
4. A sportsman may give away wild fish or game that he has caught or killed
pursuant to his license, but he may not sell it. (Fish & Game Code, §§3039, 7121.)
The transfer of human organs and blood is a special case that I discuss below.
5. E.g., a license to practice a profession, or a prescription drug in the hands of
the person for whom it is prescribed.

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PART THREE

RELATIONS AMONG
NEIGHBORS

421
CHAPTER 5

Adverse Possession

§1 TITLE VERSUS POSSESSION

An unprivileged entry on land possessed by another is a trespass.1
When, however, one possesses another’s land in a manner that is
exclusive, visible (“open and notorious”), continuous, and without the
owner’s permission (“adverse or hostile”) for a period defined by state
statute, this action transfers title from the “true” (or “record”) owner to the
adverse possessor. In this way, adverse possession doctrine transforms
trespassers into owners. The following materials address the circumstances
under which this occurs and the justifications for it.

§1.1 Border Disputes

Brown v. Gobble

474 S.E.2d 489 (W. Va. 1996)

FRANKLIN D. CLECKLEY, Justice:
This case involves the doctrines of adverse possession and tacking.
David L. Gobble and Sue Ann Gobble, appellants/defendants below,
appeal from a final order of the Circuit Court of Mercer County. At the
conclusion of a bench trial the circuit court granted judgment for a strip of
land to Gary S. Brown and Mitzi Brown, appellees/plaintiffs below.

I. Factual and Procedural Background

The plaintiffs instituted this action by filing a complaint on August 25,
1994. The complaint sought to have the defendants enjoined from
interfering with the plaintiffs’ intended use of a two-feet-wide tract of land
that formed a boundary running between the adjoining properties of the
parties. The defendants answered the complaint and filed a counterclaim
alleging ownership to the tract of land by adverse possession.
The record reveals that the defendants purchased their property by

422
deed dated April 24, 1985. At the time of this land purchase a fence was in
place which ran along the rear boundary of defendants’ property. The two-
feet-wide tract of land in question here was enclosed by the fence and
visually appeared to be part of the defendants’ property. When the
defendants bought their land, they were informed by their real estate agent
that their property ran up to and included the fence. The call references in
their deed “read” as though the two-feet-wide tract of land was part of the
conveyance.2 The defendants believed the two-feet-wide tract of land was
part of their property, and utilized it consistent with ownership rights up
until the filing of this law suit.
The plaintiffs purchased their property by deed dated April 28, 1989.
Shortly before making this purchase, the plaintiffs had a survey of the
property done. The survey revealed that the fenced-in two-feet-wide tract
of land was part of plaintiffs’ property. Although the plaintiffs were aware
at the time of the purchase of their property that the two-feet-wide tract of
land was, in fact, theirs, they did nothing to show ownership to the tract
until around August, 1994. It was in August of 1994, that the plaintiffs
decided to build a road along the two-feet-wide tract of land. To do this
meant cutting down several trees that were along the tract. The defendants
apparently attempted to prevent the plaintiffs from building the road by
asserting that they owned the tract of land. The plaintiffs thereafter
instituted the present suit. The trial of this matter was held by the circuit
court, sitting as fact finder, on December 13, 1994. The trial court made
findings of fact and conclusions of law, wherein it held that “the
defendants have failed to show by clear and convincing evidence their
ownership by way of adverse possession[.]”

II. Discussion
We note at the outset that the standard of review for judging a
sufficiency of evidence claim is not appellant friendly. Following a bench
trial, the circuit court’s findings, based on oral or documentary evidence,
shall not be overturned unless clearly erroneous, and due regard shall be
given to the opportunity of the circuit judge to evaluate the credibility of
the witnesses. We will disturb only those factual findings that strike us
wrong with the “force of a five-week-old, unrefrigerated dead fish.”

A. Standard of Proof for Adverse Possession Claims

The first argument raised by the defendants is that the circuit court
committed error by requiring them to prove adverse possession by clear
and convincing evidence. There is a minority view that a preponderance of

423
the evidence is sufficient to establish adverse possession. There is little
reason given for adopting this standard other than it is the usual rule in
civil cases.
On the other hand, the view adopted by a majority of jurisdictions is
that adverse possession must be shown by clear and convincing evidence.
It is appropriate, in our opinion, that adverse possession be proved by a
more stringent standard than a mere preponderance of the evidence.
While the preponderance standard applies across the board in civil
cases, a higher standard is needed where fairness and equity require more
persuasive proof. Although the standard clear and convincing is less
commonly used, it nonetheless is no stranger to West Virginia civil cases.
In Wheeling Dollar Sav. & Trust Co. v. Singer, 250 S.E.2d 369, 374 (W.
Va. 1978), this Court stated that “clear and convincing” is the measure or
degree of proof that will produce in the mind of the fact finder a firm
belief or conviction as to the allegations sought to be established. It should
be the highest possible standard of civil proof. The interest at stake in an
adverse possession claim is not the mere loss of money as is the case in the
normal civil proceedings. Rather, it often involves the loss of a homestead,
a family farm or other property associated with traditional family and
societal values. To this extent, most courts have used the clear and
convincing standard to protect these important property interests. Adopting
the clear and convincing standard of proof is more than a mere academic
exercise. At a minimum, it reflects the value society places on the rights
and interests being asserted.

B. The Sufficiency of the Evidence

The next argument raised by the defendants is that their evidence was
sufficient to establish adverse possession under the clear and convincing
evidence standard. Regarding the doctrine of adverse possession, we stated
in Naab v. Nolan, 327 S.E.2d 151, 153-54 (W. Va. 1985), the following:
The doctrine of adverse possession is firmly established in our property
law and accompanies W. Va. Code §55-2-1 in settling land disputes
equitably and efficiently.3 This doctrine enables one who has been in
possession of a piece of real property for more than ten years to bring an
action asserting that he is now the owner of that piece of property even
when title rests in another. In Syllabus Point 3 of Somon v. Murphy
Fabrication and Erection Co., 232 S.E.2d 524 (W. Va. 1977) this Court
stated:

One who seeks to assert title to a tract of land under the doctrine of adverse

424
 possession must prove each of the following elements for the requisite
statutory period: (1) That he has held the tract adversely or hostilely; (2) That
the possession has been actual; (3) That it has been open and notorious
(sometimes stated in the cases as visible and notorious); (4) That possession
has been exclusive; (5) That possession has been continuous; (6) That
possession has been under claim of title or color of title.

We also held in Syllabus Point 4 of Somon, that: “Where one by

mistake occupies land up to a line beyond his actual boundary, believing it
to be the true line, such belief will not defeat his right to claim that he
holds such land adversely or hostilely under the doctrine of adverse
possession.”4 In addition to recognizing the common law doctrine of
adverse possession, we have long recognized the principle of “tacking.” In
Syllabus Point 3 of Jarrett v. Stevens, 15 S.E. 177 (W. Va. 1892), we
stated that, “[t]o tack different adverse possessions to make up the period
of bar the persons holding such possessions must be connected by privity
of title or claim.”
With the above principles of law in view, we now turn to the evidence
presented below.
The defendants do not contend that they are the lawful owners of the
two-feet-wide tract of boundary land as a result of call references in their
deed. That is, they do not claim possession under color of title. They have
alleged ownership through claim of title or right. The defendants also do
not contend that they have personally possessed the two-feet-wide tract for
the requisite ten-year period. Instead, they contend that they have
established adverse possession by tacking on the time periods that their
predecessors in title claimed the two-feet-wide tract. We have held that
“tacking” permits adding together the time period that successive adverse
possessors claim property, and that should this period of time added
together be more than ten years, adverse possession may be allowed.
To establish the element of “tacking” the defendants presented
evidence that Edward and Virgie Blevins (the “Blevins”) were the original
owners of the property they purchased in 1985. The Blevins owned the
property as far back as 1937, and during the entire time of their ownership
they believed the two-feet-wide tract was part of their land, and they
exercised dominion and control over the tract consistent with ownership
rights. The Blevins sold their property on October 30, 1978, to Norman
and Martha Fletcher (the “Fletchers”), believing that they were also
conveying the two-feet-wide tract. Mr. Fletcher testified that when they
bought the property they believed that they had purchased the two-feet-
wide tract, and possessed it consistent with ownership rights. The

425
defendants testified that they bought their property from the Fletchers in
1985, and believed their land purchase included the two-feet-wide tract of
boundary land, and that they possessed it consistent with ownership rights,
up until the filing of this law suit. Based upon this tacking evidence, the
defendants contend that they are entitled as a matter of law to add the
period 1937-1985, to their nine-and-a-half year claim to the two-feet-wide
tract, which would give them far in excess of ten years adverse possession
of the tract.5
To establish the element of “hostile” or “adverse” possession by
tacking, the defendants called several witnesses who testified that the two-
feet-wide tract was fenced off as far back as 1937, that the Blevins placed
the fence along the tract, and that the Blevins claimed the tract as theirs.6
Evidence was presented to show that the Fletchers maintained the fence
along the two-feet-wide tract, and that the fence remained in place
throughout their ownership of the property. The defendants testified that
they purchased their property from the Fletchers in 1985, and that they
claimed ownership of the two-feet-wide tract, and that it remained fenced
off up until the start of the instant law suit.
To establish the element of “actual” possession by tacking, the
defendants called several witnesses who testified that the Blevins
periodically repaired the fence surrounding the two-feet-wide tract, that
they routinely planted a garden along the tract, and that the Blevins
constructed and maintained a shed along a portion of the tract. Mr.
Fletcher testified that he regularly planted a garden along the tract, that he
routinely removed weeds from along the tract and fence, and that he
picked blackberries from the area and walnuts from trees that had grown
along the tract.7 The defendants testified that they planted gardens along
the tract, that they built a treehouse in one of the trees that had grown
along the tract, and that they regularly mowed the grass and weeds in the
area.
To establish the element of “open and notorious” possession by
tacking, the defendants called several witnesses who testified that during
the period that the Blevins owned the defendants’ property, the reputation
of the two-feet-wide tract in the community was that it belonged to the
Blevins.8 Mr. Fletcher testified that the reputation in the community was
that the two-feet-wide tract was part of his property. The defendants
testified that the reputation in the community was that the two-feet-wide
tract was part of their property.
To establish the element of “exclusive” possession by tacking, the
defendants presented testimony by two of the original owners of plaintiffs’

426
property.9 These two witnesses testified that neither the Blevins’ nor the
Fletchers’ claim to the two-feet-wide tract was ever objected to by them or
those who owned the property with them. The defendants also presented
evidence to show that only the Blevins and Fletchers respectively had
control and dominion over the two-feet-wide tract. The defendants also
testified that they had exclusive control and dominion over the two-feet-
wide tract up until the time of this law suit.
To establish the element of “continuous” possession the defendants
presented testimony that the Blevins enclosed, maintained, cultivated and
claimed ownership of the two-feet-wide tract up until they sold their
property to the Fletchers. Mr. Fletcher testified that he maintained,
cultivated and claimed ownership of the two-feet-wide tract up until he
sold the property to the defendants. The defendants testified that they
maintained, cultivated and claimed ownership of the two-feet-wide tract up
until the instant law suit.
To establish the element of “claim of title” the defendants presented
evidence to show that neither the Blevins, Fletchers nor the defendants had
actual title to the two-feet-wide tract, yet each claimed ownership of it
pursuant to all of the above conduct, during their entire respective
occupancy.
The trial court found that this evidence did not establish tacking or
adverse possession by clear and convincing evidence. The trial court made
this finding notwithstanding the fact that none of the defendants’ tacking
or adverse possession evidence was challenged or rebutted by the
plaintiffs.
The findings made by the trial court are inadequate to allow this Court
to find that all relevant factors were considered. Though helpful, the
findings are not all-encompassing. Indeed, the findings of the circuit court
ignored the central thrust of the defendants’ evidence.
The circuit court either misunderstood or misapplied the theory of the
defendants. The defendants do not claim that their actual possession of the
property in question is sufficient to establish adverse possession. Rather,
they contend that their predecessors in interest met all the necessary
prerequisites of adverse possession and under the doctrine of tacking, the
predecessors’ interest was passed onto the defendants. The circuit court’s
findings never addressed this aspect of the defendants’ case.
The upshot is that the circuit court failed to make any findings that
would dispose of the defendants’ tacking claim. [Accordingly, the
judgment of the Circuit Court of Mercer County is reversed and
remanded.]

427
 Notes and Questions
1. Adverse possession claims generate substantial litigation. Each of
the elements of adverse possession has caused problems of interpretation
and application. Moreover, a significant number of states either add other
elements to the standard list or identify multiple ways to acquire property
by adverse possession. It is therefore crucial to examine carefully the
version of the doctrine that has been adopted in your jurisdiction.

ELEMENTS OF ADVERSE POSSESSION

The elements of a claim for adverse possession typically include (1) actual
possession that is (2) open and notorious, (3) exclusive, (4) continuous, and (5)
adverse or hostile (6) for the statutory period. Most states agree on this list of
elements. Some states have enacted shorter statutes of limitation depending on
whether the possessor has acted under (7) “color of title” or has (8) paid property
taxes on the land.

Adverse possession doctrine allows a non-owner to acquire full

ownership rights in real property if the non-owner “actually possesses”
property without permission by the “true” owner (meaning the formal title
holder) in a visible manner for the period of time established by statute.
Adverse possession claims may be brought by the adverse possessor
herself in a lawsuit against the record owner to quiet title. This kind of
claim asks the court to grant a declaratory judgment that the adverse
possessor has become the owner of the disputed property through adverse
possession. Adverse possession claims may also arise as defenses to
trespass or ejectment claims by record owners. In ejectment lawsuits, the
record owner claims that the adverse possessor is wrongfully occupying
her property and seeks a court order ejecting the adverse possessor from
the property; the adverse possessor defends by asserting that he has
acquired title by adverse possession and that plaintiff therefore has no right
to eject him. In trespass cases, the plaintiff alleges an intentional intrusion
on her property, while the adverse possessor defends by alleging that he is
not trespassing because he has acquired ownership of the property by
adverse possession.
2. Actual possession. The adverse possessor must physically occupy
the property in some manner. Some states have statutes that identify which

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types of actions are required to establish “actual” possession. Cal. Code
Civ. Proc. §323; Fla. Stat. §95.16; N.Y. Real Prop. Acts. §522. In the
absence of a statute, “[a]ctual occupancy means the ordinary use to which
the land is capable and such as an owner would make of it.” Smith v.
Hayden, 772 P.2d 47, 55 (Colo. 1989). This may be shown by enclosing
the property by a fence and treating it as one’s own. Krosmico v. Pettit,
968 P.2d 345 (Okla. 1998). But see Hovendick v. Ruby, 10 P.3d 1119
(Wyo. 2000) (“fence of convenience” designed to contain or keep out
animals gives rise to a presumption of permissive use while a boundary
fence gives rise to a presumption of adverse possession); N.Y. Real Prop.
Acts. §543 (stating that enclosure of land by a fence or hedge is not
sufficient for adverse possession). In the absence of a fence, one must
demonstrate actual possession by engaging in significant activities on the
land, such as building on the land and/or living or conducting a business
there. Other actions that are often sufficient to show actual possession are
farming, clearing the land, and planting shrubs. Harris v. Lynch, 940
S.W.2d 42 (Mo. Ct. App. 1997). The touchstone is proof the possessor
treated the land as an “average owner” would. Jarvis v. Gillespie, 587
A.2d 981, 985 (Vt. 1991).
An adverse possessor who has a deed that purports to transfer the land
in question but is ineffective to transfer title because of a defect in the deed
(such as lack of a signature) or a defect in the process by which the deed
was issued (lack of notice to the owner when the property is sold for
failure to pay property taxes, for example) has color of title to the
property. In that case, occupation of any portion of the land described in
the defective title is generally deemed to be actual possession of the whole
lot described in the void deed. See §1.2, infra.10
3. Open and notorious. Courts generally agree that the possessory
acts must be sufficiently visible and obvious to put a reasonable owner on
notice that her property is being occupied by a non-owner. Lawrence v.
Town of Concord, 788 N.E.2d 546, 551-552 (Mass. 2003); Grappo v.
Blanks, 400 S.E.2d 168 (Va. 1991). The adverse possessor need not
demonstrate that the “true owner” (the formal title holder) observed or
knew about the adverse possessor’s use of the property; rather, the true
owner is “charged with seeing what reasonable inspection would disclose.”
William B. Stoebuck & Dale A. Whitman, The Law of Property §11.7, at
856 (3d ed. 2000). Accord, Lawrence v. Town of Concord, 788 N.E.2d at
552 (adverse possession available even when record owner did not know it
owned the property in question).
A great deal of litigation has been generated over which acts are

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sufficient to put owners on notice. Enclosing land by a fence or a wall, as
in Brown v. Gobble, is universally recognized as sufficiently open and
notorious. Smith v. Tippett, 569 A.2d 1186 (D.C. 1990). Other acts deemed
sufficient include building a structure, Smith v. Hayden, supra (garage
located on neighboring property); clearing the land, laying down a
driveway, mowing grass, and using the strip for parking, storage, garbage
removal, and picnicking, Chaplin v. Sanders, 676 P.2d 431 (Wash. 1984);
and planting and harvesting crops, Cheek v. Wainwright, 269 S.E.2d 443
(Ga. 1980). Cf. Rhodes v. Cahill, 802 S.W.2d 643 (Tex. 1990) (holding
that isolated and selective clearing of trees for timber or grazing purposes
and grazing cattle and goats without enclosing the land are insufficient to
show adverse possession over a ten-year period).
4. Exclusive. The exclusivity requirement does not mean that no one
but the owner used the property for the statutory period. Owners routinely
allow others to enter their property for various purposes. Exclusivity
generally means that the use “is of a type that would be expected of a true
owner of the land in question” and that “the adverse claimant’s possession
cannot be shared with the true owner.” Smith v. Tippett, 569 A.2d at 1190.
Proving that possession was not shared with the true owner may require a
showing that “the record owner has been effectively excluded,” Smith v.
Hayden, 772 P.2d at 52, although occasional entry by the true owner may
not defeat the claim. Id. at 53. Two adverse possessors who possess
property jointly may acquire joint ownership rights as co-owners.11
5. Continuous (tacking doctrine). The requirement that the adverse
possessor’s use be continuous does not mean that she must be on the
property 24 hours a day. Nor does it mean that the owner may never leave
the property for extended periods of time. Depending on the type of
property in question, even extended absences may not defeat the claim. In
Howard v. Kunto, 477 P.2d 210 (Wash. Ct. App. 1970), for example,
adverse possession was established over a parcel of land used seasonally
as a summer cabin. The court held the continuity requirement to mean that
the adverse possessor must exercise control over the property in the ways
customarily pursued by owners of that type of property. “[T]he requisite
possession requires such possession and dominion ‘as ordinarily marks the
conduct of owners in general in holding, managing, and caring for
property of like nature and condition.’ ” Id. at 213-214.
What happens if someone adversely possesses property for less than
the time period required by the relevant statute and sells the property — or,
more precisely, purports to sell it — to another owner? The general rule is
that the succeeding periods of possession by different persons may be

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added together; this is called tacking. Successors can add the original
adverse possessor’s holding period only if they are in privity with one
another, meaning that the original adverse possessor purported to transfer
title to the property to the successor. Shelton v. Strickland, 21 P.3d 1179,
1184 (Wash. Ct. App. 2001). If, however, the successor dispossessed the
prior adverse possessor forcibly, the tacking doctrine does not apply.
6. Adverse or hostile. Of all the elements of adverse possession, the
adverseness requirement has given rise to the most confused and varied
treatment. The courts agree that the adverseness requirement means that
the use is nonpermissive. A showing that the true owner has permitted the
use will defeat the claim. Beyond this basic premise, however, much
disagreement ensues. It is important to distinguish the requirements for the
state of mind of the true owner from the requirements for the state of mind
of the adverse possessor.
a. True owner’s state of mind. If someone is occupying another’s
land with the owner’s permission, the occupier cannot acquire the land
by adverse possession. The court’s question, therefore, is whether the
true owner permitted the use; if so, this defeats an adverse possession
claim. Although it is counterintuitive, the adverse possessor must show
that her use was nonpermissive to obtain ownership by adverse
possession. What evidence is sufficient to prove that possession is
nonpermissive? This is generally not a problem if the owner has
expressly granted permission (through granting a license or lease, for
example) or has expressly denied permission (by posting “No
Trespassing” signs, for example). In many cases, however, the owner
has said nothing either way. In such cases, the courts almost always
hold that there is a presumption that possession of another’s property is
nonpermissive. Robarge v. Willett, 636 N.Y.S.2d 938 (App. Div.
1996). This means that adverse possession can be established by
longstanding, visible, continuous possession of another’s land. No
proof need be given on the question of adverseness; lack of permission
is presumed. If all the elements are met, adverse possession can be
claimed unless the true owner produces evidence to show that the use
was permissive.
Co-owners of property, such as two sisters who own a house jointly
or two roommates who share an apartment, are each legally entitled to
possess the whole property. They work out actual usage informally
between or among themselves. Use of the whole property by one of
two co-owners is as of right because each is acting within her legal
rights if she occupies the whole property. No permission is needed to

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possess the whole property so no trespass has occurred if an owner
possesses the whole. To acquire adverse possession against a co-owner,
one must make an explicit statement of intent to take possession of the
entire property by adverse possession; this is called an ouster.12
Similarly, possession that begins as permissive will stay that way
unless the owner explicitly revokes permission or the adverse possessor
announces that she is ousting the true owner and claiming the property
as her own. However, if the owner allows another to possess his
property for a very long time and the possessor reasonably relies on
that permission to invest in the land, she may be granted possessory
rights on the ground that the owner is estopped from denying continued
permission.13
b. Adverse possessor’s state of mind. Four approaches exist. They
include (i) an objective test based on possession (the rule in most
states); and subjective tests based on (ii) a claim of right; (iii)
intentional dispossession; and (iv) good faith. An objective test
makes the adverse possessor’s state of mind irrelevant, while a
subjective test requires the adverse possessor to prove a particular
attitude on her part in addition to showing that the true owner did not
permit the possession.
i. Lack of permission. The first approach is an objective test,
meaning that the adverse possessor’s state of mind is irrelevant. All
that matters is that the possessor lacked permission from the true
owner. This is the law in the overwhelming majority of states. See
Yourik v. Mallonee, 921 A.2d 869, 878 (Md. 2007) (adverse
possessor wins, even though she knew she was occupying property
owned by another).
ii. Claim of right. Some courts state that the adverse possessor
must allege a “claim of right.” This looks like a subjective test
because it means “a possessor’s intention to appropriate and use the
land as his own to the exclusion of all others.” Grappo v. Blanks, 400
S.E.2d at 171. However, in most states, this second test is actually a
variant on the first. States that require a “claim of right” generally do
not require proof of what the adverse possessor was thinking; all they
require is that the adverse possessor act toward the land as an average
owner would act. “That intention need not be expressed but may be
implied by a claimant’s conduct. Actual occupation, use, and
improvement of the property by the claimant, as if he were in fact the
owner, is conduct that can prove a claim of right.” Id. This collapses
the claim of right test into the “actual possession” test, automatically

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satisfying the claim of right if actual possession has been shown.
Some states that require a showing of a claim of right demand
evidence of “subjective intent to ‘possess[] the property intending to
be its owner and not in subordination to the true owner.’” Hoffman v.
Freeman Land and Timber, LLC., 994 P.2d 106, 112 (Or. 1999).
These states usually permit adverse possession where the possessor
occupied the property under a mistaken belief as to the boundary
line, but not if the evidence shows that the adverse possessor did not
occupy the land with the intent to own it. Petsch v. Widger, 335
N.W.2d 254, 260 (Neb. 1983); Mid-Valley Resources, Inc. v.
Engelson, 13 P.3d 118, 122 (Or. Ct. App. 2000).
iii. Intentional dispossession. A minority of states go further and
require intentional dispossession in certain cases. Under this test, the
adverse possessor must know that she is occupying property owned
by someone else and must intend to dispossess the true owner. A
claim of adverse possession will “fail[] where an encroaching
neighbor is under a mistaken belief as to boundary location and
therefore lacks intention to dispossess the true owner.” Brown v.
Clemens, 338 S.E.2d 338, 339 (S.C. 1988). The courts that adopt this
test ordinarily limit it to boundary disputes. Perry v. Heirs at Law &
Distributees of Gadsden, 449 S.E.2d 250 (S.C. 1994).
Most scholars and courts reject this test on the grounds that it
rewards wrongdoers (intentional trespassers) and fails to protect
innocent persons who have mistakenly occupied land belonging to
another. It can seem perverse to deny protection to good faith
possessors while granting repose to those who intended to invade and
steal neighboring land. “To limit the doctrine of adverse possession
to the latter type places a premium on intentional wrongdoing,
contrary to fundamental justice and policy.” Smith v. Tippett, 569
A.2d at 1191. One answer may lie in the type of disputes a
jurisdiction wants to rule out. Border disputes between neighbors
may be more likely to be based on mistakes. And yet they generate
discord. Squatting, however, often enjoys support among neighbors
when squatters improve property that owners have left to decay. See
Eduardo M. Peñalver & Sonia K. Katyal, Property Outlaws 133-134
(2010). If a community plagued by underused property wants to
encourage squatting (perhaps to punish absentee owners) but avoid
discord among neighbors, it might conclude that intentional adverse
possession should be allowed while adverse possession by mistake
should not. See id. at 148-152 (defending intentional adverse
possession under contexts of extreme economic inequality); see also

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 Lee Anne Fennell, Efficient Trespass: The Case for “Bad Faith”
Adverse Possession, 100 Nw. U. L. Rev. 1037 (2006).
iv. Good faith. Some states require the exact opposite of an intent
to oust the true owner: instead, they require good faith occupation to
prevail. In these jurisdictions, only innocent possessors — those who
mistakenly occupy property owned by someone else — can acquire
ownership by adverse possession. Colo. Rev. Stat. §38-41-101(3)(b)
(II); Ga. Code §§44-5-161 to -162; N.M. Stat. §37-1-22); Carpenter
v. Ruperto, 315 N.W.2d 782, 786 (Iowa 1982) (“A claim of right by a
squatter is a false claim. To permit a squatter to assert a claim of right
would put a premium on dishonesty.”).
Some states provide a shorter statute of limitations if the
possession was in good faith. Compare La. Civ. Code arts. 3473 and
3475 with art. 3486 (10-year period for prescription if possession was
in good faith and 30-year period if possession was in bad faith).
Professor Richard Helmholz has argued that even though most states
reject a good faith test, they in fact grant adverse possession only to
good faith possessors. They do this, he claims, by manipulating the
other elements of the test, such as the open and notorious,
exclusivity, or continuity requirements. Richard Helmholz, Adverse
Possession and Subjective Intent, 61 Wash. U. L.Q. 331 (1983);
Richard Helmholz, More on Subjective Intent: A Response to
Professor Cunningham, 64 Wash. U. L.Q. 65 (1986). Professor
Roger Cunningham has rejected Helmholz’s claim, arguing instead
that the courts do not in fact require good faith to prevail. Roger
Cunningham, Adverse Possession and Subjective Intent: A Reply to
Professor Helmholz, 64 Wash. U. L.Q. 1 (1986). Whoever is correct
in this debate, it is clear that most courts have so far rejected the idea
of adopting a good faith test as a formal element in adverse
possession doctrine. Chaplin v. Sanders, 676 P.2d 431 (Wash. 1984).
7. For the statutory period. The statutory period varies widely from
state to state. As of 2013, the periods include 5 years (3 states), 7 years (4
states), 10 years (16 states), 15 years (9 states), 18 years (1 state), 20 years
(12 states), 21 years (2 states), 30 years (2 states), and 40 years (1 state).
See 10 Thompson on Real Property, Thomas Editions §87.01. Some define
different periods, depending on whether the adverse possessor has paid
property taxes on the property in question or whether the adverse
possessor had color of title.
Many states will toll the statute of limitations if the true owner is under
a disability such as infancy, insanity, or incompetence (wardship), either

434
providing that the statute begins running only after the disability ends,
shortening the limitations period once the disability is removed, or
providing a maximum period longer than the standard statute of limitations
even if the disability has not terminated. Other categories may include
imprisonment and absence from the state.
8. Claims against the government. Courts have traditionally held that
adverse possession claims cannot prevail against government property.
Thus, those who possess or use public property could never acquire
prescriptive rights in that property. Stickney v. City of Saco, 770 A.2d 592,
603 (Me. 2001). However, a significant number of states have passed
statutes limiting or abolishing governmental immunity from adverse
possession. Paula R. Latovick, Adverse Possession Against the States: The
Hornbooks Have It Wrong, 29 U. Mich. J.L. Reform 939 (1996). See Ky.
Rev. Stat. §413.150; N.C. Gen. Stat. §1-35; N.D. Cent. Code §28-01-01;
Wis. Stat. §893.29. Other states have limited the rule by common law,
thereby allowing adverse possession claims against government owners if
the property is not held for public use or is dedicated to commercial
purposes or is otherwise not open to the public. American Trading Real
Estate Properties, Inc. v. Town of Trumbull, 574 A.2d 796, 800 (Conn.
1990); Devins v. Borough of Bogota, 592 A.2d 199 (N.J. 1991). A federal
statute allows adverse possession of federal lands in certain instances if a
claimant has occupied the property for 20 years in good faith reliance on a
claim or color of title and has either cultivated the land or constructed
improvements. 43 U.S.C. §1068.
9. Effect on preexisting nonpossessory interests. Adverse possessors
generally obtain ownership rights subject to preexisting liens, easements,
restrictive covenants, and mineral interests. Unless the adverse possessor
has acted in a manner inconsistent with those interests, they have been
held to persist.
10. Border disputes. New York substantially changed its adverse
possession law in 2008, effectively abolishing adverse possession in most
border dispute cases. The law allows an adverse possessor to acquire
property by building a permanent structure that encroaches on land owned
by another but denies adverse possession by deeming “permissive and
non-adverse” what the statute calls “de minimis non-structural
encroachments” such as lawn mowing, plantings, fences, and sheds. N.Y.
Real Prop. Acts §543. Would you support passage of a similar law in your
state?
11. Protecting the true owner. Once a record owner discovers that a

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neighbor has encroached on her land, what can that owner do to protect his
interests?

§1.2 Color of Title

“An individual acquires color of title when a written conveyance
appears to pass title but does not do so, either from want of title in the
person making it, or the defective mode of conveyance.” Glaser v. Bayliff,
1999 WL 34709, at *4 (Ohio Ct. App. 1999). The defective title may be
void because the person who conveys it does not actually own the land it
purports to convey; because the document lacks a signature, Romero v.
Garcia, 546 P.2d 66 (N.M. 1976); because it contains mistaken or
ambiguous descriptions of the land to be conveyed, Quarles v. Arcega, 841
P.2d 550 (N.M. Ct. App. 1992); or because it was procured through a
faulty procedure, such as a deed granted at a tax sale when the sheriff
failed to follow statutorily mandated procedures, Green v. Dixon, 727 So.
2d 781 (Ala. 1998) (color of title established by tax deed that was void
because of lack of notice to the owner). What sort of document counts as
providing a claimant with “color of title”? Consider the following case.

Romero v. Garcia

546 P.2d 66 (N.M. 1976)

DAN SOSA, JR., J.
Plaintiff-appellee Ida Romero, formerly Garcia, filed suit to quiet title
against defendants-appellants Mr. and Mrs. Antonio Garcia, who are her
former father-in-law and mother-in-law. The suit to quiet title was based
upon adverse possession for more than ten years under color of title and
payment of taxes. From judgment for the plaintiff, defendants appeal. We
affirm the trial court.

CONTEXT

In community property states, property acquired by a married couple is held

jointly as a “community.” Both members of the community must sign a deed
conveying community property. In Romero, the deed purporting to convey the
parcel was void because it included only the signature of Octaviano’s father,
but not that of his mother. For more on community property, see Chapter 9,
§3.2.

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 The facts are the following: In 1947 plaintiff Ida Garcia Romero and
her deceased husband Octaviano Garcia, son of the defendants, purchased
the 13 acres in dispute for $290 from Octaviano’s father, Antonio Garcia.
Mrs. Antonio Garcia failed to join in the conveyance. The 13 acres were
carved out of 165 acres Antonio Garcia had purchased in 1923. The
plaintiff and her deceased husband entered into possession in 1947 and
built a home on the land with the help of both defendants. The deed was
recorded in May, 1950. Ida and Octaviano lived in their home until 1962,
when he died, whereupon she moved to Colorado and subsequently
remarried.
The main thrust of the appellants’ argument concerns the deed.
Appellants argue that (1) the void deed was inadequate for color of title
and (2) the deed’s description was inadequate for adverse possession
because it failed to describe a specific piece of property. The first
argument is clearly erroneous. A deed is sufficient for the purpose of color
of title even though it is void because it lacks the signature of a member of
the community.
We move to the question of whether the deed was insufficient for
adverse possession because it failed to describe adequately a parcel of land
which can be ascertained on the ground. Since the deed in question was in
Spanish, the court and the parties relied on the following English
translation of the description:

A piece of land containing 13 acres more or less, within the following

description: NE 1/4 SE 1/4, S 1/2 SE 1/4 NE 1/4, Section 32, NW 1/4 SW
1/4, S 1/2 SW 1/4 NW 1/4, Section 33, Township 32 N. Range 7E N.M.P.M.,
said 13 acres are bounded as follows: East and South bounded by property of
Antonio Garcia; on the North by the National Forest and on the West by
property of Alfonso Marquez. The said 13 acres are in the NW corner of the
ranch above described.

Not translated but part of the deed to the appellee’s husband are the
following words in Spanish: “Con derecho de agua del Sublet del Rio de
Los Pinos,” which translated mean “with water rights assigned from the
Sublet [creek] of the Los Pinos river.”
The description in the deed specified that the land is bounded on the
north by the National Forest and on the west by Alfonso Marquez and on
the south and east by the grantor. The deed also specified that there shall
be water rights to the land from the Los Pinos River. The Los Pinos River
is generally to the south of this property and at one point only some twenty
feet from the alleged southern boundary. In Richardson v. Duggar, 525

437
P.2d 854, 857 (N.M. 1974) we held that the deed is not void for want of
proper description if, with the deed and with extrinsic evidence on the
ground, a surveyor can ascertain the boundaries.
In the case at bar we had testimony from the grantor that the fence line
along the entire northern boundary had been there for over fifty years, and
the fence line on the western boundary of the property which he conveyed
to his son had also been there for more than fifty years. We therefore see
that the northwest corner was adequately established as being the
intersection of these two fence lines. The surveyor testified that the
plaintiff showed him generally where the land was and pointed to the
house that was built by the plaintiff and the defendants. The surveyor
walked down the western boundary line and found a pipe in position; he
established that pipe as the southwest corner. He shot an angle parallel to
the northern boundary line and found a pile of rocks which he established
as the southeastern corner. He then closed the parallelogram by shooting a
line to the northern boundary parallel to the western fence. This
parallelogram measured 12.95 acres; the deed granted “13 acres more or
less.” Thus, the land is in the shape of a parallelogram and is bounded by
the National Forest on the north, by Alfonso Marquez (now lands of Mr.
L.C. White) on the west, and on the south and east by the grantor. This
parallelogram is also in close proximity to the river from which water
could be used in accordance with the assignment of the water rights.
Mrs. Romero consistently identified this land as the property she and
her deceased husband had purchased and which she thereafter possessed
and from which she sold the hay for several years. Defendant failed to
object to this testimony.
The trial court made the following findings of fact:

15. The land described in the complaint of the plaintiff herein, by virtue of
the description of the said deed itself and the actions and understandings of
the parties as to the boundaries of said land, is capable of determination as to
the exact location of the boundaries of said land conveyed to Plaintiff’s
deceased husband.
16. The Northwest corner of the land conveyed is established by the
intersection of a fence line extending along the entire northern boundary of
said property from east to west, and the point where an existing fence line
along the westerly boundary of said property intersected; the Southwest
corner of said lands of the Plaintiff was marked by an iron pipe found in
place by a surveyor, and the Southeast corner of said property conveyed was
marked by a pile of rocks, and the Northeast corner of said tract was marked
by an existing fence extending from East to West along the entire northerly
boundary of said tract of land.

438
 The court feels that when the evidence, with all reasonable inferences
deducible therefrom, is viewed in the light most favorable in support of the
findings, there was substantial evidence to support these findings of fact
and others relevant to this issue.
The court in Garcia v. Garcia, 525 P.2d 863, 865 (N.M. 1974) stated
that “. . . an indefinite and uncertain description may be clarified by
subsequent acts of the parties,” and found that:

The evidence here is clear that subsequent acts of the parties in going upon
and generally pointing out the boundaries of the lands to the surveyor, aided
by other extrinsic evidence, enabled the surveyor to prepare the plat relied
upon by all the parties. In fact, if it were not for the extrinsic evidence by
which the surveyor was able to locate the lands, the 1968 deed from Nazario
to plaintiffs would fail for lack of means by which to identify any lands.

In the case at bar the subsequent acts of the parties in erecting a house
and pointing to the land were sufficient to ascertain the boundaries.
Finally, appellants argue that appellee failed to pay the tax
continuously, for appellee had been in arrears several times, ranging from
1½ to almost 4 years. However, appellee did pay the taxes in each case
before a tax deed was issued to the state. Thus, we hold that appellee
complied substantially with the continuous payment of taxes requirement
of adverse possession under N.M. Stat. §23-1-22.
The judgment of the trial court will be affirmed.

Notes and Questions

1. Legal consequences of color of title. Some states lower the number
of years required to obtain adverse possession when the owner has color of
title. Compare Tex. Code §16.026 (10 years if no color of title) with Tex.
Code §16.025 (5 years if cultivated, paid taxes, with registered deed) and
Tex. Code §16.024 (3 years if under color of title). In a few states, adverse
possession statutes treat color of title as a prerequisite for any successful
adverse possession claim. See, e.g., N.M. Stat. §37-1-22.
In all states, as noted above in §1.1, when color of title exists, courts
use the land area described in the title as conclusive evidence of the
property that is being adversely possessed. Actual possession of any
portion of that land constitutes adverse possession of all the land described
in the document providing color of title (except to the extent that some
portion of the land described is actually occupied by the original title
owner). In such a case of so-called constructive possession, color of title
functions as fences often do to help the court determine the boundaries of

439
the land being claimed by adverse possession.
2. Color of title and permission. As we discussed above, color of title
sometimes exists because a technical defect in the deed conveying the
property renders the conveyance invalid. In those situations, the true owner
intends to convey the property but fails to do so. Does this mean that the
occupant takes possession with the owner’s permission and therefore fails
to satisfy the requirement of adversity? After all, in a sense, she enters the
property with the true owner’s (i.e., the failed conveyor’s) consent.
On the other hand, she takes possession of the property as someone
claiming ownership on her own behalf, not as someone entering by virtue
of ongoing permission granted by the owner and (therefore) as someone
subordinate to the owner’s superior title. Where an adverse possessor
enters the property as part of an intended (but somehow invalid)
conveyance, courts typically deem the possession to be adverse to the
owner. See Polanski v. Town of Eagle Point, 141 N.W.2d 281 (Wis. 1966)
(“Where it is admitted that the present possession is the result of a
conveyance by a former owner, it is obvious that there will be no forcible
entry. However, the occupation of property pursuant to a deed is
presumptively and in fact an act adverse to and in derogation of the former
owner’s title.”); cf. Hubbard v. Curtiss, 684 P.2d 842 (Alaska 1984) (“The
possession of a grantee is presumptively adverse to his grantor . . . because
once the grantor has purported to convey property neither he nor his
grantee believe that the grantee’s possession is subordinate to the grantor’s
title.”); 3 Am. Jur. 2d Adverse Possession §192.
Another approach would be to treat situations in which the parties
intended to transfer a property interest but failed for some reason as a
special case of adverse possession in which adversity (understood as
nonpermissiveness) is not required. The Restatement (Third) of Property
(Servitudes) §2.16 favors this approach for prescriptive easements,
discussed in §3, below. Which approach is better?

§1.3 Squatters

Nome 2000 v. Fagerstrom

799 P.2d 304 (Alaska 1990)

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 Map: Osborne Road, Nome, Alaska

WARREN MATTHEWS, JR., Chief Justice.

This appeal involves a dispute over a tract of land measuring
approximately seven and one-half acres, overlooking the Nome River
(hereinafter the disputed parcel). Record title to a tract of land known as
mineral survey 1161, which includes the disputed parcel, is held by Nome
2000.
On July 24, 1987, Nome 2000 filed suit to eject Charles and Peggy
Fagerstrom from the disputed parcel. The Fagerstroms counterclaimed that
through their use of the parcel they had acquired title by adverse
possession.
A jury trial ensued and, at the close of the Fagerstroms’ case, Nome
2000 moved for a directed verdict on two grounds. First, it maintained that
the Fagerstroms’ evidence of use of the disputed parcel did not meet the
requirements of the doctrine of adverse possession. Alternatively, Nome
2000 maintained that the requirements for adverse possession were met
only as to the northerly section of the parcel and, therefore, the
Fagerstroms could not have acquired title to the remainder. The trial court
denied the motion. After Nome 2000 presented its case, the jury found that
the Fagerstroms had adversely possessed the entire parcel.
The disputed parcel is located in a rural area known as Osborn. During
the warmer seasons, property in Osborn is suitable for homesites and
subsistence and recreational activities. During the colder seasons, little or
no use is made of Osborn property.
Charles Fagerstrom’s earliest recollection of the disputed parcel is his
family’s use of it around 1944 or 1945. At that time, he and his family
used an abandoned boy scout cabin present on the parcel as a subsistence
base camp during summer months. Around 1947 or 1948, they moved
their summer campsite to an area south of the disputed parcel. However,
Charles and his family continued to make seasonal use of the disputed
parcel for subsistence and recreation.
In 1963, Charles and Peggy Fagerstrom were married and, in 1966,
they brought a small quantity of building materials to the north end of the
disputed parcel. They intended to build a cabin. In 1970 or 1971, the
Fagerstroms used four cornerposts to stake off a twelve acre, rectangular
parcel for purposes of a Native Allotment application.14 The northeast and
southeast stakes were located on or very near mineral survey 1161. The

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northwest and southwest stakes were located well to the west of mineral
survey 1161. The overlap constitutes the disputed parcel. The southeast
stake disappeared at an unknown time. Also around 1970, the Fagerstroms
built a picnic area on the north end of the disputed parcel. The area
included a gravel pit, beachwood blocks as chairs, firewood and a 50-
gallon barrel for use as a stove.
About mid-July 1974, the Fagerstroms placed a camper trailer on the
north end of the disputed parcel. The trailer was leveled on blocks and
remained in place through late September. Thereafter, until 1978, the
Fagerstroms parked their camper trailer on the north end of the disputed
parcel from early June through September. The camper was equipped with
food, bedding, a stove and other household items.
About the same time that the Fagerstroms began parking the trailer on
the disputed parcel, they built an outhouse and a fish rack on the north end
of the parcel. Both fixtures remained through the time of trial in their
original locations. The Fagerstroms also planted some spruce trees, not
indigenous to the Osborn area, in 1975-76.
During the summer of 1977, the Fagerstroms built a reindeer shelter on
the north end of the disputed parcel. The shelter was about 8 × 8 feet wide,
and tall enough for Charles Fagerstrom to stand in. Around the shelter, the
Fagerstroms constructed a pen which was 75 feet in diameter and 5 feet
high. The shelter and pen housed a reindeer for about six weeks and the
pen remained in place until the summer of 1978.
During their testimony, the Fagerstroms estimated that they were
personally present on the disputed parcel from 1974 through 1978, “every
other weekend or so” and “[a] couple times during the week . . . if the
weather was good.” When present they used the north end of the parcel as
a base camp while using the entire parcel for subsistence and recreational
purposes. Their activities included gathering berries, catching and drying
fish and picnicking. Their children played on the parcel. The Fagerstroms
also kept the property clean, picking up litter left by others.
While so using the disputed parcel, the Fagerstroms walked along
various paths which traverse the entire parcel. The paths were present prior
to the Fagerstroms’ use of the parcel and, according to Peggy Fagerstrom,
were free for use by others in connection with picking berries and fishing.
On one occasion, however, Charles Fagerstrom excluded campers from the
land. They were burning the Fagerstroms’ firewood.

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 Nome 2000 placed into evidence the deposition testimony of Dr.
Steven McNabb, an expert in anthropology, who stated that the
Fagerstroms’ use of the disputed parcel was consistent with the traditional
Native Alaskan system of land use. According to McNabb, unlike the non-
Native system, the traditional Native system does not recognize exclusive
ownership of land. Instead, customary use of land, such as the
Fagerstroms’ use of the disputed parcel, establishes only a first priority
claim to the land’s resources. The claim is not exclusive and is not a matter
of ownership, but is more in the nature of a stewardship. That is, other
members of the claimant’s social group may share in the resources of the
land without obtaining permission, so long as the resources are not abused
or destroyed. McNabb explained that Charles’ exclusion of the campers
from the land was a response to the campers’ use of the Fagerstroms’
personal property (their firewood), not a response to an invasion of a
perceived real property interest.
Nevertheless, several persons from the community testified that the

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Fagerstroms’ use of the property from 1974 through 1977 was consistent
with that of an owner of the property. For example, one Nome resident
testified that since 1974 “[the Fagerstroms] cared for [the disputed parcel]
as if they owned it. They made improvements on it as if they owned it. It
was my belief that they did own it.”
During the summer of 1978, the Fagerstroms put a cabin on the north
end of the disputed parcel. Nome 2000 admits that from the time that the
cabin was so placed until the time that Nome 2000 filed this suit, the
Fagerstroms adversely possessed the north end of the disputed parcel.
Nome 2000 filed its complaint on July 24, 1987.
The Fagerstroms’ claim of title by adverse possession is governed by
Alaska Stat. §09.10.030, which provides for a ten-year limitations period
for actions to recover real property.15 Thus, if the Fagerstroms adversely
possessed the disputed parcel, or any portion thereof, for ten consecutive
years, then they have acquired title to that property. Because the
Fagerstroms’ use of the parcel increased over the years, and because Nome
2000 filed its complaint on July 24, 1987, the relevant period is July 24,
1977 through July 24, 1987.
We recently described the elements of adverse possession as follows:
“In order to acquire title by adverse possession, the claimant must prove,
by clear and convincing evidence, . . . that for the statutory period ‘his use
of the land was continuous, open and notorious, exclusive and hostile to
the true owner.’” Smith v. Krebs, 768 P.2d 124, 125 (Alaska 1989). The
first three conditions — continuity, notoriety and exclusivity — describe
the physical requirements of the doctrine. The fourth condition, hostility, is
often imprecisely described as the “intent” requirement.
Nome 2000 argues that as a matter of law the physical requirements
are not met absent “significant physical improvements” or “substantial
activity” on the land. Thus, according to Nome 2000, only when the
Fagerstroms placed a cabin on the disputed parcel in the summer of 1978
did their possession become adverse. For the prior year, so the argument
goes, the Fagerstroms’ physical use of the property was insufficient
because they did not construct “significant structure[s]” and their use was
only seasonal. Nome 2000 also argues that the Fagerstroms’ use of the
disputed parcel was not exclusive because “[o]thers were free to pick the
berries, use the paths and fish in the area.” We reject these arguments.
Whether a claimant’s physical acts upon the land are sufficiently
continuous, notorious and exclusive does not necessarily depend on the
existence of significant improvements, substantial activity or absolute
exclusivity. Indeed, this area of law is not susceptible to fixed standards
because the quality and quantity of acts required for adverse possession

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depend on the character of the land in question. Thus, the conditions of
continuity and exclusivity require only that the land be used for the
statutory period as an average owner of similar property would use it.
Where, as in the present case, the land is rural, a lesser exercise of
dominion and control may be reasonable.
The character of the land in question is also relevant to the notoriety
requirement. Use consistent with ownership which gives visible evidence
of the claimant’s possession, such that the reasonably diligent owner
“could see that a hostile flag was being flown over his property,” is
sufficient. Shilts v. Young, 567 P.2d 769, 776 (Alaska 1977). Where
physical visibility is established, community repute is also relevant
evidence that the true owner was put on notice.16
Applying the foregoing principles to this case, we hold that the jury
could reasonably conclude that the Fagerstroms established, by clear and
convincing evidence, continuous, notorious and exclusive possession for
ten years prior to the date Nome 2000 filed suit. We point out that we are
concerned only with the first year, the summer of 1977 through the
summer of 1978, as Nome 2000 admits that the requirements of adverse
possession were met from the summer of 1978 through the summer of
1987.
The disputed parcel is located in a rural area suitable as a seasonal
homesite for subsistence and recreational activities. This is exactly how
the Fagerstroms used it during the year in question. On the premises
throughout the entire year were an outhouse, a fish rack, a large reindeer
pen (which, for six weeks, housed a reindeer), a picnic area, a small
quantity of building materials and some trees not indigenous to the area.
During the warmer season, for about 13 weeks, the Fagerstroms also
placed a camper trailer on blocks on the disputed parcel. The Fagerstroms
and their children visited the property several times during the warmer
season to fish, gather berries, clean the premises, and play. In total, their
conduct and improvements went well beyond “mere casual and occasional
trespasses” and instead “evince[d] a purpose to exercise exclusive
dominion over the property.” See Peters v. Juneau-Douglas Girl Scout
Council, 519 P.2d 826, 830 (Alaska 1974). That others were free to pick
berries and fish is consistent with the conduct of a hospitable landowner,
and undermines neither the continuity nor exclusivity of their possession.
See id. at 831 (claimant “merely acting as any other hospitable landowner
might” in allowing strangers to come on land to dig clams).
With respect to the notoriety requirement, a quick investigation of the
premises, especially during the season which it was best suited for use,
would have been sufficient to place a reasonably diligent landowner on

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notice that someone may have been exercising dominion and control over
at least the northern portion of the property. Upon such notice, further
inquiry would indicate that members of the community regarded the
Fagerstroms as the owners. Continuous, exclusive, and notorious
possession were thus established.
Nome 2000 also argues that the Fagerstroms did not establish hostility.
It claims that “the Fagerstroms were required to prove that they intended to
claim the property as their own.” According to Nome 2000, this intent was
lacking as the Fagerstroms thought of themselves not as owners but as
stewards pursuant to the traditional system of Native Alaskan land usage.
We reject this argument and hold that all of the elements of adverse
possession were met.
What the Fagerstroms believed or intended has nothing to do with the
question whether their possession was hostile. Hostility is instead
determined by application of an objective test which simply asks whether
the possessor “acted toward the land as if he owned it,” without the
permission of one with legal authority to give possession. Hubbard v.
Curtiss, 684 P.2d 842, 848 (Alaska 1984). As indicated, the Fagerstroms’
actions toward the property were consistent with ownership of it, and
Nome 2000 offers no proof that the Fagerstroms so acted with anyone’s
permission. That the Fagerstroms’ objective manifestations of ownership
may have been accompanied by what was described as a traditional Native
Alaskan mind-set is irrelevant. To hold otherwise would be inconsistent
with precedent and patently unfair.
Having concluded that the Fagerstroms established the elements of
adverse possession, we turn to the question whether they were entitled to
the entire disputed parcel. Specifically, the question presented is whether
the jury could reasonably conclude that the Fagerstroms adversely
possessed the southerly portion of the disputed parcel.
Absent color of title,17 only property actually possessed may be
acquired by adverse possession. Here, from the summer of 1977 through
the summer of 1978, the Fagerstroms’ only activity on the southerly
portion of the land included use of the pre-existing trails in connection
with subsistence and recreational activities, and picking up litter. They
claim that these activities, together with their placement of the cornerposts,
constituted actual possession of the southerly portion of the parcel. Nome
2000 argues that this activity did not constitute actual possession and, at
most, entitled the Fagerstroms to an easement by prescription across the
southerly portion of the disputed parcel.
Nome 2000 is correct. The Fagerstroms’ use of the trails and picking
up of litter, although perhaps indicative of adverse use, would not provide

446
the reasonably diligent owner with visible evidence of another’s exercise
of dominion and control. To this, the cornerposts add virtually nothing.
Two of the four posts are located well to the west of the disputed parcel.
Of the two that were allegedly placed on the parcel in 1970, the one
located on the southerly portion of the parcel disappeared at an unknown
time. The Fagerstroms maintain that because the disappearing stake was
securely in place in 1970, we should infer that it remained for a
“significant period.” Even if we draw this inference, we fail to see how
two posts on a rectangular parcel of property can, as the Fagerstroms put
it, constitute “[t]he objective act of taking physical possession” of the
parcel. The two posts simply do not serve to mark off the boundaries of the
disputed parcel and, therefore, do not evince an exercise of dominion and
control over the entire parcel. Thus, we conclude that the superior court
erred in its denial of Nome 2000’s motion for a directed verdict as to the
southerly portion. This case is remanded to the trial court, with instructions
to determine the extent of the Fagerstroms’ acquisition in a manner
consistent with this opinion.

CONTEXT

The plaintiff in Nome 2000 claimed that the Fagerstroms had not acquired the
property by adverse possession because they were Native Alaskans and their
use did not establish sufficient “possessory” control as to constitute a claim of
ownership protectable by adverse possession law. The court rejected this
argument. Why? If you were the attorney for the true owner, what better
argument could you have presented to support your client’s position?

Notes and Questions

1. Good faith. Should an adverse possessor gain title to property if she
knows she is occupying property belonging to another, as the Fagerstroms
did? Would your opinion of the proper result in Brown v. Gobble change if
you knew that the adverse possessors intentionally and knowingly built the
fence in a manner that encroached several feet onto their neighbor’s
property?
In 2007, Richard McLean, a former judge and mayor of Boulder,
Colorado, and his wife, attorney Edith Stevens, won a lawsuit against their
neighbors Don and Susie Kirlin in which McLean and Stevens claimed a
third of the Kirlins’ land by adverse possession. The trial judge believed
their evidence that they had taken over the property and occupied it for 25

447
years, more than the 18 years required by the statute of limitations. The
case elicited a firestorm of protest because McLean and Stevens admitted
that they knew they were trespassing on their neighbors’ property the
whole time. See Heath Urie, Couple Will Appeal “Adverse Possession”
Ruling, Daily Camera Online, Nov. 15, 2007. This intentional “land grab”
created an enormous backlash that led to Colorado amending its statutes in
2008 to allow adverse possession only if the adverse possessor “had a
good faith belief [that he or she] was the actual owner of the property and
the belief was reasonable under the particular circumstances.” Colo. Rev.
Stat. §38-41-101(3)(b)(II). Alaska similarly amended its law in 2003 to
adopt a good faith requirement for border cases. Alaska Stat. §09.45.052
(adverse possessors can prevail in border disputes only if they have “a
good faith but mistaken belief” that the property lay within the borders of
their own land). And in 2008, New York amended its adverse possession
statute to require the claimant to show “a reasonable basis for the belief
that the property belongs to the adverse possessor.” N.Y. Real Prop. Acts
§501.
Would you favor passing such a statute in your jurisdiction? Should
border cases be treated any differently from those in which someone
squats on another’s land? What are the arguments for and against adopting
a good faith requirement in these cases?
2. Rural land. When land is possessed in a rural area, on land that is
wooded and/or unimproved, as in Nome 2000, some courts adopt different
standards.
a. Actual possession. Some courts hold that actual possession can
be established by lesser acts than would be required in an urban area.
This is because the law requires the adverse possessor to use the land
as an average owner would use it, and if land in the area is not used
intensively, then actual possession may be shown with fewer acts on
the land. However, other courts focus on the fact that the use must be
“open and notorious” and that greater acts should be required in rural
areas to ensure that a reasonable owner would be on notice of the
occupation of her land. Most courts refuse to adopt a special rule for
rural, wooded, or unimproved land. Which of these three approaches is
best?
b. Adverse. Should the courts presume that possession of rural land
is permissive rather than nonpermissive? The owner in Nome 2000, for
example, may have had no objection to the Fagerstroms’ use of the
land because it did not, for the moment, interfere with any of the
owner’s interests. Should the presumption that land use is

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 nonpermissive be reversed for unimproved land in areas that are
wooded, remote, and unimproved?
3. Family. Should possession be presumed to be permissive when the
adverse possessor and record title holder are in the same family or
otherwise related to each other? Compare Petch v. Widger, 335 N.W.2d
254 (Neb. 1983) (yes), with Totman v. Malloy, 725 N.E.2d 1045 (Mass.
2000) (no).
4. Self-Help. As we discuss in Chapter 11, landlords are typically
barred from engaging in self-help to remove defaulting tenants from their
property. Should the law apply the same policy against self-help to
conflicts between owners and adverse possessors? Between owners and
squatters?

§2 JUSTIFICATIONS FOR ADVERSE

POSSESSION: “ROOTS WHICH WE SHOULD
NOT DISTURB” OR “LAND PIRACY”?
Robert Cooter and Thomas Ulen propose two economic justifications
for adverse possession. First they argue that by quieting title and closing
off stale claims, adverse possession “lowers the cost of establishing
rightful ownership claims by removing the risk that ownership will be
disputed on the basis of the distant past.” Robert Cooter & Thomas Ulen,
Law and Economics 155 (5th ed. 2007). Uncertainty inhibits transactions,
or it raises their costs, thereby lowering their profitability. This is because
people can sell only what they own; if it is unclear what people own, they
will be inhibited from entering transactions because of the risk that they
will not in fact be buying or selling what they are purporting to buy or sell.
By defining who is the lawful owner in the case of boundary disputes,
adverse possession doctrine both settles the dispute and allows further
transactions to take place. Id.
It may be true that adverse possession settled boundary disputes before
a recording system was in place; with both a recording system and the
ability to use scientific surveying methods to fix the boundaries of
property, however, it is almost always more efficient and economical to
rely on the boundaries fixed in the record title to identify the record owner
than it is to conduct a lawsuit to determine whether the complicated and
confusing elements of adverse possession have been met. Even in cases of
conflicting deeds — where two deeds purport to grant ownership to the
same parcel or strip to different persons — it would be less expensive

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simply to rely on a rule that ownership vests in the person whose deed was
recorded first.
Richard Epstein provides another explanation of how adverse
possession lowers the costs of determining the title holder. He argues that
it “shorten[s] the period during which prospective purchasers and lenders
(both noted for their squeamishness) need examine the state of the title.”
Richard Epstein, Past and Future: The Temporal Dimension in the Law of
Property, 64 Wash. U. L.Q. 667, 678 (1986). Of course, in the case of a
record owner whose deed properly describes the land in question and an
adverse possessor whose deed does not cover that land, this explanation is
wanting. Rather than fixing the owner in a certain fashion, the rule tends to
generate litigation. In this type of dispute, it would almost certainly be
more predictable simply to fix title in the record owner. And in the case of
conflicting deeds (two deeds whose land descriptions both cover the strip
of property in question), it would almost certainly be less expensive simply
to limit the time period (to 50 years or so) within which one must search
the title records and then fix ownership in the person whose deed was
recorded first.
The second explanation Cooter and Ulen advance for adverse
possession is that it “prevents valuable resources from being left idle for
long periods of time by specifying procedures for a productive user to take
title from an unproductive user.” Cooter & Ulen, supra, at 155. Those who
do not use their property run the risk of losing that property to an adverse
possessor. Cooter and Ulen do note, however, that using property is not
always beneficial to society. Moreover, if the adverse possessor really
values the property more than the true owner, why not require the adverse
possessor to find out who the true owner is and offer to buy the property
from him?
Justice Oliver Wendell Holmes offered a different explanation for
adverse possession in a letter to William James. Holmes explained adverse
possession as based on the desire to protect the expectations of the adverse
possessor who has come to “shape his roots to his surroundings, and when
the roots have grown to a certain size, cannot be displaced without cutting
at his life.” Tioga Coal Co. v. Supermarkets General Corp., 546 A.2d 1, 5
(Pa. 1988) (quoting Holmes). This explanation rests on the desire to
protect the settled expectations of the adverse possessor as against the true
owner, who would regard recovery of the land as an unexpected windfall
— like winning the lottery.
Judge Richard Posner of the United States Court of Appeals for the
Seventh Circuit adopts Holmes’s explanation but translates it into the
language of wealth and utility. Posner argues:

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 Over time, a person becomes attached to property that he regards as his own
(is this a purely psychological phenomenon or can it be explained in
economic terms?), and the deprivation of the property would be wrenching.
Over the same period of time, as Holmes pointed out, a person loses
attachment to property that he regards as no longer his own, and the
restoration of the property would give him therefore only moderate pleasure.
This is a point about diminishing marginal utility of income. The adverse
possessor would experience the deprivation of the property as a diminution
in his wealth; the original owner would experience the restoration of the
property as an increase in his wealth. If they have the same wealth, their
combined utility will be greater if the adverse possessor is allowed to keep
the property.

Richard Posner, Economic Analysis of Law §3.12, at 97-98 (8th ed. 2011).
Stewart Sterk has similarly presented an economic defense of adverse
possession. Like Posner and Cooter and Ulen, Sterk asserts that the
adverse possessor is likely to value the property more than the true owner.
Stewart Sterk, Neighbors in American Land Law, 87 Colum. L. Rev. 55
(1987). He explains that the true owner has “demonstrated virtually no
concern with the possessor’s occupation.” Id. at 80. Because the
encroaching adverse possessor has shown by her actions that she values
the strip more, it is therefore wealth-maximizing to transfer ownership to
her. If this is so, why not rely on private bargaining to do this? If the
adverse possessor really values the strip more than the true owner, why
shouldn’t she have to offer the true owner enough money to induce the
true owner to sell? After all, requiring a transaction will test the
proposition that the adverse possessor is the most valued user.
Sterk answers that the costs of strategic bargaining may discourage
such a wealth-maximizing transaction. In a two-person bargaining
situation, each party must guess what the other party’s bottom line is —
how much time she has to bargain and what price she is willing to pay or
accept — and what bargaining strategy the other side will adopt. “If the
costs of transmitting offers and counteroffers are high, the bargainer may
find that his best strategy is to eschew bargaining altogether.” Id. at 72. If
the adverse possessor usually values the strip more, and the costs of
bargaining prohibit a transfer from the true owner to the adverse possessor,
then adverse possession doctrine promotes efficiency by vesting ownership
in the adverse possessor. Does this mean, however, that the transfer should
not require compensation from the adverse possessor to the record owner?
As Sterk and others have noted, moreover, it is not a foregone
conclusion that the adverse possessor places a higher value on the property
than the true owner, at least if value is measured in terms of willingness to

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pay in a market transaction. “[T]he adverse possessor’s offer price is likely
to be lower, and may be much lower, than her asking price. The adverse
possessor may not be able to come up with $10,000 in cash, or be willing
to borrow $10,000 to buy the strip, but may be very willing to keep the
strip rather than sell it to the true owner for the same price.” Jack
Beermann & Joseph William Singer, Baseline Questions in Legal
Reasoning: The Example of Property in Jobs, 23 Ga. L. Rev. 911, 964-965
(1989).
But the inability of the cash- or credit-poor to come up with money to
make a market offer may make “willingness to pay” a poor metric for
measuring the degree to which an adverse possessor values the property.
As Eduardo Peñalver and Sonia Katyal have argued, “[p]eople who have
nothing (or very little) will have limited means to express in market offers
the value they place on an item of property. . . . The adverse possessor’s
long-term use (and improvement) of the property, combined with the risk
of civil and criminal sanctions, will in many cases constitute strong prima
facie evidence that the lawbreaker places high value on the property.” See
Eduardo M. Peñalver & Sonia K. Katyal, Property Outlaws 128-129
(2010). Lee Fennell concurs that “[t]he law’s harsh treatment of knowing
trespassers before the statutory period has run amounts to a built-in test of
the relative subjective values that the trespasser and the record owner place
on the land.” Lee Anne Fennell, Efficient Trespass: The Case for “Bad
Faith” Adverse Possession, 100 Nw. U. L. Rev. 1037, 1043 (2006).
As a consequence of the operation of distortions on some adverse
possessors’ ability to express their valuation of the land in terms of offers
to pay, determining who values the land more may differ according to
which side is required to buy the land from the other. “Because of the
difference between offer and asking prices, the result may differ depending
on which party is declared the owner of the disputed strip.” Beerman &
Singer, supra, at 964-965. Under these circumstances, efficiency analysis
based on “willingness to pay” becomes far less determinate.
Professor Margaret Jane Radin adopts Holmes’s explanation for
adverse possession but uses the language of justice and fairness rather than
economics. Her approach centers on the significant distinction between
personal and fungible property: an object is “fungible” if “it is perfectly
replaceable with money”; it is “personal” if it “has become bound up with
the personhood of the holder and is no longer commensurate with money.”
Radin argues that the adverse possessor’s interest is “initially fungible” but
“becomes more and more personal as time passes.” Margaret Jane Radin,
Time, Possession, and Alienation, 64 Wash. U. L.Q. 739, 748 n.26 (1986).
“At the same time, the titleholder’s interest fades from personal to fungible

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and finally to nothingness. At what point is the titleholder detached enough
and the adverse possessor attached enough to make the switch? This
[requires] a moral judgment.” Id. at 748-749. One problem with this
explanation, as Radin concedes, is that the personality theory does not
always apply to corporations. Id. at 749.
Another moral basis for adverse possession lies in “the reliance
interests that the possessor may have developed through longstanding
possession of the property.” Thomas Merrill, Property Rules, Liability
Rules, and Adverse Possession, 79 Nw. U. L. Rev. 1122, 1131 (1984-
1985). Thus, adverse possession may be justified by the moral principle of
protecting reliance on relationships. The adverse possessor and the true
owner develop a kind of relationship based on the true owner’s
acquiescence in having her property occupied by the adverse possessor.
“The possessor comes to expect and may have come to rely on the fact that
the true owner will not interfere with the possessor’s use of the property . .
. and the true owner has fed those expectations by her actions (or her
failure to act).” Joseph William Singer, The Reliance Interest in Property,
40 Stan. L. Rev. 611, 666-667 (1988). The true owner has failed to
interfere with the adverse possessor’s use, thereby generating expectations
of continued access on the part of the adverse possessor. For that reason,
“[i]t is morally wrong for the true owner to allow a relationship of
dependence to be established and then to cut off the dependent party.” Id.
at 667. Does this argument adequately account for the law’s distinction
between permissive use (which cannot generate a claim for adverse
possession) and nonpermissive use (which can)?
Is there any way to justify the extension of adverse possession doctrine
to the knowing trespasser — the land pirate who intentionally trespasses
and occupies neighboring land, knowing that the neighbor is ignorant of
the actual border? It seems perverse to reward such a person. Under this
view, the law of adverse possession should always include a good faith
standard, either as an element of the claim that must be proved by the
adverse possessor or as a defense allowing the true owner to defeat a claim
of adverse possession if the true owner can show the presence of bad faith.
Several arguments might justify granting protection to the land pirate.
First, one purpose of the adverse possession doctrine is to create security
by encouraging owners to rely on existing practical arrangements that have
persisted for a long time. Resting title on something as difficult to prove as
good faith (how can we easily determine someone’s state of mind?) will
make property rights too unpredictable and generate even more litigation,
making ownership less stable, less certain, and less predictable than it now
is.

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 Second, we might interpret the failure of the true owner to object to the
presence of a squatter as tantamount to abandonment of the owner’s rights.
Finders generally become owners of abandoned goods. Adverse
possession requires occupation to be open and notorious. An owner’s
failure to object to such an occupation may indicate a lack of concern
about the encroachment. Strictly speaking, American law does not allow
landowners to abandon ownership of their property, but for an owner who
places no value on her rights — as evidenced by her failure to assert them
within the lengthy adverse possession period — it might not be accurate to
call the intentional trespasser a pirate or thief. After all, we do not think of
finders of abandoned property in these terms.
Third, even if we view the land pirate as an immoral thief, one policy
behind the statute of limitations is to give victims incentives to bring
lawsuits within a reasonable time; when this is done, everyone has repose,
knowing that she is not subject to lawsuits for actions undertaken long ago.
The interest in repose is a strong one. Moreover, it is wrong for the victim
to wait too long to vindicate her rights. One can argue about the amount of
time that is appropriate, but at some point the failure to assert one’s rights
may become more blameworthy than the original wrong.
Finally, in situations of intentional adverse possession, the title owner
may not be a hapless neighbor but a land speculator who is merely
warehousing the property in the hope of being able to sell it and reap a
profit should land prices rise. In the meantime, the property sits unused
and decaying. During the recent foreclosure crisis, banks became the
owners of large numbers of properties in hard-hit communities. Instead of
quickly renting or selling these properties, some banks held them vacant
for protracted periods of time. These vacant properties became unsightly
magnets for crime. Under these circumstances, neighbors may judge a
squatter who moves in and improves the property to be a sympathetic
character who helps to remove the blight of empty housing from the
community. See Peñalver & Katyal, supra, at 133-134; Ben Austen, The
Death and Life of Chicago, N.Y. Times Magazine, May 29, 2013
(describing a movement of squatters in Chicago who, typically with the
support of neighbors, occupy housing that has been foreclosed and held
vacant by banks).
Because adverse possession doctrine employs relatively flexible
standards, it allows substantial room for manipulation by decision makers
and, in certain cases, significant uncertainty for property owners. To avoid
such uncertainty, more rigid rules could be adopted to settle boundary and
other possessory disputes. Yet adverse possession is one of the oldest rules
of property law, and some version of it already exists in every jurisdiction.

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Most scholars continue to think that it both promotes justice and fulfills
important social and individual needs.

§3 PRESCRIPTIVE EASEMENTS
If the scope of the non-owner’s actions is limited to a narrow use of
another’s land rather than general possession of it, she may be granted a
prescriptive easement rather than title by adverse possession. Easements
are limited rights to use the property of another. They can be either
affirmative (the right to engage in a particular use on another’s land) or
negative (the right to limit or block a particular use of another’s land). The
right to cross neighboring property — known as a right of way — is an
example of an affirmative easement. The right to prevent a neighbor from
adding an extra story onto her building is an example of a negative
easement. See Chapter 8, §2. Affirmative easements, but not negative
easements, may be acquired by prescription.

Community Feed Store, Inc. v. Northeastern Culvert Corp.

559 A.2d 1068 (Vt. 1989)

Map: Westminster Station, Vermont

[west of U.S. Route 5 at
connection with Route 123]

ERNEST W. GIBSON III, Justice.

Plaintiff brought an action claiming a prescriptive easement over a
portion of defendant’s land. The trial court rejected the claim and, instead,
entered judgment for defendant on its counterclaim for ejectment, from
which plaintiff appeals. We reverse.
Plaintiff operates a small wholesale and retail animal feed business in
Westminster Station, Vermont. Defendant is a neighboring business which
owns the land adjacent to that upon which plaintiff’s buildings stand. At
issue is a parcel of land to the north of plaintiff’s principal building (the
“mill”), which testimony showed to be a rectangular area measuring
approximately 60 × 90 feet, covered with gravel but not otherwise
improved. Plaintiff owns that part of the gravel area extending
approximately twenty-eight feet to the north of the mill; the remainder

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belongs to defendant.
The mill has loading areas on both the north and south sides: the north
loading dock is used mostly by trucks delivering bag feed and by
customers coming to pick up feed, while the southern area is where
plaintiff receives shipments of feed in bulk. Testimony showed that
vehicles using either loading area would use the gravel lot for turning and
backing. Evidence tended to show that the suppliers’ trucks as well as the
customers’ smaller vehicles used the gravel lot for this purpose.
Although defendant bought its land in 1956, it was not until a new
survey was made in 1984 that it was conclusively established that the bulk
of the gravel area used by plaintiff’s vehicles actually belonged to
defendant. Defendant then erected a barrier at approximately the location
of the survey line to prevent cars and trucks from using its portion of the
gravel area, precipitating plaintiff’s lawsuit for declaration of a
prescriptive easement.
The court, after making findings of fact, concluded that plaintiff’s
claim of a prescriptive easement failed for two reasons: first, plaintiff
failed to prove with sufficient particularity the width and length of the
easement; and second, any use of the area in question by plaintiff or its
customers was made with the permission of the fee owner. Plaintiff claims
that the court erred in these conclusions and in the findings of fact
supporting them, and that the record as a whole supports the conclusion
that a prescriptive easement exists.
Findings of fact will not be overturned on appeal unless they are
clearly erroneous. The evidence must be viewed in the light most favorable
to the prevailing party, and the findings will be upheld if supported by
reasonable or credible evidence, even if contrary evidence exists. Despite
this strict standard, a thorough review of the record leads us to the
conclusion that plaintiff is correct in its claims that the court erred in
making two findings of fact.
In Finding 18, the court held that although “all types of vehicles have
turned and backed up to plaintiff’s building for loading and unloading
since the early 1920s,” plaintiff had “failed to prove by the requisite
measure of proof as to what portion, if any, of defendant’s land” was used
by plaintiff’s vehicles. This finding, which entails both an issue of law (the
measure of proof necessary to establish an easement) and an issue of fact,
served as the basis for the court’s first conclusion of law denying the claim
for a prescriptive easement.
The elements necessary to establish a prescriptive easement and
adverse possession are essentially the same under Vermont law: an adverse
use or possession which is open, notorious, hostile and continuous for a

456
period of fifteen years, and acquiescence in the use or possession by the
person against whom the claim is asserted. The difference lies in the
interest claimed. The term “prescription” applies to the acquisition of
nonfee interests, while “adverse possession” indicates that the interest
claimed is in fee.
Adverse possession may be asserted either under claim of title (where
claimant took possession under a deed which is for some reason defective),
or under a claim of right which arises from the open, notorious and hostile
possession of the land at issue.18 Where there is color of title, it is
relatively simple to ascertain the extent of the possession claimed, since
“actual and exclusive occupation of any part of the deeded premises
carr[ies] with it constructive possession of the whole. . . .” In the absence
of color of title, however, and where a lot has no definite boundary marks,
adverse possession can only extend as far as claimant has actually
occupied and possessed the land in dispute.
Where prescriptive use is claimed, our law requires proof similar to
that needed to establish adverse possession under claim of right. In Morse
v. Ranno, 32 Vt. 600, 607 (1860), this Court held that where a claim of
prescriptive easement for a public highway over private land was made,

the extent of the acquisition, the width of the road, must be determined by the
extent of the actual occupation and use. There can be no constructive
possession beyond the limits which are defined by the user upon the land, or
by other marks or boundaries marking the extent of the claim.

See also Gore v. Blanchard, 118 A. 888, 894 (Vt. 1922) (width of highway
acquired by user is determined by the extent of the actual use and
occupation or by other marks and boundaries indicating the extent of the
claim).
This approach to defining the extent of a prescriptive easement is
reflected in the position taken by the drafters of the Restatement of
Property, which states that “[t]he extent of an easement created by
prescription is fixed by the use through which it was created.” Restatement
of Property §477 (1944).

No use can be justified under a prescriptive easement unless it can fairly be

regarded as within the range of the privileges asserted by the adverse user
and acquiesced in by the owner of the servient tenement. Yet, no use can
ever be exactly duplicated. If any practically useful easement is ever to arise
by prescription, the use permitted under it must vary in some degree from the
use by which it was created. Hence, the use under which a prescriptive
easement arises determines the general outlines rather than the minute details

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 of the interest. Id., comment b (emphasis added).

In California, case law requires claimants to show prescriptive

easements by “a definite and certain line of travel” for the statutory period.
Warsaw v. Chicago Metallic Ceilings, Inc., 676 P.2d 584, 587 (Cal. 1984).
Despite the apparently restrictive nature of that standard, however, the
Warsaw court, on facts almost identical to ours, found that an easement
existed for the purpose of trucks turning around and positioning
themselves at loading docks attached to plaintiff’s building, stating that
“[s]light deviations from the accustomed route will not defeat an easement,
[only] substantial changes which break the continuity of the course of
travel. . . .” Id.
From the case law cited above, it is clear that when a prescriptive
easement is claimed, the extent of the user must be proved not with
absolute precision, but only as to the general outlines consistent with the
pattern of use throughout the prescriptive period. We hold that where a
claimant adduces enough evidence to prove those general outlines with
reasonable certainty, it has met its burden on that issue.
In this case, the trial court had before it extensive evidence as to the
nature and scope of the user claimed. Testimony showed that the gravel
area at issue was approximately 60 by 90 feet long, extending from the
northern end of the mill approximately to where a railroad call box
(attached to what resembles a telephone pole) is located. Surveys were
introduced showing the exact northern boundary of plaintiff’s land, falling
approximately twenty-eight feet to the north of the mill and, therefore,
twenty-eight feet into the gravel area. Photographs were also admitted into
evidence clearly showing the gravel area and the northern loading dock. In
addition, plaintiff’s president drew a diagram showing the use of the gravel
area by trucks and cars, indicating the railroad call box as the north limit.
Under the standard discussed above, we conclude that plaintiff met its
burden by establishing the general outlines of the easement with
reasonable certainty.
The second — and in its own view, more important — basis upon
which the court denied plaintiff’s claim was its conclusion that any use
made by plaintiff was with the fee owner’s permission.

ELEMENTS OF PRESCRIPTION

458
 The elements for establishing a prescriptive easement are the same as those for
adverse possession except that the claimant must show adverse “use” rather than
adverse “possession.” Most courts drop the exclusivity requirement, although
some retain it. See Hoffman v. United Iron & Metal Co., 671 A.2d 55, 64 (Md.
Ct. Spec. App. 1996); Rogers v. Marlin, 754 So. 2d 1267, 1272 (Miss. Ct. App.
1999). A few states add the requirement that the true owner “acquiesce” in the
adverse use.

[T]he elements necessary to prove a prescriptive easement [are] open,

notorious, hostile and continuous use over a fifteen-year period in which
the fee owner has acquiesced. In its findings, the trial court found as fact
that the area in dispute had been used by vehicles of all descriptions in a
manner consistent with the claimed use since the 1920s. The record
showed that this use continued uninterrupted, and in a manner
substantially unchanged since then but for the modernization of the
vehicles using the area, until the barrier was erected in 1984. On the facts
as found by the court, this comprises “open, notorious and continuous” use
of defendant’s property.
The general rule is that open and notorious use will be presumed to be
adverse. The trial court noted in its order (without further comment), and
the defendant argues, that not this presumption but the presumption that
public use of private property is by permission should apply. This case
does not, however, involve . . . generalized public use.19
In order to prove the final element of its claim, the passing of the
fifteen-year period set forth at Vt. Stat. tit. 12, §501, plaintiff proved the
chain of title of its property from plaintiff’s predecessors in interest from
1929 through the present, and showed through uncontradicted testimony
that those predecessors had also made use of the gravel area now claimed
by plaintiff as an easement by prescription. Under the doctrine of
“tacking,” plaintiff may add those previous periods of use to its own upon
a showing that it has “assume[d] the use of the easement directly from his
predecessor as a part of his receipt of the dominant estate.” The record
supports the conclusion that adverse use began no later than 1929, with the
result that the prescriptive period expired in 1944. The record supports a
conclusion that the claimed use was made in an open, notorious,
continuous and adverse manner from 1929 until at least 1956.

Notes and Questions

CONTEXT

459
 As in adverse possession, occasional or sporadic use is likely to violate the
continuity requirement for a prescriptive easement. Barchowsky v. Silver
Farms, Inc., 659 A.2d 347, 354 (Md. Ct. Spec. App. 1995). However, in United
States ex rel. Zuni Tribe of N.M. v. Platt, 730 F. Supp. 318 (D. Ariz. 1990), the
court recognized a prescriptive easement of passage in the Zuni Tribe, which
had traversed a 110-mile path located on private lands every four years on a
pilgrimage to a sacred site and probably had been doing so since 1540.

1. Burden of proof. As with adverse possession, many courts require

proof of adverse use for prescriptive easements by clear and convincing
evidence, McDonald v. Harris, 978 P.2d 81 (Alaska 1999), while some
require only that the claimant prove the elements by a preponderance of
the evidence. Stiefel v. Lindemann, 638 A.2d 642, 649 n.8 (Conn. Ct. App.
1994).
Adverse possession claims result in a transfer of title to the adverse
possessor while prescriptive easement claims result in the right to continue
the kind and amount of use that persisted during the statutory period.
2. Acquiescence. As Community Feed Store demonstrates, a
significant number of states require the prescriptive easement claimant to
prove acquiescence by the true owner as one of the elements of the claim.
This is a confusing term. How can the true owner both “acquiesce” in the
use and “not permit” it?
The acquiescence requirement may have its origin in the theory that
prescriptive easements are based not on adverse or nonpermissive use, but
on a lost grant. Because statutes of limitation usually applied only to
possessory claims in England, English law protected longstanding use on
the premise that the use had a lawful origin. The device of choice was the
fiction of a lost grant. This theory presumes initial permissive use and
therefore contradicts the requirement of proving that use was adverse or
nonpermissive.
For some courts today, acquiescence merely means that the owner did
not assert her right to exclude by bringing a trespass action; this
interpretation renders the requirement duplicative and unnecessary. For
some courts, however, it does have independent significance; it means that
the landowner must have known about the use and passively allowed it to
continue without formally granting permission. Sparling v. Fon du Lac
Township, 745 N.E.2d 660 (Ill. App. Ct. 2001). Alternatively, it could
mean that a reasonable owner would or should have known of the use; this
meaning duplicates the requirement that the use be open and notorious

460
because use is open and notorious only if it is sufficiently visible to put a
reasonable owner on notice of it. Hodgins v. Sales, 76 P.3d 969, 973
(Idaho 2003); Jones v. Cullen, 1998 WL 811558, at *5 (Minn. Ct. App.
1998); Lingvall v. Bartmess, 982 P.2d 690, 694 (Wash. Ct. App. 1999).
3. Presumptions as to permission. Most states presume that a use that
satisfies the other elements of prescription is nonpermissive, just as they
do with adverse possession. See, e.g., Harambasic v. Owens, 920 P.2d 39,
40-41 (Ariz. Ct. App. 1996). However, a significant minority of courts
presume that use, unlike possession, is presumptively permissive rather
than adverse. Johnson v. Coshatt, 591 So. 2d 483, 485 (Ala. 1991); McGill
v. Wahl, 839 P.2d 393, 397-398 (Alaska 1992). They do so because
owners often do allow their neighbors to cross over their land as a
“neighborly gesture,” Jones v. Cullen, 1998 WL 811558, at *5 (Minn. Ct.
App. 1998), and there may therefore be more warrant for assuming that
limited uses are permissive than there is for presuming that occupation is
permissive. Johnson v. Stanley, 384 S.E.2d 577, 579 (N.C. Ct. App. 1989).
Some courts adopt a presumption that use is permissive only if it can be
shown that there was a community custom to allow such uses on the land
of others. Warnack v. Coneen Family Trust, 879 P.2d 715 (Mont. 1994).
Finally, some states protect owners from prescriptive easements over large
bodies of unenclosed land under a “neighborhood accommodation
exception” where the owners could not reasonably know of passings over
the land. See Algermissen v. Sutin, 61 P.3d 176, 182 (N.M. 2002)
(describing but not applying this exception).

CONTEXT

Trees. A great deal of litigation has ensued between neighbors over

encroaching trees. Owners are entitled to cut branches of their neighbors’ trees
that encroach over their land. Lane v. W.J. Curry & Sons, 92 S.W.3d 355, 360
(Tenn. 2002). Can a tree owner obtain a prescriptive easement allowing the
tree’s branches to remain over neighboring land? Almost all courts hold no,
creating an important exception to the prescriptive easement doctrine. Pierce v.
Casady, 711 P.2d 766 (Kan. Ct. App. 1985); Koresko v. Farley, 844 A.2d 607
(Pa. Commw. Ct. 2004). However, some courts may allow such rights to ripen
into easements. Garcia v. Sanchez, 772 P.2d 1311 (N.M. Ct. App. 1989); Jones
v. Wagner, 624 A.2d 166, 171 n.3 (Pa. Super. Ct. 1993).

4. Adversity and color of title, revisited. As we discussed in

461
connection with color of title and adverse possession, situations in which
parties intend to transfer a property interest but fail to do so through some
technical defect can create a puzzle for doctrines (like adverse possession
and prescription) that insist on “adversity.” Some courts have responded to
this puzzle by theorizing that use of property under a defective conveyance
is not actually permissive. In contrast, the Restatement (Third) of Property
§2.16 responds by distinguishing between two categories of “prescriptive”
uses: (1) uses that are “adverse to the owner of the land” or (2) uses that
are “made pursuant to the terms of an intended but imperfectly created
servitude.” Uses that arise under an “imperfectly created servitude” do not
need to be adverse.
5. The good faith problem. In Community Feed Store, one person
mistakenly used his neighbor’s property. In contrast, in Warsaw v.
Chicago Metallic Ceilings, Inc., 676 P.2d 584 (Cal. 1984), cited in
Community Feed Store, the adverse user clearly knew that it was
trespassing on neighboring property. In Warsaw, plaintiffs arranged for the
construction of a large commercial building on their property but
unfortunately left insufficient space between the edge of the building and
their property line. The 40-foot driveway was “inadequate since the large
trucks which carried material to and from plaintiffs’ loading dock could
not turn and position themselves at these docks without traveling onto the
defendant’s property,” id. at 586, which they proceeded to do for the next
seven years. When defendant developed plans to build on the portion of its
property that had been used by plaintiffs to back up its delivery trucks,
plaintiffs sued to establish a prescriptive easement over the 25-foot strip on
the edge of defendant’s property. Defendant unwisely continued
construction over the disputed strip while litigation proceeded. Plaintiffs
ultimately prevailed, obtaining a prescriptive easement since the relevant
statute of limitations allowed a relatively short six-year period to establish
such an easement.
6. Acquisition by the public. Many older cases and some modern
cases hold that the public could not acquire an easement by prescription.
Mihalczo v. Borough of Woodmont, 400 A.2d 270, 272 (Conn. 1978);
Forest Hills Gardens Corp. v. Baroth, 555 N.Y.S.2d 1000, 1002 (Sup. Ct.
1990). This rule is based partly on the difficulty of proving continuity of
use (how does one define the public?), partly on the difficulty of excluding
the general public from certain areas, and partly on the presumption that
public use of private property is permissive rather than adverse.
However, the strong trend of modern cases is to recognize that the
public may acquire prescriptive easements, while often presuming that

462
public access to private land is permissive in the absence of clear evidence
to the contrary, thereby defeating the claim for prescription. Houghton v.
Johnson, 887 N.E.2d 1073 (Mass. App. Ct. 2008) (evidence insufficient to
prove public prescriptive easement over private beach); Weidner v. State,
860 P.2d 1205, 1209 (Alaska 1993) (holding that the state could acquire an
easement by prescription); Limestone Dev. Corp. v. Village of Lemont, 672
N.E.2d 763, 768 (Ill. App. Ct. 1996); Fears v. YJ Land Corp., 539 N.W.2d
306, 308 (N.D. 1995). This is the approach adopted by the Restatement
(Third) of Property (Servitudes) §2.18 (2000). Some states have statutes
providing that use by the public of a road for a certain amount of time
creates a public highway. Idaho Code §40-202. A few states have used this
doctrine to recognize prescriptive rights in the public to use beaches for
recreational purposes. City of Daytona Beach v. Tona-Rama, Inc., 294 So.
2d 73, 75 (Fla. 1974); Villa Nova Resort, Inc. v. State, 711 S.W.2d 120,
127 (Tex. Ct. Civ. App. 1986).

Problems
1. What arguments could you make for the plaintiff in Community
Feed Store that use of another’s property is presumptively nonpermissive?
What arguments could you make for the defendant true owner that use of a
neighbor’s property in the context of the case should be held
presumptively permissive (with the owner’s implied consent) and thus not
subject to prescription? Which presumption do you think the court should
adopt? Why?
2. Assume the facts in Warsaw v. Chicago Metallic Ceilings, supra, in
which the neighbor knew its trucks were trespassing on neighboring land.
For each of the following questions, construct the strongest arguments on
both sides, and then determine what the rule of law should be and justify it.
a. Should there be a good faith requirement? The adverse user
clearly knew that it was using someone else’s property. To obtain an
easement by prescription, should the adverse user be required to have
good faith, that is, not to know that it is trespassing on someone else’s
property?
b. Should the adverse user lose when the problem is the result of
its own negligence? The adverse users in Warsaw negligently built
their building too close to the property line. Their need to trespass on
the true owner’s property for the purpose of backing up their trucks is
therefore the result of their own bad planning. Should the court adopt
an exception to the prescriptive easement rules to deny the plaintiff a
remedy when the plaintiff’s trespassory activity is necessitated by the

463
 plaintiff’s own negligent planning?
c. Should there be compensation for the prescriptive easement
when the adverse user acted in bad faith? Adverse possessors and
prescriptive easement claimants obtain property rights by prescription
without obligation to compensate the true owner for the property rights
lost by the true owner. In Warsaw, however, Justice Reynoso
dissented, on the grounds that it was unfair to award a prescriptive
easement to a bad faith trespasser — one who knew that she was
trespassing on neighboring property — without requiring her to
compensate the true owner for the property rights lost. What arguments
can you make for and against this proposal? What rule of law should
the court adopt? Should the same rule apply where the trespass is
innocent?

§4 OTHER INFORMAL WAYS TO TRANSFER

TITLE TO REAL PROPERTY
The Statute of Frauds generally requires a formal writing to transfer
interests in real property. As adverse possession demonstrates, however,
there are significant exceptions to this general principle. In boundary
disputes, a variety of doctrines may result in transfers of ownership
without the formalities that usually accompany property transfers. Unlike
the case of adverse possession or prescriptive easements, these rules may
apply even when non-owners have occupied the property in question with
the true owner’s permission.

§4.1 The Improving Trespasser

What happens when someone mistakenly invests a lot of money in
building a structure that encroaches on a neighbor’s property? If the
structure decreases the value of the neighboring property, the owner
ordinarily wishes it to be removed. Owners normally have the right to end
a continuing trespass. But should the result be any different when the
structure costs a substantial amount to build and causes only a negligible
amount of harm to the property interests of the landowner? Should it
matter that the owner of the land on which the encroachment was placed
failed to object or intervene while the construction was occurring?
The converse problem occurs when the structure improves the value of
the neighboring property. In this case, the landowner may wish to keep the
structure; because it is on her property, the courts generally hold that she
has a right to do so. But does the builder have a right to be compensated

464
for the amount spent in the construction to avoid unjust enrichment to the
landowner, or would this unjustly force the landowner to pay for
something she never wanted or bargained for? If the structure merely
encroaches on the neighboring land, should the builder have a right to
purchase the land over which it sits, even if the landowner objects?

A. Removal of Encroaching Structures: Relative Hardship

Many courts, especially in older cases, hold that a property owner has
an absolute right to an injunction ordering an encroaching structure
removed, no matter what the cost involved or the relative value of the
properties or the extent of the encroachment. This is most often done in the
case of a fence or wall, driveway, or overhanging porch or fire escape, but
some courts go so far as to order the removal of an encroaching building.
For example, in Bishop v. Reinhold, 311 S.E.2d 298 (N.C. Ct. App. 1984),
defendants partially erected their house on the adjoining, unimproved lot
of the plaintiffs. The court held that the plaintiffs had an absolute right to
have the part of the house that encroached on plaintiffs’ property removed.
See, e.g., Geragosian v. Union Realty Co., 193 N.E. 726, 728 (Mass. 1935)
(“The general rule is that the owner of land is entitled to an injunction for
the removal of trespassing structures.”).
The majority of states, however, now reject this rigid approach and
instead adopt the relative hardship doctrine. Urban Site Venture II
Limited Partnership v. Levering Associates Limited Partnership, 665 A.2d
1062 (Md. 1995); Restatement of Property §563 (1944). If the
encroachment is innocent (the result of a mistake), the harm minimal, the
interference in the true owner’s property interests small, and the costs of
removal substantial, the courts often refuse to grant an injunction ordering
removal of the structure. Instead, they will either order the encroaching
party to pay damages to the landowner to compensate for the decrease in
market value of the owner’s land or order a forced sale of the property
from the landowner to the owner of the encroaching structure with
damages equal to the value of the land taken and possibly a premium to
compensate for the involuntary nature of the transfer in ownership. If,
however, the cost of removal is not substantial or the interference with the
neighbor’s ability to use its property is substantial, removal will still be
ordered. The North Carolina Court of Appeals explained the doctrine in
Williams v. South & South Rentals, Inc., 346 S.E.2d 665, 669 (N.C. Ct.
App. 1986):

Where the encroachment is minimal and the cost of removing the

465
 encroachment is most likely substantial, two competing factors must be
considered in fashioning a remedy. On the one hand, without court
intervention, a defendant may well be forced to buy plaintiff’s land at a price
many times its worth rather than destroy the building that encroaches. On the
other hand, without the threat of a mandatory injunction, builders may view
the legal remedy as a license to engage in private eminent domain. The
process of balancing the hardships and the equities is designed to eliminate
either extreme. Factors to be considered are whether the owner acted in good
faith or intentionally built on the adjacent land and whether the hardship
incurred in removing the structure is disproportionate to the harm caused by
the encroachment. Mere inconvenience and expense are not sufficient to
withhold injunctive relief. The relative hardship must be disproportionate.

When the encroachment is innocent, the remedy will depend both on

the circumstances and on the views of the judge about the relative equities.
Removal was ordered in Leffingwell v. Glendenning, 238 S.W.2d 942
(Ark. 1951), where a stone-and-cement wall encroached from three to four
inches onto neighboring property. The court ordered removal of the
encroachment on the ground that “the cost to appellees of removal is not
disproportionate to the value appellant appears to place on the land.” Id. at
944; see also Storey v. Patterson, 437 So. 2d 491, 495 (Ala. 1983)
(ordering the defendant to remove the portion of her concrete driveway
that encroached 12 feet onto a small neighboring lot because the
encroachment “permanently impaired the [plaintiffs’] use and enjoyment
of their property”).
But courts will refuse to order the removal of a mistaken encroachment
when the equities tilt strongly in favor of the encroacher. In Yeakel v.
Driscoll, 467 A.2d 1342 (Pa. Super. Ct. 1983), the court declined to order
the removal of a recently constructed fire wall that encroached two inches
onto plaintiff’s porch. The court invoked the maxim de minimus non curat
lex, meaning “that the law will not concern itself with trifles. More
specifically it means that a court will not grant equitable relief to a plaintiff
who seeks a decree which will do him no good but which will work a
hardship on another.” Id. at 1344. See Gilpin v. Jacob Ellis Realties, 135
A.2d 204 (N.J. Super. Ct. App. Div. 1957) (denying an injunction
removing an encroachment when the cost of removal was $11,500 and the
damage to neighboring property was only $1,000); Generalow v.
Steinberger, 517 N.Y.S.2d 22 (App. Div. 1987) (refusing to order removal
of a driveway and wall that encroached 8.4 inches onto neighboring
property and relegating plaintiff to damages); Knuth v. Vogels, 61 N.W.2d
301 (Wis. 1953) (refusing to order removal of a garage that encroached
one to two feet onto plaintiff’s property and giving the defendant

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trespasser the option of removing the structure or paying damages).
Where encroachment occurs in bad faith, however, courts refuse to
consider arguments about relative hardship. For example, in Warsaw v.
Chicago Metallic Ceilings, Inc., 676 P.2d 584 (Cal. 1984), the defendant
proceeded to build a structure that infringed on its neighbor’s property,
even though the defendant knew that plaintiff claimed that the structure
would infringe on the plaintiff’s property. The court ordered the structure
removed. The court did not weigh relative hardship because “the defendant
acted with a full knowledge” of the owner’s asserted rights. Id. at 588.
Because construction began while a lawsuit was pending regarding the
parties’ property rights, the court held that defendant “gambled on the
outcome of the action and lost.” Id. Accord, Goulding v. Cook, 661 N.E.2d
1322 (Mass. 1996) (ordering removal of septic tank built when builder
knew land ownership was in dispute).

B. Enrichment versus Forced Sale

What happens when, rather than partially encroaching, an entire

structure is built on land belonging to another? Are the situations
meaningfully different? Traditionally, courts have held that the structure
belongs to the owner of the land on which it sits. Banner v. United States,
238 F.3d 1348 (Fed. Cir. 2001). Does this result in unjust enrichment to
the landowner? Or is it an appropriate result in light of the builder’s
negligence in building on someone else’s land? If both parties were
negligent in allowing the construction to happen, what should the court
do? Should it order the landowner to pay for the building so that the
landowner is not unjustly enriched? Or should the landowner be forced to
sell the land to the builder? The following case deals with these questions.

Somerville v. Jacobs

170 S.E.2d 805 (W. Va. 1969)

Map: 1600 13th Street, Parkersburg,

West Virginia

FRANK C. HAYMOND, President:

The plaintiffs, W.J. Somerville and Hazel M. Somerville, the owners

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of Lots 44, 45 and 46 in the Homeland Addition to the city of Parkersburg,
in Wood County, believing that they were erecting a warehouse building
on Lot 46 which they owned, [and in reliance on a surveyor’s report and
plat,] mistakenly constructed the building on Lot 47 owned by the
defendants, William L. Jacobs and Marjorie S. Jacobs. Construction of the
building was completed in January 1967 and by deed dated January 14,
1967 the Somervilles conveyed Lots 44, 45 and 46 to the plaintiffs Fred C.
Engle and Jimmy C. Pappas who subsequently leased the building to the
Parkersburg Coca-Cola Bottling Company, a corporation. Soon after the
building was completed but not until then, the defendants learned that the
building was on their property and claimed ownership of the building and
its fixtures on the theory of annexation. The plaintiffs then instituted this
proceeding for equitable relief in the Circuit Court of Wood County and in
their complaint prayed, among other things, for judgment in favor of the
Somervilles for $20,500.00 as the value of the improvements made on Lot
47, or, in the alternative, that the defendants be ordered to convey their
interest in Lot 47 to the Somervilles for a fair consideration. The Farmers
Building and Loan Association, a corporation, the holder of a deed of trust
lien upon the land of the defendants, was on motion permitted to intervene
and be made a defendant in this proceeding.
The controlling question for decision is whether a court of equity can
award compensation to an improver for improvements which he has placed
upon land not owned by him, which, because of mistake, he had reason to
believe he owned, which improvements were not known to the owner until
after their completion and were not induced or permitted by such owner,
who is not guilty of any fraud or inequitable conduct, and require the
owner to pay the fair value of such improvements or, in the alternative, to
convey the land so improved to the improver upon his payment to the
owner of the fair value of the land less the value of the improvements.
Though there are numerous decisions by this Court relating to
improvements to land, the precise question here involved is one of first
impression in this jurisdiction.
[T]he question has been considered by appellate courts in other
jurisdictions and though the cases are conflicting the decisions in some
jurisdictions, upon particular facts, recognize and sustain the jurisdiction
of a court of equity to award compensation to the improver to prevent
unjust enrichment to the owner and in the alternative to require the owner
to convey the land to the improver upon his payment to the owner of the
fair value of the land less the improvements.
In Section 625, Chapter 11, Volume 2, Tiffany Real Property, Third
Edition, the text contains this language:

468
 Since the rule that erections or additions made by one who has no rights to
land are fixtures, and therefore not removable by him, even though he made
them in the belief that he was the owner of the land, is calculated to cause
hardship to an innocent occupant of another’s land, by giving the benefit of
his labor and expenditures to the landowner, the courts of this country,
without either imputing fraud or requiring proof of it, hold it inequitable to
allow one to be enriched under such circumstances by the labor and
expenditures of another who acted in good faith and in ignorance of any
adverse claim or title. Applying this doctrine of “unjust enrichment,” a court
of equity will, on the principle that he who seeks equity must do equity,
refuse its assistance to the rightful owner of land as against an occupant
thereof unless he makes compensation for permanent and beneficial
improvements, made by the latter without notice of the defect in his title.

From the foregoing authorities it is manifest that equity has jurisdiction

to, and will, grant relief to one who, through a reasonable mistake of fact
and in good faith, places permanent improvements upon land of another,
with reason to believe that the land so improved is that of the one who
makes the improvements, and that the plaintiffs are entitled to the relief
which they seek in this proceeding.
The undisputed facts, set forth in the agreed statement of counsel
representing all parties, is that the plaintiff W.J. Somerville in placing the
warehouse building upon Lot 47 entertained a reasonable belief based on
the report of the surveyor that it was Lot 46, which he owned, and that the
building was constructed by him because of a reasonable mistake of fact
and in the good faith belief that he was constructing a building on his own
property and he did not discover his mistake until after the building was
completed. It is equally clear that the defendants who spent little if any
time in the neighborhood were unaware of the construction of the building
until after it was completed and were not at any time or in any way guilty
of any fraud or inequitable conduct or of any act that would constitute an
estoppel. In short, the narrow issue here is between two innocent parties
and the solution of the question requires the application of principles of
equity and fair dealing between them.
It is clear that the defendants claim the ownership of the building.
Under the common law doctrine of annexation, the improvements passed
to them as part of the land. This is conceded by the plaintiffs but they
assert that the defendants can not keep and retain it without compensating
them for the value of the improvements, and it is clear from the testimony
of the defendant William L. Jacobs in his deposition that the defendants
intend to keep and retain the improvements and refuse to compensate the
plaintiffs for their value. The record does not disclose any express request

469
by the plaintiffs for permission to remove the building from the premises if
that could be done without its destruction, which is extremely doubtful as
the building was constructed of solid concrete blocks on a concrete slab,
and it is reasonably clear, from the claim of the defendants of their
ownership of the building and their insistence that certain fixtures which
have been removed from the building be replaced, that the defendants will
not consent to the removal of the building even if that could be done.
In that situation if the defendants retain the building and refuse to pay
any sum as compensation to the plaintiff W.J. Somerville they will be
unjustly enriched in the amount of $17,500.00, the agreed value of the
building, which is more than eight and one-half times the agreed $2,000.00
value of the lot of the defendants on which it is located, and by the
retention of the building by the defendants the plaintiff W.J. Somerville
will suffer a total loss of the amount of the value of the building. If,
however, the defendants are unable or unwilling to pay for the building
which they intend to keep but, in the alternative, would convey the lot
upon which the building is constructed to the plaintiff W.J. Somerville
upon payment of the sum of $2,000.00, the agreed value of the lot without
the improvements, the plaintiffs would not lose the building and the
defendants would suffer no financial loss because they would obtain
payment for the agreed full value of the lot and the only hardship imposed
upon the defendants, if this were required, would be to order them to do
something which they are unwilling to do voluntarily. Under the facts and
circumstances of this case, if the defendants refuse and are not required to
exercise their option either to pay W.J. Somerville the value of the
improvements or to convey to him the lot on which they are located upon
his payment of the agreed value, the defendants will be unduly and
unjustly enriched at the expense of the plaintiff W.J. Somerville who will
suffer the complete loss of the warehouse building which by bona fide
mistake of fact he constructed upon the land of the defendants. Here, in
that situation, to use the language of the Supreme Court of Michigan in
Hardy v. Burroughs, 232 N.W. 200, “It is not equitable . . . that defendants
profit by plaintiffs’ innocent mistake, that defendants take all and plaintiffs
nothing.”
To prevent such unjust enrichment of the defendants, and to do equity
between the parties, this Court holds that an improver of land owned by
another, who through a reasonable mistake of fact and in good faith erects
a building entirely upon the land of the owner, with reasonable belief that
such land was owned by the improver, is entitled to recover the value of
the improvements from the landowner and to a lien upon such property
which may be sold to enforce the payment of such lien, or, in the

470
alternative, to purchase the land so improved upon payment to the
landowner of the value of the land less the improvements and such
landowner, even though free from any inequitable conduct in connection
with the construction of the building upon his land, who, however, retains
but refuses to pay for the improvements, must, within a reasonable time,
either pay the improver the amount by which the value of his land has been
improved or convey such land to the improver upon the payment by the
improver to the landowner of the value of the land without the
improvements.
FRED CAPLAN, Judge, dissenting:
Respectfully, but firmly, I dissent from the decision of the majority in
this case. Although the majority expresses a view which it says would
result in equitable treatment for both parties, I am of the opinion that such
view is clearly contrary to law and to the principles of equity and that such
holding, if carried into effect, will establish a dangerous precedent.
I am aware of the apparent alarmist posture of my statements asserting
that the adoption of the majority view will establish a dangerous precedent.
Nonetheless, I believe just that and feel that my apprehension is justified.
On the basis of unjust enrichment and equity, the majority has decided that
the errant party who, without improper design, has encroached upon an
innocent owner’s property is entitled to equitable treatment. That is, that
he should be made whole. How is this accomplished? It is accomplished
by requiring the owner of the property to buy the building erroneously
constructed on his property or by forcing (by court edict) such owner to
sell his property for an amount to be determined by the court.
What of the property owner’s right? The solution offered by the
majority is designed to favor the plaintiff, the only party who had a duty to
determine which lot was the proper one and who made a mistake. The
defendants in this case, the owners of the property, had no duty to perform
and were not parties to the mistake. Does equity protect only the errant and
ignore the faultless? Certainly not.
It is not unusual for a property owner to have long range plans for his
property. He should be permitted to feel secure in the ownership of such
property by virtue of placing his deed therefor on record. He should be
permitted to feel secure in his future plans for such property. However, if
the decision expressed in the majority opinion is effectuated then security
of ownership in property becomes a fleeting thing. It is very likely that a
property owner in the circumstances of the instant case either cannot
readily afford the building mistakenly built on his land or that such
building does not suit his purpose. Having been entirely without fault, he
should not be forced to purchase the building.

471
 In my opinion for the court to permit the plaintiff to force the
defendants to sell their property contrary to their wishes is unthinkable and
unpardonable. This is nothing less than condemnation of private property
by private parties for private use. Condemnation of property (eminent
domain) is reserved for government or such entities as may be designated
by the legislature. Under no theory of law or equity should an individual
be permitted to acquire property by condemnation. The majority would
allow just that.
I am aware of the doctrine that equity frowns on unjust enrichment.
However, contrary to the view expressed by the majority, I am of the
opinion that the circumstances of this case do not warrant the application
of such doctrine. It clearly is the accepted law that as between two parties
in the circumstances of this case he who made the mistake must suffer the
hardship rather than he who was without fault.
I would remand the case to [the circuit] court with directions that the
trial court give the defendant, Jacobs, the party without fault, the election
of purchasing the building, of selling the property, or of requiring the
plaintiff to remove the building from defendant’s property.20

Notes and Questions

1. Mistake. When a builder mistakenly constructs an entire structure
on land belonging to another, the courts generally rule that the landowner
becomes the owner of the structure built on her land by another. Does this
rule make sense, given the fact that the landowner stood by and allowed
the construction to occur without intervening? Does the owner have any
obligation to look out for her own rights? Does the landowner have to
compensate the builder? The builder claims that failure to compensate will
leave the landowner unjustly enriched by the builder’s investment;
moreover, both parties made a mistake — the builder by encroaching on
neighboring property and the landowner by not noticing that someone was
building on her own land and not taking action to prevent it. Which
property claim should prevail?
Like the court in Somerville v. Jacobs, some courts hold that an
innocent trespasser who improves property in the good faith belief that it
was her own property has a right to compensation for the value of the
improvements made when those improvements increase the value of the
property. Some courts, however, hold that “trespassers cannot have the
advantage of any benefits they have made to the property. Such
improvements belong to the landowner, without compensation to
trespassers for labor or materials.” 9-64A Powell on Real Property

472
§64A.05[5]. Do you agree with the majority or the dissenting opinion in
Somerville?
2. Betterment statutes. Some states have betterment statutes that
allow owners to choose between paying the builder the value of
improvements built on their land or selling the land on which the
improvement sits to the builder. They generally allow compensation only
when the builder had color of title and believed in good faith that the land
was hers. See, e.g., Ark. Code §18-60-213; N.C. Gen. Stat. §§1-340 to 1-
351. In effect, these statutes force owners to pay for unwanted
improvements or give up to the builder land they otherwise would have
owned. Should the burden be on the builder to make sure she is building
on her own land, or should the landowner have an obligation to determine
if someone else is building on her own land and act to stop the trespass?

Problem
In Banner v. United States, 238 F.3d 1348 (Fed. Cir. 2001), aff’g 44
Fed. Cl. 568 (Fed. Cl. 1999), title to most of the town of Salamanca, New
York, was held by the Seneca Nation of Indians. In the 1870s, non-Indians
began to settle on Seneca land pursuant to leases granted them by the
Seneca Nation. However, under federal Indian law,21 those leases were not
valid under federal law without the consent of the United States. An 1875
federal statute validated the leases and extended them for a number of
years. Several statutes followed until Congress unilaterally extended those
leases in an 1890 federal statute for 99 years. With no choice but to extend
the leases, the Seneca Nation itself renewed the leases at nominal rents of
$1 to $10 a year. Those rents were not raised over the entire period of the
leases until they expired on February 1, 1991.
At that point the City of Salamanca created a public authority to
negotiate a new arrangement with the Seneca Nation. That agreement
provided that “(1) the United States and the state of New York would pay
a combined $60 million to the Seneca Nation to remedy the severe value
inequities of the 99-year leases, (2) the Seneca Nation would offer new
leases to the then-existing lessees with a term of forty years, renewable for
another forty years at fair market value. . . .” Id. The agreement left for the
future the question of who would own the improvements on the land at the
end of the leases if they ever expired and were not renewed. That
agreement was ratified by Congress in legislation passed in 1990.
Because some individuals refused to accept the lease renewals, the
United States brought suit against them on behalf of the Seneca Nation to
eject them from Seneca lands. The court ruled that the tribe was not

473
obligated to renew the leases and that ejectment was a proper remedy. The
court also ruled that the Seneca Nation owned the improvements placed on
the land. The ejected owners then brought a claim against the United
States arguing that, by failing to provide compensation for the lost value of
their dwellings, the United States had taken their property without just
compensation. The Federal Circuit Court affirmed the ruling of the Court
of Federal Claims that no such taking had occurred because the common
law granted ownership of buildings built on land belonging to another to
the owner of the land.
Were the courts correct to hold that the Seneca Nation owned the
improvements built on their land? Does it matter that, in the past, the
United States had consistently sided with the settlers and protected their
interests when they conflicted with the interests of the Seneca Nation?
Does it matter that Congress had several times passed statutes ratifying
and extending the leases without regard to whether the Seneca Nation
wanted the leases to be extended? Would it matter if the United States had,
in the past, verbally assured the settlers that, at some point, the land would
be transferred from the Seneca Nation to the non-Indian settlers?
What are the arguments for and against requiring the Seneca Nation or
the United States to compensate the builders for the improvements placed
on Seneca land? What are the arguments for a forced sale of the land from
the Seneca Nation to the home builders who had lived on the land for more
than 100 years?

§4.2 Boundary Settlement

A. Oral Agreement

Courts may uphold oral agreements between neighbors that set the
boundary between their properties if (1) both parties are uncertain where
the true boundary lies or a genuine dispute exists over the location of the
boundary, (2) the parties can prove the existence of an agreement setting
the boundary, and (3) the parties take (and/or relinquish) possession to the
agreed line. Fogerty v. State, 231 Cal. Rptr. 810 (Ct. App. 1986); Shultz v.
Johnson, 654 So. 2d 567 (Fla. Dist. Ct. App. 1995); Morrissey v. Haley,
865 P.2d 961 (Idaho 1993); Lawrence Berger, Unification of the Doctrines
of Adverse Possession and Practical Location in the Establishment of
Boundaries, 78 Neb. L. Rev. 1, 7-11 (1999).

B. Acquiescence

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 Even without an oral agreement, the courts may nonetheless recognize
longstanding acquiescence by both neighbors in a common boundary.
William B. Stoebuck & Dale A. Whitman, The Law of Property §11.8, at
864 (3d ed. 2000). “(1) [A]djoining owners (2) who occupy their
respective tracts up to a clear and certain line (such as a fence), (3) which
they mutually recognize and accept as the dividing line between their
properties (4) for a long period of time, cannot thereafter claim that the
boundary thus recognized is not the true boundary.” Tresemer v.
Albuquerque Public School District, 619 P.2d 819, 820 (N.M. 1980).
Accord, Huntington v. Riggs, 862 N.E.2d 1263 (Ind. Ct. App. 2007); RHN
Corp. v. Veibell, 96 P.3d 935 (Utah 2004).

C. Estoppel

A boundary may be established by estoppel when one owner

“erroneously represents to the other that the boundary between them is
located along a certain line [and] the second, in reliance on the
representations, builds improvements which encroach on the true boundary
or takes other detrimental actions.” Stoebuck & Whitman, supra, §11.8, at
866. The party who made the representations is then “estopped to deny
them, and the boundary is in effect shifted accordingly.” Id. Some states
may find estoppel even when no explicit representation is made; they may
infer a representation “from an owner’s silence in the face of knowledge
that his neighbor is building an encroaching structure.” Id. §11.8, at 867.

D. Laches

An owner who delays in asserting a property interest may be barred

from asserting the interest by the equitable doctrine of laches. Laches is
“an equitable defense based primarily on circumstances which render
inequitable the granting of relief to a dilatory plaintiff.” Rilley v. Quinlan,
1999 Mich. App. LEXIS 2467 (1999). The doctrine applies when “there
has been an unexcused or unexplained delay in commencing an action and
a corresponding change of material condition, which results in prejudice.”
Id. Mere lapse of time is insufficient to support the defense of laches. “It
must appear [that] the delay resulted in some prejudice to the party
asserting laches which would make it inequitable to disregard the lapse of
time and incidental consequences.” Id. If an owner knows about an
encroachment and does nothing to stop it, the delay in asserting the
owner’s rights may cause the encroacher to invest in reliance on the belief
that the occupation is not wrongful. In that case, even if the statute of

475
limitations has not run, the court may deny injunctive relief because of the
unreasonable delay in asserting the owner’s rights.

§4.3 Dedication
A dedication is a transfer of real property from a private owner to a
government entity such as a city. A valid dedication requires an offer by
the owner of the property and an acceptance by the public. The offer
consists of words or conduct on the part of the owner that demonstrate an
intent to turn the property over to the public. The offer may be made by a
written or oral statement from the owner. The courts may also find an
implied offer by one who invites or merely permits the public to use her
land for a long period of time. The acceptance may be made formally by
passing a city council resolution or informally by taking over maintenance
of the area or ceasing to collect property taxes on the parcel. Finally, just
as an offer may be implied from the owner’s longstanding acquiescence in
public use, an acceptance may be implied from long and substantial public
use, even absent governmental action. Stoebuck & Whitman, supra, §11.6,
at 846-850.
Most courts take seriously the idea that the owner must express an
intent to make a gift of the property to the public, whether this is expressed
through an oral statement or by conduct evidencing an intent to make a
gift. See, e.g., General Auto Service Station v. Maniatis, 765 N.E.2d 1176
(Ill. App. Ct. 2002) (evidence insufficient to show either dedication or
acceptance despite long public usage). Some courts, however, have found
dedication when the owner has objected to public use but has made no
serious effort to stop that use. In Gion v. City of Santa Cruz, 465 P.2d 50
(Cal. 1970), for example, the California Supreme Court found that the
owners of a private beach had “dedicated” their property to the public by
acquiescing in longstanding public use; the owners’ efforts to stop the use
were “half-hearted and ineffectual.” Stoebuck & Whitman, supra, §11.6, at
848. This opinion proved controversial, however, and was effectively
overturned by a subsequent California statute. See Cal. Civ. Code §§813,
1009.

§4.4 Riparian Owners: Accretion and Avulsion

Special rules have developed to govern changes in borders of “riparian
property” located on a river or other body of water. Slow changes in
buildup of land caused by slow deposit of silt or sand on the border of the
land (accretion) belong to the owner of the land whose borders are thus
enlarged; gradual losses of land caused by erosion shrink the owner’s land

476
rights. However, very sudden changes caused by events such as
earthquakes and floods (referred to as avulsion) are generally held not to
change the borders of property. City of Long Branch v. Liu, 833 A.2d 106
(N.J. Super. Ct. 2003) (avulsion found from government infusion of new
sand).

§5 ADVERSE POSSESSION OF PERSONAL

PROPERTY
The analog for trespass in the context of chattels is conversion. The
statute of limitations for conversion begins to run when the property is
wrongfully taken (converted) and the owner dispossessed of the property.
Songbyrd, Inc. v. Estate of Albert B. Grossman, 23 F. Supp. 2d 219
(N.D.N.Y. 1998) (adverse possession of music recordings); Vigilant
Insurance Co. of America v. Housing Authority of the City of El Paso, 660
N.E.2d 1121 (N.Y. 1995) (bonds). Without supplemental doctrines, the
wrongful possessor would become immune from suit by the original owner
upon the expiration of the statute of limitations. But the transfer of title to
the possessor upon the expiration of the limitations period — as occurs
with the adverse possession of land — would be harsher for chattel owners
than it would be for landowners. Do you see why? As a result, courts have
developed different rules that (under certain circumstances) work to extend
the statute of limitations for conversion. Most jurisdictions follow one of
two principal approaches: the discovery rule or the demand rule.
The leading case establishing the discovery rule is O’Keeffe v. Snyder,
416 A.2d 862 (N.J. 1980). In O’Keeffe, the painter Georgia O’Keeffe sued
a New York gallery owned by Barry Snyder to recover three paintings
stolen from her and purchased for $35,000 by Snyder from a third party,
Ulrich A. Frank, who had inherited them from his father. Snyder claimed
that he had acquired title to the paintings by adverse possession under New
Jersey’s six-year statute of limitations. Snyder claimed that the six-year
period started to run when the paintings were stolen. In contrast, O’Keeffe
argued that she had not known where the paintings were after they were
stolen and thus could not reasonably have made a demand to have the
paintings returned. Since she had sued the possessor within six years of
discovering where the paintings were, her claim should not be barred. The
court agreed, noting that a thief can never acquire good title and that no
one can acquire good title from a thief; even a bona fide purchaser who is
unaware that property was stolen will not ordinarily be able to retain
ownership in a contest with the true owner. An exception to this principle

477
is contained in the Uniform Commercial Code, which provides that
entrusting possession of goods to a merchant who deals in that kind of
goods gives the merchant the power to transfer all the rights of the
entruster to a buyer in the ordinary course of business, thereby vesting
good title in the buyer as against the original owner. See U.C.C. §2-403(2).
The court held that if that section of the UCC did not apply, the statute of
limitations for adverse possession (in someone other than the true owner)
would start to run only when the true owner discovers, or reasonably
should have discovered, where the stolen personal property was located.
The question, therefore, was whether O’Keeffe had used due diligence to
recover the paintings and whether the paintings had been concealed from
her. Accord, Charash v. Oberlin College, 14 F.3d 291, 299 (6th Cir. 1994).
In contrast to the discovery rule for adverse possession of personal
property, the New York Court of Appeals has promulgated a demand rule
— one that is rather more protective of the interests of the true owner, at
least when the artwork has been sold to a bona fide purchaser who was
unaware of the theft. In Solomon R. Guggenheim Foundation v. Lubell,
569 N.E.2d 426 (N.Y. 1991), a Chagall gouache was stolen from the
storeroom of the Guggenheim Museum in the late 1960s. However, the
museum neither notified the police nor publicly announced the theft. The
current possessor argued that the failure to attempt to recover the artwork
meant that the museum’s rights were barred by the three-year statute of
limitations. The museum responded that this was a tactical decision “based
upon its belief that to publicize the theft would succeed only in driving the
gouache further underground and greatly diminishing the possibility that it
would ever be recovered.” The court rejected the discovery rule on the
grounds that it was wrong to place a general obligation of due diligence on
the true owner. Rather, the court held that “a cause of action for replevin
against the good faith purchaser of a stolen chattel accrues when the true
owner makes demand for return of the chattel and the person in possession
of the chattel refuses to return it. Until demand is made and refused,
possession of the stolen property by the good faith purchaser for value is
not considered wrongful.” The court explained, id. at 431:

[O]ur decision today is in part influenced by our recognition that New York
enjoys a worldwide reputation as a preeminent cultural center. To place the
burden of locating stolen artwork on the true owner and to foreclose the
rights of that owner to recover its property if the burden is not met would, we
believe, encourage illicit trafficking in stolen art. Three years after the theft,
any purchaser, good faith or not, would be able to hold onto stolen art work
unless the true owner was able to establish that it had undertaken a
reasonable search for the missing art. This shifting of the burden onto the

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 wronged owner is inappropriate. In our opinion, the better rule gives the
owner relatively greater protection and places the burden of investigating the
provenance of a work of art on the potential purchaser.

Oddly, however, although the court rejected placing a due diligence

obligation on the museum for the purpose of applying adverse possession
doctrine, the court held that the museum might be precluded from
recovering its property because of the equitable doctrine of laches. Under
that rule of law, a plaintiff may not prevail if the plaintiff unreasonably
delayed in asserting its rights and others were prejudiced by that delay.
Does this doctrine impose a due diligence requirement through the back
door?
Which rule is better — the discovery rule or the demand rule? See also
Autocephalous Greek-Orthodox Church of Cyprus v. Goldberg & Feldman
Fine Arts, Inc., 717 F. Supp. 1374 (S.D. Ind. 1989) (theft and sale of
Christian mosaics from Cyprus and application of the discovery rule).

Problem
An increasing amount of attention has focused on artworks confiscated
by the Nazis from Jewish families during World War II. See, e.g., Patricia
Cohen, Museums Faulted on Restitution of Nazi-Looted Art, N.Y. Times,
June 30, 2013. Some of these works were subsequently sold and purchased
by good faith buyers. Others were donated to museums. In either case,
disputes have arisen between current possessors and the heirs of the
original owners over ownership of the works.
Assume a painting was taken from a Jewish family by the Nazi regime
pursuant to its racially motivated policy of extermination. The painting
winds up in the hands of a private family and is later sold to a museum in
the United States in 1960. The painting is displayed for 40 years. The
granddaughter of the couple who owned the painting discovers in January
2001 that it belonged to her grandparents and sues to obtain ownership of
the painting. The statute of limitations for adverse possession is 30 years.
a. What is the plaintiff’s argument for adopting the demand rule?
b. What is the defendant’s argument for the discovery rule?
c. What should the court do?

1. See Chapter 1 for further discussion of trespass law.

2. The pertinent call references of defendants’ deed provide:

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 thence leaving the said Willowbrook Road N 71 degrees 28” E 184.80 feet to
a fence post in the line of said private driveway, thence S 32 degrees 33” E
133.80 feet to a fence post in the line of said driveway, thence S 17 degrees
04” W 13 feet to a fence post in the line of said private driveway[.]
[Emphasis added.]

3. W. Va. Code §55-2-1 states: “No person shall make an entry on, or bring an
action to recover, any land, but within ten years next after the time at which the
right to make such entry or to bring such action shall have first accrued to himself
or to some person through whom he claims.” — EDS.
4. Thus, the law in West Virginia is that where a person, acting under a mistake
as to the true boundary lines between his or her land and that of another, takes
possession of land believing it to be his or her own, up to the mistaken line, claims
a prescriptive right to it and so holds, the holding is adverse, and, if continued for
the requisite period may ripen into adverse possession. The fact that the one who
takes possession under these circumstances had no intention of taking what did not
belong to him or her, does not affect the operation of this rule. In all cases, the
intention and not the mistake is the test by which the character of the possession is
determined.
5. Based upon the evidence the defendants presented regarding the Belvins and
Fletchers, the defendants actually misunderstand the import of their evidence. The
evidence seems to suggest that the Blevins may very well have established adverse
possession to the two-feet-wide tract, because they maintained the tract for over ten
years. The Blevins conveyed their adversely possessed property to the Fletchers,
and the Fletchers in turn conveyed the same to the defendants. Therefore the
tacking involved here does not require analysis of the defendants’ period of
ownership, unless it is established that the Blevins did not in fact acquire adverse
possession. If it is determined that the Blevins acquired adverse possession of the
two-feet-wide tract, the issue then merely becomes whether the Blevins intended to
convey the two-feet-wide tract to the Fletchers, and whether the Fletchers intended
to convey the two-feet-wide tract to the defendants. The period of ownership by the
defendants becomes irrelevant under this scenario. It is only if a determination is
made that the Blevins did not establish adverse possession that the defendants’
period of ownership becomes relevant for tacking on the time period of the
Fletchers.
6. We have held that to establish “hostile” or “adverse” possession, evidence
must be presented which shows that possession of disputed property was against
the right of the true owner and is inconsistent with the title of the true owner for the
entire requisite ten-year period.
7. We have held that to establish “actual” possession, evidence must be
presented which shows that possession of disputed property was used for
enjoyment, cultivation, residence or improvements for the entire requisite ten-year
period.
8. We have held that to establish “open and notorious” possession, evidence

480
must be presented which shows that possession of disputed property was in such a
manner as to give notice to the true owner that the property is being claimed by
another for the entire requisite ten-year period.
9. We have held that to establish “exclusive” possession, evidence must be
presented which shows that possession of disputed property was used only by the
occupant and others were not permitted to use it or claim ownership during the
entire requisite ten-year period.
10. Cases involving mistaken boundaries may generate claims of either adverse
possession or what are called prescriptive easements, which involve rights of
access but not ownership. Prescriptive easements are discussed in detail in §3,
infra. Border disputes may also be resolved by a variety of other doctrines, such as
oral agreement, acquiescence, estoppel, and laches. See §4, infra.
11. They will own the property as tenants in common. See Chapter 9, §2.
12. For rules about joint owners and the definition of ouster, see Chapter 9, §2.2.
13. See Chapter 8, §2.3.
14. Federal law authorizes the Secretary of the Interior to allot certain non-
mineral lands to Native Alaskans. As a result of her application, Peggy was
awarded two lots (lots 3 and 12) which border the disputed parcel along its western
boundary.
15. A seven-year period is provided for by Alaska Stat. §09.25.050 when
possession is under “color and claim of title.” The Fagerstroms do not maintain
that their possession was under color of title.
16. The function of the notoriety requirement is to afford the true owner an
opportunity for notice. However, actual notice is not required; the true owner is
charged with knowing what a reasonably diligent owner would have known.
17. As noted above, the Fagerstroms do not claim the disputed parcel by virtue
of [color of title].
18. The court here uses “claim of title” to mean “color of title.” This is incorrect.
Most courts use the term “claim of title” interchangeably with “claim of right,” as
distinct from “color of title,” i.e., a defective deed. — EDS.
19. Defendant’s reliance on Plimpton v. Converse, 44 Vt. 158 (1871), is
misplaced. That case, which also enunciated the “public use” exception to the
general presumption of adversity, involved one shopholder’s claim of prescriptive
easement as to passage, both for himself and his customers, over a neighboring
shopholder’s land. There, the Court found that because the second shopholder had
already opened his land to general passage by his own customers, there was a
presumption of permission to all public users, including the first shopholder and
his customers. Those facts are distinguishable from the instant case, in which no
showing was made that defendant had “thrown open” its land to general passage.
20. The West Virginia Supreme Court has acknowledged a change in the law
measuring restitution damages, stating that the “measure of damages in an unjust
enrichment claim is the greater of the enhanced market value of the property or the
cost of the improvements to the property.” Realmark Developments, Inc. v.
Ranson, 588 S.E.2d 150 (W. Va. 2003). — EDS.

481
21. For more on tribal title and federal Indian law, see Chapter 2, §1.

482
CHAPTER 6

Nuisance: Resolving Conflicts Between

Free Use and Quiet Enjoyment

§1 LAND USE CONFLICTS AMONG NEIGHBORS

We do not live alone, and the use of one’s own property can affect the
property and personal interests of others, even if we do not commit a
trespass by physically intruding onto their land. Nontrespassory
interferences with the property rights of others can occur when the use of
one’s own property harms the property interests of one’s neighbors. Such
conflicts may arise in a wide variety of situations, including pollution,
noise, odors, criminal activity, excavation undermining lateral support of
neighboring land, flooding, and blocking access to light and air.
Because use of one’s land often affects other landowners, the privilege
to use one’s property is limited by the legal rights of other owners to be
protected from uses that unreasonably harm their use or enjoyment of their
own property. At the same time, the right to be secure from conduct that
interferes with one’s use or enjoyment of property is not absolute. Because
interests in free use often clash with interests in security, we cannot
provide absolute protection for either. As the Restatement (Second) of
Torts notes, “[i]t is an obvious truth that each individual in a community
must put up with a certain amount of annoyance, inconvenience and
interference and must take a certain amount of risk in order that all may
get on together.” Restatement (Second) of Torts §822, cmt. g (1977).
However, free use rights must be limited when “the harm or risk to one is
greater than he ought to be required to bear under the circumstances, at
least without compensation.” Id.
Nuisance law is the principal means by which the common law of
property addresses land use conflicts. Nuisance doctrine provides remedies
for conduct that causes unreasonable harm to the use and enjoyment of
land. Supplementing the basic nuisance analysis are a series of special
rules that courts and legislatures have developed to govern conflicts over
support obligations, water rights, and access to light and air.

The Reciprocal Nature of Conflicting Land Uses

483
 When a factory spews smoke into the air and pollutes the environment
for neighboring owners, we normally view the factory as causing harm to
surrounding homeowners. But economist Ronald Coase notes that
regulations that prevent a factory from polluting the air would limit the
owner’s freedom to operate the factory as it wishes and thus impose costs
on the owner.

The question is commonly thought of as one in which A inflicts harm on B

and what has to be decided is: how should we restrain A? But this is wrong.
We are dealing with a problem of a reciprocal nature. To avoid the harm to B
would inflict harm on A. The real question that has to be decided is: should A
be allowed to harm B or should B be allowed to harm A? The problem is to
avoid the more serious harm.

Ronald Coase, The Problem of Social Cost, 3 J.L. & Econ. 1, 2 (1960).
Coase cites the example of Sturges v. Bridgman, LR 11 Ch D 842 (1879),
a famous case about a candy maker who uses noisy machinery that
disturbs the work of a doctor next door.

To avoid harming the doctor would inflict harm on the confectioner. The
problem posed by this case was essentially whether it was worth while, as a
result of restricting the methods of production which could be used by the
confectioner, to secure more doctoring at the cost of a reduced supply of
confectionery products.

Id. To determine whether to regulate the polluting factory or the

confectioner requires comparing the costs and benefits of allowing the
defendant to operate with the costs and benefits of prohibiting or
regulating the defendant’s operations.
In the context of land use disputes, one owner is seeking to be secure
from harms caused by another owner’s land use; the question is whether to
protect the plaintiff’s interest in security from harm or the defendant’s
interest in freedom of action. Regulating an activity harms those who wish
to engage in it either by banning it or by making it more expensive. Failing
to regulate an activity also has harmful consequences: it authorizes one
owner to interfere with or even destroy the interests of others in the use
and enjoyment of their property. Deciding not to protect property interests
by failing to prohibit harmful use of land is as much a regulatory choice as
choosing to prohibit or limit such uses.
Like most economists, Coase eschews moral judgment and attempts to
remain studiously neutral as between the conflicting activities. The only
question is which activity causes more harm. This suggests that the central

484
question is the magnitude of the harms on both sides and not their
character. This assumption seems innocuous when the two activities are
equally legitimate, such as the conflict between the confectioner and the
doctor or between the cattle rancher and the farmer. But is this assumption
always warranted? Take the pollution example. It is true that regulation of
the polluting activity may reduce the amount of the product created by that
activity, and we would like to know what this cost is before we choose to
regulate the conduct to avoid the pollution. This does not necessarily mean
that we are — or should be — indifferent as between an economic activity
that causes pollution and one that does not cause pollution.
In determining how serious these consequences of a land use are, as
Coase asks us to do, we should be interested not only in the dollar value of
production or income but also in the full range of relevant values — some
of which are hard to put a dollar value on. We care, for example, about the
distribution of costs and benefits; it is wrong to make some people bear a
disproportionate share of the burdens necessary to promote social welfare.
In addition, some values are more fundamental than others. For example,
the law deems an unprivileged intrusion on property to be a trespass
whether or not the benefits of entry outweigh the costs, giving individual
interests in possession a privileged status. How do we determine which
interests are fundamental? How should we evaluate costs and benefits that
are hard to describe in monetary terms: should we assign numbers to
account for the magnitude of such costs and benefits, or should we
evaluate those considerations in another way?

§2 NUISANCE
As with all legal questions, there are two distinct (though related)
issues in all nuisance cases. The first question is which party has the basic
entitlement. Does the plaintiff have a right to be secure from this kind of
harm, or does the defendant have the right to engage in the activity? The
second question has to do with the remedy used to vindicate the
entitlement.

§2.1 Defining Unreasonable Interference

A nuisance is a substantial and unreasonable interference with the use

or enjoyment of land. San Diego Gas & Electric Co. v. Superior Court,
920 P.2d 669, 696 (Cal. 1996); Bargmann v. Soll Oil Co., 574 N.W.2d
478, 486 (Neb. 1998); Schneider National Carriers, Inc. v. Bates, 147
S.W.3d 264, 269 (Tex. 2004). Nuisance law is a flexible doctrine that has

485
been applied in a variety of circumstances.
Typical nuisance cases involve activities that are “offensive,
physically, to the senses and [which] by such offensiveness makes life
uncomfortable [such as] noise, odor, smoke, dust, or even flies.” In re
Chicago Flood Litigation, 680 N.E.2d 265, 278 (Ill. 1997). Nuisances have
been found in the case of vibration or blasting that damages a house; the
emission of pollutants, such as smoke, dust, gas or chemicals; offensive
odors; and noise. See, e.g., Howard Opera House Association v. Urban
Outfitters, Inc., 322 F.3d 125 (2d Cir. 2003) (applying Vermont law) (loud
music in retail store that violates local noise ordinance constitutes nuisance
against neighboring tenants); Shutes v. Platte Chemical Co., 564 So. 2d
1382 (Miss. 1990) (toxic waste spilled at chemical factory seeps through
the ground, killing vegetation on nearby parcels of land and depreciating
the value of the property constitutes a nuisance); Padilla v. Lawrence, 685
P.2d 964 (N.M. Ct. App. 1984) (homeowners recover from manure
processing plant for damage to property interests resulting from odors,
dust, noise, and flies); Bradley v. American Smelting & Refining Co., 709
P.2d 782 (Wash. 1985) (homeowner entitled to bring a claim for nuisance
against copper smelting factory that emitted microscopic airborne particles
of heavy metals in the manufacturing process).

Dobbs v. Wiggins

401 Ill. App. 3d 367 (2010)

Justice BRUCE D. STEWART delivered the opinion of the court:
The plaintiffs and the defendant all reside on a dead-end road, Triton
Lane, in rural Jefferson County, Illinois. Larry and Frances Dobbs live on
a parcel of property that is directly north of Wiggins’s property, and
Wayne and Lorena Richard lived on a parcel of property that lies north of
the Dobbs property. The Dobbses and the Richards have lived on their
property for approximately 30 years. Wiggins purchased his property on
Triton Lane in 1995, built a home and dog kennels on the property, and
began raising, training, and kenneling bird dogs. On November 19, 2007,
the Dobbses and the Richards filed a complaint against Wiggins that
alleged that barking dogs on the Wiggins property constituted a private
nuisance.
The circuit court began a two-day bench trial on the plaintiffs’
complaint on April 15, 2009. At the trial, Larry Dobbs testified that . . .
Wiggins’s property was directly south of his property line. Larry testified
that he enjoyed working outside in his garden, in his flower bed, and
around his fish pond, sitting outside on his deck, and hosting cookouts for

486
family members. According to Larry, at first Wiggins “didn’t have that
many” dogs, and the dogs did not bark much. However, the noise from
barking dogs kenneled on Wiggins’s property grew worse over time. In an
attempt to alleviate some of the noise, Larry planted a row of cedar trees
on his property.
Larry told the court that his house was approximately 200 to 250 yards
from a barn where Wiggins kenneled many of his dogs. Larry testified that
the barking was constant, day and night. The dogs might bark for two
straight hours, take a break, and start barking again, but there was never
any extended period of time in which they completely quit barking. Larry
stated that in 2007 the barking was at its worst. When he went outside to
do chores, he did not spend any time outside enjoying his property like he
had in the past. He used to enjoy having his windows at his home open,
but he now keeps them shut because of the barking noise. According to
Larry, the noise was worse during the summer months as compared to the
winter months. Larry approached Wiggins sometime in August of 2007 to
complain about the noise. [Larry] testified that the noise was less at the
time of the trial than in July of 2007 because there were fewer dogs on
Wiggins’s property; however, the barking noise was still a problem that
made it hard for him to enjoy his property. He testified that he could hear
the barking from inside his house. Wiggins testified that on February 16,
2009, the parties inspected Wiggins’s kennels in preparation for the trial,
and at that time, he counted a total of 69 dogs on Wiggins’s property.
During the inspection, whenever someone arrived, the dogs barked for 20
to 30 minutes before quieting down. After the dogs quieted down, they
could carry on a normal conversation in front of the kennels.
Frances testified that she had been married to Larry for 16 years and
had lived on their property on Triton Lane since that time. Frances noticed
the noise from Wiggins’s barking dogs sometime after Wiggins purchased
his property. Frances described the barking as “[e]xcessive, continuous,
chronic barking.” Frances testified: “I’m an early riser and sometimes I
would be up five, six in the morning and they would be barking and
continue barking for hours. Then, you know, they might quit for half an
hour, couple of minutes. Sometimes I would think, oh, thank goodness,
you know, they’ve quit barking and I’d step outside and here they go again
and I would have to go back into the house.” Prior to Wiggins kenneling
dogs on his property, Frances liked to open the windows to her home in
the springtime and let fresh air in. Now she no longer liked to open her
windows because of Wiggins’s barking dogs. Frances claimed that the
barking could be heard inside and that she had to turn on a radio or
television to drown out the noise. She testified that a lot of nights, she

487
could not go to sleep because of the noise. [T]he barking noise had caused
her stress and restricted her and Larry from enjoying any outside activities
in their yard.
Wayne Richard testified that he had lived on Triton Lane with his wife
for 30 years. Wayne testified that his house was 200 to 250 yards north of
the Dobbs house. He estimated that his house was approximately 500
yards northwest of Wiggins’s property. His house and the Dobbs house
were the houses closest to Wiggins’s property. Wayne testified that he
liked to garden, mow, and race lawnmowers with his grandson in his yard.
In the evenings, he liked to sit outside on his patio and listen to the sounds
of nearby wildlife, including coyotes, turkeys, geese, and occasionally,
nearby cattle. He testified that the coyotes howling would cause Wiggins’s
dogs to start barking.
According to Wayne, . . . the noise from the dogs on Wiggins’s
property gradually increased over time. He stated that it was noticeable in
2007 and became a “real nuisance” to him in 2007. He testified, “[W]e
can’t do anything outside without hearing the dogs.” Wayne used to like
having his windows open, but with the windows open, he could hear the
dogs barking from everywhere in the house. He had to close his windows,
and he usually turned on his television or his radio so he could not hear the
barking. Wayne had been to the Dobbses’ property and heard the dogs
barking inside and outside of their house as well.
Wayne testified that he had two conversations about the dogs with
Wiggins. According to Wayne, Wiggins stated that he wanted to be a good
neighbor and had bought some device to quiet the dogs but that he was
“within his rights” regardless of how many dogs were barking. Wiggins
told Wayne that he moved to the country so he could raise the dogs, and
Wayne responded that he moved to the country to get away from noise.
Wayne’s wife, Lorena (Lori), testified that she enjoyed various
activities outside, including gardening, reading, playing with kids, and
cooking out. Now everything she did outside was “to the accompaniment
of barking dogs.” She did not invite people over for an outside activity
very often anymore because of the noise. She used to like to keep the
windows in her house open in the spring before it got too hot, but they did
not open the windows as often because of the barking, and they no longer
slept with the windows open. According to Lori, when Wiggins moved
into the area, he started raising dogs and the noise began to escalate as he
accumulated more dogs. Lori testified that, in 2006, she could no longer
ignore the noise. Every time she was outside — morning, noon, and
evening — she could hear the dogs barking, whining, howling, and
yipping. The noise got worse in 2007 and continued through 2009 at the

488
same frequency and intensity.
Mary McKowen lived in a house that was approximately 2¼ miles
north of the Dobbs house, and she had lived there for approximately 40
years. She was a longtime friend of Larry Dobbs and his family.
McKowen testified that when she and her husband, Nolan, were outside on
their property, they could hear Wiggins’s dogs barking to the south.
During her visits at the Dobbs residence in 2007, McKowen could hear the
dogs barking outside every time she visited, which she felt was very
annoying.
Charles Downey lived on Triton Lane approximately one mile north of
the Dobbs residence, and he had lived there for nearly 30 years. He had
been to the Dobbs house at various times and had heard the dogs barking
at the Dobbs home. Downey described the barking as “quite a bit louder”
at the Dobbs property and testified that the barking would be annoying to
listen to all the time. Downey testified that he also, from time to time,
helped Wiggins at his property, including feeding his dogs and horses. In
addition, Downey designed and built some of Wiggins’s kennels. Downey
estimated that in 2007 Wiggins had more than 100 dogs on his property.
Martin Boykin of the Jefferson County Animal Control testified that in
January of 2008, he responded to Triton Lane in response to a complaint
that a dog owned by the Dobbses was acting aggressively, trying to bite
people, and not allowing the mail to be delivered. On that occasion, he
spoke with both Wiggins and Larry Dobbs near their property line for at
least a half an hour. In describing the barking coming from the Wiggins
property during this visit, Boykin testified: “You could hear somewhat
some barking but nothing to — you couldn’t really tell, I mean, a number
of dogs or anything like that. It wasn’t nothing loud or, you know,
anything that would disturb anyone, I would assume.” He told the circuit
court that he did not believe the barking level was “disturbing.” He
testified that he had not been to the property except on that one occasion.
Wiggins testified that he had been involved in raising and training bird
dogs since he was a child helping his grandfather raise and train bird dogs.
Wiggins testified that from 2002 to 2008, he has had a total income of
$139,295 from selling his bird dogs. Wiggins testified that after he moved
to his Triton Lane property and built his kennels, he asked Larry several
times every year whether his dogs bothered him in any way. According to
Wiggins, Larry always told him that the dogs were not a problem and that
he could not hear them. Wiggins testified that he had hundreds of such
conversations with Larry over the years. However, in a conversation on
August 11, 2007, Larry told Wiggins that the barking was out of control
and asked him to do something about it. According to Wiggins, that was

489
the first time Larry had complained about the barking in the 15 years he
had lived there. At that time, he owned approximately 100 dogs. After that
conversation, Wiggins made attempts to reduce the noise level. Wiggins
believed that because of these measures, the dogs were quieter at the time
of the trial than they had been in 2007.
On July 21, 2009, the circuit court entered a judgment in favor of the
plaintiffs. The court found that, although Wiggins’s land was well-suited
for a dog kennel, the barking dogs resulted in an invasion of the plaintiffs’
interest in the use and enjoyment of their lands and that the gravity of the
harm done to the plaintiffs outweighed the utility of Wiggins’s dog
kennels. The court ordered Wiggins to decrease the number of dogs in his
possession to no more than six, to kennel his dogs in the southern region of
his property, and to take all the steps necessary to adequately suppress any
noise caused by any barking dogs. Wiggins filed a timely notice of appeal.
The first argument that Wiggins raises on appeal is that the circuit
court’s finding that his dogs constituted a nuisance was against the
manifest weight of the evidence. We disagree.
“[A]n appellate court will defer to the findings of the circuit court
unless they are against the manifest weight of the evidence.” Chicago
Investment Corp. v. Dolins, 481 N.E.2d 712 (Ill. 1985). Accordingly, in
the present case, we will review the circuit court’s finding that the barking
dogs constituted a nuisance under the manifest-weight-of-the-evidence
standard.
“A private nuisance is a substantial invasion of another’s interest in the
use and enjoyment of his or her land.” Willmschen v. Trinity Lakes
Improvement Ass’n, 840 N.E.2d 1275 (Ill. App. 2005). “The invasion must
be either intentional or negligent, and unreasonable.” Id. at 553. In
determining whether particular conduct constitutes a nuisance, the
standard is the conduct’s effect on a reasonable person. The Illinois
Supreme Court has frequently stated that a nuisance must be physically
offensive to the senses to the extent that it makes life uncomfortable. An
invasion constituting a nuisance can include noise, smoke, vibration, dust,
fumes, and odors produced on the defendant’s land and impairing the use
and enjoyment of neighboring land. Whether the complained-of activity
constitutes a nuisance is generally a question of fact. In an action to enjoin
a private nuisance, the circuit court must balance the harm done to the
plaintiffs against the benefit caused by the defendant’s use of the land and
the suitability of the use in that particular location.
In Woods v. Khan, 420 N.E.2d 1028 (Ill. App. 1981), the plaintiffs
brought a lawsuit to enjoin the defendants’ poultry business as a private
nuisance. The plaintiffs lived within a mile of the defendants’ poultry

490
business in rural Godfrey, Illinois, and they had lived there before the
defendants built their facility in the area. The neighborhood was zoned
agricultural, and many of the plaintiffs raised livestock on their own
property. The plaintiffs complained that the poultry facility resulted in bad
odors and swarms of flies and that the intensity of both varied from day to
day. Some of the plaintiffs were required to seal their houses when the
odor and insects were at their worst, and some plaintiffs cut back on
outdoor activities and quit inviting guests to their homes. Some plaintiffs
complained of breathing difficulties, sore throats, and nausea.
In Woods, the court concluded “that the trial court properly determined
that the odors and flies were sufficiently bothersome to justify injunctive
relief.” In weighing the gravity of the harm to the plaintiffs against the
utility of the defendants’ business and the suitability of its location, the
court stated that the following questions had to be answered: “(1) Are the
defendants engaged in a useful enterprise? (2) Is this area of rural Godfrey
well suited for an egg production facility? (3) Which came first, the
chickens or the plaintiffs? (4) Can the odors and flies be reduced? (5) Is
modification of the facility practical?” The court concluded that although
the poultry facility was a vital industry, the poultry facility was the
“newcomer to the area” and was located too close to several residences.
As noted above, in order to prove an actionable nuisance, the plaintiffs
had the burden of proving that barking dogs constituted an invasion that
was substantial, intentional or negligent, and unreasonable. The plaintiffs
presented sufficient evidence for the circuit court to find the elements
necessary to conclude that the barking dogs from the Wiggins property
constituted a nuisance.
First, the plaintiffs presented sufficient evidence for the circuit court to
find that the barking noise emanating from the Wiggins property was
substantial. In determining whether the noise was substantial, the circuit
court had to consider the effect it would have on a normal person of
ordinary habits and sensibilities. The circuit court found that the plaintiffs
were not “unduly sensitive” and were not “delicate, fastidious, [or]
pursuing a dainty way of life.” This finding was not against the manifest
weight of the evidence. Wiggins disputed the extent of the barking and
presented conflicting evidence on that issue, but the circuit court, as the
trier of fact, determined the credibility of the witnesses and the weight to
be given to the evidence. We cannot say that the circuit court’s finding of a
substantial invasion of the plaintiffs’ properties was unsupported by the
facts presented at the trial.
[T]he circuit court [also] found that the noise nuisance was
unreasonable. The resolution of this question of fact required the circuit

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court to weigh the gravity of the harm done to the plaintiffs against the
utility of Wiggins’s kennels and the suitability of the location of his
kennels. The circuit court found as follows:

That although the Defendant is operating a small business on his property,

the gravity of the harm done to the Plaintiffs outweighs the utility of the
Defendant’s business and the suitability of the location of that business. To
make this finding the Court balanced the following:
(a) Defendant is engaged in a useful business (raising bird dogs);
(b) Defendant is located in an area of Jefferson County well-suited for
a dog kennel;
(c) Plaintiffs were located on their property before the Defendant
started his dog kennel;
(d) Although the Defendant has made efforts, the barking of the dogs
cannot be reduced to a level that is not a substantial invasion of Plaintiffs’
lands; and
(e) There is no practical way to modify the Defendant’s kennels to stop
the dogs from barking.

The circuit court was charged with the task of balancing these
conflicting interests to determine whether the intentional invasion of
barking noise was an unreasonable invasion and, therefore, an actionable
private nuisance. The circuit court heard enough evidence to conclude that
69 or more dogs kenneled on Wiggins’s property caused an unreasonable
noise invasion that interfered with the plaintiffs’ use and enjoyment of
their nearby land. The appellate court is not permitted to “substitute its
judgment on questions of fact fairly submitted, tried, and determined from
the evidence which did not greatly preponderate either way.” Maple v.
Gustafson, 603 N.E.2d 508 (Ill. 1992). Accordingly, we must affirm the
circuit court’s finding that the barking from the dogs kenneled on
Wiggins’s property constituted a private nuisance.
Wiggins argues, alternatively, that even if the plaintiffs sufficiently
established that his dogs constituted a nuisance, the remedy issued by the
circuit court was improper because it effectively terminated his business
without affording him an opportunity to reduce or abate the nuisance. The
granting of an injunction is within a trial court’s discretion, and on appeal,
the reviewing court will only reverse a circuit court’s ruling when the
circuit court manifestly abused its discretion. The mere existence of a
nuisance does not automatically entitle the plaintiffs to injunctive relief
against the nuisance. “Equity will not, as a matter of course, order relief in
nuisance cases until all the circumstances and consequences of such action
are considered.” Tamalunis v. City of Georgetown, 542 N.E.2d 402 (Ill.

492
App. 1989).
In the present case, the circuit court entered a permanent injunction
requiring Wiggins to decrease the number of dogs in his possession to no
more than six, to kennel the dogs only at a location in the southern region
of his property, and to take all the steps necessary to adequately suppress
any noise caused by the dogs barking. It was not against the manifest
weight of the evidence for the circuit court to find that the number of dogs
Wiggins kenneled on his property at the time of the trial, 69 dogs or more,
constituted a private nuisance given the testimony concerning the noise
level even after Wiggins attempted measures to reduce the noise.
However, the evidence at the trial was insufficient to support a finding that
Wiggins must reduce the number of dogs in his possession to six in order
to abate the nuisance. Therefore, an injunction requiring him to reduce the
number of dogs in his possession to six or less was an abuse of discretion
under the facts presented at the trial.
The evidence at the trial suggested that Wiggins might be able to
correct the nuisance by reducing the number of dogs to some number
fewer than 69 but greater than 6. Wiggins began kenneling dogs on his
property beginning in 1995, and he did so for more than 10 years without
any complaints from his neighbors. The evidence at the trial included
testimony describing several measures Wiggins took after August of 2007
to reduce the barking noise. The circuit court found that these measures
were insufficient to abate the noise nuisance from the 69 or more barking
dogs. However, the evidence presented at the trial was insufficient to
determine the maximum number of dogs that could be maintained on the
property without causing a private nuisance.
“The restraint imposed by an injunction should not be more extensive
than is reasonably required to protect the interests of the party in whose
favor it is granted[ ] and should not be so broad as to prevent defendant
from exercising his rights.” People ex rel. Traiteur v. Abbott, 327 N.E.2d
130 (Ill. App. 1975).
The circuit court found that Wiggins’s canine business was a useful
business located in an appropriate rural area, and we believe that further
evidence is necessary for the circuit court to determine the proper scope of
injunctive relief. The circuit court had insufficient evidence to consider all
the circumstances and consequences of injunctive relief limiting Wiggins
to six dogs, and we believe that the scope of the injunction was an abuse of
discretion based on the evidence before the circuit court. Without further
evidence, we cannot determine whether the circuit court’s injunction was
too broad in scope, creating an unnecessary hardship on Wiggins. We do
not offer any opinion on the number of dogs Wiggins should be limited to

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kenneling on his property; we only conclude that the evidence presented at
the trial was insufficient to determine the appropriate remedy.
Accordingly, we remand this cause for further proceedings relevant to the
scope of the injunctive relief necessary to abate the noise nuisance.

Page County Appliance Center, Inc. v. Honeywell, Inc.

347 N.W.2d 171 (Iowa 1984)

W.W. REYNOLDSON, Chief Justice.
Plaintiff Page County Appliance Center, Inc. (Appliance Center), sued
Honeywell, Inc. (Honeywell), and ITT Electronic Travel Services, Inc.
(ITT), for nuisance and tortious interference with business relations.
Defendants appeal from judgment entered on jury verdicts awarding
compensatory and punitive damages. Honeywell appeals from a judgment
rendered against it on ITT’s cross-claim for indemnification. We reverse
and remand for new trial.
Appliance Center has owned and operated an appliance store in
Shenandoah, Iowa, since 1953. . . . Before 1980, [the owner, John
Pearson,] had no reception trouble with his display televisions. In early
January 1980, however, ITT placed one of its computers with Central
Travel Service in Shenandoah as part of a nationwide plan to lease
computers to retail travel agents. Central Travel was separated by only one
other business from the Appliance Center. This ITT computer was
manufactured, installed, and maintained by Honeywell.
Thereafter many of Pearson’s customers told him his display television
pictures were bad; on two of the three channels available in Shenandoah he
had a difficult time “getting a picture that was fit to watch.” After
unsuccessfully attempting several remedial measures, in late January 1980,
he finally traced the interference to the operations of Central Travel’s
computer. Both defendants concede Pearson’s problems were caused by
radiation leaking from the Honeywell computer.
[After Pearson complained to Kay Crowell, owner of Central Travel,]
Honeywell technicians made repeated trips to make various unsuccessful
adjustments to the computer. They found the computer was operating
properly; the interference-causing radiation was a design and not a service
problem.
The Honeywell engineers effected a 70 percent improvement in the
television reception by certain modifications of the computer in the fall of
1980. Pearson, still dissatisfied, started this action in December. While the
suit was pending, Honeywell further modified the computer, finally
alleviating Pearson’s problems in May 1982.

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 At trial a Honeywell senior staff engineer admitted the technology to
manufacture a non-radiation-emitting computer was available long before
it developed this computer, but opined it would have been neither cost nor
consumer effective to utilize that technology. He testified Honeywell
believed it had corrected Pearson’s problems in the fall of 1980.
The Appliance Center’s case against Honeywell and ITT finally was
submitted to the jury on the theories of nuisance and tortious interference
with prospective business relations. It asked for only injunctive relief
against Kay Crowell, doing business as Central Travel Service. The latter’s
motion for summary judgment was sustained. The jury found for the
Appliance Center against the remaining defendants on both theories, and
further found the Appliance Center should recover $71,000 in
compensatory damages and $150,000 in exemplary damages. . . . Trial
court awarded ITT full indemnity against Honeywell, in the amount of
$221,000, together with attorney fees and costs. Both defendants appeal
from the judgment in favor of Appliance Center; Honeywell additionally
appeals from the judgment awarding ITT indemnity.
Our analysis of ITT’s first contention must start with Iowa Code
section 657.1, which in relevant part states:

Whatever is . . . an obstruction to the free use of property, so as essentially to

interfere with the . . . enjoyment of . . . property, is a nuisance, and a civil
action by ordinary proceedings may be brought to enjoin and abate the same
and to recover damages sustained on account thereof.

Narrowing our focus, we note the Appliance Center is alleging a

“private nuisance,” that is, an actionable interference with a person’s
interest in the private use and enjoyment of his or her property. It also is
apparent that if Central Travel’s computer emissions constitute a nuisance
it is a “nuisance per accidens, or in fact” — a lawful activity conducted in
such a manner as to be a nuisance.
Principles governing our consideration of nuisance claims are well
established. One’s use of property should not unreasonably interfere with
or disturb a neighbor’s comfortable and reasonable use and enjoyment of
his or her estate. A fair test of whether the operation of a lawful trade or
industry constitutes a nuisance is the reasonableness of conducting it in the
manner, at the place, and under the circumstances shown by the evidence.
Each case turns on its own facts and ordinarily the ultimate issue is one of
fact, not law. The existence of a nuisance is not affected by the intention of
its creator not to injure anyone. Priority of occupation and location —
“who was there first” — is a circumstance of considerable weight.

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 When the alleged nuisance is claimed to be offensive to the person,
courts apply the standard of “normal persons in a particular locality” to
measure the existence of a nuisance. This normalcy standard also is
applied where the use of property is claimed to be affected. “The plaintiff
cannot, by devoting his own land to an unusually sensitive use, . . . make a
nuisance out of conduct of the adjoining defendant which would otherwise
be harmless.” W. Prosser, The Law of Torts §87, at 579 (4th ed. 1971).
In the case before us, ITT asserts the Appliance Center’s display
televisions constituted a hypersensitive use of its premises as a matter of
law, and equates this situation to cases involving light thrown on outdoor
theater screens in which light-throwing defendants have carried the day. . .
.
We cannot equate the rare outdoor theater screen with the ubiquitous
television that exists, in various numbers, in almost every home. Clearly,
the presence of televisions on any premises is not such an abnormal
condition that we can say, as a matter of law, that the owner has engaged
in a peculiarly sensitive use of the property. This consideration, as well as
related considerations of unreasonableness, gravity of harm, utility of
conduct, and priority of occupation, are factual determinations that should
have been submitted to the jury in this case. We find no trial court error in
refusing to direct a verdict on this ground.
ITT’s second contention asserts trial court should have directed a
verdict in its favor because it did not participate in the creation or
maintenance of the alleged nuisance. We have noted ITT was engaged in a
multimillion dollar, national program to lease computers to travel
agencies. It owned this computer and leased it to Central Travel. It was to
ITT that the agency first turned when the effect of the computer radiation
became apparent. ITT continued to collect its lease payments; the
computer did not operate for the benefit of Crowell alone. The jury could
have found ITT evidenced some measure of its responsibility, as owner of
the computer, in contacting Honeywell and making belated inquiries
regarding Appliance Center’s problems both to Pearson and Crowell.
An action for damages for nuisance need not be predicated on
negligence. Nuisance ordinarily is considered as a condition, and not as an
act or failure to act on the part of the responsible party. A person
responsible for a harmful condition found to be a nuisance may be liable
even though that person has used the highest possible degree of care to
prevent or minimize the effect.
Where there is reasonable doubt whether one of several persons is
substantially participating in carrying on an activity, the question is for the
trier of fact. We hold such reasonable doubt existed on the record made in

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this case, and trial court did not err in refusing to direct a verdict on this
ground.
Honeywell asserts trial court should have granted its motion for
directed verdict because, even though it manufactured the computer,
Central Travel and ITT were in control of the instrument at all relevant
times; thus Honeywell did not have the legal right to terminate its use.
Honeywell devotes ten and one-half pages of its brief to this thesis without
mentioning that it had an ongoing contract to service and maintain the
computer.
Much of what we have written [above] applies here. Again, the issue is
one of material participation. Honeywell’s design permitted radiation to
escape this computer, although technology was available to minimize this
effect. Apparently factors of cost and ease of service access weighed more
in the design decision. Honeywell was the only party with the
technological know-how to control the radiation leakage. Its maintenance
contract with ITT clearly absolved it of any liability if anyone else made
any alterations or additions to the equipment, and reserved the right to
terminate the agreement should that occur. As with ITT, we think
Honeywell’s material participation was an issue for the finder of fact.
Trial court’s instructions required Appliance Center to prove
defendants “unreasonably” interfered with the Center’s use and enjoyment
of its property. Honeywell and ITT objected, in essence, that this permitted
the jury to judge “unreasonableness” in a vacuum; that the instructions
made no attempt to define the unreasonableness concept. Because
reasonableness under our nuisance decisions ordinarily is a question for
the jury, the court on retrial should provide more guidance for the jury.
In Bates v. Quality Ready Mix Co., 154 N.W.2d 852, 857 (Iowa 1968),
we noted that reasonableness is a function of the manner in which, and the
place where, defendant’s business is conducted, and the circumstances
under which defendant operates. Additional factors . . . include priority of
location, character of the neighborhood, and the nature of the alleged
wrong. The “character and gravity of the resulting injury” is, in fact, “a
major factor in determining reasonableness,” Montgomery v. Bremer
County Board of Supervisors, 299 N.W.2d 687, 697 (Iowa 1980).
Balanced against the gravity of the wrong is the utility and meritoriousness
of the defendant’s conduct.
Another instruction given in this case stated that “[o]ne who
contributes to the creation or continuance of a nuisance may be liable.”
ITT objected that neither this instruction nor any other informed the jury
that a defendant’s conduct must be a “substantial factor” in bringing about
the alleged harm. Upon retrial the instructions should incorporate this

497
requirement.
Both Honeywell and ITT objected because the court did not submit to
the jury the issue whether Appliance Center was devoting its premises to
an unusually sensitive use. The discussion in division I is relevant here.
We hold defendants were entitled to have this question resolved by the
jury.
We reverse and remand with instructions to set aside the judgment in
favor of Appliance Center against Honeywell and ITT, and the judgment
entered on ITT’s cross-claim against Honeywell. Defendants shall be
granted a new trial in conformance with this opinion.

Notes and Questions

1. Unreasonable harm to the use and enjoyment of land. How do
the courts determine when an interference with the use and enjoyment of
land is unreasonable? First, they must determine what interests are
encompassed by the right to the “use and enjoyment of land.” Those
interests include freedom from pollution, noise, odors, and smoke. Is the
market value of the plaintiff’s property (by itself) such an interest? If not,
why not? Second, they need to determine how serious the interference
must be for a nuisance to be present. Traditionally, the court required the
harm to be substantial before it could give rise to a nuisance claim. Third,
if defendant has substantially interfered in the plaintiff’s use and
enjoyment of land, how do we determine whether that harm is
unreasonable? For intentional nuisances, the focus of the reasonableness
inquiry is on the impact of the defendant’s conduct on the plaintiff. Courts
ask whether the defendant’s conduct creates consequences for the plaintiff
that a typical landowner should not be expected to bear. The question is
whether those consequences exceed a reasonable threshold beyond which
the court will conclude that the defendant has created a nuisance. Was the
harm to Wiggins’s neighbors from the barking of his dogs substantial or a
mere annoyance that people should have to bear?

NUISANCE:

A harm that is (1) substantial and (2) unreasonable.

Factors Courts Consider in Finding Nuisance:
1. The extent of the harm.
2. The character of the harm.

498
 3. The economic and social value of the conflicting activities.
4. The suitability of the activities for the location.
5. The ability of either party to avoid the conflict and the practicability and
fairness of making the party do so.
See, e.g., Restatement (Second) of Torts §828 (1977).

In answering these questions, courts consider both fairness and

welfare. On the fairness side, courts will consider:
a. The character of the harm. Aesthetic harms will be viewed as
less serious than health or safety concerns.
b. Distributive considerations. Is it fair to make an individual
owner bear the costs of defendant’s socially beneficial activity, or
should those costs be spread around to the owner causing the damage
and its employees and customers?
c. Fault. Is one of the owners engaged in a disfavored activity? Is
the conduct appropriate for the area? Did the plaintiff come to the
nuisance?

On the welfare side, courts will consider:

d. Costs and benefits. The costs and benefits of allowing the
harmful conduct must be compared with the costs and benefits of
prohibiting it.
e. Incentives. What effects will liability or immunity have on
incentives to engage in the respective activities? How will the
distribution of the burdens and benefits of conflicting land uses affect
incentives to invest in safety or to engage in desirable economic
activities?
f. Lowest cost avoider. Which party can more cheaply avoid the
cost? Should this party also bear the burden of paying that cost?

Malice may also be relevant to the court’s evaluation of the

defendant’s conduct. For example, many states will grant injunctions
against so-called spite fences constructed for the sole purpose of blocking
their neighbors’ light and air. When such fences serve no purpose other
than the builders’ desire to hurt their neighbors, some states will grant an
injunction ordering the fence torn down. See Wilson v. Handley, 119 Cal.
Rptr. 2d 263 (Ct. App. 2002) (applying Cal. Civ. Code §841.4); DeCecco
v. Beach, 381 A.2d 543 (Conn. 1977) (applying Conn. Gen. Stat. §52-
570); Gertz v. Estes, 879 N.E.2d 617 (Ind. Ct. App. 2008) (applying Ind.
Code §§32-26-10-1 and -2). But see Maioriello v. Arlotta, 73 A.2d 374

499
(Pa. 1950) (refusing to enjoin a spite fence). Why should malice figure in
the nuisance calculus?
2. Intentional nuisance, negligence, ultrahazardous activities, and
nuisances per se. Intentional nuisance must be distinguished from
negligence. Negligence law prohibits and provides remedies for
unreasonable conduct; this implies a judgment that a reasonable person
would have foreseen the harm and prevented it. Intentional nuisance
focuses primarily on the result of the conduct rather than the conduct
itself; the question is not whether the defendant’s conduct was
unreasonable but whether the interference suffered by the plaintiff is
unreasonable. Such interference is unreasonable under nuisance law if it
involves substantial harm that an owner should not have to bear for the
good of society. Thus, conduct that is not negligent (because the defendant
took due care to avoid the harm) may still constitute a nuisance (because
the conduct in fact results in harm to the neighbors’ property interests that
is not justified by the social utility of the conduct causing it). Conversely,
where the defendant’s conduct is negligent, defendant may be liable under
a negligence theory even if the impact on the plaintiff would not otherwise
rise to the level of a substantial interference.
Most courts impose strict liability on landowners if they engage in
ultrahazardous activities that cause harm to neighboring land. In such
cases, nontrespassory conduct may result in liability without a need to
prove either negligence or the unreasonableness and substantial harm
requirements of nuisance doctrine. Some cases have imposed strict liability
on landowners who have stored toxic waste on their property. See, e.g., T
& E Industries v. Safety Light Corp., 587 A.2d 1249 (N.J. 1991); State v.
Ventron Corp., 468 A.2d 150 (N.J. 1983).
Some activities may be so disfavored that they will be held to
constitute nuisances no matter where they take place or what consequences
they generate — so-called nuisances per se. An example would be
criminal activity such as property routinely used for illegal drug
manufacture or sale. Otherwise lawful activities may constitute nuisances
because they are “a right thing in a wrong place — like a pig in the parlor
instead of the barnyard.” Village of Euclid v. Ambler Realty Co., 272 U.S.
365, 388 (1962). For example, in one Texas case, the trial court affirmed a
jury’s finding that a 21-story tall apartment building constituted a nuisance
because of its location within a neighborhood primarily made up of
detached, single-family homes. See Loughhead v. 1717 Bissonnet, L.L.C.,
No. 2013-26155, 2014 WL 8774060 (Tex. Dist. May 1, 2014), reversed in
part ___ S.W.3d ___ (Tex. App. 2016).

500
 3. Who can be sued? Can a manufacturer of a hazardous substance be
sued for damages for nuisance when it leaks through the ground and
causes harm to neighboring land? Page County adopts the general rule that
imposes liability on any actor who “materially participated” in causing the
harm. See also Parks Hiway Enterprises, LLC v. CEM Leasing, Inc., 995
P.2d 657, 667 (Alaska 2000) (question is whether defendant’s conduct was
a “substantial factor” in causing the harm). What factors led the court to
determine that the evidence showed that Honeywell contributed to the
harm? Would Honeywell have been liable if its only participation was the
design and sale of the computer? Compare Hall v. Phillips, 436 N.W.2d
139 (Neb. 1989) (manufacturer and distributor of herbicide liable for
nuisance), and New York v. Fermenta ASC Corp., 630 N.Y.S.2d 884 (Sup.
Ct. 1995) (holding the manufacturer and distributor of a herbicide liable
for trespass when it broke down in the soil after usage by customers and a
chemical byproduct leached through the soil and invaded the public water
supply), with Parks Hiway Enterprises, supra (gas producer not liable for
nuisance merely because it produced the gas that bled into neighboring
land).
4. When to sue?
a. Not too early. The doctrine of anticipatory nuisance governs
lawsuits to bar a nuisance before the challenged use is actually in place.
Most courts agree that a claimant seeking an injunction against a use
that is not yet in place must prove with near certainty that the use, once
in place, will constitute a nuisance. See, e.g., Simpson v. Kollasch, 749
N.W.2d 671 (Iowa 2008) (“An anticipated nuisance will not be
enjoined unless it clearly appears a nuisance will necessarily result
from the act.”); Duff v. Morgantown Energy Associates, 421 S.E.2d
253 (W. Va. 1992) (“[T]o warrant injunctive relief as to a prospective
nuisance, ‘the fact that it will be a nuisance if so used must be made
clearly to appear, beyond all ground of fair questioning.’ ”). However,
once a nuisance-causing activity is built, the waste of dismantling the
operation may weigh against finding a nuisance. How does the
difficulty of obtaining an injunction on a theory of anticipatory
nuisance affect the usefulness of nuisance law as a tool for regulating
land use conflicts?
b. Not too late. Nuisance claimants must sue before the statute of
limitations expires. Many courts distinguish between temporary and
permanent nuisances. A permanent nuisance either irreparably injures
the plaintiff’s property or is of such a character that it is likely to
continue indefinitely; in such a case, the statute of limitations for

501
 bringing a claim begins at the time the nuisance begins. In contrast, a
temporary nuisance occurs intermittently or can be alleviated by
changes in the defendant’s conduct. For temporary nuisances, the claim
“accrues anew upon each injury.” Schneider National Carriers, 147
S.W.3d at 270, 272.
5. Nuisance defenses. Two common defenses to nuisance claims are
(1) that the defendant got there first and (2) that the plaintiff is too
sensitive:
a. Temporal priority, and “coming to the nuisance.” The fact that
a harmful activity was established first will weigh in favor of the
defendant. When the plaintiff comes to the nuisance, one can argue that
she created the problem herself. An owner who builds a house next to a
pig farm should not be surprised at the resulting odors. For this reason,
in all states, it will be harder for a plaintiff to prevail in a nuisance case
if she came to the nuisance. At the same time, coming to the nuisance
is not an absolute defense; it may be wrong to continue operating a
polluting activity once it becomes surrounded by numerous other
homes and businesses. Some statutes do make it an absolute defense in
certain cases that the plaintiff came to the nuisance.
When owners come to the nuisance, the courts may enjoin the
offending activity on the condition that those who came to the nuisance
compensate the prior developer for the costs associated with shutting
down and/or relocating. In Spur Industries v. Webb, 494 P.2d 700
(Ariz. 1972), for example, a developer built a residential community
near a cattle ranch. Ordinarily, it would be possible to convince a court
that the smells generated by a cattle ranch constitute a substantial and
unreasonable interference in the use and enjoyment of residential
property. However, because the homeowners “came to the nuisance,”
they had a much harder time convincing the court that the cattle feedlot
should be shut down than they would have had if the residential
community had been established first. This is probably why the court
in Spur granted the plaintiffs an injunction only on the condition that
they compensate the defendant for the costs that relocation would
impose on him.

CONTEXT

Many states have passed right to farm statutes that protect farmers from
liability for nuisance if their farms were established before surrounding
residential property was constructed. However, the Iowa Supreme Court found

502
 that one such statute unconstitutionally took away the right to sue for nuisance.
Bormann v. Board of Supervisors, 584 N.W.2d 309 (Iowa 1998).

b. Unusual sensitivity. Unlike in negligence law, in the law of

nuisance, even serious harms may be privileged if the plaintiff is
unusually sensitive and the court concludes that it would be wrong to
regulate the defendant’s generally inoffensive activity or impose
damages for the plaintiff’s harm. Jenkins v. CSX Transportation, Inc.,
906 S.W.2d 460 (Tenn. Ct. App. 1995) (no remedy for plaintiff who
had an extremely rare allergy to fumes from railroad ties near his land).
Nuisance law aims to protect owners’ reasonable interests in the use
and enjoyment of their land. In Page County, the court considered but
ruled out the argument that the defendant’s conduct should not be
judged a nuisance because the plaintiff was abnormally sensitive. Do
you agree with its conclusion that the plaintiff was not abnormally
sensitive to electromagnetic interference? If the plaintiff were a
homeowner complaining that she suffered interference with her
television reception due to the defendant’s business, do you think the
court would have found the harm to rise to the level of a nuisance?
Would the answer change between the 1980s and today?
6. Aesthetic nuisance and stigma. Although most nuisance cases
involve physical harm to land or discomfort or danger to persons, the
doctrine is broad enough to encompass any conduct that causes
unreasonable and substantial harm to the use and enjoyment of land. Thus,
nuisance claims have been brought against owners who have allowed their
property to be overrun by drug dealers, thereby interfering with the
interests of landowners in the neighborhood. Lew v. Superior Court, 25
Cal. Rptr. 2d 42 (Ct. App. 1993). In several cases, homeowners have been
enjoined from lavish displays of lights and loud Christmas music that drew
an enormous influx of visitors to a residential neighborhood. See, e.g.,
Osborne v. Power, 908 S.W.2d 340 (Ark. 1995); Rodrigue v. Copeland,
475 So. 2d 1071 (La. 1985).
Courts have historically been reluctant to find visual annoyances, by
themselves, to be nuisances in the absence of physical manifestations, such
as foul odors, or threats to health or safety. Mere unsightliness, the usual
account goes, was not enough to ground a nuisance claim. See Note,
Aesthetic Nuisance: An Emerging Cause of Action, 45 N.Y.U. L. Rev.
1075, 1080-1087 (1970); Note, Dix W. Noel, Unaesthetic Sights as
Nuisances, 25 Cornell L.Q. 1, 1-5, 8 (1939). In recent years, however,
courts have been more willing to find a nuisance on the basis of mere

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visual harm. See Rattigan v. Wile, 841 N.E.2d 680, 689 (Mass. 2006)
(“[T]he modern trend is toward recognition that aesthetic considerations
may legitimately generate public and private concern.”); Foley v. Harris,
286 S.E.2d 186, 190-191 (Va. 1982) (unsightly junked cars on lot were a
nuisance); John Copeland Nagle, Moral Nuisances, 50 Emory L.J. 265,
286-287 (2001) (detecting a judicial trend in favor of recognizing aesthetic
nuisances). But see Henry E. Smith, Exclusion and Property Rules in the
Law of Nuisance, 90 Va. L. Rev. 965, 999-1000 (2004) (describing courts
as continuing to reject claims of aesthetic nuisance). Despite this trend,
courts remain reluctant to do so where the claim of harm is based on a
mere difference in taste. They seem more likely to find a visual nuisance
where there is some evidence of malice or spite. See, e.g., Rattigan, at 688-
690. The general trend toward accepting nuisance claims based on
aesthetic harm seems consistent with the basic premises of nuisance law,
particularly where there are strong, widely shared norms against the
particular type of land use that generates the visual harm.
In DeSario v. Industrial Excess Land Fill Inc., No. 89-570 (Ohio Ct.
Common Pleas 1994), a jury awarded the owners of noncontaminated
property within two miles of a toxic waste dump $6.7 million in damages
for the loss of their property value caused by the “stigma” of being near
the dump. Natl. L.J., Jan. 16, 1995, at A13. Accord, Scheg v. Agway, Inc.,
645 N.Y.S.2d 687 (App. Div. 1996). Most courts deny such claims, even if
the loss of market value of the land is substantial. For example, in Adams
v. Star Enterprises, 51 F.3d 417 (4th Cir. 1995), the court refused to allow
owners of property adjacent to land contaminated by a leak at an oil
distribution facility to recover damages for mere fear of future health
effects or for diminution in the value of their property absent a showing of
detectable, physical encroachment on their property. Accord, Smith v.
Kansas Gas Service Co., 169 P.3d 1052, 1063 (Kan. 2007) (no nuisance
when natural gas escaped from a facility in the absence of physical injury
to properties or interference with use and enjoyment “distinct from the
claim that the property’s value has diminished because of marketplace fear
or stigma”). Which approach is best?
7. Public nuisances. A public nuisance is “an unreasonable
interference with a right common to the general public.” Restatement
(Second) of Torts §821B(1) (1977). The traditional example is obstruction
of public highways. As it originated in England, the public nuisance
doctrine covered a host of minor criminal offenses. It was extended to
allow common law actions involving such claims as

interference with the public health, as in the case of keeping diseased animals

504
 or the maintenance of a pond breeding malarial mosquitoes; with the public
safety, as in the case of the storage of explosives in the midst of a city or the
shooting of fireworks in the public streets; with the public morals, as in the
case of houses of prostitution or indecent exhibitions; with the public peace,
as by loud and disturbing noises; with the public comfort, as in the case of
widely disseminated bad odors, dust and smoke; with the public
convenience, as by the obstruction of a public highway or a navigable
stream.

Id. §821B. Traditionally, public nuisances could be challenged only by

public officials. Private landowners could obtain a remedy against a public
nuisance only if they suffered some special damage different from that
generally suffered by the public as a whole. The Restatement (Second) of
Torts, however, provides that any member of the public affected by the
activity should be able to bring a lawsuit, and this seems to represent the
trend in the law. Restatement (Second) of Torts §821c (1979). Statutes may
authorize individuals to bring claims to abate public nuisances. See Kellner
v. Capelini, 516 N.Y.S.2d 827 (Civ. Ct. 1986) (applying an ordinance
giving citizens the right to sue to shut down a public nuisance and granting
an injunction ordering a landlord to evict tenants who used the property for
illegal crack cocaine sales).
In the late twentieth century, the courts began to see an explosion of
public nuisance litigation. It has been used to challenge liquor stores that
sell liquor to minors, theaters or stores showing or selling pornographic
materials, and motels that are used for prostitution. See, e.g., City of Miami
v. Keshbro, Inc., 717 So. 2d 601 (Fla. Dist. Ct. App. 1998) (motel closed
for prostitution and drug use); Bosarge v. State ex rel. Price, 666 So. 2d
485 (Miss. 1995) (club closed for selling liquor to minors); State ex rel.
Bowers v. Elida Road Video & Books, Inc., 696 N.E.2d 668 (Ohio Ct.
App. 1997) (adult bookstore closed because of sexual activity). Some
cities have used public nuisance in an effort to abate harms caused when
owners leave their buildings or land vacant for long periods of time. See,
e.g., Jonathan Oosting, Michigan Approved for $100 Million in Federal
Funding to Demolish Blighted Homes in 5 Cities, June 6, 2013, available
at
http://www.mlive.com/politics/index.ssf/2013/06/michigan_100_million_demolitio.html
(last checked Nov. 7, 2016).
8. Climate change as a public nuisance. In 2004, several states (along
with nonprofit land trusts) sued various electric utilities, arguing that their
emission of greenhouse gases — and the resultant changes in the climate
— constituted a public nuisance under state and federal law. The U.S.

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Supreme Court held that federal environmental laws preempted the
plaintiffs’ federal common law claims, but left open the possibility that the
plaintiffs might have surviving nuisance claims under state law. See
American Electric Power Co. v. Connecticut, 131 S. Ct. 2527 (2011). At
least one federal court has subsequently held that state law nuisance claims
are also preempted by federal environmental laws. See Comer v. Murphy
Oil USA, Inc., 839 F. Supp. 2d 849 (S.D. Miss. 2012).
9. Statutory and administrative regulation of land use. Although
nuisance litigation retains significance, in recent years it has been eclipsed
to a substantial extent by federal and state environmental protection
legislation. In light of the difficulty of proving anticipatory nuisance and
the costs of abating nuisances once they are in place, does this shift make
sense? Federal legislation includes the Clean Air Act, 42 U.S.C. §§7401-
7642; the Clean Water Act, 33 U.S.C. §§1251-1376; the Comprehensive
Environmental Response, Compensation, and Liability Act (the Superfund
Act, or CERCLA), 42 U.S.C. §§6901-9657; and the Superfund
Amendments and Reauthorization Act of 1986 (SARA), Pub. L. No. 99-
499, 100 Stat. 1613. State environmental regulation may place more
stringent limits on environmental pollution. In addition, local zoning law
may regulate and separate incompatible neighboring land uses.
Environmental protection statutes ordinarily establish administrative
agencies with powers to issue regulations having the force of law. Those
agencies generally have enforcement powers, such as the power to impose
fines on persons who violate the regulations or to obtain injunctive relief in
court to compel compliance.

Problems
1. Drug dealing. A half-vacant apartment building is used by drug
dealers and drug users. Some of the dealers are tenants in the building who
sell crack cocaine in their apartments, while other dealers have entered the
building without the owner’s permission, using vacant apartments to
conduct their business. The illegal activities have attracted a large number
of drug buyers and users into the neighborhood, disrupting a formerly
quiet neighborhood of brownstone homes and turning the area into a drug
market. The landlord is a real estate company engaged in the business of
renting housing. The landlord in no way encouraged or participated in the
illegal activities, but has failed to do anything to remedy the problem.
Twenty neighbors bring a lawsuit against the landlord claiming the
landlord’s use of its property constitutes a nuisance. They ask for damages
and for an injunction ordering the landlord to stop the illegal activity.

506
 In Lew v. Superior Court, 25 Cal. Rptr. 2d 42 (Ct. App. 1994), the
court enforced a state statute providing that landlords could be held liable
for nuisance when the landlords’ apartments had become a hub of drug
activity and landlords did not act reasonably in dealing with the problem.
Commentators have disagreed about the fairness of imposing such
obligations on landlords. Compare David C. Anderson, How to Rescue a
Crack House, N.Y. Times, Feb. 8, 1993, at A-16, with Gideon Kanner,
California Makes Landlords Do the Police’s Job, Wall St. J., Jan. 27,
1993, at A-19; see also City of Seattle v. McCoy, 4 P.3d 159, 168 (Wash.
Ct. App. 2000) (an innocent owner who does not cause and could not have
reasonably prevented illegal drug use on the premises has not caused a
nuisance). Accord, Restatement (Second) of Torts §838 (1977) (“A
possessor of land upon which a third party carries on an activity that
causes a nuisance is subject to liability for the nuisance if . . . (a) the
possessor knows or has reason to know [of the activity] and (b) he
consents to the activity or fails to exercise reasonable care to prevent the
nuisance”).
a. What arguments could you make on behalf of the plaintiffs for
both damages and injunctive relief?
b. What arguments could you make on behalf of the defendant
landlord that it is not responsible for criminal actions committed by its
tenants and that it is certainly not responsible for the actions of
trespassers and therefore is not liable for either damages or injunctive
relief to abate the nuisance?
c. What should the court do? Explain your reasoning.
2. Secondhand smoke. A tenant living in a second-floor condominium
unit in a three-story, six-unit building complains about cigarette smoke
originating in the downstairs unit. The smoke enters the second-floor
apartment through vents in the central cooling and heating system. The
upstairs tenant cannot stand the smell of the smoke, and the smoke itself
makes her cough and wheeze. The downstairs owner is a smoker who
argues that she is entitled to smoke in her own home. Although smoking is
now prohibited by law in most restaurants and workplaces in the
jurisdiction, no law prohibits smoking at home. Should a judge rule that
the smoking constitutes a nuisance? If so, should she grant an injunction
ordering the condo owner to stop smoking at home? One state has a statute
defining a nuisance to include “tobacco smoke that drifts into any
residential unit a person rents, leases, or owns, from another residential or
commercial unit.” Utah Code §78B-6-1101(3). Compare DeNardo v.
Corneloup, 163 P.3d 956 (Alaska 2007) (secondhand smoke drifting from

507
one property to another is not a nuisance), with Dworkin v. Paley, 638
N.E.2d 636 (Ohio Ct. App. 1994) (tenant allowed to move out before the
end of the lease term when downstairs tenant disturbed her quiet
enjoyment by excessive smoking).

§2.2 Nuisance Remedies

As we noted above, nuisance cases always involve two questions: (1)
the determination of the entitlement to engage in a use or to be free from
the harm caused by someone else’s use and (2) the choice of a remedy. As
Guido Calabresi and A. Douglas Melamed observed in an extremely
influential law review article, there are typically two types of remedies in
the nuisance context: injunctions and damages, or in their terminology,
“property rules” and “liability rules.” See Guido Calabresi & A. Douglas
Melamed, Property Rules, Liability Rules, and Inalienability: One View of
the Cathedral, 85 Harv. L. Rev. 1089 (1972).
Property rules (injunctions) fix an absolute entitlement either to
engage in the conduct (no liability) or to be secure from the harm
(injunctive relief ordering defendant to stop committing the harm). With
property rules, the parties are free to bargain to give up their rights to
commit or be free from the harm. The price of the entitlement would
therefore be fixed by private bargaining rather than by a court order.
Liability rules (damages), in contrast, prohibit one party from
interfering with the interests of the other unless the party is willing to pay
an amount determined by a court of law or some other authoritative third
party. If the plaintiff is entitled to be protected from the harm by a liability
rule, then defendant’s failure to prevent the harm subjects the defendant to
damages. Conversely, if defendant is entitled to engage in the harmful
activity, protecting that entitlement with a liability rule means that the
plaintiff will be able to obtain an injunction stopping that activity if it
compensates the defendant for the economic losses associated with
stopping the activity; this later remedy is called a purchased or
conditional injunction. A plaintiff will be granted an injunction only if it
pays damages to compensate defendant for its losses.1
Table 6-1 summarizes these rules.

Table 6-1 Entitlements

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 In a case like Dobbs v. Wiggins, where a plaintiff is seeking only
injunctive relief, the two stages can seem to collapse into one. While this is
understandable, the failure to keep the entitlement question separate from
the remedial, balancing of utilities question is the source of some
confusion in nuisance law. The Restatement (Second) of Torts §826(a), for
example, appears to mix these two questions when it defines a land use as
“unreasonable” (i.e., a nuisance) where the “gravity of the harm [to the
plaintiff] outweighs the utility of the actor’s conduct.” If the question at
the entitlement stage were simply a matter of balancing the utilities, a
defendant’s actions would be allowed to impose enormous costs on its
neighbors just because the defendant’s use is a socially valuable one. If
that were the law, what kinds of land uses would it favor?
Nuisance law permits the decision maker to consider the utility of the
defendant’s conduct at both stages, but the relevance of that utility will be
different in the two stages. In determining whether to classify the
defendant’s conduct as a nuisance, courts weigh the utility of the
defendant’s conduct in the defendant’s favor. That is, a defendant whose
behavior is socially beneficial gets more leeway to impose costs on its
neighbors, but the focus remains on the impact of the defendant’s conduct
on the plaintiff. The fact that a defendant’s conduct is socially valuable is
not decisive. In contrast to the entitlement stage, where the focus is on the
impact on the plaintiff, the costs and benefits of the defendant’s conduct is
a central consideration at the remedial stage.

Boomer v. Atlantic Cement Co.

26 N.Y.2d 219 (1970)

509
FRANCIS BERGAN, Judge.
Defendant operates a large cement plant near Albany. These are
actions for injunction and damages by neighboring land owners alleging
injury to property from dirt, smoke and vibration emanating from the
plant. A nuisance has been found after trial, temporary damages have been
allowed; but an injunction has been denied. The public concern with air
pollution arising from many sources in industry and in transportation is
currently accorded ever wider recognition accompanied by a growing
sense of responsibility in State and Federal Governments to control it.
Cement plants are obvious sources of air pollution in the neighborhoods
where they operate.
But there is now before the court private litigation in which individual
property owners have sought specific relief from a single plant operation.
The threshold question raised by the division of view on this appeal is
whether the court should resolve the litigation between the parties now
before it as equitably as seems possible; or whether, seeking promotion of
the general public welfare, it should channel private litigation into broad
public objectives.
A court performs its essential function when it decides the rights of
parties before it. Its decision of private controversies may sometimes
greatly affect public issues. Large questions of law are often resolved by
the manner in which private litigation is decided. But this is normally an
incident to the court’s main function to settle controversy. It is a rare
exercise of judicial power to use a decision in private litigation as a
purposeful mechanism to achieve direct public objectives greatly beyond
the rights and interests before the court. Effective control of air pollution is
a problem presently far from solution even with the full public and
financial powers of government. In large measure adequate technical
procedures are yet to be developed and some that appear possible may be
economically impracticable.
It seems apparent that the amelioration of air pollution will depend on
technical research in great depth; on a carefully balanced consideration of
the economic impact of close regulation; and of the actual effect on public
health. It is likely to require massive public expenditure and to demand
more than any local community can accomplish and to depend on regional
and interstate controls.
A court should not try to do this on its own as a by-product of private
litigation and it seems manifest that the judicial establishment is neither
equipped in the limited nature of any judgment it can pronounce nor
prepared to lay down and implement an effective policy for the elimination
of air pollution. This is an area beyond the circumference of one private

510
lawsuit. It is a direct responsibility for government and should not thus be
undertaken as an incident to solving a dispute between property owners
and a single cement plant — one of many — in the Hudson River valley.
The cement making operations of defendant have been found by the
court of Special Term to have damaged the nearby properties of plaintiffs
in these two actions. That court, as it has been noted, accordingly found
defendant maintained a nuisance and this has been affirmed at the
Appellate Division. The total damage to plaintiffs’ properties is, however,
relatively small in comparison with the value of defendant’s operation and
with the consequences of the injunction which plaintiffs seek.
The ground for the denial of injunction, notwithstanding the finding
both that there is a nuisance and that plaintiffs have been damaged
substantially, is the large disparity in economic consequences of the
nuisance and of the injunction. This theory cannot, however, be sustained
without overruling a doctrine which has been consistently reaffirmed in
several leading cases in this court and which has never been disavowed
here, namely that where a nuisance has been found and where there has
been any substantial damage shown by the party complaining an injunction
will be granted.
The rule in New York has been that such a nuisance will be enjoined
although marked disparity be shown in economic consequence between
the effect of the injunction and the effect of the nuisance.
The court at Special Term also found the amount of permanent damage
attributable to each plaintiff, for the guidance of the parties in the event
both sides stipulated to the payment and acceptance of such permanent
damage as a settlement of all the controversies among the parties. The total
of permanent damages to all plaintiffs thus found was $185,000. This basis
of adjustment has not resulted in any stipulation by the parties.
This result at Special Term and at the Appellate Division is a departure
from a rule that has become settled; but to follow the rule literally in these
cases would be to close down the plant at once. This court is fully agreed
to avoid that immediately drastic remedy; the difference in view is how
best to avoid it.2
One alternative is to grant the injunction but postpone its effect to a
specified future date to give opportunity for technical advances to permit
defendant to eliminate the nuisance; another is to grant the injunction
conditioned on the payment of permanent damages to plaintiffs which
would compensate them for the total economic loss to their property
present and future caused by defendant’s operations. For reasons which
will be developed the court chooses the latter alternative.
If the injunction were to be granted unless within a short period — e.g.,

511
18 months — the nuisance be abated by improved methods, there would
be no assurance that any significant technical improvement would occur.
Moreover, techniques to eliminate dust and other annoying by-products of
cement making are unlikely to be developed by any research the defendant
can undertake within any short period, but will depend on the total
resources of the cement industry nationwide and throughout the world.
The problem is universal wherever cement is made.
For obvious reasons the rate of the research is beyond control of
defendant. If at the end of 18 months the whole industry has not found a
technical solution a court would be hard put to close down this one cement
plant if due regard be given to equitable principles. On the other hand, to
grant the injunction unless defendant pays plaintiffs such permanent
damages as may be fixed by the court seems to do justice between the
contending parties. All of the attributions of economic loss to the
properties on which plaintiffs’ complaints are based will have been
redressed.
The limitation of relief granted is a limitation only within the four
corners of these actions and does not foreclose public health or other
public agencies from seeking proper relief in a proper court. It seems
reasonable to think that the risk of being required to pay permanent
damages to injured property owners by cement plant owners would itself
be a reasonable effective spur to research for improved techniques to
minimize nuisance. The power of the court to condition on equitable
grounds the continuance of an injunction on the payment of permanent
damages seems undoubted. [P]ermanent damages are allowed where the
loss recoverable would obviously be small as compared with the cost of
removal of the nuisance.
Thus it seems fair to both sides to grant permanent damages to
plaintiffs which will terminate this private litigation. The theory of damage
is the “servitude on land” of plaintiffs imposed by defendant’s nuisance.
The judgment, by allowance of permanent damages imposing a servitude
on land, which is the basis of the actions, would preclude future recovery
by plaintiffs or their grantees. This should be placed beyond debate by a
provision of the judgment that the payment by defendant and the
acceptance by plaintiffs of permanent damages found by the court shall be
in compensation for a servitude on the land.
The orders should be reversed, without costs, and the cases remitted to
Supreme Court, Albany County to grant an injunction which shall be
vacated upon payment by defendant of such amounts of permanent
damage to the respective plaintiffs as shall for this purpose be determined
by the court.

512
MATTHEW J. JASEN, Judge (dissenting).
I see grave dangers in overruling our long-established rule of granting
an injunction where a nuisance results in substantial continuing damage. In
permitting the injunction to become inoperative upon the payment of
permanent damages, the majority is, in effect, licensing a continuing
wrong. It is the same as saying to the cement company, you may continue
to do harm to your neighbors so long as you pay a fee for it. Furthermore,
once such permanent damages are assessed and paid, the incentive to
alleviate the wrong would be eliminated, thereby continuing air pollution
of an area without abatement.
It is true that some courts have sanctioned the remedy here proposed
by the majority in a number of cases, but . . . [i]n those cases, the courts, in
denying an injunction and awarding money damages, grounded their
decision on a showing that the use to which the property was intended to
be put was primarily for the public benefit. Here, on the other hand, it is
clearly established that the cement company is creating a continuing air
pollution nuisance primarily for its own private interest with no public
benefit. This kind of inverse condemnation may not be invoked by a
private person or corporation for private gain or advantage. The promotion
of the interests of the polluting cement company has, in my opinion, no
public use or benefit. Nor is it constitutionally permissible to impose
servitude on land, without consent of the owner, by payment of permanent
damages where the continuing impairment of the land is for a private use.

Notes and Questions

1. Stage 1 and stage 2. If the defendant’s conduct was so valuable,
why did the court in Boomer even find it to be a nuisance? Atlantic
Cement’s behavior was reasonable on the social level in the sense that it
increased overall social utility, but the costs of the defendant’s activity
were not fairly distributed. The concentrated nature of the harm generated
by the defendant’s cement factory violated the individual plaintiff’s right
to security; the harm was greater than any individual should be forced to
bear for the good of society. Requiring damages but not awarding an
injunction, therefore, was consistent with a determination that the activity
was efficient — it increased social utility to allow it to go forward because
its overall benefits vastly outweighed its costs (the stage 2 nuisance
inquiry) — but that the costs of the activity were unfairly distributed (the
stage 1 nuisance inquiry) — the plaintiff’s property interests were being
unfairly sacrificed. Resorting to a damages remedy where the costs of an
injunction would be too high (relative to the benefit it would generate)

513
gives courts a way to recompense the wrong being perpetrated on the
plaintiff while allowing a socially valuable use to continue. See, e.g.,
Loughhead v. 1717 Bissonnet, L.L.C., No. 2013-26155, 2014 WL 8774060
(Tex. Dist. May 1, 2014) (finding an apartment building to be a nuisance,
but declining to enjoin its construction).
2. Responses to Boomer. After the Boomer decision, the American
Law Institute (partially) endorsed the court’s approach in a revision of the
Restatement (Second) of Torts. Section 826(b) of the Restatement (Second)
supplements the (confusing) balancing test §826(a) with a test that
provides for damages when “the harm caused by the conduct is serious and
the financial burden of compensating for this and similar harm to others
would not make the continuation of the conduct not feasible.” Does the
infeasibility of paying damages suggest that (taking into account the costs
of the defendant’s conduct for the plaintiff) the defendant’s conduct is not
cost effective? If so, why should the defendant escape paying damages if
their payment would put it out of business? What about the possibility that
the defendant’s activities generate positive externalities — benefits that
accrue to others and that are not reflected in the defendant’s balance
sheets?
3. How much of an innovation? Although injunctions are the most
common remedy for nuisance, the law in most jurisdictions is that a
plaintiff is not automatically entitled to injunctive relief just because the
defendant’s conduct constitutes a nuisance. Instead, the question whether
to grant an injunction (and the proper scope of that injunction) rests with
the sound discretion of the trial court. The court in Boomer characterized
its use of a damages remedy in that case as a dramatic innovation because
it believed that the prior law required an injunction to issue automatically
and without exception upon determining a defendant’s conduct to
constitute a nuisance. While there was at least one earlier case to that
effect in New York, the usual practice once a nuisance has been found was
(and continues to be) to balance the utilities before granting an injunction.
Courts applied a presumption in favor of granting injunctive relief to
successful plaintiffs but refused to do so where the cost of the injunction to
the defendant dramatically outweighed the value of the injunction to the
plaintiff. See Douglas Laycock, The Neglected Defense of Undue Hardship
(and the Doctrinal Train Wreck in Boomer v. Atlantic Cement), 4 J. Tort
L. 1, 7-19 (2012). Professor Laycock describes how the majority in
Boomer distorted the legal landscape in New York, confusing generations
of subsequent legal scholars. He concludes, “[T]he bottom line is that
Boomer was no innovation. The opinion could have been written as a

514
straightforward application of the undue hardship defense with only one or
at most a few exceptional cases.” Id.

§2.3 Nuisance or Trespass?

Johnson v. Paynesville Farmers Union Cooperative Oil Co.

817 N.W.2d 693 (Minn. 2012)

LORIE SKJERVEN GILDEA, Chief Justice.
This action involves alleged pesticide contamination of organic farm
fields in central Minnesota. Appellant Paynesville Farmers Union
Cooperative Oil Company (“Cooperative”) is a member owned farm
products and services provider that, among other things, applies pesticides
to farm fields. Respondents Oluf and Debra Johnson (“Johnsons”) are
organic farmers. The Johnsons claim that while the Cooperative was
spraying pesticide onto conventionally farmed fields adjacent to the
Johnsons’ fields, some pesticide drifted onto and contaminated the
Johnsons’ organic fields. The Johnsons sued the Cooperative on theories
including trespass, nuisance, and negligence per se and sought damages
and injunctive relief.
Before discussing the factual background of this case, it is helpful to
briefly summarize the organic farming regulations at issue. American
organic farming is regulated by the Organic Foods Production Act of 1990,
7 U.S.C. §§6501-6523 (2006) (“OFPA”), and the associated federal
regulations in the National Organic Program, 7 C.F.R. §205 (2012)
(“NOP”). Minnesota has adopted the OFPA and the NOP as its state
organic farming law.
Under the OFPA and the NOP regulations, a producer cannot market
its crops as “organic,” and receive the premium price paid for organic
products, unless the producer is “certified” by an organic certifying agent.
Among numerous other requirements, the NOP provides that land from
which crops are intended to be sold as organic must “[h]ave had no
prohibited substances . . . applied to it for a period of 3 years immediately
preceding harvest of the crop.” 7 C.F.R. §205.202(b).3 Under the NOP
regulations, crops may not be sold as organic if the crops are shown to
have a prohibited substance on them at levels that are greater than 5
percent of the Environmental Protection Agency’s tolerance level for that
substance. 7 C.F.R. §205.671.
In June 2007, the Johnsons filed a complaint with the Minnesota
Department of Agriculture (“MDA”), alleging that the Cooperative had

515
contaminated one of their transitional soybean fields4 through pesticide
drift. The subsequent MDA investigation verified that on June 15, 2007, a
date when winds were blowing toward the Johnsons’ fields at 9 to 21 miles
per hour, the Cooperative sprayed Status (diflufenzopyr and dicamba) and
Roundup Original (glyphosate) onto a conventional farmer’s field
immediately adjacent to one of the Johnsons’ transitional soybean fields.
The MDA informed the Johnsons that there was no tolerance for
diflufenzopyr in soybeans (organic, transitional, or conventional) and that,
pending chemical testing, the MDA would “determine if there [would] be
any harvest prohibitions” on the Johnsons’ soybeans. After receiving the
results of the chemical testing, the MDA informed the parties that test
results revealed that the chemical dicamba was present, but below
detection levels. The MDA also reported that the chemicals diflufenzopyr
and glyphosate were not present. Because only one of the three chemicals
was present based on its testing, the MDA concluded that “it can not be
proven if the detections were from drift.” And even though the testing did
not find diflufenzopyr, the MDA still required that the Johnsons plow
down a small portion of the soybeans growing in the field because of “the
presence of dicamba” and based on the “visual damage” observed to this
crop. In response to this MDA directive, the Johnsons destroyed
approximately 10 acres of their soybean crop.
The Johnsons also reported the alleged pesticide drift to their organic
certifying agent, the Organic Crop Improvement Association (OCIA), as
they were required to do under the NOP. In an August 27, 2007 letter, the
OCIA stated that there may have been chemical drift onto a transitional
soybean field and that chemical testing was being done. The Johnsons
were also told that “[i]f the analysis indicate[d] contamination,” they
would have to “take this land back to the beginning of 36-month
transition.” Based on the OCIA’s letter, and the dicamba found by the
MDA, the Johnsons took the transitional soybean field back to the
beginning of the 3-year transition process. In other words, the Johnsons
did not market soybeans harvested from this field as organic for an
additional 3 years.
On July 3, 2008, the Johnsons reported another incident of alleged
contamination to the MDA. The MDA investigator did not observe any
plant injury, but chemical testing revealed a minimal amount of glyphosate
in the Johnsons’ transitional alfalfa. The Johnsons reported another
incident of drift on August 1, 2008. The MDA “did not observe any plant
injury to the alfalfa field or plants, grass and weeds,” but chemical testing
revealed the presence, at minimal levels, of chloropyrifos. The MDA
concluded that drift from the Cooperative’s spraying caused both of the

516
positive test results. After receiving these test results, the Johnsons took
the affected alfalfa field out of organic production for an additional 3
years.
Based on the presence of pesticides in their fields, the Johnsons filed
this lawsuit against the Cooperative, alleging trespass, nuisance,
negligence per se, and battery.5 They sought damages and a permanent
injunction prohibiting the Cooperative from spraying pesticides within a
half mile of the Johnsons’ fields.
After a hearing, the district court granted the Cooperative summary
judgment on all of the Johnsons’ claims, denied the Johnsons’ motion to
amend, and vacated the temporary injunction. The district court concluded
that the Johnsons’ trespass claim failed as a matter of law, relying on the
court of appeals decision in Wendinger v. Forst Farms, Inc., 662 N.W.2d
546, 550 (Minn. App. 2003), which held that Minnesota does not
recognize trespass by particulate matter.6 The district court also concluded
that all of the Johnsons’ negligence per se and nuisance claims failed as a
matter of law because the Johnsons lacked evidence of damages. This
determination was based on the court’s conclusion that because there was
no evidence that any chemical on the Johnsons’ crops exceeded the 5
percent tolerance level in 7 C.F.R. §205.671, the Johnsons could have sold
their crops as organic and therefore the Johnsons did not prove damages.
Because the Johnsons did not have any “evidence of damages based on the
NOP regulations,” the court concluded that all of the Johnsons’ claims
must be dismissed.
The court of appeals reversed and remanded. We granted the
Cooperative’s petition for review.

I.
We turn first to the question of whether, as the district court held, the
Johnsons’ trespass claim fails as a matter of law. The Johnsons assert that
the Cooperative trespassed when it sprayed pesticide onto a neighboring
conventional field and wind carried the pesticide, as particulate matter,
onto the Johnsons’ land. The Johnsons contend “that as long as there is
damage to the land resulting from deposition of ‘particulate matter’ a
viable claim for trespass exists.” The Cooperative argues that the invasion
of particulate matter does not, as a matter of law, constitute a trespass in
Minnesota.
In Minnesota, a trespass is committed where a plaintiff has the “right
of possession” to the land at issue and there is a “wrongful and unlawful
entry upon such possession by defendant.” All Am. Foods, Inc. v. Cnty. of

517
Aitkin, 266 N.W.2d 704, 705 (Minn. 1978). Actual damages are not an
element of the tort of trespass. In the absence of actual damages, the
trespasser is liable for nominal damages. Finally, because trespass is an
intentional tort, reasonableness on the part of the defendant is not a
defense to trespass liability.
We have not specifically considered the question of whether
particulate matter can result in a trespass. The “gist of the tort” of trespass,
however, is the “intentional interference with rights of exclusive
possession.” Dan B. Dobbs, The Law of Torts §50 at 95 (2000). In other
words, the tort of trespass is committed when a person “intentionally
enters or causes direct and tangible entry upon the land in possession of
another.” Id., §50 at 95 (footnotes omitted). And the defendant’s entry
must be done “by means of some physical, tangible agency” in order to
constitute a trespass. James A. Henderson, Jr. et al., The Torts Process 386
(7th ed. 2007). Our case law is consistent with this traditional formulation
of trespass because we have recognized that a trespass can occur when a
person or tangible object enters the plaintiff’s land.
When people or tangible objects enter the plaintiff’s land without
permission, these entries disturb the landowner’s right to exclusively
possess her land. But the disruption to the landowner’s exclusive
possessory interest is not the same when the invasion is committed by an
intangible agency, such as the particulate matter at issue here. Such
invasions may interfere with the landowner’s use and enjoyment of her
land, but those invasions do not require that the landowner share
possession of her land in the way that invasions by physical objects do.
The court of appeals forged new ground in this case and extended
Minnesota trespass jurisprudence when it held that a trespass could occur
through the entry of intangible objects, such as the particulate matter at
issue here. The court looked outside Minnesota to support the holding it
reached.
In Bradley [v. Am. Smelting & Ref. Co., 709 P.2d 782 (1985)], the
Washington Supreme Court held that particulate matter deposited on the
plaintiff’s land from the defendant’s copper smelter could constitute a
trespass. 709 P.2d at 784, 790. And in Borland [v. Sanders Lead Co., 369
So. 2d 523 (Ala. 1979)], the Alabama Supreme Court upheld a trespass
claim based on the defendant’s “emission of lead particulates and
sulfoxide gases” that the plaintiffs alleged accumulated on their property.
369 So. 2d at 525-26.
[T]he expansion of the tort of trespass in cases such as Bradley and
Borland to include invasions by intangible matter potentially “subject[s]
countless persons and entities to automatic liability for trespass absent any

518
demonstrated injury.” John Larkin, Inc. [v. Marceau], 959 A.2d 551, 555
(Vt. 2008). To guard against that result, the courts in both Bradley and
Borland required that it be reasonably foreseeable that the intangible
matter “result in an invasion of plaintiff’s possessory interest,” and that the
invasion caused “substantial damages” to the plaintiff’s property. Borland,
369 So. 2d at 529; accord Bradley, 709 P.2d at 791. This formulation of
trespass, however, conflicts with our precedent defining the elements of
trespass. Under Minnesota trespass law, entry upon the land that interferes
with the landowner’s right to exclusive possession results in trespass
whether that interference was reasonably foreseeable or whether it caused
damages.
Not only is the rule from the Bradley and Borland courts inconsistent
with our trespass precedent, but the rule in those cases also blurs the line
between trespass and nuisance. Traditionally, trespasses are distinct from
nuisances: “[t]he law of nuisance deals with indirect or intangible
interference with an owner’s use and enjoyment of land, while trespass
deals with direct and tangible interferences with the right to exclusive
possession of land.” Dobbs, supra, §50 at 96. But in cases like Bradley and
Borland, the courts “call[ ] the intrusion of harmful microscopic particles”
a trespass and not a nuisance, and then “us[e] some of the techniques of
nuisance law to weigh the amount and reasonableness of the intrusion.”
Dobbs, supra, §50 at 96.
But the Johnsons argue that Bradley and Borland reflect the modern
view of trespass and urge us to likewise abandon the traditional
distinctions between trespass and nuisance when considering invasions by
particulate matter. We decline the Johnsons’ invitation to abandon the
traditional distinctions between trespass and nuisance law. Our trespass
jurisprudence recognizes the unconditional right of property owners to
exclude others through the ability to maintain an action in trespass even
when no damages are provable. The rule the Johnsons advocate, and that
the court of appeals adopted, erodes this right because it imposes on the
property owner the obligation to demonstrate that the invasion causes
some consequence. Imposing this restriction on a trespass claim is
inconsistent with our precedent that provides a remedy to a property owner
“for any trivial trespass.” Romans [v. Nadler], 14 N.W.2d 482, 486 (Minn.
1944). Moreover, it is not necessary for us to depart from our traditional
understanding of trespass because other causes of action — nuisance and
negligence — provide remedies for the type of behavior at issue in this
case.
The Johnsons’ claim is that the Cooperative’s actions have prevented
them from using their land as an organic farm, not that any action of the

519
Cooperative has prevented the Johnsons from possessing any part of their
land. The Johnsons’ claim is one for nuisance, not trespass. We therefore
hold that the district court did not err in concluding that the Johnsons’
trespass claim failed as a matter of law.

II.
Having concluded that the Johnsons’ trespass claim fails as a matter of
law, we turn next to their nuisance and negligence per se claims. The
Johnsons allege that the pesticide drift from the Cooperative’s spraying
constituted a nuisance because it caused an interference with their use and
enjoyment of their land. The Johnsons also allege that the pesticide drift
constitutes negligence per se, asserting that the Cooperative violated Minn.
Stat. §18B.07 (2010) by “direct[ing] . . . pesticide[s] onto property beyond
the boundaries of the target site,” using the pesticides in a manner
inconsistent with their labels, and endangering the Johnsons’ agricultural
products. The Johnsons seek loss of profits under both the nuisance and
negligence per se claims based on their alleged inability to market their
crops as organic under 7 C.F.R. §205.202(b). In addition, the Johnsons
claim damages for actual crop losses, inconvenience, and adverse health
effects.
The district court dismissed the Johnsons’ nuisance and negligence per
se claims because the court concluded that the Johnsons had not proven
damages. Specifically, the court concluded that the Johnsons had no
evidence of damages “from any alleged drift because there is no evidence
said drift caused [the Johnsons] to lose their organic certification and there
is no evidence that [the Johnsons] could not still sell their crops as organic
since the levels of prohibited substances were below the applicable
tolerance levels.” Based on this conclusion, the court granted the
Cooperative summary judgment and dismissed the Johnsons’ nuisance and
negligence per se claims.

A.
The Johnsons argue that they had to remove certain fields from organic
production for 3 years because pesticides were “applied to” those fields in
violation of 7 C.F.R. §205.202(b). As a result, the Johnsons claim they lost
the ability to market crops from that field as organic, and therefore lost the
opportunity to seek the premium prices commanded by organic products.
For its part, the Cooperative argues that the phrase “applied to it” in 7
C.F.R. §205.202(b), unambiguously means that the organic farmer
intentionally applied the prohibited substance to the field. Because the

520
Johnsons did not apply pesticides to the field, the Cooperative argues that
section 205.202(b) does not restrict the Johnsons’ sale of organic products.
When we read the phrase “applied to it” in 7 C.F.R. §205.202(b),
within the context of the OFPA’s focus on regulating the practices of the
producer of organic products, we conclude that this phrase unambiguously
regulates behavior by the producer. In other words, in order for products to
be sold as organic, the organic farmer must not have applied prohibited
substances to the field from which the product was harvested for a period
of 3 years preceding the harvest.
As the Johnsons read section 205.202(b), any amount of pesticide, no
matter how it came into contact with the field, would require that the field
be taken out of organic production for 3 years. [T]he OFPA and NOP
would not need a provision allowing crops with minimum levels of
pesticide on them (i.e., less than 5 percent) to be sold as organic because
such crops would necessarily have been harvested from fields ineligible
for organic production. We are not to adopt an interpretation that renders
one section of the regulatory scheme a nullity. See Markham v. Cabell,
326 U.S. 404, 409 (1945).
Having concluded that “applied to it” refers to situations where the
producer has applied prohibited substances to the field, we must consider
whether the district court correctly dismissed the Johnsons’ nuisance and
negligence per se claims based on 7 C.F.R. §205.202(b). In other words,
the question presented is whether the Johnsons created an issue for trial
that the Cooperative’s pesticide drift required the Johnsons to remove their
field from organic production due to 7 C.F.R. §205.202(b). We conclude
that they did not.
Construing the evidence in the light most favorable to the Johnsons,
their certifying agent, OCIA, directed them to take their soybean fields out
of organic production for 3 years. But any such directive was inconsistent
with the plain language of 7 C.F.R. §205.202(b). It was also inconsistent
with the OFPA because the Johnsons presented no evidence that any
residue exceeded the 5 percent tolerance level in 7 C.F.R. §205.671. The
certifying agent’s erroneous interpretation of section 205.202(b) and the
OFPA was the proximate cause of the Johnsons’ injury, but the Johnsons
cannot hold the Cooperative liable for the certifying agent’s erroneous
interpretation of the law. The Johnsons’ remedy for the certifying agent’s
error was an appeal of that determination because it was “inconsistent with
the” OFPA. 7 U.S.C. §6520(a)(2).

B.

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 Our conclusion that the district court properly dismissed the Johnsons’
negligence per se and nuisance claims based on 7 C.F.R. §205.202(b),
does not, however, end our analysis of those claims. [T]he Johnsons claim
that the MDA required them to destroy a portion of their transitional
soybeans affected by the alleged 2007 drift because of “the presence of
dicamba” on and “visual damage” to the soybeans. The Johnsons argue
that the Cooperative is liable, under nuisance and negligence per se
theories, for damages resulting from the destruction of these soybeans.
Because the district court failed to address whether there were any genuine
issues of material fact on this aspect of the Johnsons’ nuisance and
negligence per se claims, we hold that the court erred when it dismissed
these claims.
In addition, the Johnsons’ nuisance claim alleges that pesticides below
the recommended dosage can spur weed growth and that they have had to
take extra measures to control weeds in 2007 and 2008 as a result of drift
onto their fields from the Cooperative’s actions. They also contend that the
drift caused additional record-keeping and other burdens in connection
with the operation of their farm. Finally, they allege that Oluf Johnson
suffers from “cotton mouth, swollen throat and headaches” when exposed
to pesticide drift. In Highview North Apartments v. County of Ramsey, we
held that “disruption and inconvenience” caused by a nuisance are
actionable damages. 323 N.W.2d 65, 73 (Minn. 1982). The
“inconvenience” and adverse health effects the Johnsons allege are the
type of claims contemplated in Highview North Apartments, and if proven,
they may affect the Johnsons’ ability to use and enjoy their land and
thereby constitute a nuisance. See Minn. Stat. §561.01. Because the district
court failed to address whether there are any genuine issues of material
fact on this aspect of the Johnsons’ nuisance claim, we hold that the court
erred when it dismissed the nuisance claim.

Notes and Questions

Nuisance and trespass. Some harms that were traditionally not
counted as trespasses clearly involve the physical invasion of land. For
example, air pollution involves the physical invasion of land by smoke
particles, but it has usually been characterized as a nuisance rather than a
trespass. And courts have sometimes used principles drawn from nuisance
law to analyze whether an injunction is the appropriate for repeated, low-
grade trespasses. See, e.g., Casteel v. Town of Afton, 287 N.W. 245 (Iowa
1939).
Some courts have tried to distinguish trespass from nuisance by

522
arguing that a trespass must be “direct,” such as a bullet fired across land,
and that smoke particles carried by the wind constitute an “indirect”
invasion and therefore do not qualify as an intentional invasion. Other
courts have sometimes held that trespass requires invasion by physical
objects that are larger than microscopic particles. But the trend is to focus
not so much on the size of the particles as on the nature of the interest the
plaintiff is asserting. According to Prosser and Keeton,

[T]respass is an invasion of the plaintiff’s interest in the exclusive possession

of his land, while nuisance is an interference with his use and enjoyment of
it. The difference is that between walking across his lawn and establishing a
bawdy house next door; between felling a tree across his boundary line and
keeping him awake at night with the noise of a rolling mill.

Prosser & Keeton, Torts §87, at 622. In other words, the interest being
protected by trespass law is the plaintiff’s possessory interest in the land.
Nuisance concerns one owner’s use of her own land that interferes with
her neighbor’s use and enjoyment of his property. The interest being
protected is not the right to exclusive possession but instead the right to
quiet enjoyment of the land.
Under this interest-focused approach, we might conceivably
understand the same invasion of a plaintiff’s property by particles as both a
trespass and a nuisance, or as either of the two. See, e.g., Amaral v.
Cuppels, 831 N.E.2d 915 (Mass. App. Ct. 2005); H.E. Stevenson et al. v.
E.I. DuPont de Nemours, 327 F.3d 400 (5th Cir. 2003) (applying Texas
law); Gill v. LDI, 19 F. Supp. 2d 1188 (W.D. Wash. 1998); Hoery v.
United States, 64 P.3d 214 (Colo. 2003); New York v. Fermenta ASC
Corp., 630 N.Y.S.2d 884 (Sup. Ct. 1995). For example, in Bradley v.
American Smelting & Refining Co., 709 P.2d 782 (Wash. 1985), which the
court discussed in Johnson, the Washington Supreme Court allowed
plaintiffs to proceed on both trespass and nuisance claims against a factory
emitting arsenic and cadmium that fell on plaintiffs’ land. However, the
court in Bradley made two significant changes in trespass law as it applied
to microscopic particles. It held, first, that a trespass could occur only if
the particles fell to the ground and stayed there rather than dissipating
through the air. Second, the court held that liability for trespass by such
particles could be found only if plaintiffs could prove substantial damage.
The court justified this change by arguing that a “reconciliation must be
found between the interest of the many who are unaffected by the possible
poisoning and the few who may be affected.” 709 P.2d at 785. It further
explained that “[n]o useful purpose would be served by sanctioning actions

523
in trespass by every landowner within a hundred miles of a manufacturing
plant. Manufacturers would be harassed and the litigious few would cause
the escalation of costs to the detriment of the many.” Id. at 791. Accord,
Public Service Co. of Colorado v. Van Wyck, 27 P.3d 377, 390 (Colo.
2001) (“[I]n Colorado, an intangible intrusion may give rise to claim for
trespass, but only if an aggrieved party is able to prove physical damage to
the property caused by such intangible intrusion”). In light of these
modifications of traditional trespass law by the court in Bradley, what is
the benefit (if any) of characterizing a claim as a trespass by microscopic
particles rather than as a traditional nuisance claim? Other courts, like the
court in Johnson, reject the Bradley approach, holding instead that
physical invasion by dust, noise, and vibration does not constitute a
trespass, although it may well be a nuisance. See, e.g., Adams v.
Cleveland-Cliffs Iron Co., 602 N.W.2d 215 (Mich. Ct. App. 1999).

§3 LIGHT AND AIR

Fontainebleau Hotel Corp. v. Forty-Five Twenty-Five, Inc.

114 So. 2d 357 (Fla. Dist. Ct. App. 1959)

Map: 4525 & 4441 Collins Avenue,

Miami Beach, Florida

PER CURIAM.
This is an interlocutory appeal from an order temporarily enjoining the
appellants from continuing with the construction of a fourteen-story
addition to the Fontainebleau Hotel, owned and operated by the appellants.
Appellee, plaintiff below, owns the

524
 Figure 1 — Fontainebleau Hotel, photograph from the Library of
Congress (1955)

Eden Roc Hotel, which was constructed in 1955, about a year after the
Fontainebleau, and adjoins the Fontainebleau on the north. Both are luxury
hotels, facing the Atlantic Ocean. The proposed addition to the
Fontainebleau is being constructed twenty feet from its north property line,
130 feet from the mean high water mark of the Atlantic Ocean, and 76 feet
8 inches from the ocean bulkhead line. The 14-story tower will extend 160
feet above grade in height and is 416 feet long from east to west. During
the winter months, from around two o’clock in the afternoon for the
remainder of the day, the shadow of the addition will extend over the
cabana, swimming pool, and sunbathing areas of the Eden Roc, which are
located in the southern portion of its property.
In this action, plaintiff-appellee sought to enjoin the defendants-
appellants from proceeding with the construction of the addition to the
Fontainebleau (it appears to have been roughly eight stories high at the
time suit was filed), alleging that the construction would interfere with the
light and air on the beach in front of the Eden Roc and cast a shadow of
such size as to render the beach wholly unfitted for the use and enjoyment
of its guests, to the irreparable injury of the plaintiff; further, that the
construction of such addition on the north side of defendants’ property,
rather than the south side, was actuated by malice and ill will on the part of
the defendants’ president toward the plaintiff’s president; and that the
construction was in violation of a building ordinance requiring a 100-foot

525
setback from the ocean. It was also alleged that the construction would
interfere with the easements of light and air enjoyed by plaintiff and its
predecessors in title for more than twenty years and “impliedly granted by
virtue of the acts of the plaintiff’s predecessors in title, as well as under the
common law and the express recognition of such rights by virtue of
Chapter 9837, Laws of Florida 1923. . . .” Some attempt was also made to
allege an easement by implication in favor of the plaintiff’s property, as
the dominant, and against the defendants’ property, as the servient,
tenement.
The defendants’ answer denied the material allegations of the
complaint, pleaded laches and estoppel by judgment.
The chancellor heard considerable testimony on the issues made by the
complaint and the answer and, as noted, entered a temporary injunction
restraining the defendants from continuing with the construction of the
addition. His reason for so doing was stated by him, in a memorandum
opinion, as follows:

[N]o one has a right to use his property to the injury of another. In this case it
is clear from the evidence that the proposed use by the Fontainebleau will
materially damage the Eden Roc. There is evidence indicating that the
construction of the proposed annex by the Fontainebleau is malicious or
deliberate for the purpose of injuring the Eden Roc, but it is scarcely
sufficient, standing alone, to afford a basis for equitable relief.

This is indeed a novel application of the maxim sic utere tuo ut

alienum non laedas. This maxim does not mean that one must never use
his own property in such a way as to do any injury to his neighbor. It
means only that one must use his property so as not to injure the lawful
rights of another. In Reaver v. Martin Theatres, 52 So. 2d 682, 683 (Fla.
1951), under this maxim, it was stated that “it is well settled that a property
owner may put his own property to any reasonable and lawful use, so long
as he does not thereby deprive the adjoining landowner of any right of
enjoyment of his property which is recognized and protected by law, and
so long as his use is not such a one as the law will pronounce a nuisance.”
[Emphasis supplied.]
No American decision has been cited, and independent research has
revealed none, in which it has been held that — in the absence of some
contractual or statutory obligation — a landowner has a legal right to the
free flow of light and air across the adjoining land of his neighbor. Even at
common law, the landowner had no legal right, in the absence of an
easement or uninterrupted use and enjoyment for a period of 20 years, to

526
unobstructed light and air from the adjoining land. And the English
doctrine of “ancient lights” has been unanimously repudiated in this
country.
There being, then, no legal right to the free flow of light and air from
the adjoining land, it is universally held that where a structure serves a
useful and beneficial purpose, it does not give rise to a cause of action,
either for damages or for an injunction under the maxim sic utere tuo ut
alienum non laedas, even though it causes injury to another by cutting off
the light and air and interfering with the view that would otherwise be
available over adjoining land in its natural state, regardless of the fact that
the structure may have been erected partly for spite.
We see no reason for departing from this universal rule. If, as
contended on behalf of plaintiff, public policy demands that a landowner
in the Miami Beach area refrain from constructing buildings on his
premises that will cast a shadow on the adjoining premises, an amendment
of its comprehensive planning and zoning ordinance, applicable to the
public as a whole, is the means by which such purpose should be achieved.
. . . But to change the universal rule — and the custom followed in this
state since its inception — that adjoining landowners have an equal right
under the law to build to the line of their respective tracts and to such a
height as is desired by them (in the absence, of course, of building
restrictions or regulations) amounts, in our opinion, to judicial legislation.
Since it affirmatively appears that the plaintiff has not established a
cause of action against the defendants by reason of the structure here in
question, the order granting a temporary injunction should be and it is
hereby reversed with directions to dismiss the complaint.

Prah v. Maretti

321 N.W.2d 182 (Wis. 1982)

SHIRLEY S. ABRAHAMSON, Justice.
This appeal from a judgment of the circuit court for Waukesha county,
Max Raskin, circuit judge, was certified to this court by the court of
appeals, as presenting an issue of first impression, namely, whether an
owner of a solar-heated residence states a claim upon which relief can be
granted when he asserts that his neighbor’s proposed construction of a
residence (which conforms to existing deed restrictions and local
ordinances) interferes with his access to an unobstructed path for sunlight
across the neighbor’s property. This case thus involves a conflict between
one landowner (Glenn Prah, the plaintiff) interested in unobstructed access
to sunlight across adjoining property as a natural source of energy and an

527
adjoining landowner (Richard D. Maretti, the defendant) interested in the
development of his land.
According to the complaint, the plaintiff is the owner of a residence
which was constructed during the years 1978-1979. The complaint alleges
that the residence has a solar system which includes collectors on the roof
to supply energy for heat and hot water and that after the plaintiff built his
solar-heated house, the defendant purchased the lot adjacent to and
immediately to the south of the plaintiff’s lot and commenced planning
construction of a home. The complaint further states that when the plaintiff
learned of defendant’s plans to build the house he advised the defendant
that if the house were built at the proposed location, defendant’s house
would substantially and adversely affect the integrity of plaintiff’s solar
system and could cause plaintiff other damage. Nevertheless, the
defendant began construction. The complaint further alleges that the
plaintiff is entitled to “unrestricted use of the sun and its solar power” and
demands judgment for injunctive relief and damages.
Plaintiff’s home was the first residence built in the subdivision, and
although plaintiff did not build his house in the center of the lot it was built
in accordance with applicable restrictions. Plaintiff advised defendant that
if the defendant’s home were built at the proposed site it would cause a
shadowing effect on the solar collectors which would reduce the efficiency
of the system and possibly damage the system. To avoid these adverse
effects, plaintiff requested defendant to locate his home an additional
several feet away from the plaintiff’s lot line, the exact number being
disputed. Plaintiff and defendant failed to reach an agreement on the
location of defendant’s home before defendant started construction.
We consider first whether the complaint states a claim for relief based
on common law private nuisance. This state has long recognized that an
owner of land does not have an absolute or unlimited right to use the land
in a way which injures the rights of others. The rights of neighboring
landowners are relative; the uses by one must not unreasonably impair the
uses or enjoyment of the other. When one landowner’s use of his or her
property unreasonably interferes with another’s enjoyment of his or her
property, that use is said to be a private nuisance.
The private nuisance doctrine has traditionally been employed in this
state to balance the rights of landowners, and this court has recently
adopted the analysis of private nuisance set forth in the Restatement
(Second) of Torts. The Restatement defines private nuisance as “a
nontrespassory invasion of another’s interest in the private use and
enjoyment of land.” Restatement (Second) of Torts §821D (1977). The
phrase “interest in the private use and enjoyment of land” as used in

528
§821D is broadly defined to include any disturbance of the enjoyment of
property.
Although the defendant’s obstruction of the plaintiff’s access to
sunlight appears to fall within the Restatement’s broad concept of a private
nuisance as a nontrespassory invasion of another’s interest in the private
use and enjoyment of land, the defendant asserts that he has a right to
develop his property in compliance with statutes, ordinances and private
covenants without regard to the effect of such development upon the
plaintiff’s access to sunlight. In essence, the defendant is asking this court
to hold that the private nuisance doctrine is not applicable in the instant
case and that his right to develop his land is a right which is per se superior
to his neighbor’s interest in access to sunlight. This position is expressed
in the maxim “cujus est solum, ejus est usque ad coelum et ad inferos,”
that is, the owner of land owns up to the sky and down to the center of the
earth. The rights of the surface owner are, however, not unlimited.
The defendant is not completely correct in asserting that the common
law did not protect a landowner’s access to sunlight across adjoining
property. At English common law a landowner could acquire a right to
receive sunlight across adjoining land by both express agreement and
under the judge-made doctrine of “ancient lights.” Under the doctrine of
ancient lights if the landowner had received sunlight across adjoining
property for a specified period of time, the landowner was entitled to
continue to receive unobstructed access to sunlight across the adjoining
property. Under the doctrine the landowner acquired a negative
prescriptive easement and could prevent the adjoining landowner from
obstructing access to light.7
Although American courts have not been as receptive to protecting a
landowner’s access to sunlight as the English courts, American courts have
afforded some protection to a landowner’s interest in access to sunlight.
American courts honor express easements to sunlight. American courts
initially enforced the English common law doctrine of ancient lights, but
later every state which considered the doctrine repudiated it as inconsistent
with the needs of a developing country. Indeed, for just that reason this
court concluded that an easement to light and air over adjacent property
could not be created or acquired by prescription and has been unwilling to
recognize such an easement by implication.
Many jurisdictions in this country have protected a landowner from
malicious obstruction of access to light (the spite fence cases) under the
common law private nuisance doctrine. If an activity is motivated by
malice it lacks utility and the harm it causes others outweighs any social
values. . . . Thus a landowner’s interest in sunlight has been protected in

529
this country by common law private nuisance law at least in the narrow
context of the modern American rule invalidating spite fences.
This court’s reluctance in the nineteenth and early part of the twentieth
century to provide broader protection for a landowner’s access to sunlight
was premised on three policy considerations. First, the right of landowners
to use their property as they wished, as long as they did not cause physical
damage to a neighbor, was jealously guarded.
Second, sunlight was valued only for aesthetic enjoyment or as
illumination. Since artificial light could be used for illumination, loss of
sunlight was at most a personal annoyance which was given little, if any,
weight by society.
Third, society had a significant interest in not restricting or impeding
land development. This court repeatedly emphasized that in the growth
period of the nineteenth and early twentieth centuries change is to be
expected and is essential to property and that recognition of a right to
sunlight would hinder property development.
Considering these three policies, this court concluded that in the
absence of an express agreement granting access to sunlight, a
landowner’s obstruction of another’s access to sunlight was not actionable.
These three policies are no longer fully accepted or applicable. They
reflect factual circumstances and social priorities that are now obsolete.
First, society has increasingly regulated the use of land by the
landowner for the general welfare.
Second, access to sunlight has taken on a new significance in recent
years. In this case the plaintiff seeks to protect access to sunlight, not for
aesthetic reasons or as a source of illumination but as a source of energy.
Access to sunlight as an energy source is of significance both to the
landowner who invests in solar collectors and to a society which has an
interest in developing alternative sources of energy.
Third, the policy of favoring unhindered private development in an
expanding economy is no longer in harmony with the realities of our
society. The need for easy and rapid development is not as great today as it
once was, while our perception of the value of sunlight as a source of
energy has increased significantly.
Courts should not implement obsolete policies that have lost their vigor
over the course of the years. The law of private nuisance is better suited to
resolve landowners’ disputes about property development in the 1980’s
than is a rigid rule which does not recognize a landowner’s interest in
access to sunlight. As we said in Ballstadt v. Pagel, 232 N.W. 862 (Wis.
1930), “What is regarded in law as constituting a nuisance in modern times
would no doubt have been tolerated without question in former times.” We

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read State v. Deetz, 224 N.W.2d 407 (Wis. 1974), as an endorsement of the
application of common law nuisance to situations involving the conflicting
interests of landowners and as rejecting per se exclusions to the nuisance
law reasonable use doctrine.
In Deetz the court abandoned the rigid common law common enemy
rule with respect to surface water and adopted the private nuisance
reasonable use rule, namely that the landowner is subject to liability if his
or her interference with the flow of surface waters unreasonably invades a
neighbor’s interest in the use and enjoyment of land. Restatement (Second)
of Torts, §§822, 826, 829 (1977). This court concluded that the common
enemy rule which served society “well in the days of burgeoning national
expansion of the mid-nineteenth and early-twentieth centuries” should be
abandoned because it was no longer “in harmony with the realities of our
society.” Deetz, supra, 224 N.W.2d 407. We recognized in Deetz that
common law rules adapt to changing social values and conditions.
Yet the defendant would have us ignore the flexible private nuisance
law as a means of resolving the dispute between the landowners in this
case and would have us adopt an approach, already abandoned in Deetz, of
favoring the unrestricted development of land and of applying a rigid and
inflexible rule protecting his right to build on his land and disregarding any
interest of the plaintiff in the use and enjoyment of his land. This we refuse
to do.8
Private nuisance law, the law traditionally used to adjudicate conflicts
between private landowners, has the flexibility to protect both a
landowner’s right of access to sunlight and another landowner’s right to
develop land. Private nuisance law is better suited to regulate access to
sunlight in modern society and is more in harmony with legislative policy
and the prior decisions of this court than is an inflexible doctrine of non-
recognition of any interest in access to sunlight across adjoining land.
We therefore hold that private nuisance law, that is, the reasonable use
doctrine as set forth in the Restatement, is applicable to the instant case.
Recognition of a nuisance claim for unreasonable obstruction of access to
sunlight will not prevent land development or unduly hinder the use of
adjoining land. It will promote the reasonable use and enjoyment of land in
a manner suitable to the 1980’s. That obstruction of access to light might
be found to constitute a nuisance in certain circumstances does not mean
that it will be or must be found to constitute a nuisance under all
circumstances. The result in each case depends on whether the conduct
complained of is unreasonable.
Accordingly we hold that the plaintiff in this case has stated a claim
under which relief can be granted. Nonetheless we do not determine

531
whether the plaintiff in this case is entitled to relief. In order to be entitled
to relief the plaintiff must prove the elements required to establish
actionable nuisance, and the conduct of the defendant herein must be
judged by the reasonable use doctrine.
The circuit court concluded that because the defendant’s proposed
house was in conformity with zoning regulations, building codes and deed
restrictions, the defendant’s use of the land was reasonable. This court has
concluded that a landowner’s compliance with zoning laws does not
automatically bar a nuisance claim.
[O]ur examination of the record leads us to conclude that the record
does not furnish an adequate basis for the circuit court to apply the proper
legal principles on summary judgment. The application of the reasonable
use standard in nuisance cases normally requires a full exposition of all
underlying facts and circumstances. Too little is known in this case of such
matters as the extent of the harm to the plaintiff, the suitability of solar
heat in that neighborhood, the availability of remedies to the plaintiff, and
the costs to the defendant of avoiding the harm. Summary judgment is not
an appropriate procedural vehicle in this case when the circuit court must
weigh evidence which has not been presented at trial.
Because the plaintiff has stated a claim of common law private
nuisance upon which relief can be granted, the judgment of the circuit
court must be reversed.

WILLIAM CALLOW, Justice, dissenting.

The majority concludes that this court’s past reluctance to extend
protection to a landowner’s access to sunlight beyond the spite fence cases
is based on obsolete policies which have lost their vigor over the course of
the years. The three obsolete policies cited by the majority are: (1) Right of
landowners to use their property as they desire as long as no physical
damage is done to a neighbor; (2) In the past, sunlight was valued only for
aesthetic value, not a source of energy; and (3) Society has a significant
interest in not impeding land development. . . . The majority has failed to
convince me that these policies are obsolete.
I firmly believe that a landowner’s right to use his property within the
limits of ordinances, statutes, and restrictions of record where such use is
necessary to serve his legitimate needs is a fundamental precept of a free
society which this court should strive to uphold.
In the instant case, we are dealing with an action which seeks to restrict
the defendant’s private right to use his property, notwithstanding a
complete lack of notice of restriction to the defendant and the defendant’s
compliance with applicable ordinances and statutes. The plaintiff who

532
knew of the potential problem before the defendant acquired the land seeks
to impose such use restriction to accommodate his personal, private benefit
— a benefit which could have been accommodated by the plaintiff
locating his home in a different place on his property or by acquiring the
land in question when it was for sale prior to its acquisition by the
defendant.
The right of a property owner to lawful enjoyment of his property
should be vigorously protected, particularly in those cases where the
adjacent property owner could have insulated himself from the alleged
problem by acquiring the land as a defense to the potential problem or by
provident use of his own property.
The majority concludes that sunlight has not heretofore been accorded
the status of a source of energy, and consequently it has taken on a new
significance in recent years. Solar energy for home heating is at this time
sparingly used and of questionable economic value because solar
collectors are not mass produced, and consequently, they are very costly.
Their limited efficiency may explain the lack of production.
Regarding the third policy the majority apparently believes is obsolete
(that society has a significant interest in not restricting land development) .
. . , I concede the law may be tending to recognize the value of aesthetics
over increased volume development and that an individual may not use his
land in such a way as to harm the public. The instant case, however, deals
with a private benefit. [At the same time, it] is clear that community
planners are acutely aware of the present housing shortages, particularly
among those two groups with limited financial resources, the young and
the elderly. While the majority’s policy arguments may be directed to a
cause of action for public nuisance, we are presented with a private
nuisance case which I believe is distinguishable in this regard.
I would submit that any policy decisions in this area are best left for
the legislature. “What is ‘desirable’ or ‘advisable’ or ‘ought to be’ is a
question of policy, not a question of fact. What is ‘necessary’ or what is ‘in
the best interest’ is not a fact and its determination by the judiciary is an
exercise of legislative power when each involves political considerations.”
In re City of Beloit, 155 N.W.2d 633, 636 (Wis. 1968). . . . I would concur
with these observations of the trial judge: “While temptation lingers for the
court to declare by judicial fiat what is right and what should be done,
under the facts in this case, such action under our form of constitutional
government where the three branches each have their defined jurisdiction
and power, would be an intrusion of judicial egoism over legislative
passivity.”
In order for a nuisance to be actionable in the instant case, the

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defendant’s conduct must be “intentional and unreasonable.” It is
impossible for me to accept the majority’s conclusion that Mr. Maretti, in
lawfully seeking to construct his home, may be intentionally and
unreasonably interfering with the plaintiff’s access to sunlight.
I conclude that plaintiff’s solar heating system is an unusually sensitive
use. In other words, the defendant’s proposed construction of his home,
under ordinary circumstances, would not interfere with the use and
enjoyment of the usual person’s property. . . . “The plaintiff cannot, by
devoting his own land to an unusually sensitive use, such as a drive-in
motion picture theater easily affected by light, make a nuisance out of
conduct of the adjoining defendant which would otherwise be harmless.”
I further believe that the majority’s conclusion that a cause of action
exists in this case thwarts the very foundation of property law. Property
law encompasses a system of filing and notice in a place for public records
to provide prospective purchasers with any limitations on their use of the
property. Such a notice is not alleged by the plaintiff. Only as a result of
the majority’s decision did Mr. Maretti discover that a legitimate action
exists which would require him to defend the design and location of his
home against a nuisance suit, notwithstanding the fact that he located and
began to build his house within the applicable building, municipal, and
deed restrictions.
I believe the facts of the instant controversy present the classic case of
the owner of a solar collector who fails to take any action to protect his
investment. There is nothing in the record to indicate that Mr. Prah
disclosed his situation to Mr. Maretti prior to Maretti’s purchase of the lot
or attempted to secure protection for his solar collector prior to Maretti’s
submission of his building plans to the architectural committee. Such
inaction should be considered a significant factor in determining whether a
cause of action exists.
I do not believe that an adjacent lot owner should be obliged to
experience the substantial economic loss resulting from the lot being
rendered unbuildable by the contour of the land as it relates to the location
and design of the adjoining home using solar collectors.

Notes and Questions

1. Light and air. The vast majority of courts in the United States
would hold that, in the absence of an agreement to the contrary, owners
have absolute rights to develop their property without liability for any
interference with their neighbor’s interests in light and air. See also Sara C.
Bronin, Solar Rights, 89 B.U. L. Rev. 1217, 1250-1257 (2009) (describing

534
general failure of nuisance claims to permit solar power). This is often
expressed by saying that no easement for light and air exists unless a
contract creates it. One exception to this principle is that some courts will
enjoin “spite fences” — structures that are erected for the sole purpose of
maliciously harming the neighbor by interfering with her access to
sunlight. DeCecco v. Beach, 381 A.2d 543 (Conn. 1977) (applying Conn.
Gen. Stat. §52-570); Gertz v. Estes, 879 N.E.2d 617 (Ind. Ct. App. 2008)
(applying Ind. Code §§32-26-10-1 and -2). But see Maioriello v. Arlotta,
73 A.2d 374 (Pa. 1950) (holding that owners may build so as to obstruct
light, air, and view of adjoining landowners, even though the structure
serves no useful purpose and is erected solely to annoy the adjoining
owner).
Another state that has joined the Wisconsin Supreme Court in using
nuisance doctrine to adjudicate conflicts over light and air in some
instances is New Hampshire. In Tenn v. 889 Associates, Ltd., 500 A.2d
366 (N.H. 1985), for example, Justice David Souter applied nuisance law
to a claim that construction of a building would interfere with light and air
of the building next to it. Explicitly rejecting the rule in Fontainebleau,
Justice Souter wrote:

The present defendant urges us to adopt the Fontainebleau rule and thereby
to refuse any common law recognition to interests in light and air, but we
decline to do so. If we were so to limit the ability of the common law to
grow, we would in effect be rejecting one of the wise assumptions
underlying the traditional law of nuisance: that we cannot anticipate at any
one time the variety of predicaments in which protection of property interests
or redress for their violation will be justifiable. For it is just this recognition
that has led the courts to avoid rigid formulations for determining when an
interference with the use of property will be actionable, and to rest instead on
the flexible rule that actionable, private nuisance consists of an unreasonable
as well as a substantial interference with another person’s use and enjoyment
of his property. That is, because we have to anticipate that the uses of
property will change over time, we have developed a law of nuisance that
protects the use and enjoyment of property when a threatened harm to the
plaintiff owner can be said to outweigh the utility of the defendant owner’s
conduct to himself and to the community.

Id. at 370. At the same time, the court upheld the lower court’s
determination that construction of the building would not constitute a
nuisance since the plaintiff’s building would continue to receive sufficient
light characteristic of an urban area where buildings often buttress and
block the sides of adjacent structures.

535
 2. Solar shade statutes. California has passed a statute called the
Solar Shade Control Act, Cal. Pub. Res. §§25980-25986, which provides
that “[a]fter the installation of a solar collector, a person owning or in
control of another property shall not allow a tree or shrub to be placed or,
if placed, to grow on that property so as to cast a shadow greater than 10
percent of the collector absorption area upon that solar collector surface at
any one time between the hours of 10 A.M. and 2 P.M., local standard
time.” Id. §25982. The statute was amended in 2008 (after a highly
publicized controversy that resulted in the destruction of eight redwoods)
to ensure that the statute would no longer apply to trees planted prior to
installation of the solar collector. Felicity Barringer, Trees Block Solar
Panels, and a Feud Ends in Court, N.Y. Times, Apr. 7, 2008, at A-14; see
also Troy A. Rule, Airspace in a Green Economy, 59 UCLA L. Rev. 270
(2011) (advocating increased use of options and liability rules to facilitate
alternative energy while respecting owners’ interests under existing law).

Law and Economics Analysis of Nuisance

Terms:
Economists recognize different definitions of the term efficiency. An action is
Pareto efficient if it makes someone better off without making anyone worse
off. Perfectly voluntary transactions are considered Pareto efficient. Economic
analysis of law, however, often uses Kaldor-Hicks efficiency, which defines
an action as efficient if its benefits outweigh its costs, even if someone is made
worse off.

1. Externalities. Economic analysis of law seeks to identify the most

efficient rule of law, generally by evaluating the costs and benefits of
different alternatives. Traditional analysis of efficiency in nuisance cases
starts from the notion of externalities. Externalities are costs imposed on
third parties that are not taken into account in the actor’s own cost-benefit
determinations. The factory owner in Boomer, for example, harms
neighboring homeowners by causing pollution. This harm is a cost of the
factory’s economic activity; it is a loss that must be borne by society as a
consequence of operation of the factory. Yet, unless the law intervenes, the
factory’s owner will not take account of this cost in determining whether
its operations are profitable; a rationally self-interested factory will go
forward with the activity even if the net social costs of its activity
outweigh the benefits. Classical economic analysis of nuisance sought to

536
make the factory to pay for and thereby internalize the external harms that
its operation causes. By requiring the company to account to society for
the harm it caused, the factory’s private cost-benefit calculations would be
made congruent with the social cost-benefit calculation; its decisions about
the level and manner of operation will therefore promote social welfare.
2. Coase Theorem. In his famous article The Problem of Social Cost,
3 J.L. & Econ. 1 (1960), Ronald Coase criticized the argument that
property owners should necessarily be required to internalize their external
costs.
a. Joint costs. As discussed in §1, Coase observed that externalities
are reciprocal. In Boomer, for example, if the houses were not located
near the factory, there would be no problem. It therefore is not obvious
that the factory must internalize the costs it imposes. It could as easily
be said that the homeowners should internalize the costs of engaging in
a sensitive use like homeowning by compensating the factory for its
losses associated with shutting down or installing pollution control
devices. A better way to understand the situation, Coase argued, is to
consider the problem as involving joint costs that each activity imposes
on the other. The problem is to determine who should bear the burden
of avoiding it.
b. Subsequent bargains. Another crucial part of Coase’s analysis is
that parties are free to bargain around any legal allocation of
entitlements. Even if the court rules that the homeowners have the right
to an injunction ordering the factory to stop operating, the factory will
not necessarily shut down. Rather, the factory may offer the
homeowners a money payment to induce them to sell their property
right to enjoin the nuisance. If the factory values the right to pollute
more than the homeowners value the right to be free from pollution, the
factory owner will be able to offer the homeowners enough to persuade
them to forgo their right to be free from pollution. Similarly, if the
court rules that the factory operation is not a nuisance, the homeowners
may attempt to pay the factory owner to induce it not to exercise its
right to operate the factory. They will succeed if they value the right to
be free from pollution more highly than the factory owner values the
right to pollute.
If the costs of transacting are zero, then the choice of legal rules or
the allocation of the entitlement in question will arguably have no
effect on allocative efficiency. Whoever values the entitlement more
will either keep it — if they already own it — or will buy it from the
other party. This is part I of the Coase Theorem: If there are no

537
transaction costs, it does not matter which legal rule is chosen because
any legal rule will produce an efficient result.
Take the case of Fontainebleau Hotel Corp. v. Forty-Five Twenty-
Five, Inc. The legal issue is whether the Fontainebleau Hotel has a
legal liberty to build an addition onto its hotel that would cast a shadow
over the swimming pool of the Eden Roc. Either the Fontainebleau has
an entitlement to build freely, without liability to its neighbor, or the
Eden Roc has an entitlement to be free from wrongful interference with
its light and air. Assume the Fontainebleau Hotel anticipates that its
profits will rise if it builds the addition both because it can
accommodate more people and because it will increase the demand for
rooms at the Fontainebleau by decreasing the number of people willing
to take rooms at the Eden Roc. This anticipated rise in profits translates
into a $10 million increase in the market value of the Fontainebleau’s
property. At the same time, if the addition is built, the Eden Roc will
suffer a decrease of $6 million in the market value of its property.
Assuming that no third parties are affected by this decision (an
unrealistic but simplifying assumption), social wealth will be increased
by allowing the addition to be built. It will cause $10 million of benefit
and only $6 million of harm, making society better off overall by $4
million.
If the transaction costs are zero, the Fontainebleau will go ahead and
build the addition. If the court holds that the addition is a nuisance and
that the Eden Roc has the right to an injunction stopping the addition,
the parties will bargain around this result, since the Fontainebleau
stands to gain $10 million if the addition is built while the Eden Roc
will lose only $6 million. If the Fontainebleau offers the Eden Roc any
amount over $6 million, the Eden Roc will be better off accepting the
money and selling to the Fontainebleau the right to build without
liability than it would be by blocking the addition. A payment of more
than $6 million will fully compensate the Eden Roc for the losses
associated with the addition; in theory, there should be no difference
between not having the addition built and having the addition built with
a $6 million payment. Any money offered over $6 million will leave
the Eden Roc better off than before.
At the same time, so long as the Fontainebleau makes a payment
under $10 million, it will be better off building the addition while
paying the Eden Roc to induce it to give up its nuisance claim than not
going ahead with the project. The costs of paying off the Eden Roc will
be less than the benefits of constructing the addition. Thus, in the
absence of transaction costs, the parties will agree for some sum

538
between $6 million and $10 million to allow the project to go forward.
If the court holds that the addition is not a nuisance, the project will
similarly go forward. In this case, the Eden Roc would be willing to
offer the Fontainebleau up to $6 million to prevent the building of the
addition. Any amount over $6 million would be irrational; the Eden
Roc would be worse off than if it paid nothing. It would make no sense
to pay $7 million to avoid a $6 million harm. At the same time, the
Fontainebleau would not accept any payment under $10 million to give
up its right to build. Any payment under $10 million would leave it
worse off than if it built the project. Thus, in the absence of transaction
costs, the efficient allocation of entitlements is achieved no matter how
the court rules.
c. Distributive issues. Even if the choice of legal rule has no effect
on efficiency in the absence of transaction costs, it has an enormous
effect on the distribution of wealth between the parties. Efficiency
analysis may tell us whether an activity should go forward, but it is not
decisive as to who should pay for this outcome. In our example, we
have assumed that the project is wealth maximizing because it creates
benefits of $10 million and costs of only $6 million; we therefore
conclude that the project is efficient and should go forward despite the
losses it will inflict on the Eden Roc.9 But efficiency analysis does not
tell us who should bear the $6 million cost of obtaining this $10 million
benefit. The court could choose to impose the cost either on the
plaintiff Eden Roc, by denying the plaintiff any remedy, or on the
Fontainebleau, by requiring it to pay damages of $6 million to the Eden
Roc. As long as damages are calculated correctly,10 allowing the
plaintiff to receive damages, but not an injunction, will achieve the
efficient result because the project will go forward (the cost of the
damages are less than the expected profits); at the same time, such a
result will achieve the distributive goal of placing the burden on the
party that profits from the activity.
Similarly, if the numbers were reversed and the project was
inefficient, the court could choose who should bear the economic costs
of forgoing the project. Assume the benefits to the Fontainebleau are
$6 million and the costs to the Eden Roc are $10 million. In this case,
the losses outweigh the benefits and the project will decrease, rather
than increase, social wealth; it should therefore be enjoined. Granting
the plaintiff an injunction stopping the project will achieve the efficient
result. Again, efficiency analysis cannot give us a conclusive answer as
to who should pay the costs associated with the injunction. The court

539
could choose to impose the burden on the Fontainebleau by granting
the plaintiffs a simple injunction, thereby denying the Fontainebleau
the opportunity to make $6 million. Or, the court could impose the cost
on the plaintiff by granting the Eden Roc a purchased injunction,
conditioning the injunction on the Eden Roc’s compensating the
Fontainebleau for the $6 million loss the injunction imposes on it. Only
an analysis of distributive justice can tell us who should bear the cost.
d. Transaction costs. The observation that the choice of legal rules
has no effect on allocative efficiency depends on the assumption that
there are no transaction costs, or costs to the parties in reaching an
agreement. But there are always transaction costs, as Coase well
understood. The legal rule chosen by the court may therefore affect the
outcome. If the court chooses the wealth-maximizing entitlement, all
well and good from an efficiency standpoint; but if the court chooses
the inefficient entitlement, transaction costs may be so high as to
prevent the parties from correcting the mistake by a subsequent
bargain.
Suppose an agreement between the Fontainebleau and the Eden Roc
costs $5 million to reach. This sum includes the cost of conducting the
negotiations, hiring attorneys, getting financing to buy off the other
party, and bringing into the talks third parties who might be benefited
or harmed by construction of the project. If the court grants the
Fontainebleau the right to build by holding that the project is not a
nuisance, the Fontainebleau will go ahead and build, thereby achieving
the efficient result. If, however, the court rules the project a nuisance,
thereby assigning the entitlement to the Eden Roc, the project will not
go forward: the Eden Roc will not accept less than $6 million to give
up its rights to stop the project, and the cost of arranging such a deal is
$5 million. The total cost of buying the right to build is therefore $6
million plus $5 million, or $11 million. But the Fontainebleau stands to
gain only $10 million by building the addition. It will not pay $11
million to get a $10 million gain; it would be better off not building.
This result is inefficient since the benefits to society of the project are
greater than the costs. This, then, is part II of the Coase Theorem: In
the presence of transaction costs, the choice of entitlements by the
courts may have an effect on efficiency. The courts may increase
efficiency by assigning entitlements to the parties who would purchase
them in the absence of transaction costs.
There are several kinds of transaction costs.11 One of the most basic
is bargaining costs, costs incurred in finding and negotiating with

540
others. These include the time spent in negotiating and reaching
agreement, the cost of getting advice necessary to complete the
agreement (such as legal and financial advice), and the costs of
generating information necessary to determine whether to go ahead
with the deal. They may also include the cost of litigation; as part of
the bargaining process, one party may file suit as a way to pressure the
other party into reaching an agreement.
Strategic bargaining costs, including holdout and free rider
problems, may also increase the costs of agreement. Strategic
bargaining arises when each party attempts to get as much as possible
out of the other party by stalling or waiting or otherwise trying to
capture the most gains from the deal. Holdout problems arise when
one party holds out for more money on the wrongful assumption that
the other party is willing to pay more; imperfect information about the
other party’s desires may squelch a deal that would be to both parties’
advantage. Free rider problems arise when one party waits for others
to take care of the problem; a party may not bring a nuisance suit
because it wrongly assumes or hopes that others will bring the suit and
pay the costs. Free rider problems are common in fund-raising drives
by public television and radio stations; many listeners fail to make a
donation because they assume others will do so, thereby enabling the
free riders to get something for nothing. Other commonly discussed
transaction costs include administrative costs (the costs of litigation or
enforcement or even of maintaining a system of property) and agency
costs (the costs associated with hiring other people to carry out a task,
including the possibility that they may not carry out the employer’s
purposes accurately and diligently).
Transaction costs are likely to be high if the transaction involves a
large number of parties. So far, we have assumed that the Eden Roc
and the Fontainebleau are the only legal actors affected by the decision
to build the addition to the Fontainebleau. This is clearly a false
assumption. Whichever way the decision goes, there are many people
who will be affected by it, both positively and negatively. Those who
will benefit by construction of the addition may include present and
future employees and shareholders of the Fontainebleau, the city
government (if the project has the effect of increasing tourism and
therefore increasing the tax base of the city), other businesses in the
city that will provide services to the Fontainebleau and its customers,
and the families of all the persons benefited by the Fontainebleau’s
operations. Those who may be harmed by the project include the
shareholders and employees of the Eden Roc (assuming none benefits

541
from the Fontainebleau’s renewed prosperity) and their families, the
city government (if the net effect of the project is negatively affecting
tax revenues), and citizens who may lose access to part of the beach.
The cost of finding all the individuals affected by this dispute, getting
them involved in negotiations on one side or the other, and reaching
agreement are enormous.
Transaction costs can also be high when numbers are small. Focus
again on just Fontainebleau and Eden Roc. If either party wants to
reverse an entitlement awarded by the court, they each have only one
party with whom to bargain. If the court awards the entitlement to Eden
Roc, the only way for Fontainebleau to get the right to build is to buy it
from Eden Roc (and no one else). And, conversely, the only party to
whom Eden Roc can sell that entitlement (if it is so inclined) is
Fontainebleau, and no one else. Parties in this situation are said to be
locked into a bilateral monopoly.12 Although the number of people
involved in these negotiations may be small (only two), the bilateral
monopoly may generate high transaction costs that make it hard for
parties to bargain toward an efficient solution. Each party has an
incentive to try to leverage its monopoly position to extract as hard a
bargain as it can from the other. In the absence of market competition
to discipline these ambitions, the result can be paralysis.
Transaction costs may therefore prevent parties from making
mutually beneficial exchanges. Because of the prevalence of these
costs, the courts may be able to improve efficiency by paying attention
to these and other impediments to bargaining. If the court can both
identify relevant transaction costs and make fairly accurate judgments
about which party would purchase the entitlement in the absence of
these impediments to agreement, it can increase social wealth by
assigning the entitlement to the party that would purchase it in the
absence of these transaction costs.
e. Lowest cost avoider. Often the court itself lacks perfect
information concerning the wants of the parties. This is because parties
have strong incentives to misstate their true valuation of a particular
entitlement. Courts attempting to choose legal rules in a way that
promotes efficiency therefore may resort to second-best solutions. One
is to look to objective measures of value, such as the value of an
entitlement on the open market. But claimants may value the
entitlement in question more highly than the fair market value. In light
of the difficulties of answering the valuation question, a common
solution proposed by law and economics scholars is to place the burden

542
 either on the party that has access to the best information and the
greatest incentives to make a general social cost-benefit analysis or on
the party that can avoid the harm at the lowest cost (the so-called
lowest cost avoider). This is an imperfect solution because the cost of
avoiding a harm can be difficult to ascertain in advance.
Recall Calabresi and Melamed’s distinction between property rules
and liability rules, discussed above in §2.2. The concept of transaction
costs is relevant to their distinction. If a court can measure damages
caused by a behavior more accurately than it can obtain information
about who values an entitlement more highly, it can encourage the
efficient result by resorting to a liability rule (damage) remedy over a
property rule (injunction) remedy. See 85 Harv. L. Rev. 1107-1109. On
this assumption, even if the court assigns the entitlement incorrectly, a
party who values the entitlement more highly will simply pay the
damages remedy and proceed. See id. at 1120. As we have already
observed, the liability rule remedy may also have desirable distributive
consequences by forcing the party who ultimately gets the entitlement
to share the benefits with those who are harmed as a result. Of course,
courts cannot be sure that they are measuring harms accurately, and so
the possibility of inefficiency still looms large.
3. Critiques of (some kinds of) efficiency analysis. Certain common
forms of economic analysis of law have been subject to a number of
challenges. Below we will examine some of the most important objections.
a. Efficiency is a function of the initial distribution of wealth.
Much economic analysis defines value by reference to willingness and
ability to pay. This means, of course, that the preference of those who
have more wealth count more in the analysis since their ability to pay is
greater than those with less wealth. Determinations of efficiency
therefore become a function of the distribution of wealth.
Judge Richard Posner of the Seventh Circuit Court of Appeals is one
of the inventors and most influential proponents of the economic
analysis of law. Although he justifies the use of wealth maximization
as a measure of both social welfare and justice, he notes that reliance
on “willingness to pay” as a criterion of value may sometimes conflict
with achieving a result that maximizes social utility. He gives an
example of a poor person selling a wood carving in order to get money
to buy food. The presence of economic inequality, Posner concedes,
undermines the “moral foundations” of a social system oriented
narrowly toward “efficiency” when that concept is measured by
reference to willingness to pay because “the pattern of consumption

543
and production is determined by the distribution of wealth.” Richard
Posner, Economic Analysis of Law §1.2, at 15 (9th ed. 2014). Judge
Posner notes that “[i]f that distribution is unjust, the pattern of
economic activities derived from it will not have a strong claim to be
regarded as just either.” Id.
Since efficiency when measured in terms of willingness to pay is a
function of the distribution of wealth, it is incomplete as a criterion of
justice without a defense of the existing distribution of wealth. Yet
economic analysis cannot itself provide such a justification since it
determines value by willingness and ability to pay, which in turn is
determined by an initial distribution of wealth. Id. For this reason, the
initial distribution of wealth or property rights must be justified on
other grounds, such as a political theory of justice.
One response to the impact of the existing distribution on
willingness to pay is to structure our cost-benefit analysis to weigh
costs or benefits felt by the worst-off more heavily than those felt by
the best-off. Known as “prioritarianism,” see, e.g., Matthew D. Adler,
Well Being and Fair Distribution 360-367 (2012), this tipping of the
scales in favor of the worst-off could generate efficiency judgments
that diverge dramatically based on who is affected by a particular
activity. If the owners of a factory tend to be well off, and those who
live near a factory (and suffer most from its activities) tend to be worse
off, a prioritarian standard of efficiency might suggest awarding the
entitlement to be free from pollution to the neighbors, even when we
are confident that the owners of the factory are willing to pay more for
the right to pollute.
b. Offer-asking problem. Transaction cost analysis depends on the
assumption that it is possible, in most cases, to generate a single
answer to the question who values the entitlement more by asking who
is likely to end up with it after a bargaining process in the absence of
transaction costs. This analysis assumes that, in the absence of
transaction costs, the same party will end up with the entitlement no
matter who owned the entitlement at the start of the bargaining.
Whoever values the entitlement more will either keep it (if she is the
initial owner) or buy it (if she is initially the non-owner). This
prediction depends on the assumption that offer and asking prices are
unlikely to differ very much.
Many scholars argue that this assumption is unwarranted. They
suggest that, in many cases, how much a person values an entitlement
will depend on which party is given the entitlement initially. See
Duncan Kennedy, Cost-Benefit Analysis of Entitlement Problems: A

544
Critique, 33 Stan. L. Rev. 387 (1981). This is true because, for a
variety of reasons, offer prices will often be lower, and in some
situations much lower, than asking prices. In some cases, this objection
reinforces the concern about the distribution of wealth, which we have
already discussed. For example, in Boomer v. Atlantic Cement Co.,
suppose the factory is given the right to pollute. To apply transaction
cost analysis, we compare the factory’s asking price (to give up its
freedom of action) with the homeowners’ offer price (to obtain security
from infliction of the harm). The homeowners’ offer price is limited by
their wealth, including the amount of money and other assets they
currently own and the amount they would be willing and able to
borrow. This amount is likely to be low and may very well be less than
the amount of lost profits the factory owner would demand to shut
down the factory or install pollution control devices. Assume that 50
homeowners could offer the company $50,000 ($1,000 each), but the
lowest cost method of avoiding the harm by installing pollution control
devices would cost the factory $500,000. The cost of avoiding the harm
($500,000) is 10 times greater than the value of avoiding it ($50,000).
If this is the case, the efficient solution is to let the factory operate
freely.
On the other hand, suppose we initially grant the homeowners an
entitlement to be free from pollution. We then compare the
homeowners’ asking price and the factory owner’s offer price. For
purposes of simplicity, assume the cost of avoiding the harm is still
$500,000 and that the factory owner is willing and able to pay any
amount less than this to avoid the $500,000 expense. Assume also that
each of the homeowners equally opposes operation of the factory. The
most the factory owner would offer each homeowner to avoid
installing the pollution control devices is $500,000 divided by 50, or
$10,000. Although each of the homeowners would not be able to offer
the company more than $1,000 to induce it to stop polluting, $10,000
may not be acceptable as a payment for either relocating or living with
the grime, dirt, and health problems produced by the pollution. Each
homeowner’s asking price, in other words, may be higher than
$10,000.
Mark Kelman gives several examples of asking-offer divergence:

A fully rational individual, a professor at a business school, buys a bottle

of imported wine for $5. After its value increases, a wine dealer with
whom he regularly deals offers him $100 for the bottle of wine. Although
he has never purchased a bottle of wine for $100, in fact, he has never

545
 paid more than $35 for one and would not do so now, the professor drinks
the wine rather than sell it. . . . A consumer buys a new color television
and decides to keep his old black and white set for which he could realize
$50 [if he sold it]. If that second television were destroyed, he would not
pay $50 for a second television. [In a business school class, students]
were asked what they would pay to be able to see a mountain view that
had been blocked off for some time by factory smoke, and what one
would have to pay them to block off the view if it were not currently
blocked. Again, answers invariably followed the same pattern: People
would pay out a lower order magnitude of money to clear an obstructed
view than they would demand to allow the factory smoke to block it.

Mark Kelman, Consumption Theory, Production Theory, and Ideology in

the Coase Theorem, 52 S. Cal. L. Rev. 669, 678-679, 681-682 (1979). In
the wine example, the professor’s offer price would be $35 or less, but his
asking price is over $100; in the television example, the consumer’s offer
price would be nothing (he would not pay for a second television), but his
asking price is more than $50, while in the pollution example, the offer
price would be many times lower than the asking price.

Why might we see a divergence between offer and asking prices? One
reason may be practical. The homeowners in our example may, as a
subjective matter, be willing to pay a lot more than $1,000 to stop the
pollution, but their wealth or access to credit places an upper limit on the
offer they can realistically make. These same practical limitations do not
impose the same constraints on what they can demand in order to give up
the entitlement.

Another possible reason for offer-asking differences is the impact of

the initial allocation of the entitlement on the distribution of wealth.
With asking prices, the homeowners already own the entitlement to
prevent the pollution. They are therefore richer than they were when
the entitlements are reversed. If wealth has a declining marginal utility,
then making people wealthier (by granting them an entitlement) should
increase what they demand to part with it.
Second, in the context of many common land use disputes involving
large numbers of people affected by industrial activities, transaction
costs can work to drive down offer prices because of free-rider
problems, and drive up asking prices, because of hold-outs. Suppose,
for example, the Eden Roc Hotel was not a private concern but a
municipally owned beach open to the public. The harm caused by the
building of the addition to the Fontainebleau would be borne by all the

546
residents who used the public beach or otherwise benefited from its
availability. Transaction costs would certainly prevent all parties
affected by the dispute from participating in a massive negotiation.
Moreover, in estimating the value of keeping the public beach sunny to
the third parties affected by the project, the decision maker could use
either their offer prices or their asking prices. Their offer prices are
likely to be much lower than their asking prices. Because of free riders,
they are likely to offer very little money to keep the Fontainebleau
project from being built. If, however, we consider how much the
Fontainebleau would have to pay them to give up their right to have a
sunny public beach, the number is likely to be considerably higher, not
least because of the potential for individuals to hold out to try to
capture as high a payment as possible.
Another possible explanation for observed gaps between asking
prices and offers is a psychological one. We may value what we have
more than what we could have. See Richard Thaler, Toward a Positive
Theory of Consumer Choice, 1 J. Econ. Behav. & Org. 39, 44 (1980).
This phenomenon has become known as the endowment effect. One
explanation for the phenomenon is provided by prospect theory,
which asserts that people measure their well-being by reference to their
current entitlements or endowments, and are risk averse in that they
seek to avoid loss more than they seek to acquire gains of the same
magnitude. See Amos Tversky & Daniel Kahneman, Prospect Theory:
An Analysis of Decision Under Risk, 47 Econometrica 263 (1979).
Scores of experiments by economists and psychologists have found
evidence of the endowment effect. See, e.g., Colin Camerer, Individual
Decision Making, in The Handbook of Experimental Economics 587,
665-670 (John H. Kagel & Alvin E. Roth eds. 1995); Daniel
Kahneman et al., Experimental Tests of the Endowment Effect and the
Coase Theorem, 98 J. Pol. Econ. 1325 (1990). One classic experiment
involved students in an advanced undergraduate Law and Economics
course at Cornell. Half of the class was given Cornell mugs (easily
available at the campus bookstore) and the other group was given an
opportunity to buy them.

The students who were assigned mugs had a strong tendency to keep
them. Whereas the Coase Theorem would have predicted that about half
the mugs would trade (since transaction costs had been shown to be
essentially zero in the token experiments, and mugs were randomly
distributed), instead only fifteen percent of the mugs traded. And those
who were endowed with mugs asked more than twice as much to give up

547
 a mug as those who didn’t get a mug were willing to pay.

Christine Jolls, Cass R. Sunstein & Richard Thaler, A Behavioral

Approach to Law and Economics, 50 Stan. L. Rev. 1471, 1484 (1998).
The endowment effect’s deviation from the simplified behavioral
model at the heart of classical economic theory has given the
phenomenon a central place in efforts to create a field of behavioral
law and economics, an economic analysis of law that is based on more
complex, empirically grounded models of human behavior. Some
scholars have called the endowment effect “the most significant single
finding from behavioral economics for legal analysis to date.” Russell
Korobkin, The Endowment Effect and Legal Analysis, 97 Nw. U. L.
Rev. 1227, 1229-1230 (2003); Herbert Hovenkamp, The Limits of
Preference-Based Legal Policy, 89 Nw. U. L. Rev. 4, 55 (1994).
Nevertheless, the notion (central to most discussions of the endowment
effect) that, apart from wealth effects or other transaction costs, mere
ownership of an object changes people’s valuation of it remains
controversial. A number of studies have failed to identify a pure
endowment effect, leading some scholars to argue that its observation
is an artifact of flawed experimental design. See, e.g., Charles R. Plott
& Kathryn Zeiler, Exchange Asymmetries Incorrectly Interpreted as
Evidence of Endowment Theory and Prospect Theory?, 97 Am. Econ.
Rev. 1449 (2007).
Whether caused by practical constraints, wealth effects, transaction
costs, or an endowment effect, gaps between asking and offer prices
remain an important consideration for efficiency analysis of the law
based on willingness to pay. If asking prices are likely to be higher
than offer prices, we may arrive at conflicting definitions of which
allocation of entitlements is efficient or wealth maximizing. In cases
like this, efficiency analysis becomes indeterminate. We need some
other criterion to tell us which starting place is appropriate.
c. The difficulty of defining a “voluntary” exchange. Voluntary
exchanges increase social wealth by making both parties better off in
their own terms. In contrast, involuntary or coerced exchanges do not
make both parties better off; someone who is coerced may agree to an
arrangement that leaves her worse off. To apply transaction cost
analysis, it is necessary to define clearly what is and is not a voluntary
exchange. But this is not easy to do; people with differing political
views and theories of justice will disagree substantially on this
question, particularly in their attitudes toward the problem of unequal
bargaining power.

548
 We could define coercion narrowly to include only physical duress
(arm twisting) or physical threats (pressing a gun to the head); or we
could define it more broadly to include economic duress caused by
unequal bargaining power. There is no purely logical answer to this
question.
Suppose you have fallen into a deep pit filled with poisonous snakes.
I come along and observe you in the pit. I am not responsible for your
predicament and have no legal duty to help you. I offer to sell you a
ladder in exchange for half your future earnings. You agree to buy; I
agree to sell. It is a Pareto superior exchange; you are happier with
your life and half your future earnings than the alternative; I am
happier as well with this outcome. Is the contract voluntary? There is
no simple answer to this question. You obviously felt forced to agree;
you paid an awful lot for the ladder. But you also benefited
substantially by the deal. Is the contract fair? The terms are onerous for
you, but so was the alternative. We could, consistent with a regime of
freedom of contract, enforce this contract (because it was the result of
voluntary choice and was mutually beneficial) or not enforce it
(because it was the result of coerced choice and its terms are
unconscionable).
d. Efficiency has a conservative bias. Many critics of economic
analysis have suggested that it has a conservative bias, partly because it
gives greater weight to the interests of the wealthy and the large
corporations that currently wield substantial economic power. Because
value is defined by reference to willingness and ability to pay, and
because of the offer-asking problem, the analysis tends to privilege the
interests of property owners over the interests of non-owners. To the
extent that property owners are content with the fact that they own
property, the analysis is likely to lead unavoidably to outcomes that
differ only in marginal ways from current arrangements.
A second indication of a conservative bias in the analysis is its
requirement that the analyst hold everything constant but the particular
entitlement in question. The Fontainebleau analysis, for example,
assumed that both the existing distribution of wealth and all other legal
rules remained the same. This assumption is necessary to simplify the
analysis and produce an answer. If, instead of holding everything else
constant, we were to put more than one rule up for grabs at a time —
for example, by suggesting changes to the tax system, the antitrust
laws, the bankruptcy laws, or the rules about what constitutes unfair
competition — the analysis becomes much more difficult. This is
because every choice depends on the background set of legal

549
entitlements that define the market context in which the parties bargain.
It is only when we pay attention to the market and institutional
structures within which bargains take place that we can imagine
alternative ways of operating a decentralized market system. In
contrast, the method of holding everything constant but the one
entitlement in question makes consideration of alternative market
structures impossible. See Arthur Leff, Economic Analysis of Law:
Some Realism About Nominalism, 60 Va. L. Rev. 451 (1974); Lee
Anne Fennell, The Problem of Resource Access, 126 Harv. L. Rev.
1471 (2013); Kennedy, supra.
e. Commodification. A final critique comes from Professor
Margaret Jane Radin. Radin has argued that certain kinds of valued
resources should not be traded in the market or otherwise treated as if
they were commodities for sale; these interests are taken out of the
market system (partly or totally) and effectively made inalienable. For
example, we regulate safety conditions in the workplace to protect
individual workers from being killed or maimed on the job, and we will
not let people bargain away their right to a safe workplace. Protecting
workers from unreasonably dangerous conditions may benefit the
public by lowering costs, but it is also fundamentally designed to
protect individual dignity. Margaret Jane Radin, Market-Inalienability,
100 Harv. L. Rev. 1849 (1987). Some issues are simply discussed more
appropriately in nonmarket language, that is, in terms of justice and
rights rather than wealth and efficiency. For example, Calabresi and
Melamed argue that slavery may be inefficient because observing the
plight of slaves makes “sensitive” people “unhappy.” Guido Calabresi
& A. Douglas Melamed, Property Rules, Liability Rules, and
Inalienability: One View of the Cathedral, 85 Harv. L. Rev. 1089,
1111-1112 (1972). This is a pretty feeble way to condemn the
institution of slavery. Do we really want to say that the reason slavery
is bad is because it is inefficient, or would it be better to be able to say
that it is evil and an affront to the values of liberty and equality? The
language of efficiency simply cannot capture much of what we mean
when we talk about justice and fairness in social relationships. See also
Margaret Jane Radin, Residential Rent Control, 15 Phil. & Pub. Aff.
350 (1986).
Professor Jane Cohen has criticized a proposal by Judge Posner to
introduce more free market elements into the adoption process,
effectively allowing people greater freedom to buy and sell children.
Cohen imagines and describes the social context within which such
market transactions would take place. Her description leaves

550
 substantial doubt about whether Posner’s proposal would make our
society better off than before. Jane Maslow Cohen, Posnerism,
Pluralism, Pessimism, 67 B.U. L. Rev. 105 (1987). Professors Frances
Miller and Tamar Frankel have similarly argued that market theory
constitutes a wholly inappropriate model for public policy decisions
about adoption. Frances Miller & Tamar Frankel, The Inapplicability of
Market Theory to Adoptions, 67 B.U. L. Rev. 99 (1987).
Even focusing narrowly on the consequences of treating certain
goods as commodities, property and market solutions may backfire if
they change the social meaning of practices. The economist Fred
Hirsch calls this transformation of social meaning the
“commercialization effect.” Michael Sandel, What Money Can’t Buy
120 (2012) (citing Fred Hirsch, The Social Limits to Growth (1976)).

§4 WATER RIGHTS
§4.1 Diffuse Surface Water: Flooding Problems

Armstrong v. Francis Corp.

120 A.2d 4 (N.J. 1956)

Map: (Milton Lake) Lake Avenue,

Rahway, New Jersey

WILLIAM J. BRENNAN JR., J.

A small natural stream rose in Francis [Corporation’s] 42-acre tract,
which lies immediately south of Lake Avenue in Rahway. The stream
flowed in a northerly direction 1200 feet across the Francis lands through a
seven-foot box culvert under Lake Avenue and emptied into Milton Lake,
900 feet north of the avenue. It was the natural drainway for the larger 85-
acre area south of Lake Avenue which includes the Francis tract.
Francis stripped its tract and erected 186 small homes thereon in a
development known as Duke Estates, Section 2. It also built some 14
houses on an adjacent small tract known as Duke Estates, Section 1, lying
in another drainage area. It constructed a drainage system of streets,
pavements, gutters, ditches, culverts and catch basins to serve both

551
developments. The system emptied into a corrugated iron pipe laid by
Francis below the level of the natural stream bed on its lands. The pipe
followed the course of the stream bed to the box culvert under Lake
Avenue, although deviating from the course at some places. The pipe was
covered with fill on Francis’ tract and all evidence of the natural stream
there has disappeared.
The drainage of the original 85 acres was thus augmented not only by
the drainage of some 2 acres of the Duke Estates, Section 1, but also by
waters percolating into the joints of the pipe where it lay below the level of
the water table of the Francis tract. The pipe joints were expressly
designed to receive such percolating waters, and, to the extent that the
percolation lowered the level of the water table, the result was to provide a
drier terrain more suitable to housing development.
Where the stream passes north of Lake Avenue en route to Milton
Lake after leaving the box culvert it remains largely in its natural state and
forms the boundary line between the residential tracts of the plaintiffs
Armstrong and the defendants Klemp. The Klemps were made parties
defendant by Francis’ cross-claim but prevailed thereon and were allowed
the same relief as the Armstrongs. The stream passes through a 36-inch
culvert under the Klemp driveway and thence, across lands of the Union
County Park Commission, to the Lake. The Francis improvement resulted
in consequences for the Armstrongs and the Klemps fully described by
Judge Sullivan in his oral opinion as follows:

Now the stream as it emerges from the underground pipe goes under Lake
Avenue and then flows past and through the Armstrong and Klemp
properties is no longer the “babbling brook” that Mr. Klemp described. Now
there is a constant and materially increased flow in it. The stream is never
dry. The water is now discolored and evil smelling and no longer has any
fish in it. A heavy deposit of silt or muck up to eighteen inches in depth now
covers the bottom of the stream. After a heavy rainstorm the stream
undergoes a remarkable change for several hours. All of the upstream rain
water that used to be absorbed or held back is now channeled in
undiminished volume and at great speed into this stream. This causes a flash
rise or crest in the stream, with a tremendous volume of water rushing
through at an accelerated speed. As a result, the stream has flooded on
several occasions within the last year, although this was unheard of
previously. More distressing, however, is the fact that during these flash
situations the body of water moving at the speed it does tears into the banks
of the brook particularly where the bed may turn or twist. At a point even
with the plaintiff’s [Armstrong’s] house the stream makes a sharp bend. Here
the effect of the increased flow of water is most apparent since the bank on
plaintiff’s side of the stream has been eaten away to the extent of about ten

552
 feet. This erosion is now within fifteen feet of the Armstrong septic tank
system. It is difficult to say where it will stop, where the erosion will stop.
The silting has, of course, raised the bed of the stream up to eighteen inches
in places and the raising of the stream results in water action against different
areas of the bank so that the erosion problem while unpredictable is ominous.
The eating away of the banks in several places has loosened rocks or
boulders which have been rolled downstream by the force of the water.
Those stones, however, as they rolled through the Klemp culvert cracked and
broke the sides and bottom of the culvert and the water is now threatening to
undermine the entire masonry. There is no doubt but that the defendant’s
activities have caused all of the condition just related.
A matter of some concern is that defendant’s housing development
occupies only about one-half of the area which drains into this brook. At the
present time there is a forty acre undeveloped section to the south of the
defendant and it is reasonable to assume that it, too, will be improved and
built upon at some future time. Defendant’s underground trunk sewer was
built to accommodate any possible runoff from this tract. If and when that
section is developed, Armstrong and Klemp will have that much more
erosion, silting and flooding to deal with.

Terms:
Damnum absque injuria
means damage without a wrongful act. It is a harm that someone suffers that
does not give rise to a legal cause of action.

Judge Sullivan concluded that the Armstrongs and the Klemps were
plainly entitled to relief in these circumstances and “that the only sensible
and permanent solution to the problem is to pipe the rest of the brook,”
that is, from the culvert outlet at Lake Avenue the entire distance to Milton
Lake. A plan for that purpose had been prepared by Francis’ engineer and
approved by the Armstrongs and the Klemps at a time when efforts were
being made to compromise the dispute before the trial. The final judgment
orders Francis, at its expense, forthwith to proceed with and complete
within 60 days the work detailed on that plan. The Union County Park
Commission has given its formal consent to the doing of the work called
for by the plan on its lands.
The important legal question raised by the appeal is whether the
damage suffered by the Armstrongs and the Klemps is damnum absque
injuria, namely, merely the non-actionable consequences of the privileged
expulsion by Francis of waters from its tract as an incident to the
improvement thereof.

553
 The casting of surface waters from one’s own land upon the land of
another, in circumstances where the resultant material harm to the other
was foreseen or foreseeable, would appear on the face of it to be tortious
conduct, as actionable where the consequences of an unreasonable use of
the possessor’s land, as in the case of the abstraction or diversion of water
from a stream which unreasonably interferes with the use of the stream
below, and as in the case of the unreasonable use of percolating or
subterranean waters, and as in the case of artificial construction on one’s
land which unreasonably speeds the waters of a stream past one’s property
onto that of an owner below, causing harm. Yet only the courts of the
states of New Hampshire and Minnesota have expressly classified the
possessor’s liability, where imposed, for harm by the expulsion of surface
waters to be a tort liability. Those courts have evolved the “reasonable
use” rule laying down the test that each possessor is legally privileged to
make a reasonable use of his land, even though the flow of surface waters
is altered thereby and causes some harm to others, but incurs liability when
his harmful interference with the flow of surface waters is unreasonable.
Franklin v. Durgee, 51 A. 911 (N.H. 1901); Sheehan v. Flynn, 61 N.W.
462 (Minn. 1894).
All other states have treated the legal relations of the parties as a
branch of property law — that is, have done so, if we emphasize only the
language of the decisions and ignore the actual results reached. Two rules
have been evolved which, in their statement, are directly opposed, for
under one the possessor would not be liable in any case and under the
other he would be liable in every case. But an analysis of the results
reached under both rules shows that neither is anywhere strictly applied.
The first rule, purportedly applicable in our own State, stems from the
view that surface waters are the common enemy. The “common enemy”
rule emphasizes the possessor’s privilege to rid his lands of surface waters
as he will. That rule “is, in substance, that a possessor of land has an
unlimited and unrestricted legal privilege to deal with the surface water on
his land as he pleases, regardless of the harm which he may thereby cause
others.” The other rule, borrowed from the civil law of foreign nations and
called the “civil law” rule, emphasizes not the privileges of the possessor
but the duties of the possessor to other landowners who are affected by his
expulsion of surface waters from his lands. That rule is to the effect that “a
person who interferes with the natural flow of surface waters so as to cause
an invasion of another’s interests in the use and enjoyment of his land is
subject to liability to the other.”
[T]he courts here and elsewhere, in terms of results, have actually
come out at the “reasonable use” doctrine. Professor Kinyon and Mr.

554
McClure have summarized the course of the decisions as follows:

From the rationale of the common enemy rule, it would seem that a
possessor of land has an unlimited privilege to rid his land of the surface
water upon it or to alter its course by whatever means he wishes, irrespective
of the manner of doing it or the harm thereby caused to others. However, in
substantially all of the jurisdictions purportedly committed to that rule, the
courts have refused to go that far. Most of these courts have developed a
qualifying rule which is, in substance, that a possessor of land is not
privileged to discharge upon adjoining land, by artificial means, large
quantities of surface water in a concentrated flow otherwise than through
natural drainways, regardless of the means by which the surface water is
collected and discharged. The scope of this qualifying rule varies from
jurisdiction to jurisdiction, but it has been adopted in one form or another. . .
.
In jurisdictions purportedly committed to the civil law rule, one would
expect from the rationale of that rule to find that a possessor has no privilege,
under any circumstances, to interfere with the surface water on his land so as
to cause it to flow upon adjoining land in a manner or quantity substantially
different from its natural flow. An examination of the cases in these
jurisdictions, however, reveals that the courts have refused to follow the
rationale of the rule to that extent. In most of these jurisdictions the courts
have recognized that a possessor must have a privilege, under certain
circumstances, to make minor alterations in the natural flow of surface water
where necessary to the normal use and improvement of his land, even though
such alterations cause the surface water to flow upon adjoining land in a
somewhat unnatural manner. This is especially true where the possessor
disposes of the surface water by depositing it in existing natural drainways.
Consequently, the courts . . . , with variations from state to state, have held
that a possessor has a limited privilege to discharge surface water on other
lands, by artificial means in a non-natural manner. . . . Kinyon & McClure,
Interferences with Surface Waters, 24 Minn. L. Rev. 899, 916, 920, 913
(1940).

The authors conclude:

[Thus] even though the broad principle of reasonable use has not made
much headway as an articulate basis of decision, substantially all of the
jurisdictions which purport to follow the civil law or common enemy rules
have engrafted upon them numerous qualifications and exceptions which, in
actual result, produce decisions which are not as conflicting as would be
expected, and which would generally be reached under the reasonable use
rule.

555
 We therefore think it appropriate that this court declare, as we now do,
our adherence in terms to the reasonable use rule and thus accord our
expressions in cases of this character to the actual practice of our courts.
[I]t is significant of the true state of the law that the Restatement
[(Second)] of Torts §833, has adopted the reasonable use test as the rule
actually prevailing.
The rule of reasonableness has the particular virtue of flexibility. The
issue of reasonableness or unreasonableness becomes a question of fact to
be determined in each case upon a consideration of all the relevant
circumstances, including such factors as the amount of harm caused, the
foreseeability of the harm which results, the purpose or motive with which
the possessor acted, and all other relevant matter. It is, of course, true that
society has a great interest that land shall be developed for the greater
good. It is therefore properly a consideration in these cases whether the
utility of the possessor’s use of his land outweighs the gravity of the harm
which results from his alteration of the flow of surface waters. But while
today’s mass home building projects, of which the Francis development is
typical, are assuredly in the social good, no reason suggests itself why, in
justice, the economic costs incident to the expulsion of surface waters in
the transformation of the rural or semi-rural areas of our State into urban
or suburban communities should be borne in every case by adjoining
landowners rather than by those who engage in such projects for profit.
Social progress and the common well-being are in actuality better served
by a just and right balancing of the competing interests according to the
general principles of fairness and common sense which attend the
application of the rule of reason.

Notes and Questions

1. Diffuse surface water. Diffuse surface water is “drainage water
from rain, melting snow, and springs that runs over the surface of the earth
. . . but does not amount to a stream.” William B. Stoebuck & Dale A.
Whitman, The Law of Property §7.6, at 430 (3d ed. 2000). Such water may
coalesce into a pool or marsh but is not stable enough to constitute a lake
or stream. Surface water is generally considered a nuisance, and most
property owners are anxious to get rid of it.
The power to withdraw surface water is subject to substantial
regulation, even if no other owners are harmed through flooding or
discharge of water onto their lands. Federal and state environmental laws
regulate drainage of “wetlands” and the ability of owners to fill in such
lands for development purposes. The federal Clean Water Act, 33 U.S.C.

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§1344, for example, has been interpreted to place limits on the ability of
owners to drain and fill in wetlands for development purposes, and many
states regulate such development to protect the environment. See, e.g.,
Massachusetts Water Management Act, Mass. Gen. Laws ch. 21G, §§1-19.
Disputes arise when property owners attempt to drain surface water off
their property through pipes and drainage systems that may cause flooding
or other water damage to neighboring property. Damage may also occur
because development of property naturally changes drainage patterns and
may cause increased runoff of surface water, even if no drainage system is
installed. Property owners on lower land object to the intentional or
unintentional flooding of their property by development elsewhere. As
Justice Brennan explains, state courts have followed three different rules.
a. Common enemy rule. The common enemy doctrine allows
property owners the absolute freedom to develop their property without
liability for any resulting damage to neighbors caused by increased
runoff of surface water. This doctrine adopts the damnum absque
injuria solution to land use conflicts: The defendant is privileged to
develop its property and to expel unwanted surface water without
liability for any resultant damage to the neighbors’ property. This rule
may be the law in about 17 states. Stoebuck & Whitman, supra, at 431.
Most courts adopting this rule have substantially modified it. Some
impose liability for negligence, allowing damages for harm caused by
conduct that foreseeably causes unreasonable harm to neighbors. Many
impose liability on the developing property owner if she installs pipes
or drainage devices designed to collect and expel water in greater
quantity or with greater force than would naturally occur or in a
different direction than the natural drainage patterns of the land. See
Haith v. Atchison County, 793 S.W.2d 151 (Mo. Ct. App. 1990);
Halverson v. Skagit County, 983 P.2d 643 (Wash. 1999). Cf. Lucas v.
Rawl Family Limited Partnership, 598 S.E.2d 712 (S.C. 2004)
(common enemy rule unless defendant’s actions constitute a nuisance
per se).
b. Natural flow rule. At the other extreme is the natural flow or
civil law doctrine, which grants the injured property owner absolute
security against injury from flooding caused by a neighboring property
owner’s development of her property. Owners are entitled to discharge
water through natural drainage pathways, but any development that
alters the amount, force of flow, or direction of the natural drainage
will result in liability for any resulting harm to neighboring land. This
doctrine adopts the strict liability or veto rights solution to land use
conflicts; the injured plaintiff has the legal right to stop the defendant’s

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 activity and to recover damages for harm already inflicted. See S.D.
Codified Laws §46A-10A-70; Powers v. Judd, 553 A.2d 139 (Vt.
1988).
Until recently, the natural flow rule was the law in roughly half the
states. Today it persists in only a few states. The natural flow doctrine
might inhibit land development because most development will change
drainage patterns. To encourage development, most states following
this rule have adopted exceptions to allow minor increases in the
natural flow of surface water. Other states limit application of the
natural flow doctrine to rural land and apply the reasonable use test to
urban land. See First Lady, LLC v. JMF Properties, LLC, 681 N.W.2d
94 (S.D. 2004) (natural flow applicable except in urban settings, where
reasonable use test applies); Stoebuck & Whitman, supra, at 432. Of
course, development is possible even with strict liability on developers
for harm caused by their development; they simply must compensate
those property owners harmed by their development. If the
development is profitable enough, the project may well go forward
despite liability for resulting damage or for investment to prevent
flooding.
c. Reasonable use test. The New Jersey Supreme Court in
Armstrong adopted a middle position, the reasonable use test. This rule
requires the decision maker to determine in specific cases whether the
defendant’s conduct caused unreasonable interference with the
neighbors’ use of their land. This determination involves balancing the
social benefit derived from development of defendant’s property, the
availability of cost-effective means to avoid or mitigate the harm, and
the gravity of the harm to plaintiff’s property. Substantial harm to
neighboring property is likely to be found to be unreasonable, even if
the value of defendant’s conduct far outweighs the value of the
plaintiff’s property. It is a separate question whether the plaintiff will
be limited to damages for the harm or may get an injunction stopping
the harmful development from occurring. This test has rapidly gained
adherents and is now the majority rule. See, e.g., Locklin v. City of
Lafayette, 867 P.2d 724 (Cal. 1994); Westland Skating Center v. Gus
Machado Buick, Inc., 542 So. 2d 959 (Fla. 1989); Heins Implement Co.
v. Missouri Highway & Transportation Commission, 859 S.W.2d 681
(Mo. 1993).
2. Policy considerations. What reasons did the court give in
Armstrong for adopting the reasonable use test? Are you persuaded? What
are the disadvantages of the reasonable use test? What arguments could

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you make that the common enemy rule is preferable? What arguments
could you make that the natural flow rule is better than both of the other
rules?

Policy Arguments and Counterarguments

Justice Brennan appealed to a number of policy considerations in his
opinion in Armstrong. Lawyers appeal to policy arguments to persuade the
court to adopt a rule of law that favors their client’s interests. It is essential
for you to understand and master these arguments so that you can become
an effective advocate for a client on either side of a dispute. Policy
arguments appeal to values that are widely shared. However, they also
demonstrate that many values we hold may conflict. The fact that it is
almost always possible to generate plausible, conventional legal arguments
on both sides of a case in which both parties have intuitively attractive
claims does not mean that it is impossible to resolve legal disputes. It
simply means that decision makers must accommodate these conflicting
moral impulses to make considered judgments about the relative strength
of competing claims in particular social contexts.
This compilation of arguments is not meant to be exclusive. You will
see these arguments and others in legal analysis in both judicial opinions
and legal scholarship. You will invent or construct new arguments
yourself.

Rights: Freedom of Action versus Security

1. Justice in social relationships. Rights arguments appeal to fairness
or justice in social relationships. Those relationships sometimes involve
conflicting interests, and it is the job of both courts and legislatures to take
those interests into account, accommodating them when possible and
choosing between them when necessary. Justice Shirley Abrahamson of
the Wisconsin Supreme Court explains that the “rights of neighboring
landowners are relative; the uses of one must not unreasonably impair the
uses or enjoyment of the other.” Prah v. Maretti, 321 N.W.2d 182, 187
(Wis. 1982). Although landowners are free to use their property as they
wish, they do “not have an absolute or unlimited right to use the land in a
way that injures the rights of others.” Id.
2. Rights as freedom of action. On one hand, landowners may claim
the “right . . . to use their property as they wish[],” or the “right to develop
[their] property . . . without regard to the effect of such development upon
[others].” Id. at 189, 188. As Justice William Callow, also a member of the
Wisconsin Supreme Court, stated, “I firmly believe that a landowner’s

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right to use his property within the limits of ordinances, statutes, and
restrictions of record where such use is necessary to serve his legitimate
needs is a fundamental precept of a free society. . . .” Id. at 194 (Callow, J.,
dissenting). We can refer to the right to control the use of one’s property as
a right of freedom of action. For example, the defendant in Armstrong
claimed a right to develop its property without having to take into account
the possibility of increased surface flooding on neighboring property. To
require the developer to foresee and prevent all damage from surface water
drainage to other property or to compensate for any losses caused by
development would arguably interfere too much with the developer’s
freedom to develop its own property.
3. Rights as security. The converse of the right to use one’s property
is the right to have one’s property protected from harm. Justice
Abrahamson explains that property holders have a right to be protected
from land use by a neighbor who “unreasonably interferes with another’s
enjoyment of his or her property. . . .” Id. at 187. The freedom to use
property is limited to the extent necessary to protect other property
holders’ rights of security. Similarly, Justice Brennan argues in Armstrong
that while development is “in the social good, no reason suggests itself
why, in justice, the economic costs incident [to development] should be
borne in every case by adjoining landowners rather than by those who
engage in such projects for profit.” 120 A.2d at 10.
4. Value judgments. Each case in this chapter raises the question
where to draw the line between one possessor’s right to use her property
freely and another possessor’s right to security. The best solution may be
one that protects the legitimate interests of both parties to some extent. The
issue requires careful reflection on the social context in which the dispute
arises and value judgments about the merits of the competing claims.
These judgments include determining whether the interests asserted are
legitimate, just claims and deciding which should prevail when conflict
between legitimate claims cannot be avoided.

Social Utility: Competition versus Secure Investment

1. Promoting the general welfare by enacting appropriate
incentives. Social utility arguments appeal to the goal of generating rules
of law that promote socially desirable conduct and deter socially harmful
conduct. Most conduct has both beneficial and harmful effects. When two
legitimate activities conflict, it becomes necessary to choose which activity
should prevail. Legal rules may authorize or even encourage particular
kinds of land use by declaring that use privileged, freeing the possessor to

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engage in the activity without fear of liability to others. The rules in force
also may discourage or prohibit other kinds of land use by granting those
injured by the activity the right to obtain damages or an injunction to limit
or even terminate the activity.
Social utility arguments have two components. First, they assert that
particular legal rules create specified incentives that encourage or
discourage certain kinds of behavior. Second, they evaluate that behavior
by asserting that a particular rule is better than the alternatives either
because it promotes socially desirable conduct — behavior that has greater
social benefits than social costs — or because it discourages socially
harmful conduct — an activity whose costs outweigh its benefits.
2. Promoting competition. Lawyers often argue that social welfare is
maximized when the government deregulates economic activity by freeing
property holders to develop their property as they see fit. Justice William
Callow argued that “society has a significant interest in not restricting land
development.” 321 N.W.2d at 194 (Callow, J., dissenting). Rules
governing land use should be chosen in a way that promotes “land
improvement and development” by protecting landowners from ruinous
liability. Id. at 195. Shielding property holders from liability encourages
investment in socially beneficial economic activities. Every use of land has
potential effects on neighbors and the community as a whole, some
positive and some negative. For example, building a house or factory may
increase traffic and congestion in an area or block a beautiful view;
requiring the developer to compensate those who suffer these negative
effects may stifle desirable economic development.
3. Protecting the security of investment. The converse argument is
that no one will invest to develop property if the investment is not secure.
The basis of the institution of property is to provide security for justified
expectations. Why take the risk of building a house if your neighbor is free
to flood your property and destroy the value of your investment? Providing
this kind of security requires legal rules that give developers incentives to
use their property in ways that minimize the harm to other property
owners. Development generally should be encouraged, but not to the
extent that its harmful effects outweigh its benefits. As Justice
Abrahamson noted in Prah, “unrestricted development of land” may cause
more harm than good. 321 N.W.2d at 190. The goal should be to promote
only “reasonable” development (whose social benefits outweigh its social
costs) and to discourage “unreasonable” development. Id. at 191.
Land development benefits society, but it also may negatively affect
neighboring property. If the developer does not have to pay for these

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negative effects, a divergence arises between the private costs of the
project (the costs of building the homes) and the total social costs of the
project (the costs to the developer of building the homes plus the external
harmful effects on neighbors). Here the private benefits of the project will
outweigh its private costs, even though the total social costs of the project
may be higher than its total social benefits. Requiring the developer to
compensate those burdened by the development induces the developer to
take the external costs into account or to internalize them. By bringing
private costs in line with social costs, the rules in force can encourage
activity whose social benefits outweigh its social costs and discourage
activity whose total social costs outweigh its social benefits.13
4. Balancing interests. Assessing social utility arguments requires a
judgment about how people will actually respond to alternative legal rules;
it also involves predicting and evaluating the relative costs and benefits of
alternative legal rules. This is often expressed in judicial opinions by
stating that it is necessary to “balance the interests” of the parties to
determine which rule of law should be adopted.

Formal Realizability or Administrability: Rigid Rules versus Flexible

Standards
1. Predictability versus justice in the individual case. While rights
and social utility considerations appeal to the substantive justice or
wisdom of legal rules, formal considerations concern the manner in which
rules are expressed and implemented.
2. Rules. Legal rules are sometimes defined in a way that allows
mechanical application. For example, the rigid rule allowing 18-year olds
to vote cleanly answers the question whether a 17-year old may vote —
the answer is no. No need for interpretation or judgment arises. Duncan
Kennedy notes that “the two great social virtues of formally realizable
rules, as opposed to standards or principles, are the restraint of official
arbitrariness and certainty.” Duncan Kennedy, Form and Substance in
Private Law Adjudication, 89 Harv. L. Rev. 1687, 1688 (1976). Rules
offer certainty or predictability because each citizen knows her rights and
obligations. The rules also control arbitrary judicial discretion, with the
propitious result that like cases are treated alike and judges are prevented
from deciding cases by reference to impermissible and perhaps
unconscious biases. “[I]f private actors can know in advance the incidence
of official intervention, they will adjust their activities in advance to take
account of them. From the point of view of the state, this increases the

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likelihood that private activity will follow a desired pattern. From the point
of view of the citizenry, it removes the inhibiting effect on action that
occurs when one’s gains are subject to sporadic legal catastrophe.” Id. at
1688-1689.
Rigid rules, do, however, have distinct disadvantages. By definition,
they require particular results, even if those results seem unfair under the
circumstances. An 18-year-old-voter rule is both over- and underinclusive.
Some persons younger than 18 are mature enough to vote but are not
allowed to do so; some persons older than 18 are not mature enough to
vote but are allowed to do so. “From the point of view of the purpose of
the rules, this combined over- and underinclusiveness amounts not just to
licensing but to requiring official arbitrariness. If we adopt the rule, it is
because of a judgment that this kind of arbitrariness is less serious than the
arbitrariness and uncertainty that would result from empowering the
official to apply [a standard] directly to the facts of each case.” Id. at 1689.
3. Standards. In contrast to rigid rules, legal doctrines are sometimes
flexible. Such doctrines take the form of standards or principles.
Sometimes standards “refer directly to one of the substantive objectives of
the legal order, such as good faith, due care, fairness, unconscionability,
unjust enrichment, and reasonableness.” Id. at 1688. Other times, standards
take the form of lists of “factors” that are to be considered in adjudicating
a case. Flexible standards have the benefit of obtaining justice in the
individual case by allowing the decision maker to take account of all
relevant circumstances. Because they cannot be mechanically applied,
however, they may offer less predictability to citizens or guidance to
judges and juries in adjudicating cases.
4. Formal realizability and social utility. Kennedy notes that the
choice between rules and standards is affected by the substantive goal of
developing rules that have desirable social effects. If rules are more
predictable than standards, they may promote social welfare because they
enable people to plan and because they induce actors to look out for their
own interests knowing when the law will, and will not, protect them.
However, because of their rigidity, rules are almost certain to be either
over- or underinclusive, or both. Using rules means that “sometimes
perfectly innocent behavior will be punished, and that sometimes plainly
guilty behavior will escape sanction. These costs of mechanical over- and
underinclusion are the price of avoiding the potential arbitrariness and
uncertainty of a standard.” Id. at 1695.
Standards may therefore sometimes promote social welfare better than
rules because the very uncertainty of how the law will apply to one’s

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actions will discourage socially undesirable conduct. Actors will imagine
whether they can justify their actions to a jury, and this worry may deter
them from engaging in socially harmful conduct. Rules, in contrast, “allow
the proverbial ‘bad man’ to ‘walk the line,’ that is, to take conscious
advantage of underinclusion to perpetuate [wrongs] with impunity.” Id. at
1696. Conversely, confidence that a jury of one’s peers would find one’s
conduct reasonable would induce the actor to go forward, when a rigid rule
might deter such socially valuable conduct.
A standard counterargument in favor of rules is that rules are indeed
more predictable than standards, and the benefits achieved by
predictability far outweigh any loss to social welfare due to the
imprecision of rules. A standard response to that argument is that it is not
at all clear that rules are more predictable than standards. After all,
standards become more predictable over time as their application is
elaborated through case law. And rules cannot be mechanically applied
because they do not determine the scope of their own application. The
common law system works by distinguishing cases. A rule that grants
husbands the right to inherit the family home upon death of their wives is
not likely to be applied if the husband murders his wife. Owners have the
right to exclude non-owners from their property, but restaurants cannot
exclude people based on their race. Because we must determine the fact
situations to which rules apply, it cannot be the case that their application
is purely mechanical. Thus, the advantages of rules over standards in terms
of predictability may well be overstated.

Judicial Role and Institutional Competence

Judicial role and institutional competence arguments are concerned
with the proper spheres of authority of legal institutions and the proper
relations among separate branches of government in the legal system.
Arguments about the spheres of authority of different governmental actors
revolve around the question of which government officials may
appropriately modernize or change existing rules of law or patterns of
social practice.
Judicial role arguments address the following questions: What is the
proper role of the courts as lawmakers? What is the proper division of
lawmaking authority between the courts and the legislature? What is the
proper way for courts to interpret and implement legislative enactments?
These “judicial role” arguments typically focus on the democratic
legitimacy of legislatures and the relative illegitimacy of courts,
particularly unelected federal courts. Arguments about the proper method

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of statutory interpretation, judicial activism, and judicial restraint are
usually rooted in assumptions or arguments about the proper judicial role.
Institutional competence arguments rely on stylized descriptions of
how courts (or legislatures or administrative agencies) go about making
decisions, and how those processes might offer particular advantages or
disadvantages when resolving specific sorts of questions. For example,
lawyers will often observe that courts are more passive decision makers
than legislatures. They must wait for cases to come to them and they must
accept the information that litigants (with varying resources and different
quality of representation) bring to them. These limitations appear to
restrict the competence of judges to craft broad rules or administer
remedies that will require long-term supervision. On the other hand,
legislatures and administrative agencies may be subject to lobbying and
capture by interest groups with the resources to involve themselves in the
lawmaking or rulemaking process. Somewhat differently, they may be
particularly vulnerable to political pressure to reach decisions that are
likely to appeal to majorities at the expense of minorities. The structured
formality of litigation, someone might argue, makes courts more resistant
to each of these sorts of pressures. Our point here is not to endorse the
accuracy of any of these empirical claims, but just to introduce you to this
style of argument.

Problem
Assume that the defendant in Armstrong advocated the common
enemy rule, while the plaintiff advocated the reasonable use test. Assume
also that, based on earlier court decisions, the jurisdiction had previously
applied the common enemy rule.
1. Construct defendant’s arguments in favor of the common enemy
rule based on (a) rights, (b) social utility, (c) formal realizability, and (d)
institutional role.
2. Construct plaintiff’s arguments in favor of the reasonable use test
based on (a) rights, (b) social utility, (c) formal realizability, and (d)
institutional role.

§4.2 Ownership of Water

See Chapter 7, §8.2, at pages ♦♦♦-♦♦♦.

§5 SUPPORT RIGHTS

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 Landowners own both the surface and the earth beneath the surface
unless they have sold the subsurface to others in the form of mineral
rights.14 The subsurface is needed to support both the surface of the land
and structures built on it. Excavation or construction on a particular parcel
may have the unwanted effect of undermining the support for neighboring
land. For example, if an owner excavates all the way up to the property
line, the neighboring land may be insufficiently strong to stand up by
itself; some of it may fall into the hole created by the excavation. The
excavation has undermined the lateral support for the neighboring land
by taking away the land along the side of the neighbor’s subsurface that
held it up. Alternatively, an owner may excavate and dig a well to draw
water from underneath his own land. Since groundwater beneath the
surface is diffused throughout it, the withdrawal of water may draw some
water from beneath neighboring property. If enough water is withdrawn,
the neighbor’s subsurface may collapse, undermining support for the
surface from underneath and depriving the neighbor of subjacent support.
The materials in this section address the rules governing conflicts between
neighbors whose activities undermine support for land and structures on it.

§5.1 Lateral Support

Noone v. Price

298 S.E.2d 218 (W. Va. 1982)

Map: Glen Ferris, West Virginia

RICHARD NEELY, Justice.

In 1960 the plaintiffs below, and appellants in this Court, Mr. and Mrs.
William H. Noone, bought a house located on the side of a mountain in
Glen Ferris, West Virginia. This house had been constructed in 1928 or
1929 by Union Carbide, and in 1964, four years after plaintiffs purchased
the house, plaintiffs became aware that the wall under their front porch
was giving way and that the living room plaster had cracked.
The defendant below, appellee in this Court, Mrs. Marion T. Price,
lived directly below the plaintiffs at the foot of the hill in a house that was

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built in 1912. Sometime between 1912 and 1919 a wall of stone and
concrete was constructed along the side of the hill, ten to twelve feet
behind the defendant’s house. This wall was a hundred to a hundred and
twenty-five feet long, approximately four feet high, and of varying degrees
of thickness. The wall lay entirely on the defendant’s property, and was
approximately ten to twelve feet from the property line that divided the
defendant’s property from the plaintiffs’ property. The defendant
purchased her house in 1955 and lived there until 1972, when she sold the
property. Before the defendant’s purchase, the wall had fallen into
disrepair.
When the plaintiffs discovered that their house was slipping down the
hill, they complained to the defendant that their problem was the result of
deterioration in the defendant’s retaining wall. The defendant did nothing
to repair the wall and the plaintiffs repaired the damage to their house at a
cost of approximately $6,000.
The action before us now was filed in 1968 for damages of $50,000 for
failure of the defendant to provide lateral support for the plaintiffs’ land,
and her negligent failure to provide lateral support for their house.
Plaintiffs alleged that the wall was constructed to provide support to the
slope upon which their house was built, and that the disrepair and collapse
of the wall caused the slipping and eventual damage to their property.
The defendant denied that the wall on her property provided support to
the slope, or that the condition of her wall caused the slipping and damage
to the plaintiffs’ property. In addition, the defendant asserted that the
plaintiffs were negligent in failing to take reasonable precautions to protect
their own property and were estopped from suing her because the wall on
her property was erected by her predecessor in title and the plaintiffs had
purchased their property with knowledge of the wall’s deteriorating
condition.

Terms:
Ex jure naturae means “by natural law.” This term described rights that were
thought to inhere in ownership of land and did not have to be obtained by a
separate bargain and contract with one’s neighbor.

This case provides an opportunity that we have not had for many years
to address the obligations of adjoining landowners to provide lateral
support to each other’s land. Support is lateral when the supported and

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supporting lands are divided by a vertical plane. The withdrawal of lateral
support may subject the landowner withdrawing the support to strict
liability or to liability for negligence. We have recognized both forms of
liability in Walker v. Strosnider, 67 S.E. 1087 (W. Va. 1910) and this case,
remarkably enough, is still in harmony with the modern weight of
authority as articulated in the Restatement (Second) of Torts.
As a general rule, “[a] landowner is entitled, ex jure naturae, to lateral
support in the adjacent land for his soil.” Point 2, syllabus, McCabe v. City
of Parkersburg, 79 S.E.2d 87 (W. Va. 1953). Therefore, as we said in
syllabus point 2 of Walker, supra:

An excavation, made by an adjacent owner, so as to take away the lateral

support, afforded to his neighbor’s ground, by the earth so removed, and
cause it, of its own weight, to fall, slide or break away, makes the former
liable for the injury, no matter how carefully he may have excavated. Such
right of support is a property right and absolute.

An adjacent landowner is strictly liable for acts of commission and

omission on his part that result in the withdrawal of lateral support to his
neighbor’s property. This strict liability, however, is limited to land in its
natural state; there is no obligation to support the added weight of
buildings or other structures that land cannot naturally support. However,
the majority of American jurisdictions hold that if land in its natural state
would be capable of supporting the weight of a building or other structure,
and such building or other structure is damaged because of the subsidence
of the land itself, then the owner of the land on which the building or
structure is constructed can recover damages for both the injury to his land
and the injury to his building or structure. The West Virginia cases are
largely consistent with this position, although none has expressly so held.
The converse of the preceding rule is also the law: where an adjacent
landowner provides sufficient support to sustain the weight of land in its
natural state, but the land slips as a direct result of the additional weight of
a building or other structure, then in the absence of negligence on the part
of the adjoining landowner, there is no cause of action against such
adjoining landowner for damage either to the land, the building, or other
structure.
The issue in the case before us concerns the proper application of the
strict liability rule. The circuit court improperly awarded summary
judgment because the plaintiffs should have been allowed to prove that
their land was sufficiently strong in its natural state to support the weight
of their house, and that their house was damaged as a result of a chain

568
reaction that began when the land in its natural state, toward the bottom of
the hill, slipped as a result of the withdrawal of lateral support occasioned
by the deterioration of the retaining wall, causing, in turn, successive parts
of the hillside to subside until the ripple effect reached the foundation of
the plaintiffs’ house.
The cases recognize that lateral support sufficient to hold land in its
natural state may be insufficient to support the additional weight of a
building or other structure. If, therefore, as a result of the additional weight
of a building or other structure, so much strain is placed upon existing
natural or artificial lateral support that the support will no longer hold, then
in the absence of negligence, there is no liability whatsoever on the part of
an adjoining landowner. In the case before us, this means that if the weight
of the plaintiffs’ house placed so much pressure on the soil that the house
itself caused the subsidence, and the land would not have subsided without
the weight of the house, then the plaintiffs cannot recover.

II
A theoretical problem that presents itself in all of these cases is the
extent to which the obligation of support runs with the land. The weight of
authority appears to be that where an actor, whether he be an owner,
possessor, lessee, or third-party stranger, removes necessary support he is
liable, and an owner cannot avoid this liability by transferring the land to
another. Nevertheless, when an actor who removes natural lateral support
substitutes artificial support to replace it, such as a retaining wall, the wall
then becomes an incident to and a burden on the land upon which it is
constructed, and subsequent owners and possessors have an obligation to
maintain it.
In the case sub judice, the plaintiffs’ land had no buildings erected on it
at the time the defendant’s predecessor in title built the retaining wall on
his property; therefore, he needed only to erect a retaining wall sufficient
to provide support for their soil. He was not required to furnish a wall
sufficient to support any structure which they might erect upon their
property. The defendant, as his successor, merely had the obligation to
maintain the wall to support the plaintiffs’ land in its natural condition.
Defendant was not required to strengthen the wall to the extent that it
would provide support for the weight of plaintiffs’ buildings.

III
Since the pleadings in the case before us make reference to negligence,
it is appropriate here to address the scope of a negligence theory. In

569
general, it has been held that while an adjoining landowner has no
obligation to support the buildings and other structures on his neighbor’s
land, nonetheless, if those structures are actually being supported, a
neighbor who withdraws such support must do it in a non-negligent way.
In an action predicated on strict liability for removing support for the land
in its natural state, the kind of lateral support withdrawn is material, but
the quality of the actor’s conduct is immaterial; however, in a proceeding
based upon negligence, the kind of lateral support withdrawn is
immaterial, and the quality of the actor’s conduct is material. Comment e,
Restatement (Second) of Torts §819 succinctly explains the nature of
liability for negligence.

The owner of land may be unreasonable in withdrawing lateral support

needed by his neighbor for artificial conditions on the neighbor’s land in
either of two respects. First, he may make an unnecessary excavation,
believing correctly that it will cause his neighbor’s land to subside because of
the pressure of artificial structures on the neighbor’s land. If his conduct is
unreasonable either in the digging or in the intentional failure to warn his
neighbor of it, he is subject to liability to the neighbor for the harm caused by
it. The high regard that the law has by long tradition shown for the interest of
the owner in the improvement and utilization of his land weighs heavily in
his favor in determining what constitutes unreasonable conduct on his part in
such a case. Normally the owner of the supporting land may withdraw lateral
support that is not naturally necessary, for any purpose that he regards as
useful provided that the manner in which it is done is reasonable. But all the
factors that enter into the determination of the reasonableness or
unreasonableness of the actor’s conduct must be considered, and in a
particular case the withdrawal itself may be unreasonable. Thus, if the actor’s
sole purpose in excavating his land is to harm his neighbor’s structures, the
excavation itself is unreasonable. Furthermore, although for the purpose of
permanently leveling the land it may be reasonable to withdraw support that
is not naturally necessary, it may be unreasonable to make an excavation for
a building that will itself require a foundation, without providing for the
safeguarding of the neighbor’s structures during the progress of the work.
Likewise it is normally unreasonable not to notify an adjacent landowner of
excavations that certainly will harm his structures, unless the neighbor
otherwise has notice.
Secondly, the owner of land may be negligent in failing to provide against
the risk of harm to his neighbor’s structures. This negligence may occur
either when the actor does not realize that any harm will occur to his
neighbor’s structures or when the actor realizes that there is a substantial risk
to his neighbor’s land and fails to take adequate provisions to prevent
subsidence, either by himself taking precautions or by giving his neighbor an
opportunity to take precautions. Although the law accords the owner of the

570
 supporting land great freedom in withdrawing from another’s land support
that is not naturally necessary in respect to the withdrawal itself, it does not
excuse withdrawal in a manner that involves an unreasonable risk of harm to
the land of another. The owner in making the excavation is therefore required
to take reasonable precautions to minimize the risk of causing subsidence of
his neighbor’s land. In determining whether a particular precaution is
reasonably required, the extent of the burden that the taking of it will impose
upon the actor is a factor of great importance.

In the case of Walker v. Strosnider, supra, Judge Poffenbarger,

speaking for a unanimous court, explained the law of West Virginia in a
way completely in accord with the modern Restatement. He summarized
the cause of action for negligence as follows:

[An owner] may use his property, but he must use it in a lawful, that is,
careful, manner. In other words, he must execute the work, as far as is
reasonably practicable, and not unduly burdensome, with a view to the safety
of the buildings on the adjacent property. But for this rule, he might go at any
hour of the day or night, without having given notice to the adjoining owner,
indicating when, how or to what extent he intended to alter the condition of
his property, and make an excavation for a cellar along the entire wall of a
heavy valuable building, knowing it would fall in consequence thereof, and
yet intending to replace, the earth removed by a wall. He would be under no
duty to vary the mode or manner of his work in the slightest degree, in
respect to the time thereof or otherwise, in the interests of the safety of the
building. Having thus made the excavation, he could build his wall at his
leisure and would be under no duty to prosecute the work diligently even
though it should be apparent that delay in this part of the work would
endanger the building. Such conduct would be reckless, careless and wanton,
in view of the ease with which the mode of work could be varied, in respect
to time and manner, and previous notice given of the intention to alter the
condition of the property, the extent of the alteration, the manner in which it
is to be done and the time, so as to afford the owner of the building an
opportunity to take such measures for its protection, as he might see fit to
adopt. . . . 67 S.E. at 1090.

IV
It would appear that the case before us either stands or falls on a
question of strict liability. It is admitted that the retaining wall on the
defendant’s property was constructed at least sixty years ago, before the
construction of the plaintiffs’ house, and that all parties to this action were
aware of the condition of the wall. Furthermore, there is no allegation that
the defendant did anything to cause the collapse of the wall, but rather only

571
failed to keep it in repair. Therefore, if the plaintiffs can recover, they must
do so by proving that the disrepair of the retaining wall would have led
ineluctably to the subsidence of their land in its natural condition. If, on
the other hand, the land would not have subsided but for the weight of the
plaintiffs’ house, then they can recover nothing.

Notes and Questions

1. Easements and servitudes. An easement is a limited right to do
something on, or to control the use of, someone else’s property. An
affirmative easement is a right to do something on someone else’s
property. The right to cross someone else’s property, for example, is called
a right of way. A negative easement is a right to prevent someone else
from using her own property in a certain way. Modern terminology
confines the term easement to affirmative easements and uses the word
servitude to describe restrictions on land use, including negative
easements. See Chapter 8, §1. Most easements and servitudes are created
by agreement among neighbors. Some, like the servitude for lateral
support of land, are created by the common law. Each owner has an
obligation to maintain lateral support for neighboring land; conversely,
each owner has a right to prevent her neighbors from excavating on their
property to remove lateral support for her land.
2. Land versus structures. Courts have often distinguished lateral
support of land from lateral support of buildings or other structures built
on the land. The common law grants each landowner a servitude for lateral
support of land in its natural condition. Owners who withdraw lateral
support for neighboring land are strictly liable for any resulting damage to
the land. On the other hand, owners have no duty to support structures on
their neighbors’ land. They do have a duty not to excavate in a negligent
manner; they have a duty to act as a reasonably prudent person would —
they cannot use unreasonably dangerous engineering methods or create
unnecessary risks to adjoining property. They are also obligated to provide
temporary support for neighboring land during excavation and to notify the
neighbors if their excavation poses a risk to neighboring structures. Spall
v. Janota, 406 N.E.2d 378 (Ind. Ct. App. 1980); Klebs v. Yim, 772 P.2d
523 (Wash. Ct. App. 1989) (both holding that there is an absolute right of
lateral support for land but only a duty to refrain from negligent injury to
adjoining structures). However, the obligation to avoid negligence does
not mean that owners have a duty to avoid foreseeable harm to
neighboring structures if the land in its natural condition, in combination
with the underlying foundation of the structures, would not have been

572
sufficient to support those structures.
What happens if the land in its natural condition is sufficient to support
a structure on neighboring land and the removal of support for the land
causes a chain reaction resulting in damage to the building? Older law,
retained in some states, denied a remedy to the owner of the building.
Thurston v. Hancock, 12 Mass. 220 (1815). However, the modern
approach adopted in Noone imposes damages for harm both to the land
and to the building if the harm to the building was caused by removal of
lateral support for the land. The damages to the building are consequential
damages resulting from breach of a legal duty to support the land. If, on
the other hand, the neighboring building was built negligently with
inadequate support so that it would have been damaged eventually even if
the defendant did not withdraw lateral support for the land, then plaintiff
can recover no damages for harm to the building resulting from the
withdrawal of lateral support, under either the older or the modern
approach.
Why is the standard of care different for land and structures? This
distinction can be traced in U.S. law to an early Massachusetts case,
Thurston v. Hancock, supra. In Thurston, the plaintiff had built a brick
house with its rear wall within two feet of the boundary of his land. In
1811, the defendants began digging a foundation on their own land within
six feet of the rear of the plaintiff’s house, causing part of the earth on the
surface of the plaintiff’s land to slide onto the defendant’s land, and
rendering the foundations of the plaintiff’s house insecure so that he had to
abandon it. The Massachusetts Supreme Judicial Court held that the
plaintiff could recover only for the damage to the soil, not to the house.
Chief Justice Parker, in delivering judgment said:

It is a common principle of the civil and of the common law, that the
proprietor of land, unless restrained by covenant or custom, has the entire
dominion, not only of the soil, but of the space above and below the surface,
to any extent he may choose to occupy it. The law, founded upon principles
of reason and common utility, has admitted a qualification to this dominion,
restricting the proprietor so to use his own, as not to injure the property or
impair any actual existing rights of another. Sic utere tuo ut alienum non
laedas. But this subjection of the use of a man’s own property to the
convenience of his neighbor is founded upon a supposed preexisting right in
his neighbor to have and enjoy the privilege which by such act is impaired. A
man, in digging upon his own land, is to have regard to the position of his
neighbor’s land, and the probable consequences to his neighbor, if he digs
too near his line; and if he disturbs the natural state of the soil, he shall
answer in damages; but he is answerable only for the natural and necessary

573
 consequences of his act, and not for the value of a house put upon or near the
line by his neighbor. The plaintiff built his house within two feet of the
western line of the lot, knowing that the town, or those who should hold
under it, had a right to build equally near to the line, or to dig down into the
soil for any other lawful purpose. He knew also the shape and nature of the
ground, and that it was impossible to dig there without causing excavations.
He built at his peril; for it was not possible for him, merely by building upon
his own ground, to deprive the other party of such use of his as he should
deem most advantageous. . . . It is, in fact, damnum absque injuria.

Id. at 224, 229. Does this explanation make sense?

3. Retaining walls. If a retaining wall was built on defendant’s land
for the purpose of maintaining lateral support for plaintiff’s land,
defendant has a strict obligation to keep the wall in good repair to avoid
loss of lateral support for the plaintiff’s land. This obligation runs with
the land and is binding on subsequent owners of the property. Salmon v.
Peterson, 311 N.W.2d 205, 206-207 (S.D. 1981). However, the obligation
extends only to such support as is needed to support the neighbor’s land in
its natural condition. In the absence of statute, an owner of a retaining wall
has no obligation to keep it strong enough also to support the added weight
of the neighbor’s building. In practice, how do you think courts are likely
to go about assessing whether a defendant’s behavior satisfies the
obligation to support the land in its natural condition? See Klebs v. Yim,
772 P.2d 523 (Wash. Ct. App. 1989) (defendant had “a duty to maintain an
existing retaining wall on [defendant’s] property” and was liable for failure
to maintain the wall but was not liable for damage to plaintiff’s property
attributable to the additional weight imposed by plaintiff’s swimming
pool). If a retaining wall on defendant’s land is actually supporting the
buildings on plaintiff’s land, defendant does have a duty to act non-
negligently in withdrawing that support, by notifying the plaintiff of any
changes so that plaintiff can take steps to support her own structure.
4. Natural conditions. Do owners have obligations to take reasonable
steps to prevent natural conditions on their land from harming neighboring
owners? Some courts have held that an owner who reasonably should
know that her property is subject to landslides should take reasonable steps
to protect property downhill from her. Sprecher v. Adamson, 636 P.2d
1121 (Cal. 1981). However, other courts have taken the position that
owners are not liable for harms caused by the natural condition of their
land, although they may be liable for conditions caused by their
development of their own land. Price ex rel. Estate of Price v. City of
Seattle, 24 P.3d 1098 (Wash. Ct. App. 2001).

574
 5. Measurement of damages. Courts have used a variety of
approaches to measure damages for injury to lateral support. Those
approaches include (a) the cost of restoration; (b) the diminution in value
of the property; and (c) in the case of liability for damage to a building, the
value of the lost use of the building plus an amount representing
permanent depreciation in the building’s value. 9-64A Powell on Real
Property §64A.05.
6. Building codes and private rights of action. In addition to
common law rules regulating land use, every state has passed statutes
regulating both land use and building construction. We discuss these
statutes at greater length in the next chapter.

Massachusetts State Building Code

Mass. Gen. Laws ch. 143, §§3A, 57, 59, 94

§3A. [T]he local inspector shall enforce the state building code as to
any building or structure within the city or town from which he is
appointed.
§57. The . . . superior court shall have jurisdiction in equity to enforce .
. . the state building code . . . , the enforcement of which . . . is the
responsibility of [the] local inspector.
§59. The . . . superior court may, upon the application of the . . . local
inspector, enforce by any suitable process or decree . . . the state building
code.
§94. Whoever violates any provision of the state building code . . .
shall be punished by a fine of not more than one thousand dollars or by
imprisonment for not more than one year, or both, for each such violation.
Each day during which a violation exists shall constitute a separate
offense.

International Building Code §3307

Adopted by 780 Code of Massachusetts Regulations ch. 33

3307.1 Protection required. Adjoining public and private property
shall be protected from damage during construction, remodeling and
demolition work. Protection must be provided for footings, foundations,
party walls, chimneys, skylights and roofs. Provisions shall be made to
control water runoff and erosion during construction or demolition
activities. The person making or causing an excavation to be made shall
provide written notice to the owners of adjoining buildings advising them

575
that the excavation is to be made and that the adjoining buildings should
be protected. Said notification shall be delivered not less than 10 days
prior to the scheduled starting date of the excavation.

Notes and Questions

Effect of statutory provisions. The regulations promulgated by the
Massachusetts state building code commission apparently require all
landowners to protect neighboring structures. If an owner violates the
building code by undermining lateral support for a neighboring building, is
the violator financially liable to the injured property owner for any
resulting damage?
Three questions must be considered. First, do the regulations create a
private right of action, i.e., a right to sue the neighbor for damages? The
right may be express or implied. It is express if the text of the laws clearly
creates a right to sue and implied if the court infers such a right from the
text by reference to the purposes the regulations were intended to achieve
or the policies underlying the regulations. Second, if no such right was
created, are the remedies included in the statute (criminal penalties
including fines and imprisonment and civil claims by the local inspector)
intended to be exclusive or nonexclusive? If those remedies are exclusive,
a private owner cannot seek a remedy under the common law. If they are
nonexclusive, we reach the third question. Should the common law be
changed to promote the policies underlying the statute and regulations, or
should the legislature’s failure to alter the common law rule induce the
court to retain it until changed by the legislature?

Problem
A building in an urban downtown area is demolished to make way for
a new structure. The demolition of the building and excavation of the land
underneath it undermine lateral support for a neighboring structure,
causing damage to the foundation of the neighboring building. It seems
that the foundation of the demolished building had been providing needed
support for the neighboring structure. The owner of the damaged building
sues the neighbor for damages to recoup the cost of fixing her building.
1. Applying the Massachusetts laws and building code excerpted
above, what is plaintiff’s argument that the law entitles her to recover such
damages, either expressly or implicitly? What is defendant’s argument in
response?
2. If the state law does not provide a private right of action for non-

576
negligent harm to buildings on neighboring land, what is plaintiff’s
argument that the common law should be changed to provide such a
remedy? What is defendant’s argument that the common law negligence
standard should be retained?

§5.2 Subjacent Support

Friendswood Development Co. v. Smith-Southwest

Industries, Inc.

576 S.W.2d 21 (Tex. 1978)

PRICE DANIEL, J.
The question in this case is whether landowners who withdrew
percolating ground waters from wells located on their own land are liable
for subsidence which resulted on lands of others in the same general area.
Smith-Southwest Industries and other landowners located in the
Seabrook and Clear Lake area of Harris County brought this class action in
1973 against Friendswood Development Company and its corporate
parent, Exxon Corporation, alleging that severe subsidence of their lands
was caused by the defendants’ past and continuing withdrawals of vast
quantities of underground water from wells on defendants’ nearby lands.

Allegations and Summary Judgment Proof

[Plaintiff landowners alleged that defendant Friendswood had pumped
large amounts of subsurface waters from its own property for sale
primarily to industrial users.] These wells were drilled from 1964 through
1971, even though previous engineering reports to defendants showed that
production therefrom would result in a certain amount of land subsidence
in the area. Plaintiffs alleged that the wells were negligently spaced too
close together, too near the common boundary of lands owned by plaintiffs
and defendants, and that excessive quantities were produced with
knowledge that this would cause subsidence and flooding of plaintiffs’
lands. Plaintiffs alleged that this extensive withdrawal of ground water
proximately caused the sinking and loss of elevation above mean sea level
of their property and the property of others similarly situated along the
shores of Galveston Bay and Clear Lake, resulting in the erosion and
flooding of their lands and damage to their residences, businesses and
improvements. Plaintiffs further allege that the manner in which
Friendswood Development Company continues to use its property for the

577
withdrawal and sale of large amounts of fresh water to commercial users
on other lands constitutes a continuing nuisance and permanent loss and
damage to their property.
Plaintiffs concede that subsidence in the area complained of was
known to be a “potential problem” before defendants’ operations began,
but they allege that Friendswood and Exxon knew that the problem “would
be severely aggravated” by the withdrawals which the companies
contemplated. There was summary judgment proof of such knowledge and
aggravation.
Reports in the record and publications of official agencies reflect that
land subsidence in Harris County is not peculiar to or confined within the
Galveston Bay and Clear Creek areas described in plaintiffs’ petition.
Rather it is a problem which has existed for many years in Harris and
Galveston Counties. Harris County alone had 2,635 ground water wells in
the inventory compiled by the U.S. Geological Survey in cooperation with
the Texas Water Development Board in 1972. The Chicot and Evangeline
aquifers underlie the Houston-Galveston region, which includes all of
Harris and Galveston Counties and parts of adjacent counties. These two
aquifers furnish all of the ground water pumped in the Houston-Galveston
region, according to the U.S. Geological Report prepared by R.K.
Gabrysch and C.W. Bonnet in 1974. This report states that water level
declines of as much as 200 feet have resulted in wells completed in the
Chicot aquifer and as much as 325 feet in the Evangeline aquifer during
1943-73, and “the declines in artesian pressures have resulted in a
pronounced regional subsidence of the land surface.” It states that the area
in which there has been subsidence of one foot or more has increased from
350 square miles in 1954 to about 2,500 square miles in 1973. The contour
lines of this area encompass practically all of Harris and Galveston
Counties and include all of the principal areas of ground water
withdrawals. Maps in the report indicate that the land and wells involved
in this suit are in or near the “Johnson Space Center Area,” where the land
surface subsided about 2.12 feet between 1964 and 1973.
The general and widespread problem of subsidence in Harris and
Galveston Counties has been considered in numerous other writings, and
more notably by action of the Legislature, which created the Harris-
Galveston Coastal Subsidence District in 1975. This is a comprehensive
measure “to provide for the regulation of the withdrawal of ground water
within the boundaries of the district for the purpose of ending subsidence
which contributes to or precipitates flooding, inundation, or overflow of
any area within the district.” It includes all of Harris and Galveston
Counties and provides for a board of fifteen members with the power to

578
grant or decline permits for new wells, regulate spacing and production,
require metering devices, and adopt any rules necessary to prevent further
subsidence.

Nature of Plaintiffs’ Action

Plaintiffs have alleged an action in tort based upon the general rule that
a landowner has a duty not to use his property so as to injure others. Sic
utere tuo ut alienum non laedas. [However, this court has held that this
general rule does not apply to withdrawals of underground water. Rather,
this court has] adopted the common law rule that such rights are not
correlative, but are absolute, and thus are not subject to the conflicting
“reasonable use” rule. Houston & T.C. Ry. Co. v. East, 81 S.W. 279 (Tex.
1904).
Plaintiffs [contend] that the “reasonable use” doctrine should apply to
ground water the same as it does to other real property.
In [East,] the railroad company, with full knowledge of the long
existence of Mr. East’s small shallow well on his homestead, dug a well
twenty feet in diameter and 66 feet deep on its own adjacent property,
from which it pumped 25,000 gallons of water per day. This resulted in
lowering the water level on plaintiff’s land and drying up his well. [The
plaintiff argued for the “reasonable use” or “American rule,” which held
that the right of a landowner to draw underground water from his land was
not absolute, but limited to the amount necessary for the reasonable use of
his land, and that the rights of adjoining landowners are correlative and
limited to reasonable use. The defendant argued for the contrary English
doctrine laid down in Acton v. Blundell, 152 Eng. Rep. 1223 (Ex. 1843),
that, “if a man digs a well on his own field and thereby drains his
neighbor’s, he may do so unless he does it maliciously.”]

II. Adoption of the Common Law Rule of Absolute Ownership

Thus, on the appeal of the East case to this Court, the conflicting
aspects of the “reasonable use” rule and the common law rule, later
referred to as the “English rule” or “absolute ownership rule,” were clearly
presented. This Court discussed both rules and made a deliberate choice of
the common law rule as announced in Acton v. Blundell, supra.15
In holding that the owner may withdraw water from beneath his land
without liability for lowering the water table and thus damaging his
neighbor’s well and land, the Court mentioned only waste and malice as
possible limitations to the rule. Absent these, the Court clearly embraced
the doctrine stated in Acton v. Blundell, supra, that this type of damage

579
“falls within the description damnum absque injuria, which cannot become
the ground of action.” This legal maxim denotes a loss without injury in
the legal sense, that is, without the invasion of a legal right or the violation
of a legal duty.
The English rule of so-called “absolute ownership” was applied by this
Court in Texas Co. v. Burkett, 296 S.W. 273 (Tex. 1927), which held that a
landowner has the absolute right to sell percolating ground water for
industrial purposes off the land. At a time when the trend in other
jurisdictions was away from the English rule and toward the “reasonable
use” rule, the English rule was reaffirmed by this Court in City of Corpus
Christi v. City of Pleasanton, 276 S.W.2d 798 (Tex. 1955).

Subsidence Cases Under the Common Law Rule

Although the East, Corpus Christi, and Williams16 cases involved
damages to wells and lands of the plaintiffs because the water tables
beneath their lands were lowered by ground water withdrawals of the
defendants, none of these nor any other Texas case has dealt specifically
with land subsidence resulting from such pumping of underground waters.
In other jurisdictions adhering to the English ground water rule, liability
for neighboring land subsidence has been denied.
On the basis of the earlier decisions cited above, the Restatement of
Torts §818 (1939), adopted the following rule:

§818. Withdrawing Subterranean Water

To the extent that a person is not liable for withdrawing subterranean waters
from the land of another, he is not liable for a subsidence of the other’s land
which is caused by the withdrawal.

We have found nothing in our Constitution, laws, or decisions inconsistent

with the common law rule.

Stare Decisis
We agree that some aspects of the English or common law rule as to
underground waters are harsh and outmoded, and the rule has been
severely criticized since its reaffirmation by this Court in 1955. Most of
the critics, however, recognize that it has become an established rule of
property law in this State, under which many citizens own land and water
rights. The rule has been relied upon by thousands of farmers, industries,
and municipalities in purchasing and developing vast tracts of land

580
overlying aquifers of underground water. Approximately 50,000 wells are
used to irrigate 2,800,000 acres in the thirteen county High Plains area of
West Texas. As shown in the official reports cited earlier in this opinion,
over 2,600 water wells have been drilled in Harris County alone while this
rule of immunity from liability was in effect. The very wells which
brought about this action were drilled after the English rule had been
reaffirmed by this Court in 1955.
On this subject, we are not writing on a clean slate. Even though good
reasons may exist for lifting the immunity from tort actions in cases of this
nature, it would be unjust to do so retroactively. The doctrine of stare
decisis has been and should be strictly followed by this Court in cases
involving established rules of property rights. It is for this reason that, as to
past actions complained of in this case, we follow the English rule and
Restatement of Torts §818 (1939) in holding that defendants are not liable
on plaintiff’s allegations of nuisance and negligence.

As to Future Wells and Subsidence

[T]he Legislature has entered the field of regulation of ground water
withdrawals and subsidence. This occurred after geologists, hydrologists,
and engineers had developed more accurate knowledge concerning the
location, source, and measurement of percolating underground waters, and
after legislators became aware of the potential conflicts inherent in the
unregulated use of ground water under the English rule of ownership. With
a rule that recognizes ownership of underground water by each individual
under his own land, but with no limitation on the manner and amount
which another individual landowner might produce (absent willful waste
and malicious malice [sic]), legislative action was essential in order to
provide for conservation and protection of public interests.
The legislative policy contained in Chapter 52 of the Texas Water
Code is designed to limit the exercise of that portion of the English rule
which has been interpreted as giving each landowner the right to take all
the water he pleases without regard to the effect on other lands in the same
area. For instance, §52.117 of the Water Code, applicable to Underground
Water Conservation Districts, provides:

§52.117. Regulation of Spacing and Production17

In order to minimize as far as practicable the drawdown of the water table or

the reduction of artesian pressure, to control subsidence, or to prevent waste,
the district may provide for the spacing of water wells and may regulate the
production of wells.

581
 Ten of these Underground Water Conservation Districts are active in
an area embracing much of West Texas. The need for additional legislation
for creation of districts to cover unregulated ground water reservoirs and to
solve other conflicts which may arise in this area of water law and
subsidence seems to be inevitable. Providing policy and regulatory
procedures in this field is a legislative function. It is well that the
Legislature has assumed its proper role, because our courts are not
equipped to regulate ground water uses and subsidence on a suit-by-suit
basis.
This case, however, gives the Court its first opportunity to recognize,
and to encourage compliance with, the policy set forth by the Legislature
and its regulatory agencies in an effort to curb excessive under
groundwater withdrawals and resulting land subsidence. It also affords us
the opportunity to discard an objectionable aspect of the court-made
English rule as it relates to subsidence by stating a rule for the future
which is more in harmony with expressed legislative policy. We refer to
the past immunity from negligence which heretofore has been afforded
ground water producers solely because of their “absolute” ownership of
the water.
As far as we can determine, there is no other use of private real
property which enjoys such an immunity from liability under the law of
negligence. This ownership of underground water comes with ownership
of the surface; it is part of the soil. Yet, the use of one’s ground-level
surface and other elements of the soil is without such insulation from tort
liability. Our consideration of this case convinces us that there is no valid
reason to continue this special immunity insofar as it relates to future
subsidence proximately caused by negligence in the manner which wells
are drilled or produced in the future. It appears that the ownership and
rights of all landowners will be better protected against subsidence if each
has the duty to produce water from his land in a manner that will not
negligently damage or destroy the lands of others.
Therefore, if the landowner’s manner of withdrawing ground water
from his land is negligent, willfully wasteful, or for the purpose of
malicious injury, and such conduct is a proximate cause of the subsidence
of the land of others, he will be liable for the consequences of his conduct.
The addition of negligence as a ground of recovery shall apply only to
future subsidence proximately caused by future withdrawals of ground
water from wells which are either produced or drilled in a negligent
manner after the date this opinion becomes final.
While this addition of negligence as a ground of recovery in
subsidence cases applies to future negligence in producing water from

582
existing wells and those drilled or produced in a negligent manner in the
future, it has been suggested that this new ground of recovery should be
applied in the present cause of action. This is often done when a court
writes or adds a new rule applicable to personal injury cases, but seldom
when rules of property law are involved. This is because precedent is
necessarily a highly important factor when problems regarding land or
contracts are concerned. In deeds, property transactions, and land
developments, the parties should be able to rely on the law which existed
at the time of their actions.

JACK POPE, J., dissenting.

I respectfully dissent. The court has decided this cause upon the
mistaken belief that the case is governed by the ownership of ground
water. Plaintiffs assert no ownerships to the percolating waters pumped
and extracted from the ground by defendants. They make no complaint
that their own wells have been or will be pumped dry. They seek no
damages for the defendants’ sale of the water. Plaintiffs’ action calls for no
change in nor even a review of the English rule of “absolute ownership” of
ground water, the American rule of “reasonable use” of ground water, nor
the Texas rule of “nonwasteful” use of ground water. They claim no
correlative rights in the water. The Texas law of percolating waters is not
put in issue by this suit, and there is no occasion to overrule that law either
now or prospectively.
Plaintiffs’ complaint is that defendants are causing subsidence of their
land. They assert an absolute right to keep the surface of their land at its
natural horizon. The landowners’ right to the subjacent support for their
land is the only right in suit, and this is a case of original impression. . . . It
is no more logical to say that this is a case concerning the right to ground
water than it would be correct in a case in which an adjoining landowner
removed lateral support by a caterpillar to say that the case would be
governed by the law of caterpillars. In making this decision about one’s
right to subjacent support, I would use as analogies other kinds of cases
concerning support, such as the right to lateral support.
A landowner’s right to lateral support for his land is an absolute right.
The instrument employed in causing land to slough off, cave in or wash
away is not the real subject of inquiry. The inquiry is whether the
adjoining owner actually causes the loss of support. Whether the support is
destroyed by excavation, ditching, the flowing of water, the pumping of
water, unnatural pressure, unnatural suction, or explosives, the right to
support is the same, and it is an absolute right.
A second analogous rule which protects one’s subsurface from damage

583
by an operator on other lands is found in Gregg v. Delhi-Taylor Oil Corp.,
344 S.W.2d 411, 416 (Tex. 1961). Mr. Gregg, in the development of his
mineral lease, was preparing to use a sand fracturing technique to open
cracks and veins extending some distance from his lease and to alter the
substructure of neighboring land. By use of hydraulic pressure the ruptures
of the subsurface formations would free greater quantities of gas. The
rupture beneath the Delhi-Taylor’s lands would create only small veins
about one-tenth of an inch in diameter. This court regarded the creation of
fissures on another’s land as an invasion of property rights. . . . This court
denied one landowner the right to interfere with the subsurface of lands
beyond his own lease boundaries. The same principle was applied in
Gregg v. Delhi-Taylor Oil Corp., 344 S.W.2d 411 (Tex. 1961), and in
Delhi-Taylor Oil Corp. v. Holmes, 344 S.W.2d 420 (Tex. 1961). In my
judgment, the examples are indistinguishable from the present case.
Elliff v. Texon Drilling Co., 210 S.W.2d 558 (Tex. 1948), was another
example in which this court looked at the damage done [to] a neighbor’s
subsurface estate by an oil driller who had the right to capture oil through
the wellbore on his own lease. This court expressly rejected holdings by
the Louisiana Supreme Court which held that an adjoining owner has no
action against one who negligently destroys a reservoir. This court also
rejected the defense that one’s right to capture the oil rendered him
immune from damages for his negligence in wasting it.
We thus reach the end result. Under our prior holdings compared with
today’s, one who mines for oil may not destroy his neighbor’s subjacent
geology; but the right to pump water, we inconsistently say, is the right to
destroy the subsurface geology, the subjacent support and even the surface
of the land. Defendants may pump the plaintiffs’ land to the bottom of
Galveston Bay.
The error of the majority is its narrow focus upon the right of the
defendants to pump ground water. We should enlarge our vision so we can
see what this lawsuit is about. I do not believe it is sound law that the right
to pump water is the power to destroy the surface of surrounding
landowners. If defendants argue that they have an absolute right to pump
groundwater, plaintiffs reply that they too have an absolute right to the
support of their natural surface.
There is yet another legal principle that we should observe. Many
things, though lawful, when done to excess, become remediable. Church
bells may toll the knell of parting day or announce the time for solemn
services, but when bells continuously clang without interruption for many
days, the rights of others spring into being. What we do cannot be
understood except in relation to those we touch. We have in this case the

584
pleadings and showing that the defendants have abused their right to pump
water to the point that property and the rights of others are ignored and
destroyed.
Finally, and importantly, I dissent from the majority’s holding that
landowners in the future may prosecute a suit for damages for the
destruction of their property if, and only if the action is one for negligence,
willful waste, or malicious injury. I rather assume that pumpers of ground
water will carefully do so, will not waste their water, and will bear no ill
will toward those whose property they are destroying. I would hold that an
owner of land may assert an action against one who destroys the lateral or
subjacent support to his land in its natural state when: (1) he engages in
conduct knowing that it will cause damages to another’s land by loss or
destruction of the subjacent support, or (2) the plaintiff proves negligence,
or (3) the plaintiff proves a nuisance, and here a balancing will be a factor.
I also dissent from the court’s denial of rights to the plaintiffs, while
acknowledging that future landowners may have an action at least in
negligence. This court, in recent years, has recognized a number of new
actions, and each time, the successful party was allowed the victory. . . . In
my opinion, it is basically unfair to treat the plaintiffs in this case
unequally by recognizing that they possess an action, but by denying them
the remedy.

Notes and Questions

1. Rule of capture or right to support. The majority, in effect, reads
its past cases as holding that the absolute nature of the rule of capture for
groundwater protects those who remove groundwater from liability for the
subsidence caused by their actions. The dissent accuses the majority of
making a category mistake — applying a rule of acquisition (the rule of
capture) to resolve a dispute about the duties that owners owe to one
another (the duty not to cause subsidence). Who has the better of the
argument?
2. Current law. Some courts agree with the majority in Friendswood,
imposing liability for undermining subjacent support only when
negligence can be shown. Other courts extend the absolute duty to provide
lateral support for land to the context of subjacent support, imposing strict
liability for removal of subjacent support. See Los Osos Valley Associates
v. City of San Luis Obispo, 36 Cal. Rptr. 2d 758, 763 (Ct. App. 1994);
Muskatell v. City of Seattle, 116 P.2d 363 (Wash. 1941); Restatement
(Second) of Torts §818 illus. 1 & 2 (1977) (adopting this approach).
3. Separation of the surface from the mineral estate. One exception

585
to the rule that there is no duty to provide subjacent support in the absence
of negligence occurs when ownership of the minerals beneath the surface
is separated from ownership of the surface. In the absence of agreement to
the contrary, the owner of the surface has an absolute right not to have its
subjacent support undermined by the owner of the mineral estate. In Large
v. Clinchfield Coal Co., 387 S.E.2d 783 (Va. 1990), the plaintiffs, George
and Betty Large, sought to prevent the defendant, Clinchfield Coal
Company, from engaging in “longwall mining,” a practice that involves
removing coal without leaving any supporting pillars of coal, resulting in
subsidence of the land surface. The court held that any appreciable damage
to the surface or a diminution in its usability by the owner of the mineral
estate will be sufficient to sustain a finding of liability without a need for a
showing of negligence or unreasonableness. Accord, Platts v. Sacramento
Northern Railway, 253 Cal. Rptr. 269 (Ct. App. 1988) (holding that a
surface estate owner has an absolute right to subjacent support from the
owner of a subsurface estate but that the obligation did not run with the
land; the mineral estate owner who took possession of the property after
the act causing the removal of the surface support was not responsible for
the damage).
4. Retroactivity. The majority opinion in Friendswood argues that it is
wrong to apply a new rule of law retroactively. What exactly does this
mean? Does retroactivity constitute a particularly salient concern for
property law? Although the opinion is confusingly worded, the majority
sought to apply the new negligence rule both to new wells drilled after the
date the opinion in Friendswood was issued and to withdrawals of water
from existing wells that were drilled before the opinion was issued.
Doesn’t application of the new rule to withdrawal of water from existing
wells constitute a retroactive application of the new rule? After all,
investments were arguably made in digging existing wells based on an
expectation that the developer would be free from liability for any
resulting harm.
What arguments does the court give to justify refusing to apply the
new rule retroactively to withdrawals of water that occurred in the past?
What arguments could you make on behalf of the plaintiffs for retroactive
application of the new rule? How could you argue that even if the new rule
is applied prospectively as to all other landowners, it should be applied
retroactively to benefit the plaintiffs who brought this particular lawsuit?
Was the court correct to apply its new rule to future withdrawals of water
from existing wells?
5. Precedent. The judges in Friendswood addressed a variety of policy

586
arguments concerning the wisdom and justice of the competing rules
advocated by the parties. They also interpreted earlier decisions to
determine whether prior law answered the question, directly or indirectly.
The majority opinion concluded that the case was governed by the
previously established rule that owners have the absolute right to withdraw
groundwater from their property, even if this has the effect of withdrawing
groundwater from beneath other land. The court then chose to overrule the
cases that established the existing rule and to apply the new rule
prospectively. In contrast, the dissenting judge argued that the issue in
Friendswood was not governed by the rule about withdrawal of
groundwater at all; instead, the dissenting opinion distinguished the prior
cases establishing that rule and argued that the case was one of first
impression, meaning that the specific issue before the court had never been
precisely addressed by a prior case. In addition, each of the opinions
referred to prior cases that established a variety of rules of law by arguing
that those cases are analogous to the case at hand and that, therefore, the
principles established in those prior cases should extend to the situation
before the court.
In applying precedent, the lawyers for each side look for precedents
that help them. The plaintiff’s attorney, for example, may argue that a
prior case stands for a broad rule of law that applies to the current case as
well. To do this, the attorney must describe the holding of the earlier case
— the rule of law for which it stands — in a way that encompasses both
cases. The defendant’s attorney must attempt to distinguish the earlier case
by arguing that the factual context in the earlier case is different in
significant ways from the case at hand and that there are good reasons of
policy or justice to adjudicate this case differently from the earlier case.
Note that two steps are necessary in distinguishing a precedent: (a)
identifying significant factual differences between the prior case and the
case at hand, and (b) explaining why, as a matter of social policy, the cases
should be handled differently. The plaintiff’s attorney must counter this
argument by explaining why the case at hand is indistinguishable from the
earlier case. This requires arguing that (a) the factual differences between
the two cases are not important, and (b) the policies justifying the result in
the earlier case apply to the current case as well.
What precedents did the majority and dissenting opinions rely on to
decide the case in Friendswood? Which rules of law did the opinions
mention?
6. The complex range of solutions for land use conflicts. We have
seen that some kinds of land use disputes between neighbors, such as

587
conflicts over lateral and subjacent support, water rights, and light and air,
are governed by specific sets of legal rules. Land use disputes not covered
by these specific rules are governed by the general law of nuisance.
The courts have adopted various approaches to settle land use disputes.
At one extreme are the doctrines granting the victim absolute security from
harm to certain property interests; when courts grant veto rights, they
impose liability if the plaintiff can show that the defendant caused the
harm. At another extreme are the doctrines granting the defendant an
absolute privilege to engage in the activity without liability of any kind. In
the middle are doctrines regulating the defendant’s conduct only if it is
deemed unreasonable; the standard of what conduct is reasonable or
unreasonable may be defined by a general “reasonableness” requirement,
negligence, and nuisance.

Problem
You practice in a jurisdiction that has no precedent on the question of
whether an owner can excavate on her property and withdraw water in a
way that undermines subjacent support for property located some distance
away. At least two prior cases, however, are relevant. Your jurisdiction has
adopted the reasonable use test to govern conflicts over flooding caused by
diffuse surface water, as established in Armstrong v. Francis: owners have
a duty to act reasonably in developing their property to avoid causing
unreasonable harm to neighboring owners that results from the runoff of
diffuse surface water. Your jurisdiction has also adopted the free use or
absolute ownership test to govern disputes over groundwater, as
established in Acton v. Blundell, 152 Eng. Rep. 1223 (Exch. 1843), and
Houston & T.C. Railway Co. v. East, 81 S.W. 279 (Tex. 1904).
Landowners may withdraw as much groundwater as they wish, unless they
waste the water, even if the effect is to withdraw groundwater from
beneath the plaintiff’s land. In addition, your jurisdiction has adopted the
common law rule concerning lateral support of land: an absolute duty to
support neighboring land in its natural condition but only a duty not to act
negligently in withdrawing support from neighboring structures.

588
 1. Make an argument for the plaintiffs that precedent justifies giving
them a right to stop the subsidence and get damages for past subsidence.
2. Make an argument for the defendants that precedent gives them
freedom to withdraw the water without any liability.

1. The usual version is the option where plaintiffs have the power to shut down
the offending activity by obtaining an injunction if they choose to pay damages.
They have the option to force a sale of the entitlement from the defendant to them.
An alternative version is the put whereby defendant can force the plaintiffs to
purchase the injunction whether or not they wish to do so. See, e.g., Ian Ayres,
Protecting Property with Puts, 32 Val. U. L. Rev. 793 (1988).
2. Respondent’s investment in the plant is in excess of $45,000,000. There are
over 300 people employed there.
3. The parties agree that the pesticides the Cooperative sprayed are “prohibited
substances” under the NOP.
4. A transitional field is one onto which prohibited substances are no longer
being applied but has not yet been certified as organic.
5. The trial court dismissed the battery claim for lack of evidence of intent, and
the Plaintiffs did not appeal that dismissal. — EDS.
6. The district court defined “particulate matter” as “ ‘[m]aterial suspended in
the air in the form of minute solid particles or liquid droplets, especially when
considered as an atmospheric pollutant.’ ” (Quoting The American Heritage
Dictionary of the English Language 1282 (4th ed. 2000)). For purposes of this
opinion, we use the same definition.
7. No American common law state recognizes a landowner’s right to acquire an
easement of light by prescription.
8. Defendant’s position that a landowner’s interest in access to sunlight across
adjoining land is not “legally enforceable” and is therefore excluded per se from
private nuisance law was adopted in Fontainebleau Hotel Corp. v. Forty-Five
Twenty-Five, Inc., 114 So. 2d 357 (Fla. App. 1959). . . .
We do not find the reasoning of Fountainebleau persuasive. . . . The court did
not explain why an owner’s interest in unobstructed light should not be protected
or in what manner an owner’s interest in unobstructed sunlight differs from an
owner’s interest in being free from obtrusive noises or smells or differs from an
owner’s interest in unobstructed use of water. The recognition of a per se exception
to private nuisance law may invite unreasonable behavior.
9. The example assumes that the Fontainebleau cannot avoid the harm by
relocating its construction project.
10. This is a big “if.” See James E. Krier & Stewart J. Schwab, Property Rules
and Liability Rules: The Cathedral in Another Light, 70 N.Y.U. L. Rev. 440 (1995)
(questioning the ability of courts to calculate damages accurately).
11. Both what counts as a transaction cost and whether transaction costs should

589
be central to analysis of property rules are contested questions. See, e.g., Lee Anne
Fennell, The Problem of Resource Access, 126 Harv. L. Rev. 1471, 1479 (2013)
(noting that there is no agreed-upon definition of the term, and arguing that focus
on transaction costs misdirects property scholars).
12. Technically, the seller is trapped in a monopsony, a situation in which there
is only one buyer.
13. Note that property development has external benefits as well as external
costs: It may create jobs, expand the tax base, or provide needed housing.
Requiring the developer to pay the internal and external costs of the project may
not result in the best result from the standpoint of society as a whole if the total
social benefits of the project substantially exceed the private profits to the
developer.
14. Mineral rights include the right to extract minerals from beneath the surface
of the land.
15. The public policy considerations were said to be (1) “because the existence,
origin, movement and course of such waters, . . . are so secret, occult and
concealed that an attempt to administer any set of legal rules in respect to them
would be involved in hopeless uncertainty, and would, therefore, be practically
impossible”; and (2) “because any such recognition of correlative rights would
interfere, to the material detriment of the commonwealth, with drainage and
agriculture, mining, . . .” etc. 81 S.W. 279, 281.
16. Pecos County Water Control & Improvement District 1 v. Williams, 271
S.W.2d 503 (Tex. Ct. App. 1954). — EDS.
17. This section was replaced in 1995 by Tex. Water Code §36.116. — EDS.

590
CHAPTER 7

Land Use and Natural

Resources Regulation

§1 LAND USE REGULATION: ORIGINS,

AUTHORITY, AND PROCESS
§1.1 The Roots and Structure of Zoning
Public planning and the regulation of land use in the United States
have origins that trace to colonial history. Public officials planned early
towns, such as Annapolis and Williamsburg, as well as cities such as
Philadelphia and Washington, D.C. As the nation grew, frontier
settlements were regularly laid out in orderly fashion, with provisions for
specific types of development, street grids, and public infrastructure. See
generally James D. Kornwolf, Architecture and Town Planning in
Colonial North America (2003). By the time of the Founding, it was
common to have laws that, for example, mandated the development of
underutilized land, directed such lands to specific uses such as mills,
compelled the draining of wetlands, set fencing requirements to prevent
animals from wandering, and required the removal of noxious plants.
Other land use laws created specific residential areas in towns, regulated
the height and materials, as well as the aesthetics, of buildings, and
imposed a variety of affirmative obligations on urban land owners. See
John F. Hart, Colonial Land Use Law and Its Significance for Modern
Takings Doctrine, 109 Harv. L. Rev. 1252, 1259-1281 (1996).
As cities grew rapidly in the nineteenth century, fueled by immigration
and widespread industrialization after the Civil War, the need for planning
and land use regulation grew. Between 1840 and 1880, the number of
American cities with populations over 100,000 grew from 3 to 77. Julian
Conrad Juergensmeyer & Thomas E. Roberts, Land Use Planning and
Development Regulation Law §1.3, at 5 (3d ed. 2013). After the Chicago
World’s Fair of 1893, the City Beautiful Movement spread the ideal of
civic improvement, and local governments responded with infrastructure
investments and an era of grand public architecture.

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 At the turn of the twentieth century, urban planning began to develop
as a profession. The architect Daniel H. Burnham, who is famously
(although perhaps apocryphally) attributed with the saying “make no small
plans, they have no magic to stir men’s blood,” was the mastermind behind
the 1911 General Plan of Chicago, which was the first adopted
comprehensive city plan. The Plan of Chicago was a sweeping vision for
the city’s development, outlining future parks, boulevards, monuments, a
civic center, and other improvements, and sparked broad interest in urban
planning. See Carl Smith, The Plan of Chicago: Daniel Burnham and the
Remaking of the American City 86-87 (2006).
As comprehensive planning was gaining acceptance, local
governments were also experimenting with new approaches to land use
regulation. In 1904 and 1905, Boston enacted ordinances that divided the
city into distinct height districts, a practice that the Supreme Court upheld
in Welch v. Swasey, 214 U.S. 91 (1909). Los Angeles passed the first
modern zoning code in 1909, a city-wide ordinance that separated
residential from industrial uses. New York City in 1916 enacted a
comprehensive zoning code that defined commercial, retail, and residential
uses. And in the 1920s, the federal government began promoting zoning as
a tool for economic development, promulgating legislation that included a
model state statute to enable local governments to zone.

§1.2 Zoning Authority and Validity

As zoning spread in the 1920s, the issue of the constitutionality of this
regulatory approach to land use reached the Supreme Court. How the
Court addressed the authority for, and validity of, comprehensive zoning
set the legal terms of land use regulation for much of the subsequent nine
decades.

Village of Euclid v. Ambler Realty Co.

272 U.S. 365 (1926)

Map: Euclid Avenue, Euclid, Ohio

Mr. Justice GEORGE SUTHERLAND delivered the opinion of the Court.

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 The village of Euclid is an Ohio municipal corporation. It adjoins and
practically is a suburb of the city of Cleveland. Its estimated population is
between 5,000 and 10,000, and its area from 12 to 14 square miles, the
greater part of which is farm lands or unimproved acreage.
Appellee is the owner of a tract of land containing 68 acres, situated in
the westerly end of the village, abutting on Euclid Avenue to the south and
the Nickel Plate Railroad to the north. Adjoining this tract, both on the east
and on the west, there have been laid out restricted residential plats upon
which residences have been erected.
On November 13, 1922, an ordinance was adopted by the village
council, establishing a comprehensive zoning plan for regulating and
restricting the location of trades, industries, apartment houses, two-family
houses, single family houses, etc., the lot area to be built upon, the size and
height of buildings, etc.

Portion of the zoning map of the Village of Euclid containing Ambler

Realty’s parcel, circa 1922.

The entire area of the village is divided by the ordinance into six
classes of use districts, denominated U-1 to U-6, inclusive; three classes of

593
height districts, denominated H-1 to H-3, inclusive; and four classes of
area districts, denominated A-1 to A-4, inclusive. The use districts are
classified in respect of the buildings which may be erected within their
respective limits, as follows: U-1 is restricted to single family dwellings,
public parks, water towers and reservoirs, suburban and interurban electric
railway passenger stations and rights of way, and farming, non-
commercial greenhouse nurseries, and truck gardening; U-2 is extended to
include two-family dwellings; U-3 is further extended to include apartment
houses, hotels, churches, schools, public libraries, museums, private clubs,
community center buildings, hospitals, sanitariums, public playgrounds,
and recreation buildings, and a city hall and courthouse; U-4 is further
extended to include banks, offices, studios, telephone exchanges, fire and
police stations, restaurants, theaters and moving picture shows, retail stores
and shops, sales offices, sample rooms, wholesale stores for hardware,
drugs, and groceries, stations for gasoline and oil (not exceeding 1,000
gallons storage) and for ice delivery, skating rinks and dance halls, electric
substations, job and newspaper printing, public garages for motor vehicles,
stables and wagon sheds (not exceeding five horses, wagons or motor
trucks), and distributing stations for central store and commercial
enterprises; U-5 is further extended to include billboards and advertising
signs (if permitted), warehouses, ice and ice cream manufacturing and cold
storage plants, bottling works milk bottling and central distribution
stations, laundries, carpet cleaning, dry cleaning, and dyeing
establishments, blacksmith, horseshoeing, wagon and motor vehicle repair
shops, freight stations, street car barns, stables and wagon sheds (for more
than five horses, wagons or motor trucks), and wholesale produce markets
and salesroom; U-6 is further extended to include plants for sewage
disposal and for producing gas, garbage and refuse incineration, scrap iron,
junk, scrap paper, and rag storage, aviation fields, cemeteries, crematories,
penal and correctional institutions, insane and feeble-minded institutions,
storage of oil and gasoline (not to exceed 25,000 gallons), and
manufacturing and industrial operations of any kind other than, and any
public utility not included in, a class U-1, U-2, U-3, U-4, or U-5 use. There
is a seventh class of uses which is prohibited altogether.
Class U-1 is the only district in which buildings are restricted to those
enumerated. In the other classes the uses are cumulative — that is to say,
uses in class U-2 include those enumerated in the preceding class U-1;
class U-3 includes uses enumerated in the preceding classes, U-2, and U-1;
and so on. In addition to the enumerated uses, the ordinance provides for
accessory uses; that is, for uses customarily incident to the principal use,
such as private garages. Many regulations are provided in respect of such

594
accessory uses.
Appellee’s tract of land comes under U-2, U-3 and U-6. The first strip
of 620 feet immediately north of Euclid Avenue falls in class U-2, the next
130 feet to the north, in U-3, and the remainder in U-6. The uses of the
first 620 feet, therefore, do not include apartment houses, hotels, churches,
schools, or other public and semipublic buildings, or other uses
enumerated in respect of U-3 to U-6, inclusive. The uses of the next 130
feet include all of these, but exclude industries, theaters, banks, shops, and
the various other uses set forth in respect of U-4 to U-6, inclusive.
The ordinance is assailed on the grounds that it is in derogation of
section 1 of the Fourteenth Amendment to the federal Constitution in that
it deprives appellee of liberty and property without due process of law and
denies it the equal protection of the law, and that it offends against certain
provisions of the Constitution of the state of Ohio. The court below held
the ordinance to be unconstitutional and void, and enjoined its
enforcement, 297 F. 307.
The bill alleges that the tract of land in question is vacant and has been
held for years for the purpose of selling and developing it for industrial
uses, for which it is especially adapted, being immediately in the path of
progressive industrial development; that for such uses it has a market value
of about $10,000 per acre, but if the use be limited to residential purposes
the market value is not in excess of $2,500 per acre; that the first 200 feet
of the parcel back from Euclid Avenue, if unrestricted in respect of use,
has a value of $150 per front foot, but if limited to residential uses, and
ordinary mercantile business be excluded therefrom, its value is not in
excess of $50 per front foot.
It is specifically averred that the ordinance attempts to restrict and
control the lawful uses of appellee’s land, so as to confiscate and destroy a
great part of its value; that [prospective] buyers of land for industrial,
commercial, and residential uses in the metropolitan district of Cleveland
are deterred from buying any part of this land because of the existence of
the ordinance; that the ordinance constitutes a cloud upon the land, reduces
and destroys its value, and has the effect of diverting the normal industrial,
commercial, and residential development thereof to other and less
favorable locations.
The record goes no farther than to show, as the lower court found, that
the normal and reasonably to be expected use and development of that part
of appellee’s land adjoining Euclid Avenue is for general trade and
commercial purposes, particularly retail stores and like establishments, and
that the normal and reasonably to be expected use and development of the
residue of the land is for industrial and trade purposes.

595
 Building zone laws are of modern origin. They began in this country
about 25 years ago. Until recent years, urban life was comparatively
simple; but, with the great increase and concentration of population,
problems have developed, and constantly are developing, which require,
and will continue to require, additional restrictions in respect of the use
and occupation of private lands in urban communities. Regulations, the
wisdom, necessity, and validity of which, as applied to existing conditions,
are so apparent that they are now uniformly sustained, a century ago, or
even half a century ago, probably would have been rejected as arbitrary
and oppressive. Such regulations are sustained, under the complex
conditions of our day, for reasons analogous to those which justify traffic
regulations, which, before the advent of automobiles and rapid transit
street railways, would have been condemned as fatally arbitrary and
unreasonable. And in this there is no inconsistency, for, while the meaning
of constitutional guaranties never varies, the scope of their application
must expand or contract to meet the new and different conditions which
are constantly coming within the field of their operation. In a changing
world it is impossible that it should be otherwise. But although a degree of
elasticity is thus imparted, not to the meaning, but to the application of
constitutional principles, statutes and ordinances, which, after giving due
weight to the new conditions, are found clearly not to conform to the
Constitution, of course, must fall.
The ordinance now under review, and all similar laws and regulations,
must find their justification in some aspect of the police power, asserted
for the public welfare. The line which in this field separates the legitimate
from the illegitimate assumption of power is not capable of precise
delimitation. It varies with circumstances and conditions. A regulatory
zoning ordinance, which would be clearly valid as applied to the great
cities, might be clearly invalid as applied to rural communities. In solving
doubts, the maxim “sic utere tuo ut alienum non laedas,” which lies at the
foundation of so much of the common law of nuisances, ordinarily will
furnish a fairly helpful clew. And the law of nuisances, likewise, may be
consulted, not for the purpose of controlling, but for the helpful aid of its
analogies in the process of ascertaining the scope of, the power. Thus the
question whether the power exists to forbid the erection of a building of a
particular kind or for a particular use, like the question whether a particular
thing is a nuisance, is to be determined, not by an abstract consideration of
the building or of the thing considered apart, but by considering it in
connection with the circumstances and the locality. Sturgis v. Bridgeman,
L.R. 11 Ch. 852, 865. A nuisance may be merely a right thing in the wrong
place, like a pig in the parlor instead of the barnyard. If the validity of the

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legislative classification for zoning purposes be fairly debatable, the
legislative judgment must be allowed to control. Radice v. New York, 264
U.S. 292, 294 (1924).
There is no serious difference of opinion in respect of the validity of
laws and regulations fixing the height of buildings within reasonable
limits, the character of materials and methods of construction, and the
adjoining area which must be left open, in order to minimize the danger of
fire or collapse, the evils of overcrowding and the like, and excluding from
residential sections offensive trades, industries and structures likely to
create nuisances.
Here, however, the exclusion is in general terms of all industrial
establishments, and it may thereby happen that not only offensive or
dangerous industries will be excluded, but those which are neither
offensive nor dangerous will share the same fate. But this is no more than
happens in respect of many practice-forbidding laws which this court has
upheld, although drawn in general terms so as to include individual cases
that may turn out to be innocuous in themselves. The inclusion of a
reasonable margin, to insure effective enforcement, will not put upon a
law, otherwise valid, the stamp of invalidity. Such laws may also find their
justification in the fact that, in some fields, the bad fades into the good by
such insensible degrees that the two are not capable of being readily
distinguished and separated in terms of legislation. In the light of these
considerations, we are not prepared to say that the end in view was not
sufficient to justify the general rule of the ordinance, although some
industries of an innocent character might fall within the proscribed class. It
cannot be said that the ordinance in this respect “passes the bounds of
reason and assumes the character of a merely arbitrary fiat.” Purity Extract
Co. v. Lynch, 226 U.S. 192, 204 (1912).
It is said that the village of Euclid is a mere suburb of the city of
Cleveland; that the industrial development of that city has now reached
and in some degree extended into the village, and in the obvious course of
things will soon absorb the entire area for industrial enterprises; that the
effect of the ordinance is to divert this natural development elsewhere,
with the consequent loss of increased values to the owners of the lands
within the village borders. But the village, though physically a suburb of
Cleveland, is politically a separate municipality, with powers of its own
and authority to govern itself as it sees fit, within the limits of the organic
law of its creation and the state and federal Constitutions. Its governing
authorities, presumably representing a majority of its inhabitants and
voicing their will, have determined, not that industrial development shall
cease at its boundaries, but that the course of such development shall

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proceed within definitely fixed lines. If it be a proper exercise of the police
power to relegate industrial establishments to localities separated from
residential sections, it is not easy to find a sufficient reason for denying the
power because the effect of its exercise is to divert an industrial flow from
the course which it would follow, to the injury of the residential public, if
left alone, to another course where such injury will be obviated. It is not
meant by this, however, to exclude the possibility of cases where the
general public interest would so far outweigh the interest of the
municipality that the municipality would not be allowed to stand in the
way.
We find no difficulty in sustaining restrictions of the kind thus far
reviewed. The serious question in the case arises over the provisions of the
ordinance excluding from residential districts apartment houses, business
houses, retail stores and shops, and other like establishments. This
question involves the validity of what is really the crux of the more recent
zoning legislation, namely, the creation and maintenance of residential
districts, from which business and trade of every sort, including hotels and
apartment houses, are excluded.
The matter of zoning has received much attention at the hands of
commissions and experts, and the results of their investigations have been
set forth in comprehensive reports. These reports which bear every
evidence of painstaking consideration, concur in the view that the
segregation of residential, business and industrial buildings will make it
easier to provide fire apparatus suitable for the character and intensity of
the development in each section; that it will increase the safety and
security of home life, greatly tend to prevent street accidents, especially to
children, by reducing the traffic and resulting confusion in residential
sections, decrease noise and other conditions which produce or intensify
nervous disorders, preserve a more favorable environment in which to rear
children, etc. With particular reference to apartment houses, it is pointed
out that the development of detached house sections is greatly retarded by
the coming of apartment houses, which has sometimes resulted in
destroying the entire section for private house purposes; that in such
sections very often the apartment house is a mere parasite, constructed in
order to take advantage of the open spaces and attractive surroundings
created by the residential character of the district. Moreover, the coming of
one apartment house is followed by others, interfering by their height and
bulk with the free circulation of air and monopolizing the rays of the sun
which otherwise would fall upon the smaller homes, and bringing, as their
necessary accompaniments, the disturbing noises incident to increased
traffic and business, and the occupation, by means of moving and parked

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automobiles, of larger portions of the streets, thus detracting from their
safety and depriving children of the privilege of quiet and open spaces for
play, enjoyed by those in more favored localities — until, finally, the
residential character of the neighborhood and its desirability as a place of
detached residences are utterly destroyed. Under these circumstances,
apartment houses, which in a different environment would be not only
entirely unobjectionable but highly desirable, come very near to being
nuisances.
If these reasons, thus summarized, do not demonstrate the wisdom or
sound policy in all respects of those restrictions which we have indicated
as pertinent to the inquiry, at least, the reasons are sufficiently cogent to
preclude us from saying, as it must be said before the ordinance can be
declared unconstitutional, that such provisions are clearly arbitrary and
unreasonable, having no substantial relation to the public health, safety,
morals, or general welfare.
It is true that when, if ever, the provisions set forth in the ordinance in
tedious and minute detail, come to be concretely applied to particular
premises, including those of the appellee, or to particular conditions, or to
be considered in connection with specific complaints, some of them, or
even many of them, may be found to be clearly arbitrary and unreasonable.
But where the equitable remedy of injunction is sought, as it is here, not
upon the ground of a present infringement or denial of a specific right, or
of a particular injury in process of actual execution, but upon the broad
ground that the mere existence and threatened enforcement of the
ordinance, by materially and adversely affecting values and curtailing the
opportunities of the market, constitute a present and irreparable injury, the
court will not scrutinize its provisions, sentence by sentence, to ascertain
by a process of piecemeal dissection whether there may be, here and there,
provisions of a minor character, or relating to matters of administration, or
not shown to contribute to the injury complained of, which, if attacked
separately, might not withstand the test of constitutionality.
Under these circumstances, therefore, it is enough for us to determine,
as we do, that the ordinance in its general scope and dominant features, so
far as its provisions are here involved, is a valid exercise of authority,
leaving other provisions to be dealt with as cases arise directly involving
them.

Notes and Questions

1. A “fairly helpful clew”? The Supreme Court in Euclid invokes the
maxim sic utere tuo ut alienum non laedas to explain the scope of

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legitimate authority to zone. The village of Euclid’s zoning code, as the
Court discussed, separated apartment buildings from single-family homes
(and two-family homes from one-family homes). In those residential
zones, apartment buildings could be “a mere parasite,” the Court stated,
and “come very near to being nuisances.” What harms, specifically, did the
Court contemplate this separation of uses preventing?
The District Court in Euclid, although striking down the statute, noted
that the “blighting of property values and the congesting of population,
whenever the colored or certain foreign races invade a residential section,
are so well known as to be within the judicial cognizance.” Ambler Realty
Co. v. Village of Euclid, 297 F. 307, 313 (N.D. Ohio 1924). The Supreme
Court in Buchanan v. Warley, 245 U.S. 60 (1917), struck down a
Louisville, Kentucky statute that prohibited both white persons and
African Americans from moving into and occupying a residence on a
street that included a majority of owners of the opposite race. After
Buchanan, local governments could not directly use zoning authority to
regulate race, but a consistent critique of zoning since its inception has
been its tendency to foster segregation. See Richard H. Chused, Euclid’s
Historical Imagery, 51 Case W. Res. L. Rev. 597, 604-615 (2001).
Constitutional and statutory constraints on discriminatory and exclusionary
zoning are discussed below in §5.
2. Judicial deference. The Court in Euclid stated that “[i]f the validity
of the legislative classification for zoning purposes be fairly debatable, the
legislative judgment must be allowed to control.” Courts regularly invoke
this deference to legislative judgment when reviewing zoning ordinances.
As we will see, however, there are a number of circumstances where
courts take a more searching, less deferential, approach to challenges to
zoning ordinances. See §3.
3. Zoning legislation and the planning process. State governments,
as the Supreme Court alluded to in Euclid, are the ultimate repositories of
the police power, the authority to regulate for health, welfare, and safety.
One of the major ways states regulate property is by delegating power to
local governments to regulate land use. States delegate zoning power
through legislation, often called zoning enabling acts. The acts define
both the scope of the powers delegated to local governments and the
procedures by which the zoning process operates.
Voters in the local government elect a governing body, such as a city
council or county board of commissioners. (Many smaller communities
in New England have a town meeting form of government that allows
voters to attend regularly scheduled meetings and vote on local laws.) The

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governing body is the legislative branch of government and has the power
to adopt local laws governing land use in the jurisdiction, usually called
zoning ordinances or by-laws. Many local governments have an
executive branch as well, under a mayor, county executive, board of
selectmen, or other forms, and departments within the executive branch
that enforce zoning codes.
Zones are meant to be established in accordance with a rational scheme
for promoting development by separating incompatible uses; many zoning
enabling acts also require local governments to establish a comprehensive
plan for the jurisdiction as a whole. Such plans show the general divisions
of the jurisdiction into residential, agricultural, commercial, and industrial
uses and describe objectives, such as a certain level of residential growth,
the preservation of specified open space, particular types of industrial
development, and the like.
The comprehensive plan and the zoning ordinance itself are generally
prepared by a planning commission before adoption by the local
legislative body. Planning commissions are composed of community
members appointed by the local legislative body. In addition to developing
plans and codes, the planning commission holds public hearings,
investigates and obtains relevant information, and recommends changes
over time in the local zoning law or in standards for applying or
administering it. The commission is often aided by a planning
department composed of professional planners. If the local government is
too small to have a planning department, it may hire a private planning
firm to aid it in drafting a comprehensive plan and/or the zoning law itself.
The planning commission also receives petitions from particular
landowners who are seeking amendments to the zoning law as it applies to
their parcels. Although the planning commission has no power to pass a
zoning law itself, it does hold public hearings on such petitions and makes
recommendations to the city council or other legislative body to accept or
reject such petitions, and its recommendations are often accepted by the
lawmaking body.
Finally, most zoning enabling acts authorize municipalities to delegate
power to an administrative agency, often called the zoning board or
board of adjustment. This agency primarily serves to evaluate requests
for administrative relief from zoning requirements, as discussed in detail
below. See §4.
4. The mechanics of Euclidean zoning. Traditional “Euclidean”
zoning, so called because of the Euclid case, not the ancient Greek
mathematician, consists of both use and area zoning. Use zoning divides

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municipalities into districts and regulates the kinds of uses allowed within
each district. For example, some areas may allow only agricultural uses;
others may allow residential uses; still others may allow commercial uses
(stores and restaurants); and, finally, others permit industrial uses. As in
Euclid, such zoning is usually cumulative; the uses form a pyramidal
structure, with the most intensive uses at the top. Single-family housing is
often allowed in multi-family districts and residential housing can be
allowed in industrial districts — if anyone is willing to place housing
there. This pyramid generally does not work in the reverse; apartment
buildings are not allowed in single-family districts, industry is excluded
from residential areas, and so forth.
Area zoning, by contrast, regulates the size of lots, the height of
buildings, requirements to set back structures a certain distance from
property borders, and other aspects of the physical configuration of the
property. In order for an owner to understand the range of what is allowed
on her property under a zoning ordinance, it is necessary to examine use
and area restrictions together.
In addition to statutory language specifying various use and area zones,
zoning ordinances also generally include a zoning map. The map is
necessary to show where specific zones are physically located in a given
jurisdiction.1 The portion of the 1922 zoning map for the Village of Euclid
that contains Ambler Realty’s parcel is reproduced on page 425. Zoning
maps are available on municipal and county web sites in many
communities. Can you find the zoning map for the neighborhood you grew
up in? Where you go to law school?

5. Motivations for zoning. Zoning is often justified, as it was in

Euclid, as a means of prospectively limiting the harms that might arise
from the proximity of incompatible land uses. Is zoning a better tool for
this purpose than nuisance law? Than agreements between neighboring
owners? What are the best arguments for distinguishing each of these
approaches to controlling the uses of land? Are they necessarily mutually
exclusive?
Land use regulation can also be understood as a tool that local
governments use to influence the composition of their communities and
the tax and budgeting implications that flow from that composition.
Property taxes are a primary source of revenue for most local
governments, which can shape zoning incentives. Can you see how?
William Fischel has argued that because homeowners tend to
concentrate their assets in their homes, they are particularly politically
aware of policies that may affect the value of those homes. See William

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Fischel, The Homevoter Hypothesis: How Home Values Influence Local
Government Taxation, School Finance, and Land-Use Policies (2001).
This creates a political incentive to respond to the policy preferences of
these “homevoters,” which can translate to zoning that tends to preserve
the value of owner-occupied property. What kinds of land use regulations
would you expect to follow from this? Who might this tend to exclude?
See Edward L. Glaeser & Joseph Gyourko, Zoning’s Steep Price, 25 Reg.
24 (2002) (arguing that zoning contributes to high housing costs).

§1.3 Other Land Use Regulatory Regimes

Zoning is only one of a number of related regulatory regimes that
define the uses and development of land. Another prominent example is
subdivision regulation. In many jurisdictions, an owner seeking to
subdivide a large parcel, for example to build a neighborhood of single-
family homes, must go through a rigorous review process to ensure,
among other things, that the new subdivision will have sufficient
infrastructure such as streets, sidewalks, and sewers, and that the
subdivision will conform to legal requirements for lot sizes, open space,
police and emergency vehicle access, and connection to the jurisdiction’s
street and utility grids. Even where a parcel is not being subdivided, large-
scale development in many jurisdictions nonetheless requires a process of
site-plan review. This process similarly focuses on whether there is
sufficient infrastructure and services related to the new development.
Subdivision control and site-plan review work with zoning, but can
involve different officials and focus on different regulatory goals.
Another important regulatory regime involves housing, building, and
development codes. These codes focus on structural safety, the quality of
building materials, and public health concerns, such as ensuring sufficient
light and air in residential buildings. These are often based on model codes
that are adopted by local governments, at times with modifications. In
recent years, building codes have increasingly focused on issues such as
energy efficiency and sustainability.

§1.4 Modernizing Zoning

Euclidean zoning traditionally focused on separating uses in order to
prospectively manage land use conflicts on a comprehensive basis.
Although that remains an important aspect of most zoning codes, modern
land use regulation has evolved significantly to encompass broader goals
and new techniques. Zoning can now focus as much on development
incentives, community aesthetics, combating so-called big box

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development, and historic preservation as it does on classifying land.
One criticism of traditional zoning is that it favors a distinctly
suburban model of land use that fosters sprawling development and a
privatized approach to community through the kind of residential zones
upheld in Euclid. In response, “smart growth” or growth management laws
limit and channel the overall development in a jurisdiction, seeking to
utilize existing urban infrastructure, preserve open space, reduce car-
dependency, and promote public health. They do so through a combination
of regulations that promotes the mixing, rather than the separation, of land
uses, emphasizes a scale and density of development that facilitates
transportation options such as transit and walking, and caps the pace or
footprint of new development. Growth management laws have generated
legal challenges, which will be explored in §5.
New Urbanism similarly approaches development regulation with an
emphasis on compact, mixed-use communities that favor walkability and
transit. The heart of the new-urbanist critique of Euclidean zoning is that
its approach to land use regulation stands in stark tension with an older
tradition of urbanism that facilitated human-scale community. See Andres
Duany, Elizabeth Plater-Zyberk & Jeff Speck, Suburban Nation: The Rise
of Sprawl and the Decline of the American Dream (2001). Form-based
codes are an increasingly popular zoning technique to advance New
Urbanism. Such codes generally describe an allowable building envelope
and the aesthetics of new development, leaving the specific uses of a given
building largely unregulated. These codes often regulate through
illustrations enacted into law as opposed to the text and map approach of
traditional zoning. The idea is to focus on the experience of the streetscape
and the form of the community rather than on potential conflicts between
incompatible uses.2 These modern approaches to land use regulation place
more emphasis on sustainability and equity, with a greater recognition of
the environmental and social costs of traditional zoning.

§1.5 Patterns in Land Use Litigation

Disputes over land use regulation tend to follow two broad patterns. In
the first, a property owner who is aggrieved about a land use restriction
challenges a given action by the relevant local government agency. This
can involve situations where the initial imposition of zoning or other land
use regulation interferes with an existing use or with an owner’s plans for
her property. This kind of dispute, however, more often involves owners’
challenges to unfavorable decisions when owners seek to rezone their
property, to obtain discretionary relief from zoning, or to obtain other

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required approvals for new development.
In the second common pattern of litigation, an owner is granted the
right to do something with her property that neighbors or other community
members object to, and those neighbors challenge the local government’s
decision. In these cases, there can be questions of standing, or entitlement
to litigate, given that neighbors and others may be affected by, but not
directly subject to, a zoning decision. Decisions on standing usually turn
on a fact-specific combination of legislative authorization under the
relevant zoning code and an analysis of the extent of the injury to the
aggrieved party. Compare, e.g., Ray v. Mayor and City Council of
Baltimore, 59 A.3d 545 (Md. 2013) (residents who lived more than 1,000
feet from a site that was approved for rezoning lacked sufficient particular
aggrievement for standing), with Heffernan v. Missoula City Council, 255
P.3d 80, 90-96 (Mont. 2011) (neighbors had standing because they fell
within the statutory definition of parties entitled to challenge land use
regulatory decisions and met the state constitutional requirement of
alleging “a past, present, or threatened injury to a property or civil right”).
Public opinion and citizens associations are quite powerful in zoning
practice. Organized citizen groups may affect both the general shape of the
zoning law and individual zoning board decisions on particular
development proposals. Property developers must contend with
neighborhood opposition to particular projects and may need to negotiate
with citizens organizations to obtain their consent or acquiescence. These
negotiations can lead to community benefit agreements that specify
certain obligations for developers regarding issues such as affordable
housing, local jobs, and development-impact mitigation. Zoning boards
and city councils may also block particular developments until changes are
made so as to address the concerns of neighbors and community activists.
Perhaps not surprisingly, land use regulation, at least when it involves
large-scale development, has increasingly shifted toward a model of
negotiation. This shift may have the advantage of producing zoning rules
that more carefully balance the needs of the owner and the community in
the context of a given development proposal. Striking such a balance,
however, can pose a challenge to the model of neutral, even-handed,
prospective rational planning. See Carol Rose, Planning and Dealing:
Piecemeal Land Controls as Problem of Local Legitimacy, 71 Cal. L. Rev.
837 (1983).
Facing opposition from community groups over development or from
environmental groups who fear the adverse environmental effects of
particular projects, some developers have struck back by bringing lawsuits
against community groups to intimidate them into dropping their

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opposition. The most common action brought is a claim of defamation, in
which the developer alleges that defendants have made false statements
intended to harm the developer’s reputation. Most courts have dismissed
these lawsuits, on the grounds that (1) defendants have free speech rights
to petition the government, or (2) the statements alleged to have been
made by defendants constitute opinions, not statements of fact, and thus
cannot be true or false. These cases have been characterized as SLAPP
suits, a term that stands for “strategic lawsuits against public
participation.” See Penelope Canan & George W. Pring, SLAPPs: Getting
Sued for Speaking Out (1996).
Defendants in SLAPP suits have several avenues of recourse. They
may bring a countersuit (called a “SLAPP-back”) for the tort of malicious
prosecution, claiming that the lawsuit against them is frivolous, without
substantial basis, and motivated by malice. They may seek sanctions
against the plaintiff’s attorney through the state board of bar overseers, on
the grounds that the plaintiff’s attorney has violated state ethical guidelines
against bringing litigation for the sole purpose of harassment. If the suit
was brought in federal court, they may ask for Rule 11 sanctions, on the
grounds that the claim lacks any basis in law. Some states have also
regulated SLAPP suits by statute. See, e.g., Mass. Gen. Laws. ch. 231,
§59H; Cal. Civ. Proc. §425.16; N.Y. Civ. Rights Law §§70-a & 76-a;
N.Y.C.P.L.R. §§3211(g) & 3212(h).

§2 CONSTRAINTS ON ZONING AUTHORITY TO

PROTECT
PREEXISTING PROPERTY RIGHTS
When municipalities enact zoning codes, the legislation tends to follow
existing land use patterns. This means that owners who are using their
property in a certain way, such as for single-family homes or farmland, are
able to continue doing so. However, zoning may also require owners to
phase out or change existing uses, or may impose new rules in the middle
of the development process, as local governments recognize new concerns
(or respond to new pressures). Two doctrines in particular, prior
nonconforming use and vested rights, can provide legal protection against
newly enacted zoning or other land use regulation that surprises owners
who had invested in reliance on prior law.
The source and status of these doctrines is unclear. They may
constitute applications of the federal or state constitutional rules
prohibiting uncompensated takings of property, or due process limitations

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on retroactive legislation. However, many cases applying these rules treat
them as nonconstitutional doctrines, suggesting that they are based on an
interpretation of the state’s zoning enabling act or its administrative law
code. See generally Christopher Serkin, Existing Uses and the Limits of
Land Use Regulations, 84 N.Y.U. L. Rev. 1222 (2009).

§2.1 Prior Nonconforming Uses

Town of Belleville v. Parrillo’s, Inc.

416 A.2d 388 (N.J. 1980)

Map: Harrison Street, Belleville, New

Jersey

ROBERT L. CLIFFORD, J.
[S]ometime prior to 1955 Parrillo’s operated as a restaurant and
catering service on Harrison Street, Belleville. On January 1, 1955 the
Town enacted a new zoning ordinance of which all provisions pertinent
here are still in effect. The system created under that ordinance provided
for zoning under which specific permitted uses for each zone were
itemized. Uses not set forth for a particular zone were deemed prohibited.
Parrillo’s was situated in a “B” residence zone, which did not allow
restaurants. However, because it had been in existence prior to the
effective date of the zoning ordinance, defendant’s establishment qualified
as a preexisting nonconforming use3 and, under the terms of the ordinance,
was allowed to remain in operation.
In 1978 defendant’s owners made certain renovations in the premises.
Upon their completion Parrillo’s opened as a discotheque. We readily
acknowledge that included among those for whom the term “discotheque”
has not, at least until this case, found its way into their common parlance
are some members of this Court; and on the assumption that there may be
others whose experience has denied them an intimate familiarity with the
term and the milieu to which it applies, we pause to extend the benefit of
definition. Webster’s Third New International Dictionary 63a (1976)
informs us that a discotheque is a “small intimate nightclub for dancing to
recorded music; broadly: a nightclub often featuring psychedelic and
mixed-media attractions (as slides, movies, and special lighting effects).”

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“Disco” appears to be an accepted abbreviation. Defendant’s operation is
closer to the broad definition above than it is to a small or intimate cabaret.
Shortly after they had opened under the new format, Parrillo’s owners
applied for a discotheque license as required by the Town’s ordinance
regulating dancehalls. Although the application was denied, defendant
continued business as usual. Thereupon the municipal construction code
official filed the charges culminating in the conviction under review. The
municipal court imposed a fine of $250.00.
On a trial de novo after defendant’s appeal to the Superior Court, Law
Division, the defendant was again found guilty. The Appellate Division
reversed.
Superior Court Judge Joseph Walsh made extensive and specific
findings of fact. They are amply supported by the record and are as
follows:
The business was formerly advertised as a restaurant; it is now
advertised as a “disco.” It was formerly operated every day and now it is
open but one day and three evenings. The primary use of the dance hall
was incidental to dining; now it is the primary use. The music was
formerly provided by live bands and now it is recorded and operated by a
so-called “disc-jockey.” An admission charge of $3.00 on the Wednesday
opening and $5.00 on the Friday and Saturday openings is now mandatory
as opposed to any prior entry charge. There is no charge for Sunday.
Formerly there was but one bar; now there are several.
During the course of the testimony it was admitted that the business is
operated as a “disco.” Normal lighting in the premises was altered to
psychedelic lighting, colored and/or revolving, together with mirrored
lighting. The premises were crowded and there were long lines waiting to
enter. There are now fewer tables than the prior use required and on one
occasion there were no tables. The music was extremely loud and the
premises can accommodate 431 persons legally. There have been
numerous complaints from residents adjacent to the area. During the
course of the testimony “disco” dancing was described by the owners as
dancing by “kids” who “don’t hold each other close.” The bulk of the prior
business was food catering; now there is none. The foods primarily served
at the present time are “hamburgers” and “cheeseburgers,” although there
are other selections available to people who might come in earlier than the
“disco” starting time.
On the basis of these findings Judge Walsh concluded that there had
been a prohibited change in the use of the premises. He found to be
dispositive the straightforward proposition that “a ‘disco’ is a place
wherein you dance and a restaurant a place wherein you eat. It is as simple

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as that” — an unvarnished exercise in reductionism, perhaps, but one fully
justified in this case. He concluded that the defendant had “abandoned all
the pretenses of the continued existence of a restaurant as it was before.”
We agree with that conclusion.
Historically, a nonconforming use has been looked upon as “a use of
land, buildings or premises that lawfully existed prior to the enactment of a
zoning ordinance and which is maintained after the effective date of such
ordinance even though it does not comply with the use restrictions
applicable to the area in which it is situated.” 6 R. Powell, The Law of Real
Property, ¶871 (Perm. ed. 1979). Under the Municipal Land Use Act, N.J.
Stat. §§40:55D-1 et seq., such property is deemed to have acquired a
vested right to continue in such form, irrespective of the restrictive zoning
provisions:

Any nonconforming use or structure existing at the time of the passage of an

ordinance may be continued upon the lot or in the structure so occupied and
any such structure maybe restored or repaired in the event of partial
destruction thereof. (N.J. Stat. §40:55D-68.)

This statutory guarantee against compulsory termination, however, is

not without limit. Because nonconforming uses are inconsistent with the
objectives of uniform zoning, the courts have required that consistent with
the property rights of those affected and with substantial justice, they
should be reduced to conformity as quickly as is compatible with justice.
In that regard the courts have permitted municipalities to impose
limitations upon nonconforming uses. Such restrictions typically relate to
the change of use; the enlargement or extension of the repair or
replacement of nonconforming structures; and limits on the duration of
nonconforming uses through abandonment or discontinuance.
The method generally used to limit nonconforming uses is to prevent
any increase or change in the nonconformity. Under that restrictive view
our courts have held that an existing nonconforming use will be permitted
to continue only if it is a continuance of substantially the same kind of use
as that to which the premises were devoted at the time of the passage of
the zoning ordinance. In that regard nonconforming uses may not be
enlarged as of right except where the change is so negligible or
insubstantial that it does not warrant judicial or administrative interference.
Where there is doubt as to whether an enlargement or change is substantial
rather than insubstantial, the courts have consistently declared that it is to
be resolved against the enlargement or change.
In the instant case it is acknowledged by all parties that the former

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restaurant had constituted a proper preexisting nonconforming use. The
issue then becomes whether the conversion from a restaurant to a
discotheque represented a substantial change, and was thus improper.
Fundamental to that inquiry is an appraisal of the basic character of the
use, before and after the change.
Courts that have engaged in that appraisal have proceeded with a
caution approaching suspicion. Hantman v. Randolph Twp., 155 A.2d 554
(N.J. Super. Ct. App. Div. 1959), well illustrates the proper analysis for
examining changes in nonconforming uses. In Hantman, the plaintiffs
owned a commercial bungalow colony which was primarily dedicated to
seasonal use. When the area in which the colony was situated was zoned
for residential use, the plaintiffs’ property was afforded preexisting
nonconforming use status by the Township. In 1957 the plaintiffs
attempted to convert the bungalows into dwellings suitable for year-round
occupancy. That effort was challenged by the Township on the ground that
the change would constitute an unlawful extension of the nonconforming
use.
Reviewing the facts the court established that the plaintiffs’ bungalows
were in fact nonconforming uses. It then proceeded to address the question
of whether permitting full-time occupancy would effect a substantial
change in the premises. Answering in the affirmative, the court declared,
“an increase in the time period during which a nonconforming use is
operated may justifiably be the basis for finding an unlawful extension
thereof, just as changes in the functional use of the land or increases in the
area of use have been.” Recognizing that nonconforming uses are
disfavored, the Appellate Division emphasized the deleterious effect that
year-round operation of the bungalows might have upon the general
welfare of the municipality. Noting that where there is doubt as to the
substantiality of the extension, it should be disapproved, the court found
the proposed conversion represented a substantial, and therefore unlawful,
change in the nonconforming property. We fully approve of and adopt the
approach and analytical framework of the Hantman court.
We have already expressed our agreement with the municipal court
and with Judge Walsh, presiding at the trial de novo, that defendant’s
conversion of the premises from a restaurant to a discotheque resulted in a
substantial, and therefore impermissible, change. The entire character of
the business has been altered. What was once a restaurant is now a
dancehall. Measured by the zoning ordinance the general welfare of the
neighborhood has been demonstrably affected adversely by the conversion
of defendant’s business. Our strong public policy restricting
nonconforming uses requires reversal of the judgment below.

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 Notes and Questions
1. Curtailing incompatible uses through amortization. Even where
zoning generally follows existing patterns of development, there can be
isolated parcels that are being used in ways that are not compatible with
the surrounding zone. In many instances, this can be non-controversial, as
with a small grocery store in an otherwise residential neighborhood. But
nonconforming uses can also undermine the public purposes of zoning and
create a legislatively protected monopoly, if an owner has the exclusive
right to conduct a business in the area. Early zoning codes generally
assumed that disfavored incompatible uses would largely fade away over
time, but that turned out not to be the case for many such anomalies. (Can
you see why?) Zoning codes thus have to balance the rights of owners
whose established uses conflict with the orderly development of a
community and the expectations of neighbors who may be relying on the
general character of a neighborhood to be protected by zoning.
In most states, local governments may require nonconforming uses to
be phased out through a process called amortization. With amortization,
local governments give the nonconforming owner a limited period of time
to continue the use. If this gives owners sufficient time to realize a
reasonable return on their investment, that will balance the owner’s
reliance interest with the public’s needs represented in the zoning code.
Amortization periods can be fixed by statute, depending on the nature of
the property. See Patricia E. Salkin, Abandonment, Discontinuance and
Amortization of Nonconforming Uses: Lessons for Drafters of Zoning
Regulations, 38 Real Est. L.J. 486 (2010) (citing local amortization
statutes with periods ranging from 3 to 50 years). They can also be set on a
case-by-case basis, looking at issues such as the depreciable value of the
property and an owner’s specific investment. Courts have upheld both
methods, but in so doing, generally look to whether owners can obtain a
reasonable return on their investment, weighing public gain against private
loss. See, e.g., Bugsy’s, Inc. v. City of Myrtle Beach, 530 S.E.2d 890, 895
(S.C. 2000).
In general, nonconforming uses may continue even where property has
been transferred from one owner to another. However, in Village of
Valatie v. Smith, 632 N.E.2d 1264 (N.Y. 1994), the court upheld a
provision that provided the right to continue a nonconforming use would
be terminated upon transfer of the property. The defendant had inherited a
mobile home that was nonconforming because it was situated outside of a
mobile home park. The village sought to have the mobile home removed,
and the owner argued that pegging termination to the transfer had no

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relation either to the village’s land use objectives or to the owner’s
investment and impermissibly zoned based on who owns the property, not
on the use to which the property is being put. The court rejected these
arguments under a general test that looked to the overall reasonableness of
the amortization period.
2. Limiting changes for nonconforming uses. Belleville v. Parrillo’s
illustrates another way to balance an owner’s interest in continuing a
nonconforming use against the public interest in the zoning code, by
strictly limiting the owner to the use that existed at the time zoning was
imposed. An owner may then continue the nonconforming use indefinitely.
This right to continue a nonconforming use can raise a number of legal
challenges. For example, is an owner allowed to increase the intensity of
uses as business grows? See, e.g., Piesco v. Hollihan, 47 A.D.3d 938 (N.Y.
App. Div. 2008) (nonconforming restaurant and marina allowed to
increase the volume and intensity of the use). Can the owner of a
nonconforming parcel expand to use more of a given parcel? Compare,
e.g., Shirley Wayside Ltd. Partnership v. Board of Appeals of Shirley, 961
N.E.2d 1055 (Mass. 2012) (nonconforming mobile home park entitled to
expand the area on the property that had mobile homes on it), with Adams
Outdoor Advertising, L.P. v. Board of Zoning Appeals, 645 S.E.2d 271
(Va. 2007) (owner of nonconforming billboard denied the right to add an
electronic message board because the addition increased the billboard’s
depth, even though its visible dimensions were unchanged). How should
courts evaluate the extent to which a change to a nonconforming use is
permissible?
3. Abandonment and destruction. Under many zoning ordinances, if
a nonconforming use is abandoned or discontinued, the nonconforming
status is lost, even if the owner later attempts to reestablish that use. The
standard for abandonment or discontinuance is generally defined by the
relevant zoning code, most of which are interpreted by courts to require
proof of the owner’s intent to abandon. Compare, e.g., Gorgone v. D.C.
Board of Zoning Adjustment, 973 A.2d 692, 694 (D.C. 2009) (requiring a
showing of an overt act or failure to act that implies abandonment as well
as evidence of intent by the owner to abandon), with Pike Indus., Inc. v.
Woodward, 999 A.2d 257, 261-262 (N.H. 2010) (zoning ordinance did not
require evidence of intent to abandon where it provided that if “a non-
conforming use has been discontinued for more than one year for any
reason, such non-conforming use shall not thereafter be re-established”). If
a nonconforming use is not abandoned, but substantially damaged or
destroyed, for example in a fire, most zoning ordinances do not allow

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owners to rebuild.

§2.2 Vested Rights

Stone v. City of Wilton

331 N.W.2d 398 (Iowa 1983)

Map: Wilton, Iowa

ARTHUR MCGIVERIN, Justice.

Plaintiffs Alex and Martha Stone appeal from the dismissal of their
petition for declaratory judgment, injunctive relief and damages in an
action regarding defendant City of Wilton’s rezoning from multi-family to
single-family residential of certain real estate owned by plaintiffs. The
issues raised by plaintiffs focus on the validity of the rezoning ordinance.
We find no error in trial court’s rulings and affirm its decision.
This appeal is a zoning dispute involving approximately six acres of
land in the city of Wilton, Iowa. Plaintiffs purchased the undeveloped land
in June 1979 with the intent of developing a low income, federally
subsidized housing project. The project was to consist of several multi-
family units; therefore, feasibility of the project depended upon multi-
family zoning of the tract. At the time of purchase approximately one-
fourth of plaintiffs’ land was zoned R-1, single-family residential, and the
remainder was zoned R-2, multi-family residential.
After the land was purchased, plaintiffs incurred expenses for
architectural fees and engineering services in the preparation of plans and
plats to be submitted to the city council and its planning and zoning
commission. In addition, plaintiffs secured a Farmers’ Home
Administration (FHA) loan commitment for construction of the project.
In December 1979 plaintiffs filed a preliminary plat for the project
with the city clerk. In March 1980, following a public meeting, the
planning and zoning commission recommended to the city council that
land in the northern part of the city be rezoned to single-family residential
due to alleged inadequacies of sewer, water and electrical services. The
rezoning recommendation affected all of plaintiffs’ property plus tracts

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owned by two other developers. Plaintiffs’ application on May 21, 1980,
for a building permit to construct multi-family dwellings was denied due
to the pending rezoning recommendation.
In May 1980, plaintiffs filed a petition against the city seeking a
declaratory judgment invalidating any rezoning of their property,
temporary and permanent injunctions to prohibit passage of any rezoning
ordinance, and in the event of rezoning, $570,000 damages for monies
expended on the project, anticipated lost profits and alleged reduction in
the value of plaintiffs’ land.
In accordance with the recommendation of the planning and zoning
commission, the city council passed an ordinance rezoning the land from
R-2 to R-1 in June 1980. Following the council’s rezoning decision, the
planning and zoning commission approved plaintiffs’ preliminary plat.
[T]he inevitable restrictions on individual uses of property which
accompany zoning normally do not constitute a taking. Plaintiffs, however,
claim to have had a vested right in developing their property as subsidized,
multi-family housing and, therefore, the rezoning allegedly amounted to a
taking of this right. Consequently, they contend the zoning ordinance
should be inapplicable to their project. We disagree.
The record shows that a factor in the Stones’ choice of property was
zoning which permitted multi-family residences. Immediately after
purchasing the property in Wilton, plaintiffs made certain expenditures in
preparation for obtaining the necessary government financing and in order
to comply with city ordinances for platting and building permits. These
expenditures totaled approximately $7,900, plus the time and effort
expended personally by the plaintiffs.
The standard for determining if a property owner has vested rights in a
zoning classification was set forth in Board of Supervisors of Scott County
v. Paaske, 98 N.W.2d 827, 831 (Iowa 1959):

It is impossible to fix a definite percentage of the total cost which establishes

vested rights and applies to all cases. It depends on the type of the project, its
location, ultimate cost, and principally the amount accomplished under
conformity. Each case must be decided on its own merits, taking these
elements into consideration. (Emphasis added.)

Prior to rezoning, Paaske purchased a parcel of land onto which he

planned to move five houses. The county granted him a permit to move the
houses. Paaske excavated the basements for four houses; placed a septic
tank underground for the fifth house; laid concrete footings for the
basement of two houses; entered into a contract for the building of the

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foundations under all five houses, and placed a substantial amount of
building materials on the property before the land was rezoned. We
concluded that Paaske’s endeavors prior to rezoning were so substantial
that he had a vested right in completing his project.
In the present case, one of the factors leading to the purchase of this
land in Wilton was the fact that it was zoned for multi-family residences.
Plaintiffs secured funding from the FHA and engaged the services of an
architect and engineer who drew up plans and plats. But these were only
the most preliminary steps towards construction. The architect’s plans
were not the working blueprints of a contractor. The trial court stated they
were “the kind [of plans] that one could find in Better Homes and Gardens
[magazine].” No construction bids were sought and no construction
contracts were let. No materials were placed on the site and no
construction or earth work was started. We agree with the trial court that
plaintiffs’ efforts and expenditures prior to rezoning were not so
substantial as to create vested rights in the completion of the housing
project on that particular tract of land in Wilton.
Under the facts of this case, plaintiffs had to prove they had a vested
right to complete their intended project in order to argue that the rezoning
constituted a taking. All that the rezoning did was to deprive plaintiffs of
what they considered to be the land’s most beneficial use. If, as we have
found, the ordinance is a valid exercise of police power, the fact that it
deprives the property of its most beneficial use does not render it an
unconstitutional taking.
“In determining where a zoning regulation ends and a taking of
property begins, the test is essentially one of reasonableness.” C. Rhyne,
The Law of Local Government Operations, §26.16 at 745 (1980). We do
not believe that rezoning a portion of plaintiffs’ property from R-2 to R-1
exceeded the bounds of reasonableness. The city council clearly could
have reasonably believed that the general welfare interests of the
community outweighed the Stones’ investment interest in constructing
subsidized, multi-family housing.
Even if the testimony of Stones’ expert is accepted, the change in
zoning resulted in, at most, a 42% decrease in value of their property. Such
economic impact does not constitute a taking in light of the council’s
reasonable belief that the public welfare required a change in zoning. See
Euclid v. Ambler Realty Co., 272 U.S. 365 (1926) (75% diminution in
value caused by zoning law did not constitute a taking). Other evidence,
however, showed the rezoning to R-1 only slightly affected the fair market
value of plaintiffs’ land.
Plaintiffs’ claim to a right to realize their investment expectations

615
overlooks the fact that “rights granted by legislative action under police
power can be taken away when in the valid exercise of its discretion the
legislative body sees fit.” [Keller v. City of Council Bluffs, 66 N.W.2d 113,
119 (Iowa 1954).] At most, the decision of the council “took” from
plaintiffs a sizeable tax shelter. Because the reasonableness of the
council’s decision to rezone plaintiffs’ property clearly is at least a fairly
debatable question, we cannot substitute our view of reasonableness for
that of the council.
We hold that the ordinance which rezoned an area of the city of Wilton
that included a portion of plaintiffs’ land is valid and applicable to
plaintiffs’ land and proposed project.

Notes and Questions

Most states agree with the standard in Stone: owners have vested rights
to existing zoning law if they have invested substantially in good faith
reliance on that law. A majority of courts will require an owner’s
substantial investment to be made based on a validly issued building
permit or other approval. Julian Conrad Juergensmeyer & Thomas E.
Roberts, Land Use Planning and Development Regulation Law §5.28, at
171 (3d ed. 2013). In some states, by contrast, developers can vest their
rights if they incur substantial costs in reasonable reliance on existing law
even in the absence of a building permit. See Friends of Yamhill County,
Inc. v. Board of Commissioners of Yamhill County, 264 P.3d 1265, 1274
(Or. 2011); see also Va. Code §15.2-2307 (requiring extensive obligations
or substantial expenditure in good faith reliance on a “significant
affirmative governmental act” such as a rezoning or site plan approval).
The question of how to measure the necessary substantiality of the
investment has divided the courts. In Friends of Yamhill County, the court
noted that one approach has been to compare “ ‘the ratio of expenses
incurred to the total cost of the project,’ ” measuring “those expenses that
related ‘exclusive[ly]’ to the proposed development.” 264 P.3d at 1275
(quoting Town of Hempstead v. Lynne, 222 N.Y.S.2d 526 (1961)). Friends
of Yamhill County identified a broader approach, however, adding to the
ratio analysis other factors that include:

the good faith of the landowner, whether or not he had notice of any
proposed zoning or amendatory zoning before starting his improvements, the
type of expenditures, i.e., whether the expenditures have any relation to the
completed project or could apply to various other uses of the land, the kind
of project, the location and ultimate cost. Also, the acts of the landowner
should rise beyond mere contemplated use or preparation, such as leveling of

616
 land, boring test holes, or preliminary negotiations with contractors or
architects.

Id. (quoting Clackamas Co. v. Holmes, 508 P.2d 190 (Or. 1973) (citations
omitted)).
A minority of states grants developers vested rights upon the filing of a
valid and fully complete building permit application, without the need to
demonstrate substantial expenditures. See, e.g., Abbey Road Group, LLC v.
City of Bonney Lake, 218 P.3d 180, 182-183 (Wash. 2009). This so-called
early vesting approach is thought to promote certainty, because it identifies
a moment in the development process when owners and the local
government know that the land use rules in force will remain. Some states
allow vesting if a developer obtains site-specific approval for
development, such as a preliminary subdivision plan, even before a
building permit is issued; New Jersey provides such protection. See, e.g.,
N.J. Stat. §§40:55D-49 to 40:55D-52. Some states go so far as to grant
developers vested rights to use their land in accordance with the zoning
law in place at the time they apply for site-specific approval. Colo. Rev.
Stat. §§24-68-101 to 24-68-106; Mass. Gen. Laws ch. 40A, §6; Tex. Loc.
Govt. Code §§245.002-245.006; Wash. Rev. Code §§19.27.095,
58.17.033.

Problems
1. In Cumberland Farms v. Town of Groton, 719 A.2d 465 (Conn.
1998), land used as a gas station was rezoned for residential use. The gas
station was allowed to continue operation as a prior nonconforming use.
However, when the owner was required by federal environmental statutes
to clean up pollution caused by leaking underground storage tanks on the
property, the owner sought to open a little convenience store on the
property along with the gas station to raise enough money to pay for the
cleanup. Assume that the income from operation of the gas station is not
sufficient to pay for the environmental cleanup but that the owner could
sell the property at a very low price to someone who could clean up the
property, demolish the gas station, and construct condominiums on the
land. Such a sale would end the prior nonconforming use and clean up the
property but the current owner would have lost his business and received
very little in selling the land. The current owner cannot convert the
property to condominiums himself because no bank would loan him the
money for the project. The property has a viable economic use for another
owner but the only economically viable use for the current owner is to
open the convenience store and keep operating the gas station.

617
 Is the current owner entitled to open a small convenience store on the
gas station property under the prior nonconforming use doctrine?
2. A licensed day care center operates on a parcel of property that is
rezoned for residential use. The day care use is allowed to continue as a
prior nonconforming use. The cost of insurance rises so dramatically that it
may no longer be profitable to operate the day care center. The site is
suitable for a single-family dwelling, but the structure is not; the cost of
renovating the day care center to convert it to a single-family home is
roughly equivalent to the cost of tearing it down and building an entirely
new structure. The owner of the day care center wishes to convert the
property for use as classroom facilities for deaf high school students, who
would take some classes at the center and other classes with hearing
students at the high school. The building is suited to such a use.
a. Prior nonconforming use. Would this constitute an unlawful
extension of a prior nonconforming use under the standards articulated
in Belleville v. Parrillo’s?
b. Vested rights. The owner gets the property rezoned for school
purposes, begins plans to convert the building, hires and pays fees to an
architect and signs a contract with a building contractor to renovate the
day care center and a contract with the school board to provide classes
in sign language for the deaf high school students in the school district.
Both contracts are contingent on obtaining a building permit as
required by the local zoning law. The owner applies for, but has not yet
been granted, a building permit and has spent a total of $20,000. The
neighbors organize opposition to the location of the project and
successfully induce the city council to rescind its rezoning of the
parcel, effectively returning the parcel to residential use. The owner of
the parcel sues the city, claiming that the second rezoning interferes
with her vested rights in the prior zoning classification. She argues that
owners have vested rights to use property in accordance with existing
zoning classifications if they invest substantial amounts of money (in
addition to the purchase price of the parcel) in plans to build on the
parcel in reasonable reliance on the existing classification. The city
argues that no vested rights can arise until a building permit has
actually been issued, regardless of the sum the owner has spent in
preparatory plans. Which rule should the court adopt?

§3 REZONING AND CHALLENGES TO ZONING

CLASSIFICATIONS

618
 Developers who want to build projects that are inconsistent with
current zoning requirements may approach the planning board or the city
council with a proposal to rezone the parcel in a manner that will
authorize the project. Rezoning may be done for particular parcels or for
whole districts or portions of districts. Rezoning can involve amendments
to the text of the ordinance, which prospectively change the allowable uses
or the permitted physical attributes of the development, or can involve map
amendments, which change the geographical boundaries of existing zones.
Some rezoning involves both text and map amendments.
Many state zoning enabling acts require any changes in the zoning
ordinance to accord with the comprehensive plan. This does not mean the
plan cannot be changed over time. It does mean, however, that zoning
decisions are intended to be made with a broad, long-range view of how
uses harmonize in the jurisdiction as a whole. Some courts will hold local
legislatures strictly to the requirement that zoning proceed in accord with a
general plan, striking down zoning amendments that are not sufficiently
justified in light of comprehensive planning. Riya Finnegan LLC v.
Township Council of South Brunswick, 962 A.2d 484, 489-491 (N.J.
2008). Many courts grant greater discretion to the governing body; some
treat the zoning code itself as evidence of a master plan, and some courts,
particularly in states that have no requirement for planning, may not
require consistency with planning at all.
Review for consistency with a general plan is only one of several
doctrines under which courts reviewing challenges to particularized zoning
changes may take a less deferential approach than normally applied to
economic and social regulation. This section reviews several of these
doctrines: (1) contract and conditional zoning, (2) spot zoning, (3) the
change or mistake doctrine, and (4) characterizing rezoning as a quasi-
judicial, rather than legislative, act. These doctrines, which can overlap to
some degree in practice, do not necessarily render rezoning invalid, but
they can weaken the presumption of validity that generally applies to
legislative acts.
This less deferential approach to judicial review may be justified by
concerns about a breakdown in the political process through which a given
land use law has been passed, or concerns about local corruption.
Alternatively, courts may be seeking to reinforce the primacy of general,
prospective, comprehensive zoning. As you read the material in this
section, consider whether it is better for courts to defer to local legislatures
when owners challenge zoning law or take a more active role in overseeing
the local political process.

619
 Durand v. IDC Bellingham, L.L.C.

793 N.E.2d 359 (Mass. 2003)

Map: Bellingham, Massachusetts

CORDY, ROBERT, J.
On May 28, 1997, residents attending the town of Bellingham’s
(town’s) open town meeting voted to rezone a parcel of land located in the
town. Three and one-half years later, several residents living near the
parcel brought suit challenging the rezoning. The question before the court
is whether the town meeting vote was invalid because the prospective
owner of the parcel, IDC Bellingham, L.L.C. (IDC), had offered to give
the town $8 million if the rezoning was approved and a power plant was
built and operated on the site.

1. Background
The essential facts of this case are undisputed. In 1993, the town began
to examine ways to increase its property tax base. An economic
development task force was appointed by the town’s board of selectmen
(board) to study the issue. The task force prepared a report recommending
that development of industrial land in the town be a priority. The report
identified a parcel on the corner of Depot Street and Box Pond Road
(locus), which abutted land that was already zoned for industrial use, as a
candidate for rezoning from agricultural and suburban use to industrial
use. Subsequently, at the town’s May, 1995, town meeting, a zoning article
proposing the rezoning of the locus and an adjacent parcel for industrial
use fell eight votes short of the required two-thirds majority.
In 1997, IDC, which owned a power plant in the town, began
discussions with town officials about the possibility of rezoning the locus
so that a second plant might ultimately be built on it. These discussions
included the subject of what public benefits and financial inducements
IDC might offer the town with regard to the proposed plant. The town
administrator told IDC officials that the town was facing an $8 million
shortfall in its plans to construct a much needed new high school. Shortly

620
thereafter, the president of IDC publicly announced that IDC would make
an $8 million gift to the town if IDC (1) decided to build the plant; (2)
obtained the financing and permits necessary to build the plant; and (3)
operated the plant successfully for one year. The offer was made to
generate support for the plant and became common knowledge in the
town.
While the genesis of the offer was the need for a new high school, IDC
made it clear that the town could use the money for any municipal
purpose. The town’s high school building committee, the town’s finance
committee, the town’s master plan steering committee, and certain town
officials voiced strong support for the plant and the zoning change
required for its construction on the locus. Some committee members
engaged in a campaign to get voters to the town meeting at which the
rezoning was to be considered.
On May 28, 1997, the town held its open town meeting and a zoning
article calling for the rezoning of the locus was introduced. IDC made a
presentation of its proposed use of the locus for a second power plant and
reiterated its offer of an $8 million gift to the town if the plant was built
and became operational. The planning board and finance committee both
recommended passage of the zoning article. There was some discussion of
the zoning aspects of the proposal, as well as discussion regarding the
offered gift. Residents for and against the proposal to build a plant on the
site spoke, and IDC responded to their comments. The zoning article
passed by more than the necessary two-thirds vote of the town meeting.
Between May, 1997, and January, 2001, IDC spent approximately $7
million to develop the locus for a power plant. At some point in the
summer of 1998, the board learned that IDC was proposing to increase the
size of the plant beyond what it had presented to the town meeting in 1997.
Consequently, the board wrote a letter to the energy facilities siting board
[whose approval is required prior to the construction of any “generating
facility,” see Mass. Gen. Laws ch. 164, §§69H-69J1/2] withdrawing its
support for the plant. Shortly thereafter, representatives of IDC and the
board met to negotiate a compromise. The outcome of those negotiations
was an agreement by IDC to reduce the size of the plant and, in April,
1999, the execution of an “Agreement for Water/Wastewater Services”
between IDC and the town. The agreement provided in part that:

IDC shall provide funds ($8,000,000.00) to the Town for its various capital
expenditures, municipal projects and municipal improvements. This
Agreement is intended to memorialize, without duplicating the $8,000,000
commitment IDC and its affiliates previously made to the Town in

621
 connection with the Plant.

IDC submitted a request for five special permits to the town’s zoning
board of appeals on May 5, 2000, and the special permits were granted on
January 2, 2001. On January 23, 2001, the plaintiffs, eight landowners
located near the locus, filed suit in the Land Court against IDC, the town,
the town zoning board of appeals, and the owner of the property.
[Plaintiffs] seek declaratory judgment that the rezoning of the locus on
May 28, 1997, was void because it constituted illegal “contract” zoning.
[T]he [trial] judge found that “contract zoning” had not occurred here,
at least within the meaning he ascribed to that term. He then found that
“there would be little doubt that the 1997 rezoning was valid” if the $8
million gift offer had not been made, and proceeded to discuss its
implications. He viewed the offer of the gift as an “extraneous
consideration,” because it was not defended as being in mitigation of the
impacts of the project, and therefore concluded that it was “offensive to
public policy.” He ultimately concluded that the fact that the offer was
made was sufficient, without the necessity of finding that voting town
meeting members were influenced by it, to nullify the rezoning vote. The
defendants appealed. Because we conclude that the voluntary offer of
public benefits beyond what might be necessary to mitigate the
development of a parcel of land does not, standing alone, invalidate a
legislative act of the town meeting, we reverse.

2. Discussion
The enactment of a zoning bylaw by the voters at town meeting is not
only the exercise of an independent police power; it is also a legislative act
carrying a strong presumption of validity. It will not normally be undone
unless the plaintiff can demonstrate “by a preponderance of the evidence
that the zoning regulation is arbitrary and unreasonable, or substantially
unrelated to the public health, safety . . . or general welfare.” Johnson v.
Edgartown, 680 N.E.2d 37, 40 (Mass. 1997). If the reasonableness of a
zoning bylaw is even “fairly debatable, the judgment of the local
legislative body responsible for the enactment must be sustained.” Crall v.
Leominster, 284 N.E.2d 610, 615 (Mass. 1972). Such an analysis is not
affected by consideration of the various possible motives that may have
inspired legislative action. See Boston v. Talbot, 91 N.E. 1014, 1016-1017
(Mass. 1910). (“The diverse character of such motives, and the
impossibility of penetrating into the hearts of men and ascertaining the
truth, precludes all such inquiries as impracticable and futile”).4

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 a. State Law
Municipal zoning procedure is governed by Mass. Gen. Laws ch. 40A.
Section 5 dictates the process a municipality must follow in amending its
zoning bylaws. In a town, such an amendment must be submitted to the
board [of selectmen], which, within fourteen days, must then refer the
amendment to the planning board for review. The planning board has
sixty-five days during which to hold a public hearing, with notice provided
beforehand, at which members of the public can offer their views on the
amendment. Once the hearing has been held, the planning board has
twenty-one days to provide its recommendation to the town meeting.
Thereafter, the town meeting may adopt, reject, or amend the proposed
amendment to the zoning bylaw. The town meeting must act, however,
within six months of the planning board hearing. The amendment will not
be enacted unless it receives a two-thirds vote from town meeting. Neither
party claims that this process was not followed, and the record before us
indicates that it was.
An agreement between a property owner and a municipality to rezone
a parcel of land may cause the municipality to violate the process
mandated by §5. Such an instance of “contract zoning,” as we will refer to
it, involving a promise by a municipality to rezone a property either before
the vote to rezone has been taken or before the required §5 process has
been undertaken, evades the dictates of Mass. Gen. Laws ch. 40A, and
may render the subsequent rezoning invalid. The Land Court judge
correctly concluded that no such advance agreement existed in this case.
IDC pledged that if the town were to rezone the locus for industrial use
(and if other events occurred), IDC would pay the town $8 million. At no
time before the May 28, 1997, town meeting were the voters of town
meeting bound to approve the zoning change.5 Because the town followed
the procedures dictated by §5, the rezoning was not invalid on statutory
grounds.6

b. Validity of the Bylaw as Exercise of Legislative Police Power

The judge found that absent the $8 million offer, the rezoning was
substantively valid. We take that to mean that it was neither arbitrary nor
unreasonable, and was substantially related to the public health, safety, or
general welfare of the town. In other words, its adoption served a valid
public purpose. The record fully supports this conclusion. The locus
abutted land zoned for industrial use; a town-appointed task force
(preceding and completely unrelated to the power plant development
proposal) had recommended its rezoning after studying the town’s tax base

623
and the need for economic development;7 and a previous rezoning attempt
based on that recommendation had just barely failed to get the necessary
two-thirds majority at the 1995 town meeting.
In sum, the enactment of the bylaw rezoning the locus was not
violative of State law or constitutional provisions, and met the substantive
requirements of a valid exercise of legislative police power. Nevertheless,
the judge set it aside because he concluded that the $8 million offer was an
“extraneous consideration,” that is, an offer not “tied to the impacts of the
project” and therefore “offensive to public policy.” We must decide
whether such a consideration, voluntarily offered as part of a campaign in
support of a development project, constitutes an independent ground on
which to set aside a legislative act, regardless of its otherwise valid nature.
If it is, we must decide further whether the mere existence of an
“extraneous consideration” invalidates the legislative act as a matter of
law, regardless whether it is proved to have actually influenced the votes
of the legislative body. Because we conclude that a voluntary offer of
public benefits is not, standing alone, an adequate ground on which to set
aside an otherwise valid legislative act, we do not reach the second
question.
In general, there is no reason to invalidate a legislative act on the basis
of an “extraneous consideration,” because we defer to legislative findings
and choices without regard to motive. We see no reason to make an
exception for legislative acts that are in the nature of zoning enactments,
and find no persuasive authority for the proposition that an otherwise valid
zoning enactment is invalid if it is in any way prompted or encouraged by
a public benefit voluntarily offered. We conclude that the proper focus of
review of a zoning enactment is whether it violates State law or
constitutional provisions, is arbitrary or unreasonable, or is substantially
unrelated to the public health, safety, or general welfare. In the absence of
any infirmity other than the existence of a voluntary offer to make a gift to
the town at some time in the future when the power plant became
operational, we conclude that the judge erred in holding the zoning
ordinance invalid and granting summary judgment to the plaintiffs.

FRANCIS X. SPINA, J. (concurring in part and dissenting in part, with

whom IRELAND and COWIN, join).
A municipality may not relinquish its police power by contract. The
zoning power of a municipality is among its police powers. There is no
dispute here that the zoning change is valid on its face, but the issue that
must be addressed is whether the town meeting entered into an unlawful
agreement that called for it to relinquish its zoning power. In my view,

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there is no material fact in dispute, and the facts show that the town
meeting improperly agreed to exercise its power to rezone land in
exchange for a promise to pay money. The exercise of that power to
approve the requested zoning change was a condition precedent to the
promise of IDC Bellingham, L.L.C. (IDC Bellingham), to pay money
under its agreement with the town of Bellingham (town).
The summary judgment record establishes that IDC Bellingham
offered the town $8 million, on condition that the town meeting approve
the zoning change. The same request for a zoning change had failed two
years earlier, and the only change in circumstances was the $8 million
offer. The town meeting accepted the offer and voted for the zoning
change. The undisputed evidence indicates that the vote was not “a
decision solely in respect of rezoning the locus.” Sylvania Elec. Prods. Inc.
v. Newton, 183 N.E.2d 118, 123 (Mass. 1962). The parties struck a
bargain: the payment of money in return for a zoning change.
Representatives from IDC Bellingham walked away from the town
meeting with their zoning change and an unenforceable promise to pay $8
million. There can be no doubt that were IDC Bellingham to default on its
promise, the town would be left with a questionable contract claim based
on a sale of its police power in reliance on a promise.
It was a sale of the police power because there is nothing in the record
to legitimize the $8 million offer as “intended to mitigate the impact of the
development upon the town,” or as “reasonably intended to meet public
needs arising out of the proposed development.” Rando v. North
Attleborough, 692 N.E.2d 544, 548 (Mass. App. Ct. 1998). The record
does not show that the money “bear[s] some identifiable relationship to the
locus so that there can be assurance that the town’s legislative body did not
act for reasons irrelevant to the zoning of the site at issue.” McLean Hosp.
Corp. v. Belmont, 778 N.E.2d 1016, 1022 (Mass. App. Ct. 2002). This
analysis is consistent with the law as applied to similar situations in other
areas of zoning: towns may not exact hefty payments or require conditions
unrelated to any aspect of a site in return for favorable government action.
See, e.g., Middlesex & Boston St. Ry. v. Aldermen of Newton, 359 N.E.2d
1279, 1281-85 (Mass. 1977) (city could not condition special permit for
garden apartments on developer’s leasing five apartments to town’s low-
income housing program). Considerations that are unrelated to the impacts
of a proposed development are “extraneous” and may not provide the basis
needed to justify an exercise of the police power. Sylvania Elec. Prods.
Inc. v. Newton, supra, 183 N.E.2d at 123. Where extraneous
considerations are shown to be the basis for an exercise of the police
power, the operational vote may be “impeach[ed].” Id. Here, IDC’s offer

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was unrelated to any aspect of the proposed development or any public
need arising out of the zoning change, and therefore was not a legitimate
basis for the vote. Sadly, these circumstances demonstrate government and
private interests at their shameful worst, and are most likely to involve the
most needy towns.

Notes and Questions

1. Contract and conditional zoning. In reviewing requests to rezone
parcels, governing bodies often wish to mitigate negative externalities or
to improve neighborhood amenities in connection with the change. They
sometimes do so by negotiating with the owner and then allowing the
rezoning subject to specified conditions designed to ensure that the
development is not harmful to the neighbors or the community. These
conditions may involve anything from special limitations on uses, to
specially tailored height or bulk restrictions, to requiring dedication of land
to the city to widen abutting public streets or maintain open space. This
process is called contract or conditional zoning.
Contract zoning has often been challenged as (1) unauthorized by the
zoning enabling act; (2) inconsistent with the comprehensive plan; or (3)
illegal preferential “spot zoning.” It has also been challenged as an
unconstitutional form of lawmaking on the ground that laws should not be
negotiated with a private party but should be adopted through open
procedures that can be monitored by the public. See, e.g., Mayor &
Council of Rockville v. Rylyns Enterprises, Inc., 814 A.2d 469, 488 (Md.
2002); cf. League of Residential Neighborhood Advocates v. City of L.A.,
498 F.3d 1052, 1057 (9th Cir. 2007) (settlement agreement that allowed a
synagogue in a neighborhood zoned residential only was invalid absent
compliance with ordinary conditional use procedures). While a number of
cases strike down contract zoning, others are increasingly approving the
practice, with some state statutes now expressly authorizing it. See, e.g.,
Ariz. Rev. Stat. §§9-462.01(E), 11-832. See generally Julian Conrad
Juergensmeyer & Thomas E. Roberts, Land Use Planning and
Development Regulation Law §5.11, at 141-146 (3d ed. 2013).
2. Bilateral and unilateral agreements. Some courts distinguish
between so-called bilateral and unilateral arrangements. Bilateral
agreements involve promises on both sides, by the owner and by the local
government. For example, a city may promise to rezone a lot in return for
a promise by the owner to restrict the otherwise allowable development on
her lot and perhaps to record the restrictions as covenants. Unilateral
promises, by contrast, are commitments by the owner to agree to certain

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conditions (again, often recorded) in order to induce the municipality to
rezone the land. Such arrangements protect the rights of the public to
attend a public hearing on the rezoning proposal but still raise issues about
whether such ad hoc decision making is desirable or promotes corruption
and unfair deviations from the comprehensive plan. A handful of courts
have held that unilateral conditional zoning is unlawful. See, e.g., Dacy v.
Village of Ruidoso, 845 P.2d 793, 796-798 (N.M. 1992). However, when
the restrictions on the rezoned property are agreed to voluntarily by the
landowner as part of the rezoning process courts will often uphold the
arrangement. See, e.g., Massey v. City of Charlotte, 550 S.E.2d 838, 844
(N.C. Ct. App. 2001). These unilateral restrictions are often called
conditional (rather than contract) zoning because no promise is made by
the governing body that bargains away the police power.8
In Durand, how did the court characterize the nature of the payment
that IDC agreed to make to the town of Bellingham? What did IDC get in
return? Was the majority in Durand correct to say that the promise of
funds was “extraneous”? Why might the court have declined to second-
guess the rezoning? Should it have?
3. Spot zoning. Spot zoning refers to selective rezoning by the local
legislative body to favor a single parcel or small group of parcels. Spot
zoning doctrine originated in state constitutional proscriptions on “special
legislation,” that is, government grants or benefits given to individual
citizens that are not justified as measures intended to promote the general
welfare. Some courts hold that spot zoning is invalid unless there is a
“clear showing” of a “reasonable basis” for selective rezoning based on the
comprehensive plan and the benefits of the change. Good Neighbors of
South Davidson v. Town of Denton, 559 S.E.2d 768, 772 (N.C. 2002). A
variation on this is “reverse” spot zoning, where a parcel or small group of
parcels is singled out for more onerous restrictions. See Helena Sand and
Gravel, Inc. v. Lewis and Clark County Planning and Zoning Commission,
290 P.3d 691, 699-700 (Mont. 2012). It is difficult to win spot or reverse
spot zoning challenges; local governments generally have latitude to
rezone individual parcels of land when this is deemed to be in the public
interest. See, e.g., Historic Charleston Foundation v. City of Charleston,
734 S.E.2d 306 (S.C. 2012) (denying a spot zoning challenge to a
municipal decision changing the zoning law to allow a portion of a site
that had been limited to buildings of up to 55 feet to allow buildings up to
105 feet tall).
4. Change or mistake requirement. In some jurisdictions, rezoning of
individual parcels may only be made to reflect changes in the character of

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a neighborhood since the original zoning code was enacted or mistakes in
that zoning. See, e.g., Albuquerque Commons Partnership v. City Council
of Albuquerque, 184 P.3d 411, 425-426 (N.M. 2008) (zoning map
amendment not justified based on any change or mistake). As with spot
zoning and conformity with a comprehensive plan, the change or mistake
doctrine seeks to protect owners’ justifiable reliance on existing zoning
and the stability of the overall zoning code by limiting the types of
individualized changes that may be made to a zoning ordinance over time.
This doctrine can raise difficult questions of what constitutes a sufficient
change or mistake, and courts often accord some latitude to legislative
bodies in applying the relevant standards. See, e.g., Thomas v. Board of
Supervisors of Panola County, 45 So. 3d 1173, 1182-1187 (Miss. 2010).
5. Characterizing rezoning as quasi-judicial. Finally, some
jurisdictions temper the deference to local legislative bodies by
characterizing statutes that rezone an individual parcel as quasi-judicial or
administrative rather than legislative. In the famous case Fasano v. Board
of County Commissioners of Washington County, 507 P.2d 23 (Or. 1973),
the Oregon Supreme Court explained:

[We] would be ignoring reality to rigidly view all zoning decisions by

local governing bodies as legislative acts to be accorded a full presumption
of validity and shielded from less than constitutional scrutiny by the theory
of separation of powers. Local and small decision groups are simply not the
equivalent in all respects of state and national legislatures. It is not a part of
the legislative function to grant permits, make special exceptions, or decide
particular cases. Such activities are not legislative but administrative, quasi-
judicial, or judicial in character. To place them in the hands of legislative
bodies, whose acts as such are not judicially reviewable, is to open the door
completely to arbitrary government.
Ordinances laying down general policies without regard to a specific piece
of property are usually an exercise of legislative authority, are subject to
limited review, and may only be attacked upon constitutional grounds for an
arbitrary abuse of authority. On the other hand, a determination whether the
permissible use of a specific piece of property should be changed is usually
an exercise of judicial authority and its propriety is subject to an altogether
different test.

Id. at 26.
In the minority of jurisdictions that follow the Fasano rule, the process
of passing legislation to rezone individual parcels is treated more like an
administrative process than a legislative one. This can result in parties
having procedural rights, including the right to be heard by an impartial

628
tribunal, to present and rebut evidence, and to findings based on a record.
Id. at 30. Is it appropriate to treat local elected legislative bodies as “quasi-
judicial” entities when they pass laws to amend zoning?

§4 ADMINISTRATIVE FLEXIBILITY: ZONING

BOARDS
Zoning can be an inflexible tool because it governs entire
municipalities and reflects conditions that may change over time.
Municipalities can rezone, but that can be cumbersome if done for the
entire community and open to a number of challenges when done for
individual properties. From the earliest days of modern land use planning,
however, administrative zoning boards have had authority to administer
zoning laws in ways that increase their flexibility. In particular, zoning
boards generally can grant variances or special exceptions from
restrictions imposed by the zoning ordinance. A variance grants
permission to use or develop a parcel in a way that otherwise violates the
zoning ordinance in order to alleviate special hardship. A special
exception is a permit to develop property in ways that the zoning
ordinance authorizes only if specifically approved by the zoning board
after meeting certain conditions. Each has distinct procedural and
substantive requirements and each can be challenged, whether granted or
denied, in court.

§4.1 Variances

Krummenacher v. Minnetonka

783 N.W.2d 721 (Minn. 2010)

Map: 17622 Ridgewood Road,

Minnetonka, Minnesota

LORIE GILDEA, Justice.

This case involves the decision of respondent City of Minnetonka to
grant a variance to respondent JoAnne Liebeler so that she could expand
her nonconforming garage. Appellant Beat Krummenacher is Liebeler’s

629
neighbor and he challenges the City’s decision. The district court upheld
the City’s variance, and the court of appeals affirmed. Because we
conclude that the City applied the wrong standard to Liebeler’s variance
request, we reverse and remand to the City for reconsideration under the
correct standard.
Liebeler owns property located in Minnetonka. Krummenacher is
Liebeler’s neighbor to the west. Liebeler’s property consists of a 2.4-acre
lot, which contains a 2,975-square-foot home and an attached two-car
garage. The property also contains a detached flat-roofed garage that a
previous owner constructed sometime in the 1940s. The City has an
ordinance requiring that the detached garage be set back a minimum of 50
feet from the property’s boundary line. Minnetonka City Code §300.10.
Liebeler’s garage was constructed before this ordinance went into effect,
and it does not satisfy the setback requirement. Specifically, the garage is
nonconforming because it is set back only 17 feet from the front yard lot
line. Because the garage was constructed before the ordinance became
effective, however, the garage is a permissible nonconformity.
On March 31, 2008, Liebeler applied for a variance to expand the
detached garage by adding a pitched roof and a second-story room above
the garage that could be used as a yoga studio and craft room. Liebeler’s
proposal was to renovate the garage itself, both to fix its leakage problems
and improve its appearance, and also to expand the garage by adding a
living space above it. Because adding a second story to the garage would
result in a vertical expansion of a nonconforming structure, Liebeler was
required, under the Minnetonka City Code, to apply for a variance from
the City. See Minnetonka City Code §300.29.3(g). Liebeler’s proposed
addition would not alter the footprint of the garage and would comply with
the City zoning requirements for a detached garage with respect to
maximum height and size.
The City’s Planning Commission held a public hearing on May 15,
2008, to consider Liebeler’s request. Both Liebeler and Krummenacher
had an opportunity to present their arguments at that hearing. Liebeler
explained that she believed that the flat roof was causing leakage problems
and that the structure itself needed to be updated. Krummenacher objected
to Liebeler’s proposed project, explaining that the added height of the
garage would obstruct his view to the east.
The Planning Commission approved Liebeler’s request for the
variance. Krummenacher appealed the Planning Commission’s decision to
the Minnetonka City Council. The City Council held a public hearing on
the variance request on June 30, 2008, at which both sides presented their
arguments. After an examination of the record, the City Council upheld the

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Planning Commission’s decision and findings. The City Council found
that Liebeler’s “proposal is reasonable and would meet the required
standards for a variance.” The council listed four requirements and found
that the variance satisfied those requirements as follows:

(1) Undue Hardship: there is an undue hardship due to the topography of the
site, width of the lot, location of the driveway and existing vegetation.
(2) Unique Circumstance: The existing, non-conforming setback is a
circumstance that is not common to every similarly zoned property.
(3) Intent of the Ordinance: The improvements would not increase the
footprint of the garage, and would comply with the zoning ordinance
requirements for a detached garage for maximum height and size.
(4) Neighborhood Character: The garage improvements would not alter the
character of the neighborhood. The improvements would visually enhance
the exterior of the garage. There is also a detached garage on the property to
the east that is set back 17 feet from [the street].

Krummenacher then brought suit in district court challenging, among other

things, the City’s finding of undue hardship.
[Krummenacher argues] that the City’s decision must be set aside
because it was arbitrary and capricious. Municipalities have “broad
discretionary power” in considering whether to grant or deny a variance.
We review such decisions “to determine whether the municipality “was
within its jurisdiction, was not mistaken as to the applicable law, and did
not act arbitrarily, oppressively, or unreasonably, and to determine whether
the evidence could reasonably support or justify the determination.” In re
Stadsvold, 754 N.W.2d 323, 332 (Minn. 2008) (internal quotation
omitted).
Krummenacher argues that the City’s decision was arbitrary and
capricious because the City did not apply the proper standard to determine
whether Liebeler demonstrated “undue hardship” as defined in Minn. Stat.
§462.357, subd. 6. This provision allows a city to grant a variance “from
the literal provisions of the ordinance in instances where their strict
enforcement would cause undue hardship because of circumstances unique
to the individual property under consideration.” Minn. Stat. §462.357,
subd. 6.
Minnesota Statutes §462.357, subd. 6, provides a definition of “undue
hardship,” and that definition requires that three factors be met.
Specifically, the statute defines “undue hardship” as meaning,

the property in question cannot be put to reasonable use if used under

conditions allowed by the official controls, the plight of the landowner is due

631
 to circumstances unique to the property not created by the landowner, and
the variance, if granted, will not alter the essential character of the locality.

Id. To receive a variance, the applicant must show that he or she meets all
of the three statutory requirements of the “undue hardship” test. Id. In
addition to satisfying the “undue hardship” requirement, the statute allows
municipalities to grant variances only “when it is demonstrated that such
actions will be in keeping with the spirit and intent of the ordinance.” Id.
Krummenacher argues that Liebeler’s application does not meet any of the
requirements for “undue hardship.”
The first factor a variance applicant must establish to satisfy the
statute’s definition of “undue hardship” is that “the property in question
cannot be put to reasonable use if used under conditions allowed by the
official controls.” Minn. Stat. §462.357, subd. 6; see also Minnetonka City
Code §300.07.1(a). Krummenacher argues that based on the plain and
unambiguous language of the statute, a municipality may grant a variance
only when the property cannot be put to any reasonable use without it.
According to Krummenacher, Liebeler had a reasonable use for her garage
without the addition of a yoga studio and craft room — its current use as a
storage space for vehicles. Krummenacher argues therefore that the City
did not have the statutory authority to grant the variance.
[In] Rowell v. Board of Adjustment of Moorhead, 446 N.W.2d 917
(Minn. Ct. App. 1989), rev. denied (Minn. Dec. 15, 1989), [the court]
interpreted the “undue hardship” section of Minn. Stat. §462.357, subd. 6,
as requiring a variance applicant to show that the “property owner would
like to use the property in a reasonable manner that is prohibited by the
ordinance.” Id. at 922.
[T]he Rowell “reasonable manner” standard is the standard the City
used in evaluating Liebeler’s request for a variance. Specifically, as
reflected in the City Council Resolution, the City found that “the proposal
is reasonable” and with respect to “undue hardship,” that “[t]here is an
undue hardship due to the topography of the site, width of the lot, location
of the driveway and existing vegetation.”
The plain language of the statute and our precedent compel us to reject
the City’s invitation to adopt Rowell’s interpretation of “undue hardship.”
The statute provides that to prove “undue hardship,” the variance applicant
must show that “the property in question cannot be put to a reasonable
use” without the variance. Minn. Stat. §462.357, subd. 6.
In addition, in formulating the “reasonable manner” standard, the court
in Rowell appears to have relied on the “practical difficulties” standard.
See Rowell, 446 N.W.2d at 922. But we have made a clear distinction

632
between the “practical difficulties” standard and the “undue hardship”
standard. In Stadsvold, we interpreted Minn. Stat. §394.27, subd. 7, which
sets forth the statutory standard for county variances. This statute contains
both the “practical difficulties” standard and a “particular hardship”
standard. We distinguished the “less rigorous ‘practical difficulties’ ”
standard that applies to area variance applications from the more rigorous
“particular hardship” standard that applies to use variance applications.
Stadsvold, 754 N.W.2d at 330-31.9
Adopting the Rowell “reasonable manner” standard would be
inconsistent with the distinction we made in Stadsvold between the
“practical difficulties” and “hardship” standards. The legislature defined
the “hardship” standard in the county statute the same way it defined the
“undue hardship” standard in the municipal statute.10 Because the
legislature used the same language in both the county and city variance
statutes when defining “hardship,” our analysis in Stadsvold requires us to
conclude that the “undue hardship” standard in Minn. Stat. §462.357,
subd. 6, is more demanding than the “practical difficulties” standard the
court of appeals appears to have relied on in Rowell, 446 N.W.2d at 922.
Rowell’s interpretation of the “undue hardship” standard, requiring only
that the proposed use be “reasonable,” would render the “undue hardship”
standard in section 462.357 less stringent than the “practical difficulties”
standard and much less stringent than the “particular hardship” standard in
the county variance statute, which the “undue hardship” standard appears
to parallel. See Stadsvold, 754 N.W.2d at 331. In short, our analysis in
Stadsvold simply does not leave room for the Rowell “reasonable manner”
standard.
We recognize that the standard we apply today, while followed
elsewhere, is not the universal rule.11 For example, in Simplex
Technologies, Inc. v. Town of Newington, 145 N.H. 727, 766 A.2d 713
(2001), the New Hampshire Supreme Court provided a thorough and
insightful review of the development of land use variance law, and its
practical construction in modern times. The New Hampshire statute did
not contain a specific definition of “unnecessary hardship,” like our statute
does, and the court concluded that its prior definition of the statutory term
“unnecessary hardship” “ha[d] become too restrictive in light of the
constitutional protections by which it must be tempered.” Id. at 717. The
New Hampshire Supreme Court framed the issue in the following terms:

Inevitably and necessarily there is a tension between zoning ordinances and

property rights, as courts balance the right of citizens to the enjoyment of
private property with the right of municipalities to restrict property use. In

633
 this balancing process, constitutional property rights must be respected and
protected from unreasonable zoning restrictions.

Id. at 716-17. In light of these considerations, the New Hampshire

Supreme Court said that “unnecessary hardship” would, in the future, be
established when a landowner showed that (1) a zoning restriction as
applied interferes with a reasonable use of the property, considering the
unique setting of the property in its environment; (2) no fair and
substantial relationship exists between the general purposes of the zoning
ordinance and the specific restriction on the property; and (3) the variance
would not injure the public or private rights of others. Id. at 717.
Had the Minnesota Legislature not defined “undue hardship” in Minn.
Stat. §462.357, subd. 6, we might consider the approach articulated in
Simplex. A flexible variance standard allows municipalities to make
modest adjustments to the detailed application of a regulatory scheme
when a zoning ordinance imposes significant burdens on an individual,
and relief can be fashioned without harm to the neighbors, the community,
or the overall purposes of the ordinance. See David W. Owens, The Zoning
Variance: Reappraisal and Recommendations for Reform of a Much-
Maligned Tool, 29 Colum. J. Envtl. L. 279, 317 (2004) (“If the variance
power is to be used both as a constitutional safeguard and as a tool for
flexibility, zoning enabling acts and local ordinances should be amended
to delineate these two purposes and set different standards for each. The
failure to make such a distinction underlies much of the past controversy
regarding variances. Courts and commentators have traditionally viewed
the variances as the former — a very limited tool for avoidance of
constitutional infirmity in extraordinary cases. Most variance petitions, and
consequently most board of adjustment decision-making, have viewed the
variances as the latter — a tool to provide flexible implementation rather
than constitutional infirmity.”).
We recognize that the Rowell “reasonable manner” standard represents
a longstanding interpretation of the undue hardship standard in Minn. Stat.
§462.357, subd. 6, and that Minnesota municipalities have been granting
variances under the “reasonable manner” standard for many years. We also
recognize that our decision will result in a restriction on a municipality’s
authority to grant variances as compared with the “reasonable manner”
standard. But whatever value we may find in a more flexible standard,
particularly with regard to area variances, we cannot ignore the plain
language of the statute.
[A] property owner is entitled to have his or her variance application
heard under the correct legal standard, which supports a remand in this

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case. We reverse and remand the matter to the City for renewed
consideration of Liebeler’s variance request in light of our rejection of the
“reasonable manner” standard from Rowell.

Notes and Questions

1. Variance law on the books versus law in action. Krummenacher
illustrates a common phenomenon in the application of variance standards
where the nominal standard may not be what a city council or zoning
board actually applies. Most states allow officials to grant variances only
when application of zoning to a particular owner results in some variation
of an undue or unnecessary hardship, and the test for this can be quite
strict.
A variance generally will not be granted where the hardship is self-
imposed, Board of Adjustment v. Verleysen, 36 A.3d 326, 332 (Del. 2012),
leading some courts to hold that the owner’s refusal to sell the property for
fair market value to a neighbor who is willing and able to buy constitutes a
self-imposed hardship. Commons v. Westwood Zoning Board of
Adjustment, 410 A.2d 1138, 1142 (N.J. 1980); see also Sciacca v. Caruso,
769 A.2d 578 (R.I. 2001) (no variance when hardship was self-imposed
because of the owner’s acts in separating the property into different parcels
that caused the problem). In addition, hardship will often not be found
unless there is no economically viable use of the property (or no
reasonable return on the owner’s investment) if the zoning law is enforced.
See, e.g., Lewis v. Town of Rockport, 870 A.2d 107 (Me. 2005) (grant of a
variance reversed where owner did not demonstrate “practical loss of all
beneficial use of land”). But see Simplex Technologies v. Town of
Newington, 766 A.2d 713 (N.H. 2001) (“unnecessary hardship” standard
requires showing that zoning restriction interferes with an owner’s
“reasonable use of the property, considering the unique setting of the
property in its environment”). Many states have added the requirement that
the property must be different in some unique way from surrounding
property, such as having an unduly narrow frontage or an odd shape or
elevation, and that the hardship arise out of this condition.

FACTORS

Although different jurisdictions establish different factors, in evaluating

challenges to variances, most courts look to whether:

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 1. the property is unusual, exceptional, or unique;
2. the owner created the hardship at issue;
3. without a variance, zoning restriction imposes undue hardship or practical
difficulties; and
4. the variance will significantly undermine public good or the zoning plan.

As Krummenacher discusses, however, zoning boards routinely grant

variances on a somewhat a lower standard. This is especially the case
where the requested variance is not a dramatic change in the structure and
if no one (especially abutting neighbors) objects to the granting of the
variance, although even when neighbors object, boards sometimes choose
to favor development over such objections. In effect, zoning boards often
ignore the law and grant variances when there is no showing that the
owner has met the standard for undue hardship. Julian Conrad
Juergensmeyer & Thomas E. Roberts, Land Use Planning and
Development Regulation Law §5.14, at 150-152 (3d ed. 2013); Jesse
Dukeminier, Jr. & Clyde L. Stapleton, The Zoning Board of Adjustment: A
Case Study in Misrule, 50 Ky. L.J. 273 (1962).

If no neighbor objects to a grant of a variance on less than a strict

application of the hardship standard, there is little chance the grant of the
variance will be challenged in court. On the other hand, if a board grants a
variance when the standard for hardship is absent, and aggrieved neighbors
challenge the grant, the board’s decision is likely to be reversed.
2. Variations in the standards for variances. Some states allow
variances to be granted on a lesser showing of practical difficulties. See,
e.g., Ind. Code §36-7-4-918.5; Juergensmeyer & Roberts, supra, §5.23, at
163-164. To show practical difficulties, the owner must prove significant
economic injury from enforcement of the zoning ordinance. Some states
interpret the “practical difficulties” test to mean the same thing as the
unnecessary hardship test. The zoning enabling acts in some states require
a showing of both unnecessary hardship and practical difficulties; others
allow a variance if either of these tests is met. Some states go further and
allow variances to be issued in unusual circumstances if this will provide a
significant public benefit and the variance can be granted “without
substantial detriment to the public good and will not substantially impair
the intent and purpose” of the zoning ordinance. N.J. Stat. §40:55D-70(d),
interpreted in Cell South of N.J., Inc. v. Zoning Board of Adjustment, 796
A.2d 247 (N.J. 2002).
After the Krummenacher decision, Minnesota amended the statutory

636
standard for variances from “undue hardship” to “practical difficulties.”
See Minn. Stat. §462.357, subd. 6(b). How might Liebeler’s variance
application come out on remand if the practical difficulties standard was
applied?
3. Area versus use variances. As Krummenacher noted, variances can
be “area,” which relax lot and building restrictions, or “use,” which lift
restrictions on the purposes to which a property can be put. Some states
expressly prohibit use variances entirely. Cal. Govt. Code §65906. Other
states prohibit use variances from being granted by zoning boards on the
ground that they are effectively rezonings that should be voted on by the
city council (or other lawmaking body) and not granted by an
administrative agency such as the zoning board. Some states allow use
variances to be granted upon a showing of unnecessary hardship while
allowing area variances to be granted on the lower standard of
demonstration of practical difficulties. Juergensmeyer & Roberts, supra,
§5.15, at 152-154.

§4.2 Special Exceptions

Unlike a variance, which grants the property owner the right to do
something ordinarily prohibited by the zoning law to avoid undue
hardship, a special exception, which can also be called a special permit
or a conditional use, describes a type of land use that is permitted by the
zoning law but subject to administrative approval before it may be
allowed. The uses subject to the special exception process are often
particularly sensitive or may pose the risk of particular harms. Typical
examples include gas stations, parking lots, landfills, airports, hospitals,
and halfway houses. The special exception process can also apply to more
benign uses that nonetheless require evaluation on an individual basis
before they are sited because of their potential impact on traffic and
parking, such as recreation facilities, schools, and churches. Unlike
variances, there is a presumption that the owner can engage in the
permitted use so long as the established conditions are met. National
Cathedral Neighborhood Association v. D.C. Board of Zoning Adjustment,
753 A.2d 984, 986 n.1 (D.C. 2000). The special exception process
generally allows zoning boards to grant permission subject to specific,
reasonable conditions that might mitigate negative impacts.
Courts regularly uphold decisions by zoning boards to deny special
exceptions, see, e.g., Montgomery County v. Butler, 9 A.3d 824 (Md.
2010) (upholding the denial of a special exception for a landscaping
contractor based on a standard of “non-inherent adverse effects,”

637
specifically noise from trucks). Courts, however, will reverse such denials
if an owner meets the legislative standards or if zoning boards apply
factors that are not in the special exception statute. For example, in New
Cingular Wireless PCS v. Sussex County Board of Adjustment, 65 A.3d
607 (Del. 2013), a telephone company sought to build a cellular telephone
tower in a commercial zone, on a parcel that also included a gas station, a
fast food restaurant, and a convenience store. Because there was a
condominium next door, the company was required to obtain a special
exception from the county Board of Adjustment. The Board denied the
application, finding that the company had failed to show that the cell tower
“would not affect adversely the uses of the adjacent properties.” The
Delaware Supreme Court reversed because the statutory standard required
a finding that the proposed use will not “substantially affect adversely the
uses of adjacent and neighboring property.” Id. at 611. As the court noted,
the Board had impermissibly imposed a much heavier burden on the
company. Id. at 611-612.
Special exceptions generally require sufficient direction to the zoning
board. Vague conditions may be struck down as improper delegations of
legislative power from the municipal governing body to the administrative
zoning board. Kosalka v. Town of Georgetown, 752 A.2d 183, 187 (Me.
2000) (finding a condition that all proposed developments in a shore area
“conserve natural beauty” an unconstitutional delegation because it lacked
cognizable, quantitative standards). In Cope v. Inhabitants of the Town of
Brunswick, 464 A.2d 223 (Me. 1983), a zoning law gave the zoning board
the power to grant an exception to allow multi-unit apartment buildings in
a certain area, so long as this would “not adversely affect the health,
safety, or general welfare of the public.” After the zoning board denied the
owner’s request for the special exception, the owner challenged the
board’s action in court, which struck down the condition relating to public
welfare on the ground that it did not give sufficient guidance to the board
and effectively delegated legislative power to an unelected administrative
agency. As a remedy, the court ordered the town to grant the permit since,
by establishing the exception, the enacting legislative body had already
determined that the use would ordinarily not be detrimental to the
community.
In contrast, the Colorado Supreme Court upheld a zoning law that
provided that certain uses were “permitted” within an identified district but
retained in the zoning agency the right to review each proposed use on the
basis of “neighborhood compatibility.” City of Colorado Springs v.
SecurCare Self Storage, Inc., 10 P.3d 1244 (Colo. 2000). See also
Fordham v. Butera, 876 N.E.2d 397 (Mass. 2007) (ordinance delegating

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authority to zoning board of appeals to allow business storage activities
provided constitutionally sufficient standards).

§5 THE PROBLEM OF EXCLUSIONARY ZONING

Southern Burlington County NAACP v.
Township of Mount Laurel

336 A.2d 713 (N.J. 1975)

FREDERICK W. HALL, Justice.
This case attacks the system of land use regulation by defendant
Township of Mount Laurel on the ground that low and moderate income
families are thereby unlawfully excluded from the municipality.
There is not the slightest doubt that New Jersey has been, and
continues to be, faced with a desperate need for housing, especially of
decent living accommodations economically suitable for low and moderate
income families. Plaintiffs represent the minority group poor (black and
Hispanic) seeking such quarters. But they are not the only category of
persons barred from so many municipalities by reason of restrictive land
use regulations. We have reference to young and elderly couples, single
persons and large, growing families not in the poverty class, but who still
cannot afford the only kinds of housing realistically permitted in most
places — relatively high-priced, single-family detached dwellings on
sizeable lots and, in some municipalities, expensive apartments. We will,
therefore, consider the case from the wider viewpoint that the effect of
Mount Laurel’s land use regulation has been to prevent various categories
of persons from living in the township because of the limited extent of
their income and resources.

I. The Facts
Mount Laurel is a flat, sprawling township, 22 square miles, or about
14,000 acres, in area, on the west central edge of Burlington County.
Under the present ordinance, 29.2% of all the land in the township, or
4,121 acres, is zoned for industry. At the time of trial no more than 100
acres were actually occupied by industrial uses. The rest of the land so
zoned has remained undeveloped. [As] happens in the case of so many
municipalities, much more land has been so zoned than the reasonable
potential for industrial movement or expansion warrants. At the same time,
however, the land cannot be used for residential development under the
general ordinance.

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 The amount of land zoned for retail business use under the general
ordinance is relatively small — 169 acres, or 1.2% of the total. The
balance of the land area, almost 10,000 acres, has been developed until
recently in the conventional form of major subdivisions. The general
ordinance provides for four residential zones, designated R-1, R-1D, R-2
and R-3. All permit only single-family, detached dwellings, one house per
lot — the usual form of grid development. Attached townhouses,
apartments (except on farms for agricultural workers) and mobile homes
are not allowed anywhere in the township under the general ordinance.
The dwellings are substantial; the average value in 1971 was $32,500 and
is undoubtedly much higher today.
The general ordinance requirements, while not as restrictive as those in
many similar municipalities, nonetheless realistically allow only homes
within the financial reach of persons of at least middle income. The R-1
zone requires a minimum lot area of 9,375 square feet, a minimum lot
width of 75 feet at the building line, and a minimum dwelling floor area of
1,100 square feet if a one-story building and 1,300 square feet if one and
one-half stories or higher. The R-2 zone, comprising a single district of
141 acres in the northeasterly corner, has been completely developed.
While it only required a minimum floor area of 900 square feet for a one-
story dwelling, the minimum lot size was 11,000 square feet; otherwise the
requisites were the same as in the R-1 zone.
The general ordinance places the remainder of the township, outside of
the industrial and commercial zones and the R-1D district (to be
mentioned shortly), in the R-3 zone. This zone comprises over 7,000 acres
— slightly more than half of the total municipal area [and requires a
minimum lot size of about one-half acre (20,000 square feet), and the lot
width at the building line must be 100 feet].
The R-1D district [reduces] the minimum lot area from 20,000 square
feet required in the R-3 zone to 10,000 square feet (12,000 square feet for
corner lots) but with the proviso that one-family houses — the single
permitted dwelling use — “shall not be erected in excess of an allowable
development density of 2.25 dwelling units per gross acre.” The minimum
lot width at the building line must be 80 feet and the minimum dwelling
floor area is the same as in the R-3 zone.
A variation from conventional development has recently occurred in
some parts of Mount Laurel, as in a number of other similar municipalities,
by use of the land use regulation device known as “planned unit
development” (PUD). This scheme differs from the traditional in that the
type, density and placement of land uses and buildings, instead of being
detailed and confined to specified districts by local legislation in advance,

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is determined by contract, or “deal,” as to each development between the
developer and the municipal administrative authority, under broad
guidelines laid down by state enabling legislation and an implementing
local ordinance. The stress is on regulation of density and permitted
mixture of uses within the same area, including various kinds of living
accommodations with or without commercial and industrial enterprises.
[Mount Laurel approved four PUD projects before the state enabling
legislation was repealed in 1977.] While multi-family housing in the form
of rental garden, medium rise and high rise apartments and attached
townhouses is for the first time provided for, as well as single-family
detached dwellings for sale, it is not designed to accommodate and is
beyond the financial reach of low and moderate income families,
especially those with young children. The aim is quite the contrary; as with
the single-family homes in the older conventional subdivisions, only
persons of medium and upper income are sought as residents.
Still another restrictive land use regulation was adopted by the
township through a supplement to the general zoning ordinance enacted in
September 1972 creating a new zone, R-4, Planned Adult Retirement
Community (PARC). The enactment recited a critical shortage of adequate
housing in the township suitable “for the needs and desires of senior
citizens and certain other adults over the age of 52.” The permission was
essentially for single ownership development of the zone for multi-family
housing (townhouses and apartments), thereafter to be either rented or sold
as cooperatives or condominiums. The extensive development
requirements detailed in the ordinance make it apparent that the scheme
was not designed for, and would be beyond the means of, low and
moderate income retirees.
All this affirmative action for the benefit of certain segments of the
population is in sharp contrast to the lack of action, and indeed hostility,
with respect to affording any opportunity for decent housing for the
township’s own poor living in substandard accommodations, found largely
in the section known as Springville (R-3 zone). The 1969 Master Plan
Report recognized it and recommended positive action. The continuous
official reaction has been rather a negative policy of waiting for
dilapidated premises to be vacated and then forbidding further occupancy.
An earlier non-governmental effort to improve conditions had been
effectively thwarted. In 1968 a private non-profit association sought to
build subsidized, multi-family housing in the Springville section with
funds to be granted by a higher level governmental agency. Advance
municipal approval of the project was required. The Township Committee
responded with a purportedly approving resolution, which found a need for

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“moderate” income housing in the area, but went on to specify that such
housing must be constructed subject to all zoning, planning, building and
other applicable ordinances and codes. This meant single-family detached
dwellings on 20,000 square foot lots. (Fear was also expressed that such
housing would attract low income families from outside the township.)
Needless to say, such requirements killed realistic housing for this group
of low and moderate income families.12
The record thoroughly substantiates the findings of the trial court that
over the years Mount Laurel “has acted affirmatively to control
development and to attract a selective type of growth” and that “through its
zoning ordinances has exhibited economic discrimination in that the poor
have been deprived of adequate housing and the opportunity to secure the
construction of subsidized housing, and has used federal, state, county and
local finances and resources solely for the betterment of middle and upper-
income persons.”
There cannot be the slightest doubt that the reason for this course of
conduct has been to keep down local taxes on property (Mount Laurel is
not a high tax municipality) and that the policy was carried out without
regard for non-fiscal considerations with respect to people, either within or
without its boundaries. This conclusion is demonstrated not only by what
was done and what happened, as we have related, but also by innumerable
direct statements of municipal officials at public meetings over the years
which are found in the exhibits.

Terms:
Ratable is a term used by local officials and planners to mean property subject
to assessment and taxation. Good ratables, like industrial and commercial
uses, are those that generate tax revenue with relatively less demand for
services.

This policy of land use regulation for a fiscal end derives from New
Jersey’s tax structure, which has imposed on local real estate most of the
cost of municipal and county government and of the primary and
secondary education of the municipality’s children. The latter expense is
much the largest, so, basically, the fewer the school children, the lower the
tax rate. Sizeable industrial and commercial ratables are eagerly sought
and homes and the lots on which they are situated are required to be large
enough, through minimum lot sizes and minimum floor areas, to have
substantial value in order to produce greater tax revenues to meet school

642
costs. Large families who cannot afford to buy large houses and must live
in cheaper rental accommodations are definitely not wanted, so we find
drastic bedroom restrictions for, or complete prohibition of, multi-family
or other feasible housing for those of lesser income.
This pattern of land use regulation has been adopted for the same
purpose in developing municipality after developing municipality. Almost
every one acts solely in its own selfish and parochial interest and in effect
builds a wall around itself to keep out those people or entities not adding
favorably to the tax base, despite the location of the municipality or the
demand for varied kinds of housing. There has been no effective
intermunicipal or area planning or land use regulation. All of this is amply
demonstrated by the evidence in this case as to Camden, Burlington and
Gloucester counties. One incongruous result is the picture of developing
municipalities rendering it impossible for lower paid employees of
industries they have eagerly sought and welcomed with open arms (and, in
Mount Laurel’s case, even some of its own lower paid municipal
employees) to live in the community where they work.
The other end of the spectrum should also be mentioned because it
shows the source of some of the demand for cheaper housing than the
developing municipalities have permitted. Core cities were originally the
location of most commerce and industry. Many of those facilities
furnished employment for the unskilled and semiskilled. These employees
lived relatively near their work, so sections of cities always have housed
the majority of people of low and moderate income, generally in old and
deteriorating housing. Despite the municipally confined tax structure,
commercial and industrial ratables generally used to supply enough
revenue to provide and maintain municipal services equal or superior to
those furnished in most suburban and rural areas.
The situation has become exactly the opposite since the end of World
War II. Much industry and retail business, and even the professions, have
left the cities. Camden is a typical example. The testimonial and
documentary evidence in this case as to what has happened to that city is
depressing indeed. For various reasons, it lost thousands of jobs between
1950 and 1970, including more than half of its manufacturing jobs (a
reduction from 43,267 to 20,671, while all jobs in the entire area labor
market increased from 94,507 to 197,037). A large segment of retail
business faded away with the erection of large suburban shopping centers.
The economically better situated city residents helped fill up the miles of
sprawling new housing developments, not fully served by public transit. In
a society which came to depend more and more on expensive individual
motor vehicle transportation for all purposes, low income employees very

643
frequently could not afford to reach outlying places of suitable
employment and they certainly could not afford the permissible housing
near such locations. These people have great difficulty in obtaining work
and have been forced to remain in housing which is overcrowded, and has
become more and more substandard and less and less tax productive.
There has been a consequent critical erosion of the city tax base and
inability to provide the amount and quality of those governmental services
— education, health, police, fire, housing and the like — so necessary to
the very existence of safe and decent city life. This category of city
dwellers desperately needs much better housing and living conditions than
is available to them now, both in a rehabilitated city and in outlying
municipalities. They make up, along with the other classes of persons
earlier mentioned who also cannot afford the only generally permitted
housing in the developing municipalities, the acknowledged great demand
for low and moderate income housing.

II. The Legal Issue

The legal question before us, as earlier indicated, is whether a
developing municipality like Mount Laurel may validly, by a system of
land use regulation, make it physically and economically impossible to
provide low and moderate income housing in the municipality for the
various categories of persons who need and want it and thereby, as Mount
Laurel has, exclude such people from living within its confines because of
the limited extent of their income and resources.

CONTEXT

Until the 1950s, Mount Laurel was largely agricultural. The town had a stable
African American population that included families whose ancestors had
arrived as slaves before 1800, and had been a stop on the Underground
Railroad. After World War II, however, the town became a suburb for
Philadelphia and Camden. Farmers sold the land on which blacks had been
tenant farmers, and blacks were relegated to shacks in Springville. The Mount
Laurel litigation was catalyzed when the town blocked efforts to build
apartment buildings to replace Springville’s dilapidated housing. David Kirp,
Our Town: Race, Housing and the Soul of Suburbia 43-47 (1995).

We conclude that every such municipality must, by its land use

regulations, presumptively make realistically possible an appropriate
variety and choice of housing. More specifically, presumptively it cannot

644
foreclose the opportunity of the classes of people mentioned for low and
moderate income housing and in its regulations must affirmatively afford
that opportunity, at least to the extent of the municipality’s fair share of the
present and prospective regional need therefor. These obligations must be
met unless the particular municipality can sustain the heavy burden of
demonstrating peculiar circumstances which dictate that it should not be
required so to do.13
We reach this conclusion under state law and so do not find it
necessary to consider federal constitutional grounds urged by plaintiffs.
We begin with some fundamental principles as applied to the scene before
us.
Land use regulation is encompassed within the state’s police power. It
is elementary theory that all police power enactments, no matter at what
level of government, must conform to the basic state constitutional
requirements of substantive due process and equal protection of the laws.
These are inherent in Art. I, par. 1 of our Constitution, the requirements of
which may be more demanding than those of the federal Constitution. It is
required that, affirmatively, a zoning regulation, like any police power
enactment, must promote public health, safety, morals or the general
welfare.
[A central issue is] whose general welfare must be served or not
violated in the field of land use regulation. Frequently the decisions in this
state have spoken only in terms of the interest of the enacting municipality,
so that it has been thought, at least in some quarters, that such was the only
welfare requiring consideration. It is, of course, true that many cases have
dealt only with regulations having little, if any, outside impact where the
local decision is ordinarily entitled to prevail. However, it is fundamental
and not to be forgotten that the zoning power is a police power of the state
and the local authority is acting only as a delegate of that power and is
restricted in the same manner as is the state. So, when regulation does have
a substantial external impact, the welfare of the state’s citizens beyond the
borders of the particular municipality cannot be disregarded and must be
recognized and served.
This brings us to the relation of housing to the concept of general
welfare just discussed and the result in terms of land use regulation which
that relationship mandates. There cannot be the slightest doubt that shelter,
along with food, are the most basic human needs.
It is plain beyond dispute that proper provision for adequate housing of
all categories of people is certainly an absolute essential in promotion of
the general welfare required in all local land use regulation. Further, the
universal and constant need for such housing is so important and of such

645
broad public interest that the general welfare which developing
municipalities like Mount Laurel must consider extends beyond their
boundaries and cannot be parochially confined to the claimed good of the
particular municipality. It has to follow that, broadly speaking, the
presumptive obligation arises for each such municipality affirmatively to
plan and provide, by its land use regulations, the reasonable opportunity
for an appropriate variety and choice of housing, including, of course, low
and moderate cost housing, to meet the needs, desires and resources of all
categories of people who may desire to live within its boundaries.
Negatively, it may not adopt regulations or policies which thwart or
preclude that opportunity.
It is also entirely clear, as we pointed out earlier, that most developing
municipalities, including Mount Laurel, have not met their affirmative or
negative obligations, primarily for local fiscal reasons.
In sum, we are satisfied beyond any doubt that, by reason of the basic
importance of appropriate housing and the longstanding pressing need for
it, especially in the low and moderate cost category, and of the
exclusionary zoning practices of so many municipalities, conditions have
changed, and judicial attitudes must be altered to require, as we have just
said, a broader view of the general welfare and the presumptive obligation
on the part of developing municipalities at least to afford the opportunity
by land use regulations for appropriate housing for all.
We turn to application of these principles in appraisal of Mount
Laurel’s zoning ordinance, useful as well, we think, as guidelines for
future application in other municipalities.
The township’s general zoning ordinance (including the cluster zone
provision) permits, as we have said, only one type of housing — single-
family detached dwellings. This means that all other types — multi-family
including garden apartments and other kinds housing more than one
family, town (row) houses, mobile home parks — are prohibited.
Concededly, low and moderate income housing has been intentionally
excluded. While a large percentage of the population living outside of
cities prefers a one-family house on its own sizeable lot, a substantial
proportion do not for various reasons. Moreover, single-family dwellings
are the most expensive type of quarters and a great number of families
cannot afford them. Certainly they are not pecuniarily feasible for low and
moderate income families, most young people and many elderly and
retired persons, except for some of moderate income by the use of low cost
construction on small lots.
As previously indicated, Mount Laurel has allowed some multi-family
housing by agreement in planned unit developments, but only for the

646
relatively affluent and of no benefit to low and moderate income families.
And even here, the contractual agreements between municipality and
developer sharply limit the number of apartments having more than one
bedroom. The design of such limitations is obviously to restrict the number
of families in the municipality having school age children and thereby
keep down local education costs. Such restrictions are so clearly contrary
to the general welfare as not to require further discussion.
Mount Laurel’s zoning ordinance is also so restrictive in its minimum
lot area, lot frontage and building size requirements, earlier detailed, as to
preclude single-family housing for even moderate income families.
Required lot area of at least 9,375 square feet in one remaining regular
residential zone and 20,000 square feet (almost half an acre) in the other,
with required frontage of 75 and 100 feet, respectively, cannot be called
small lots and amounts to low density zoning, very definitely increasing
the cost of purchasing and improving land and so affecting the cost of
housing. As to building size, the township’s general requirements of a
minimum dwelling floor area of 1,100 square feet for all one-story houses
and 1,300 square feet for all of one and one-half stories or higher is
without regard to required minimum lot size or frontage or the number of
occupants. Again it is evident these requirements increase the size and so
the cost of housing. The conclusion is irresistible that Mount Laurel
permits only such middle and upper income housing as it believes will
have sufficient taxable value to come close to paying its own
governmental way.
Akin to large lot, single-family zoning restricting the population is the
zoning of very large amounts of land for industrial and related uses. Mount
Laurel has set aside almost 30% of its area, over 4,100 acres, for that
purpose; the only residential use allowed is for farm dwellings. In almost a
decade only about 100 acres have been developed industrially. Despite the
township’s strategic location for motor transportation purposes, as
intimated earlier, it seems plain that the likelihood of anywhere near the
whole of the zoned area being used for the intended purpose in the
foreseeable future is remote indeed and that an unreasonable amount of
land has thereby been removed from possible residential development,
again seemingly for local fiscal reasons.
Without further elaboration at this point, our opinion is that Mount
Laurel’s zoning ordinance is presumptively contrary to the general welfare
and outside the intended scope of the zoning power in the particulars
mentioned. A facial showing of invalidity is thus established, shifting to
the municipality the burden of establishing valid superseding reasons for
its action and non-action. We now examine the reasons it advances.

647
 The township’s principal reason in support of its zoning plan and
ordinance housing provisions, advanced especially strongly at oral
argument, is the fiscal one previously adverted to, i.e., that by reason of
New Jersey’s tax structure which substantially finances municipal
governmental and educational costs from taxes on local real property,
every municipality may, by the exercise of the zoning power, allow only
such uses and to such extent as will be beneficial to the local tax rate. In
other words, the position is that any municipality may zone extensively to
seek and encourage the “good” tax ratables of industry and commerce and
limit the permissible types of housing to those having the fewest school
children or to those providing sufficient value to attain or approach paying
their own way taxwise.
We have no hesitancy in now saying, and do so emphatically, that,
considering the basic importance of the opportunity for appropriate
housing for all classes of our citizenry, no municipality may exclude or
limit categories of housing for that reason or purpose. While we fully
recognize the increasingly heavy burden of local taxes for municipal
governmental and school costs on homeowners, relief from the
consequences of this tax system will have to be furnished by other
branches of government. It cannot legitimately be accomplished by
restricting types of housing through the zoning process in developing
municipalities.

III. The Remedy

The township is granted 90 days from the date hereof, or such
additional time as the trial court may find it reasonable and necessary to
allow, to adopt amendments to correct the deficiencies herein specified. It
is the local function and responsibility, in the first instance at least, rather
than the court’s, to decide on the details of the same within the guidelines
we have laid down. If plaintiffs desire to attack such amendments, they
may do so by supplemental complaint filed in this cause within 30 days of
the final adoption of the amendments.
The municipality should first have full opportunity to itself act without
judicial supervision. We trust it will do so in the spirit we have suggested,
both by appropriate zoning ordinance amendments and whatever
additional action encouraging the fulfillment of its fair share of the
regional need for low and moderate income housing may be indicated as
necessary and advisable. (We have in mind that there is at least a moral
obligation in a municipality to establish a local housing agency pursuant to
state law to provide housing for its resident poor now living in dilapidated,

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unhealthy quarters.) Should Mount Laurel not perform as we expect,
further judicial action may be sought by supplemental pleading in this
cause.

Notes and Questions

1. Property and regulation. Does the limitation on exclusionary
zoning imposed by the court in Mount Laurel infringe on property rights,
or does it protect them? Does it regulate the market for real property, or
does it constitute a form of deregulation?
2. Why not federal law? The New Jersey Supreme Court in Mount
Laurel relied on the New Jersey Constitution as the basis for its decision.
Why didn’t the court decide the case under the federal Constitution or
under the federal Fair Housing Act, 42 U.S.C. §3601 et seq., which
prohibits discrimination in land use regulation by local governments? See
Chapter 13. One reason might have been that the Supreme Court has
interpreted the federal due process and equal protection clauses to afford
great latitude to local governments in the absence of intentional
discrimination. See §1.2, supra. As to the federal Fair Housing Act, the
analysis of claims that land use regulations have a discriminatory effect
proceed under a doctrinal analysis that likewise gives a fair measure of
deference to local authority, and that may have been difficult to support
the sweeping remedy the Mount Laurel court adopted. See Peter H.
Schuck, Judging Remedies: Judicial Approaches to Housing Segregation,
37 Harv. C.R.-C.L. L. Rev. 289, 318 (2002) (arguing that deferential
standards under federal constitutional and statutory law best explains the
decision by advocates and the New Jersey Supreme Court to focus on
income rather than race). Keep in mind as well that any decision by the
New Jersey Supreme Court based on federal law would have been
reviewable by the U.S. Supreme Court.
3. Regionalism and land use regulation. In Euclid v. Ambler Realty,
one argument against Euclid’s zoning code was that it impeded the natural
industrial development of the larger Cleveland region of which the village
was a part. The Supreme Court rejected this argument, stating that the
village of Euclid was “politically a separate municipality, with powers of
its own and authority to govern itself as it sees fit.” 272 U.S. 365, 389
(1926). In so doing, however, the Court noted that it was not excluding
“the possibility of cases where the general public interest would so far
outweigh the interest of the municipality that the municipality would not
be allowed to stand in the way.” Id. at 390. How did the Supreme Court of
New Jersey in Mount Laurel approach the balance between local

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autonomy and “the general public interest” in evaluating the scale at which
authority over land use should be exercised?
4. Mount Laurel II. In Mount Laurel I, the Supreme Court of New
Jersey ordered the township of Mount Laurel to amend its zoning law to
remove unconstitutional restrictions on the development of low- and
moderate-income housing. This remedy depended, to some extent, on
trusting the presumed good faith of municipal officials. That trust turned
out to be unwarranted. Many municipalities, including Mount Laurel,
evaded or ignored the constitutional mandate in Mount Laurel I. Mount
Laurel, for example, responded by rezoning 20 acres of land for low-
income housing — less than one-quarter of 1 percent of the town’s entire
area — on which, for various reasons, it was exceedingly unlikely that
low-income housing would ever be built. Other communities similarly
failed to comply with the constitutional mandate.
New challenges were brought against the zoning ordinances of many
municipalities, including a second case against Mount Laurel itself. Six of
these cases were consolidated in a single appeal to the New Jersey
Supreme Court, which issued a second Mount Laurel opinion in 1983.
South Burlington County NAACP v. Township of Mount Laurel, 456 A.2d
390 (N.J. 1983) (Mount Laurel II). Chief Justice Robert Wilentz’s 120-
page opinion in Mount Laurel II took more than two years to produce.
Under Mount Laurel II, the obligation to provide a realistic opportunity for
decent housing for a municipality’s resident poor was extended to cover
every municipality in the state rather than being limited to “developing”
communities, as under Mount Laurel I. In addition, the court in Mount
Laurel II authorized affirmative remedies to encourage the construction of
low- and moderate-income housing. For example, the court provided for
the appointment of three “regional” trial judges to handle all cases
involving challenges to exclusionary zoning ordinances in the northern,
central, and southern regions of New Jersey. This arrangement was
intended to generate consistent definitions of “regions,” and the housing
needs of each region, to determine each community’s fair share of the
regional housing need in an orderly way.
The Mount Laurel II court required municipalities to take affirmative
steps to encourage the development of housing for low- and moderate-
income persons if the Mount Laurel obligations could not otherwise be
met. If municipalities failed to comply with the constitutional mandate,
courts were empowered to order affirmative remedies, including
government subsidies, incentives for private developers to set aside a
portion of their developments for low- and moderate-income residents by

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relaxing various zoning restrictions, and mandatory set-asides for
developers. The court also authorized a “builder’s remedy,” which would
order a municipality to allow a developer to construct a particular project
that includes a substantial amount of lower-income housing unless the
“municipality establishes that because of environmental or other
substantial planning concerns, the plaintiff’s proposed project is clearly
contrary to sound land use planning.” Ultimately, if all of this failed, a
special master could be appointed to rewrite the zoning ordinance to
comply with the jurisdiction’s constitutional obligations under Mount
Laurel.
5. To the legislature and back to the courts. The Mount Laurel II
opinion openly invited the New Jersey legislature to enact legislation
implementing the constitutional obligation to prevent exclusionary zoning
practices. The legislature responded by enacting the Fair Housing Act of
1985, N.J. Stat. §§52:27D-301 to 52:27D-329 (1986), which transferred
authority over Mount Laurel cases to a state administrative agency called
the Council on Affordable Housing (COAH). The act placed a temporary
moratorium on the controversial builder’s remedy; it also allowed
municipalities to buy their way out of the Mount Laurel obligation by
paying neighboring communities to absorb up to half of their fair-share
obligation in what were called “regional contribution agreements.” The
Fair Housing Act was upheld by the New Jersey Supreme Court in Hills
Development Co. v. Bernards Township, 510 A.2d 621 (N.J. 1986) (often
called Mount Laurel III). The provision of the act allowing for regional
cooperation agreements was eliminated from the statutory regime in 2008.
See In re Denial of Regional Contribution Agreement Between Galloway
Township and City of Bridgeton, 12 A.3d 232 (N.J. App. Div. 2011). The
builder’s remedy survives, however, and is available when the
municipality fails to comply fully with its statutory obligations. Toll
Brothers, Inc. v. Township of West Windsor, 803 A.2d 53 (N.J. 2002).
Starting in 1987, COAH promulgated a series of rules to define
municipal affordable housing obligations, with the most recent — “Third
Round Rules” — adopted in 2008. N.J.A.C. 5:96-1.1 to -20.4; N.J.A.C.
5:97-1.1 to -10.5, Appendices A to F. In 2013, the New Jersey Supreme
Court held that COAH’s Third Round Rules, which were predicated on a
“growth share” methodology that tied a municipality’s obligations to
future growth, violated the Fair Housing Act. In re Adoption of N.J.A.C.
5:96 and 5:97, 74 A.3d 893 (N.J. 2013). After nearly two years of delay
by COAH with no revised rules, the New Jersey Supreme Court held that
parties challenging municipalities and municipalities seeking confirmation

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of compliance with the act could seek judicial redress. In re Adoption of
N.J.A.C. 5:96 and 5:97, 110 A.3d 31 (N.J. 2015). For the moment, then,
the New Jersey courts are back in the business of directly supervising the
Mount Laurel doctrine.
6. Constitutional versus statutory approaches to exclusionary
zoning. Although much heralded, the Mount Laurel doctrine is a minority
rule, as few states have explicitly interpreted their state constitutions to
limit exclusionary zoning. Several states, however, have addressed
exclusionary zoning, as New Jersey eventually did, by statute. See James
Kushner, Affordable Housing as Infrastructure in the Time of Global
Warming, 42/43 Urb. Law. 179, 189 (2011) (noting that at least 16 states
have some form of proscription or planning requirement related to
exclusionary zoning).
For example, California, Massachusetts, and Oregon have adopted
legislation to limit exclusionary zoning. Cal. Govt. Code §§65580-
65589.8; Mass. Gen. Laws ch. 40B, §§20-23; Or. Rev. Stat. §§197.005-
197.850. California’s statute, which resembles the New Jersey Fair
Housing Act, mandates comprehensive planning by a state agency to
ensure that local zoning laws take into account each municipality’s fair
share of the regional low-income housing need. Both New Jersey and
California employ “inclusionary” zoning techniques such as set-asides and
density bonuses. In contrast, Massachusetts enacted a statute known as the
Anti-Snob Zoning Act, empowering developers to challenge local permit
denials by appealing unfavorable local zoning board decisions to a state
review board, which is authorized to overturn local board decisions that
exclude low-income housing needed in the municipality. Oregon, like
Massachusetts, prevents local governments from excluding low-cost
housing. Harold McDougall, From Litigation to Legislation in
Exclusionary Zoning, 22 Harv. C.R.-C.L. L. Rev. 623 (1987). See also
Britton v. Town of Chester, 595 A.2d 492 (N.H. 1991) (adopting a
variation of the Mount Laurel doctrine as an interpretation of the state
zoning enabling act).
7. Efficiency. In recent years, many municipalities have adopted
linkage ordinances that condition real estate development on either
providing a certain percentage of housing units for low-income persons or
paying a tax to a municipal fund for this purpose. Do these inclusionary
zoning techniques have positive or negative effects on social welfare?
Some scholars have argued that inclusionary zoning likely will be
inefficient. Professor Robert Ellickson has argued that such zoning
effectively imposes a tax on new construction because some units that

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would not otherwise be profitable must be included in the development,
thereby raising the costs of providing new housing. When the cost of new
housing is artificially raised by government regulation, less will be
provided, thereby exacerbating the already existing shortage of low-
income housing and interfering with the filtering mechanism by which
wealthy homeowners move to better housing and leave their prior
residences for less wealthy consumers. Robert C. Ellickson, The Irony of
“Inclusionary Zoning,” 54 S. Cal. L. Rev. 1167 (1981).
Other scholars, however, contend that such techniques are likely to
restore the efficient use of land by removing inefficient restrictions on
development contained in existing exclusionary zoning laws. Laws that
exclude low-income housing from the community arguably decrease social
welfare by attempting to create protected enclaves without accounting for
the externalities of limiting low-income housing to urban areas. They may
also artificially increase the cost of low-income housing by excluding it
from areas in which developers could otherwise profitably build it.
Andrew G. Dietderich, An Egalitarian’s Market: The Economics of
Inclusionary Zoning Reclaimed, 24 Fordham Urb. L.J. 23 (1996).
8. Has inclusionary zoning worked? The evidence on the
effectiveness of inclusionary zoning is mixed, and much depends on the
details of any given program. There is some indication that longer-
standing programs have stimulated the production of new low-income
housing construction. See Jenny Schuetz, Rachel Meltzer & Vicki Been,
Silver Bullet or Trojan Horse? The Effects of Inclusionary Zoning on
Local Housing Markets in the United States, 14 Urb. Stud. 297 (2011)
(collecting empirical studies and indicating, based on programs in
suburban Boston and the San Francisco metropolitan area, that production
increases were modest and impact on housing prices mixed). There is good
evidence that Mount Laurel and the process it created has led to significant
new production of low- and moderate-income housing. See Alan Mallach,
The Mount Laurel Doctrine and the Uncertainties of Social Policy in a
Time of Retrenchment, 63 Rutgers L. Rev. 849, 851 (2011). However,
there are genuine questions about whether even Mount Laurel has actually
generated social mobility. Id. at 861.
9. Growth controls. Growth controls and, more recently, “smart
growth,” ordinances raise concerns about exclusionary consequences. In
the famous case of Golden v. Planning Board of the Town of Ramapo, 285
N.E.2d 291 (N.Y. 1972), the New York Court of Appeals upheld a
provision that limited growth based on the availability of adequate
municipal services. The town had undertaken an in-depth study of existing

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land uses, infrastructure, and likely residential, commercial, and industry
development and had drafted a master plan based on that study. It then
passed amendments to its zoning code that limited the approval of new
subdivisions in order to sequence new residential development with
planned public improvements. In approving this process, the Court
indicated that it would “not countenance . . . under any guise . . .
community efforts at immunization or exclusion.” Id. at 302. The Court
found, nonetheless, that “far from being exclusionary, the present
amendments merely seek, by the implementation of sequential
development and timed growth, to provide a balanced cohesive community
dedicated to the efficient utilization of land.” Id.
Growth controls, however, remain controversial. In Zuckerman v.
Town of Hadley, 813 N.E.2d 843, 849 (Mass. 2004), for example, the
Massachusetts Supreme Judicial Court held that a town’s permanent limit
on the number of building permits that can be issued annually for single-
family homes designed to limit the number of children in public school “is
inherently and unavoidably detrimental to the public welfare, and therefore
not a legitimate zoning purpose” and thus unconstitutional. Justice Cordy
explained: “Despite the perceived benefits that enforced isolation may
bring to a town facing a new wave of permanent home seekers, it does not
serve the general welfare of the Commonwealth to permit one particular
town to deflect that wave onto its neighbors.” Id. at 850.

§6 EXPRESSION, SPEECH, AND RELIGION IN

LAND USE
§6.1 Aesthetic Zoning, Expression, and Discretion

Anderson v. City of Issaquah

851 P.2d 744 (Wash. Ct. App. 1993)

Map: 145 Gilman Boulevard,

Issaquah, Washington

FAYE COLLIER KENNEDY, Judge.

Appellants M. Bruce Anderson, Gary D. LaChance, and M. Bruce

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Anderson, Inc. (hereinafter referred to as Anderson), challenge the denial
of their application for a land use certification, arguing, inter alia, that the
building design requirements contained in Issaquah Municipal Code (IMC)
16.16.060 are unconstitutionally vague.

Facts
Anderson owns property located at 145 N.W. Gilman Boulevard in the
City of Issaquah (City). In 1988, Anderson applied to the City for a land
use certification to develop the property. The property is zoned for general
commercial use. Anderson desired to build a 6800 square foot commercial
building for several retail tenants.
After obtaining architectural plans, Anderson submitted the project to
various City departments for the necessary approvals. The process went
smoothly until the approval of the Issaquah Development Commission
(Development Commission) was sought. This commission was created to
administer and enforce the City’s land use regulations. It has the authority
to approve or deny applications for land use certification.
Chapter 16.16.060 of the IMC enumerates various building design
objectives which the Development Commission is required to administer
and enforce. Insofar as is relevant to this appeal, the Development
Commission is to be guided by the following criteria:

IMC 16.16.060(B). Relationship of Building and Site to Adjoining Area.

1. Buildings and structures shall be made compatible with adjacent
buildings of conflicting architectural styles by such means as screens and site
breaks, or other suitable methods and materials.
2. Harmony in texture, lines, and masses shall be encouraged.
IMC 16.16.060(D). Building Design.
1. Evaluation of a project shall be based on quality of its design and
relationship to the natural setting of the valley and surrounding mountains.
2. Building components, such as windows, doors, eaves and parapets, shall
have appropriate proportions and relationship to each other, expressing
themselves as a part of the overall design.
3. Colors shall be harmonious, with bright or brilliant colors used only for
minimal accent.
4. Design attention shall be given to screening from public view all
mechanical equipment, including refuse enclosures, electrical transformer
pads and vaults, communication equipment, and other utility hardware on
roofs, grounds or buildings.
5. Exterior lighting shall be part of the architectural concept. Fixtures,
standards and all exposed accessories shall be harmonious with the building
design.

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 6. Monotony of design in single or multiple building projects shall be
avoided. Efforts should be made to create an interesting project by use of
complimentary details, functional orientation of buildings, parking and
access provisions and relating the development to the site. In multiple
building projects, variable siting of individual buildings, heights of buildings,
or other methods shall be used to prevent a monotonous design.

As initially designed, Anderson’s proposed structure was to be faced

with off-white stucco and was to have a blue metal roof. It was designed in
a “modern” style with an unbroken “warehouse” appearance in the rear,
and large retail style windows in the front. The City moved a Victorian-era
residence, the “Alexander House,” onto the neighboring property to serve
as a visitors’ center. Across the street from the Anderson site is a gasoline
station that looks like a gasoline station. Located nearby and within view
from the proposed building site are two more gasoline stations, the First
Mutual Bank Building built in the “Issaquah territorial style,” an Elk’s hall
which is described in the record by the Mayor of Issaquah as a “box
building,” an auto repair shop, and a veterinary clinic with a cyclone
fenced dog run. The area is described in the record as “a natural transition
area between old downtown Issaquah and the new village style
construction of Gilman [Boulevard].”
The Development Commission reviewed Anderson’s application for
the first time at a public hearing on December 21, 1988. Commissioner
Nash commented that “the facade did not fit with the concept of the
surrounding area.” Commissioner McGinnis agreed. Commissioner Nash
expressed concern about the building color and stated that he did not think
the building was compatible with the image of Issaquah. Commissioner
Larson said that he would like to see more depth to the building facade.
Commissioner Nash said there should be some interest created along the
blank back wall. Commissioner Garrison suggested that the rear facade
needed to be redesigned.
At the conclusion of the meeting, the Development Commission voted
to continue the hearing to give Anderson an opportunity to modify the
building design.
On January 18, 1989, Anderson came back before the Development
Commission with modified plans which included changing the roofing
from metal to tile, changing the color of the structure from off-white to
“Cape Cod” gray with “Tahoe” blue trim, and adding brick to the front
facade. During the ensuing discussion among the commissioners,
Commissioner Larson stated that the revisions to the front facade had not
satisfied his concerns from the last meeting. In response to Anderson’s

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request for more specific design guidelines, Commissioner McGinnis
stated that the Development Commission had “been giving direction; it is
the applicant’s responsibility to take the direction/suggestions and
incorporate them into a revised plan that reflects the changes.”
Commissioner Larson then suggested that “[t]he facade can be broken up
with sculptures, benches, fountains, etc.” Commissioner Nash suggested
that Anderson “drive up and down Gilman and look at both good and bad
examples of what has been done with flat facades.”
As the discussion continued, Commissioner Larson stated that
Anderson “should present a [plan] that achieves what the Commission is
trying to achieve through its comments/suggestions at these meetings” and
stated that “architectural screens, fountains, paving of brick, wood or other
similar method[s] of screening in lieu of vegetative landscaping are
examples of design suggestions that can be used to break up the front
facade.” Commissioner Davis objected to the front facade, stating that he
could not see putting an expanse of glass facing Gilman Boulevard. “The
building is not compatible with Gilman.” Commissioner O’Shea agreed.
Commissioner Nash stated that “the application needs major changes to be
acceptable.” Commissioner O’Shea agreed. Commissioner Nash stated
that “this facade does not create the same feeling as the
building/environment around this site.”
Commissioner Nash continued, stating that he “personally like[d] the
introduction of brick and the use of tiles rather than metal on the roof.”
Commissioner Larson stated that he would like to see a review of the blue
to be used: “Tahoe blue may be too dark.” Commissioner Steinwachs
agreed. Commissioner Larson noted that “the front of the building could
be modulated [to] have other design techniques employed to make the
front facade more interesting.”
With this, the Development Commission voted to continue the
discussion to a future hearing.
On February 15, 1989, Anderson came back before the Development
Commission. In the meantime, Anderson’s architects had added a 5-foot
overhang and a 7-foot accent overhang to the plans for the front of the
building. More brick had been added to the front of the building. Wood
trim and accent colors had been added to the back of the building and trees
were added to the landscaping to further break up the rear facade.
Anderson explained the plans still called for large, floor to ceiling
windows as this was to be a retail premises: “[A] glass front is necessary to
rent the space. . . .” Commissioner Steinwachs stated that he had driven
Gilman Boulevard and taken notes. The following verbatim statement by
Steinwachs was placed into the minutes:

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 “My General Observation From Driving Up and Down Gilman Boulevard.”

I see certain design elements and techniques used in various combinations

in various locations to achieve a visual effect that is sensitive to the unique
character of our Signature Street. I see heavy use of brick, wood, and tile. I
see minimal use of stucco. I see colors that are mostly earthtones, avoiding
extreme contrasts. I see various methods used to provide modulation in both
horizontal and vertical lines, such as gables, bay windows, recesses in front
faces, porches, rails, many vertical columns, and breaks in roof lines. I see
long, sloping, conspicuous roofs with large overhangs. I see windows with
panels above and below windows. I see no windows that extend down to
floor level. This is the impression I have of Gilman Boulevard as it relates to
building design.

Commissioner Nash agreed stating, “[T]here is a certain feeling you

get when you drive along Gilman Boulevard, and this building does not
give this same feeling.” Commissioner Steinwachs wondered if the
applicant had any option but to start “from scratch.” Anderson responded
that he would be willing to change from stucco to wood facing but that,
after working on the project for 9 months and experiencing total
frustration, he was not willing to make additional design changes.
At that point, the Development Commission denied Anderson’s
application, giving four reasons:

1. After four [sic] lengthy review meetings of the Development

Commission, the applicant has not been sufficiently responsive to concerns
expressed by the Commission to warrant approval or an additional
continuance of the review.
2. The primary concerns expressed relate to the building architecture as it
relates to Gilman Boulevard in general, and the immediate neighborhood in
particular.
3. The Development Commission is charged with protecting, preserving
and enhancing the aesthetic values that have established the desirable quality
and unique character of Issaquah, reference IMC 16.16.010C.
4. We see certain design elements and techniques used in various
combinations in various locations to achieve a visual effect that is sensitive
to the unique character of our Signature Street. On Gilman Boulevard we see
heavy use of brick, wood and tile. We see minimal use of stucco. We see
various methods used to provide both horizontal and vertical modulation,
including gables, breaks in rooflines, bay windows, recesses and protrusions
in front face. We see long, sloping, conspicuous roofs with large overhangs.
We see no windows that extend to ground level. We see brick and wood
panels at intervals between windows. We see earthtone colors avoiding

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 extreme contrast.

Anderson, who by this time had an estimated $250,000 into the project,
timely appealed the adverse ruling to the Issaquah City Council (City
Council). After a lengthy hearing and much debate, the City Council
decided to affirm the Development Commission’s decision by a vote of 4
to 3.
The City Council considered formal written findings and conclusions
on April 3, 1989. The City Council verbally adopted its action on that date
but required that certain changes be made to the proposed findings and
conclusions. Those changes were made and the final findings and
conclusions were signed on April 5, 1989 (backdated to April 3). On April
5, a notice of action was issued to Anderson, stating that he had 14 days
from the date of that notice in which to file any appeal. Thirteen days later,
on April 18, 1989, Anderson filed a complaint in King County Superior
Court.

Discussion
[A] statute which either forbids or requires the doing of an act in terms
so vague that men [and women] of common intelligence must necessarily
guess at its meaning and differ as to its application, violates the first
essential of due process of law. Connally v. General Constr. Co., 269 U.S.
385, 391 (1926). In the area of land use, a court looks not only at the face
of the ordinance but also at its application to the person who has sought to
comply with the ordinance and/or who is alleged to have failed to comply.
The purpose of the void for vagueness doctrine is to limit arbitrary and
discretionary enforcements of the law.
Looking first at the face of the building design sections of IMC
16.16.060, we note that an ordinary citizen reading these sections would
learn only that a given building project should bear a good relationship
with the Issaquah Valley and surrounding mountains; its windows, doors,
eaves and parapets should be of “appropriate proportions”; its colors
should be “harmonious” and seldom “bright” or “brilliant”; its mechanical
equipment should be screened from public view; its exterior lighting
should be “harmonious” with the building design and “monotony should
be avoided.” The project should also be “interesting.” IMC 16.16.060(D)
(1)-(6). If the building is not “compatible” with adjacent buildings, it
should be “made compatible” by the use of screens and site breaks “or
other suitable methods and materials.” “Harmony in texture, lines, and
masses [is] encouraged.” The landscaping should provide an “attractive . .
. transition” to adjoining properties. IMC 16.16.060(B)(1)-(3).

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 As is stated in the brief of amici curiae, we conclude that these code
sections “do not give effective or meaningful guidance” to applicants, to
design professionals, or to the public officials of Issaquah who are
responsible for enforcing the code. Brief of Amici Curiae, at 1. Although it
is clear from the code sections here at issue that mechanical equipment
must be screened from public view and that, probably, earth tones or
pastels located within the cool and muted ranges of the color wheel are
going to be preferred, there is nothing in the code from which an applicant
can determine whether his or her project is going to be seen by the
Development Commission as “interesting” versus “monotonous” and as
“harmonious” with the valley and the mountains. Neither is it clear from
the code just what else, besides the valley and the mountains, a particular
project is supposed to be harmonious with, although “[h]armony in texture,
lines, and masses” is certainly encouraged. IMC 16.16.060(B)(2).
In attempting to interpret and apply this code, the commissioners
charged with that task were left with only their own individual, subjective
“feelings” about the “image of Issaquah” and as to whether this project
was “compatible” or “interesting.” The commissioners stated that the City
was “making a statement” on its “signature street” and invited Anderson to
take a drive up and down Gilman Boulevard and “look at good and bad
examples of what has been done with flat facades.” One commissioner
drove up and down Gilman, taking notes, in a no doubt sincere effort to
define that which is left undefined in the code.
The point we make here is that neither Anderson nor the
commissioners may constitutionally be required or allowed to guess at the
meaning of the code’s building design requirements by driving up and
down Gilman Boulevard looking at “good and bad” examples of what has
been done with other buildings, recently or in the past. We hold that the
code sections here at issue are unconstitutionally vague on their face. The
words employed are not technical words which are commonly understood
within the professional building design industry. Neither do these words
have a settled common law meaning.
As they were applied to Anderson, it is also clear the code sections at
issue fail to pass constitutional muster. Because the commissioners
themselves had no objective guidelines to follow, they necessarily had to
resort to their own subjective “feelings.” The “statement” Issaquah is
apparently trying to make on its “signature street” is not written in the
code. In order to be enforceable, that “statement” must be written down in
the code, in understandable terms. The unacceptable alternative is what
happened here. The commissioners enforced not a building design code
but their own arbitrary concept of the provisions of an unwritten

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“statement” to be made on Gilman Boulevard. The commissioners’
individual concepts were as vague and undefined as those written in the
code. This is the very epitome of discretionary, arbitrary enforcement of
the law.
[A]esthetic standards are an appropriate component of land use
governance. Whenever a community adopts such standards they can and
must be drafted to give clear guidance to all parties concerned. Applicants
must have an understandable statement of what is expected from new
construction. Design professionals need to know in advance what
standards will be acceptable in a given community. It is unreasonable to
expect applicants to pay for repetitive revisions of plans in an effort to
comply with the unarticulated, unpublished “statements” a given
community may wish to make on or off its “signature street.” It is equally
unreasonable, and a deprivation of due process, to expect or allow a design
review board such as the Issaquah Development Commission to create
standards on an ad hoc basis, during the design review process.
It is not disputed that Anderson’s project meets all of the City’s land
use requirements except for those unwritten and therefore unenforceable
requirements relating to building design which the Development
Commission unsuccessfully tried to articulate during the course of several
hearings. We order that Anderson’s land use certification be issued,
provided however, that those changes which Anderson agreed to through
the hearing before the City Council may validly be imposed.

Notes and Questions

1. Aesthetic zoning. Aesthetic zoning is a common aspect of
contemporary land use regulation. Common examples include the kind of
architecture or design review the court reviewed in Anderson, as well as
limitations on billboards and other signs, and regulations of particularly
unsightly land uses such as junkyards.
Courts were initially suspicious of aesthetic zoning as a valid object of
the police power, see, e.g., Spann v. Dallas, 235 S.W. 513, 516 (1921)
(“[I]t is not the law . . . that a man may be deprived of the lawful use of his
property because his tastes are not in accord with those of his neighbors”),
and some courts continue to echo Anderson’s grudging acceptance. In
Berman v. Parker, 348 U.S. 26, 33 (1954), a case that involved the use of
eminent domain for urban renewal, the Supreme Court stated that:

The concept of the public welfare is broad and inclusive. The values it
represents are spiritual as well as physical, aesthetic as well as monetary. It is
within the power of the legislature to determine that the community should

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 be beautiful as well as healthy, spacious as well as clean, well-balanced as
well as carefully patrolled.

Since Berman, courts have generally accepted aesthetics as a legitimate

goal for the exercise of land use regulatory authority.
2. Aesthetics and the first amendment. In addition to the kind of due
process challenge at issue in Anderson, aesthetic regulations can raise
significant first amendment concerns. Signage regulations have been a
particular flashpoint for this conflict. See, e.g., City of Ladue v. Gilleo, 512
U.S. 43 (1994). In Reed v. Town of Gilbert, 135 S. Ct. 2218 (2015), the
Supreme Court struck down a municipal ordinance that set different —
and increasingly stringent — rules about size, location, and allowable
duration for “ideological” signs, which communicate “a message or ideas
for noncommercial purposes”; “political” signs, which are “designed to
influence the outcome of an election”; and “temporary directional signs,”
which, as the name suggests, “direct pedestrians, motorists, and other
passersby” to certain specified events. Id. at 2224-2225. After twice being
cited for violations of the temporary directional sign provision, a church
and its pastor challenged the code, arguing that the categories constituted
content-based restrictions in violation of the first amendment. The Court
agreed.
Noting that “[c]ontent-based laws — those that target speech based on
its communicative content — are presumptively unconstitutional and may
be justified only if the government proves that they are narrowly tailored
to serve compelling state interests,” the Court found that the three
categories in the ordinance “depend entirely on the communicative content
of the sign.” Id. at 2227. The motivation of the municipality, the Court
continued, was irrelevant to the threshold question of the level of scrutiny,
as was the fact that the sign ordinance drew no distinction based on
viewpoint. Applying strict scrutiny, then, the Court held that even if the
municipality’s proffered justifications — preservation of aesthetics and
traffic safety — were both compelling governmental interests, neither were
narrowly tailored.
In one of three concurrences, Justice Kagan challenged the majority’s
insistence that all content distinctions, however innocuous, merit strict
scrutiny. There are, Justice Kagan argued:

two important and related reasons for subjecting content-based speech

regulations to the most exacting standard of review. The first is to preserve
an uninhibited marketplace of ideas in which truth will ultimately prevail.

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 The second is to ensure that the government has not regulated speech based
on hostility — or favoritism — towards the underlying message expressed.
Yet the subject-matter exemptions included in many sign ordinances do not
implicate those concerns. Allowing residents, say, to install a light bulb over
“name and address” signs but no others does not distort the marketplace of
ideas. Nor does that different treatment give rise to an inference of
impermissible government motive.

Id. at 2237. Justice Kagan concurred, however, on the ground that the
municipality’s “defense of its sign ordinance — most notably, the law’s
distinctions between directional signs and others — does not pass strict
scrutiny, or intermediate scrutiny, or even the laugh test.” Id. at 2239.
Does Reed imperil the kind of design standards at issue in Anderson?
A number of lower courts have limited Reed’s seemingly open-ended
potential by invoking a distinction the Supreme Court has drawn between
commercial and noncommercial speech, subjecting the latter to an
“intermediate” standard of review, as the Supreme Court had in
Metromedia, Inc. v. City of San Diego, 453 U.S. 490 (1991). See Note,
Free Speech Doctrine After Reed v. Town of Gilbert, 129 Harv. L. Rev.
1981, 1991 (2016). The majority in Reed, however, did not explicitly
address this distinction and Justice Breyer, in a separate concurrence in
Reed, cautioned that “the Court has applied the heightened ‘strict scrutiny’
standard even in cases where the less stringent ‘commercial speech’
standard was appropriate.” 135 S. Ct. at 2235.

Problem
If you were asked to rewrite the relevant provisions of Issaquah’s
design ordinance to meet the standards the Anderson court articulated, how
would you do so? What kinds of substantive and procedural protections for
owners going through the design-review process would you add? What
considerations would be important to preserve for the community?

§6.2 Restrictions on Free Speech in Land Use Regulation

Local governments frequently seek to regulate unpopular types of
expression, such as adult book stores and nude dancing establishments. In
City of Los Angeles v. Alameda Books, 535 U.S. 425 (2002), the Supreme
Court attempted to clarify the standards that apply to such regulations. Los
Angeles sought to prevent the grouping of adult uses through an ordinance
that barred such uses within 1,000 feet of each other and also required such
uses to be more than 500 feet from any religious institution, school, or

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public park. The ordinance, however, inadvertently allowed multiple adult
businesses in a single building. After Los Angeles amended its code to
close that loophole, two adult bookstores operating in the same
establishment filed suit. In all of this, the city had relied on an old 1977
study that indicated that the concentration of adult uses was associated
with higher rates of certain crimes in surrounding areas.
Justice O’Connor, in a plurality opinion, described the framework for
evaluating land use regulations that target speech established in Renton v.
Playtime Theatres, Inc., 475 U.S. 41 (1986), which concerned an
ordinance banning adult movie theaters from locating within 1,000 feet of
a residential zone, family dwelling, church, park, or school. First, the
Court considers whether the ordinance bans the form of expression
altogether. If it does not, the ordinance will be analyzed as “a time, place,
and manner regulation.” The Court next considers whether the restriction
is “content neutral or content based. If the regulation were content based, it
would be considered presumptively invalid and subject to strict scrutiny.”
In Renton, the Court found the ordinance to be content-neutral, because it
“was aimed not at the content of the films shown at adult theaters, but
rather at the secondary effects of such theaters on the surrounding
community, namely, at crime rates, property values, and the quality of the
city’s neighborhoods.” If content-neutral, an ordinance would be upheld so
long as it “was designed to serve a substantial government interest and that
reasonable alternative avenues of communication remained available.” The
Court in Renton found that the city met this burden. 535 U.S. at 433-434.
In Alameda Books, the court of appeals had rejected the relevance of
the 1977 study because it focused on the concentration of businesses
within a neighborhood but not within a given building. To the Alameda
Books plurality, however, this was too high a burden. Instead, it opined,
local governments are entitled “rely on any evidence that is ‘reasonably
believed to be relevant’ for demonstrating a connection between speech
and a substantial, independent government interest.” Id. at 436 (quoting
Renton, 475 U.S. at 51-52).
Justice Kennedy concurred, framing the conflict at issue as follows:

Speech can produce tangible consequences. It can change minds. It can

prompt actions. These primary effects signify the power and the necessity of
free speech. Speech can also cause secondary effects, however, unrelated to
the impact of the speech on its audience. A newspaper factory may cause
pollution, and a billboard may obstruct a view. These secondary
consequences are not always immune from regulation by zoning laws even
though they are produced by speech.

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 Municipal governments know that high concentrations of adult businesses
can damage the value and the integrity of a neighborhood. The damage is
measurable; it is all too real. The law does not require a city to ignore these
consequences if it uses its zoning power in a reasonable way to ameliorate
them without suppressing speech.

Id. at 444. Justice Kennedy argued that “[t]hese ordinances are content
based, and we should call them so,” but that the Renton analysis should
control nonetheless. On that analysis, Justice Kennedy argued, it is not
enough to examine secondary effects in isolation in evaluating the
evidence a jurisdiction relies on to justify restricting adult speech; instead
a court must evaluate “how speech will fare” under the law. If the effect of
the ordinance is to reduce secondary effects by reducing (rather than
merely dispersing) speech, then it is impermissible. Id. at 450-451.
State constitutional law can be more protective of speech than the
federal Constitution. In City of Erie v. Pap’s A.M., 529 U.S. 277 (2000),
the Supreme Court upheld the constitutionality of a zoning ordinance that
effectively banned nude dancing, finding the law a valid content-neutral
regulation of conduct rather than expression, geared to protecting the
people from the secondary effects of adult entertainment establishments.
Accord, Barnes v. Glen Theatre, Inc., 501 U.S. 560, 570 (1991)
(government has legitimate interest in preventing public nudity that is
“unrelated to the suppression of free expression”). However, in Mendoza
v. Licensing Board of Fall River, 827 N.E.2d 180 (Mass. 2005), the state
supreme court interpreted its state constitutional free speech guarantee
more broadly and found that, while the city could regulate the time, place,
and manner of the practice, the city could not completely ban nude
dancing from anywhere in the city.

§6.3 Freedom of Religion and Religious Land Uses

Westchester Day School v. Village of Mamaroneck

504 F.3d 338 (2d Cir. 2007)

RICHARD J. CARDAMONE, Circuit Judge:
For nearly 60 years Westchester Day School (plaintiff, WDS, day
school, or school) has been operating an Orthodox Jewish co-educational
day school with classes from pre-school to eighth grade. Believing it
needed to expand, the school submitted construction plans to the Village of
Mamaroneck and an application for the required special permit. When the
village zoning board turned the application down, the present litigation

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ensued.
Westchester Day School is located in the Orienta Point neighborhood
of the Village of Mamaroneck, Westchester County, New York. Its
facilities are situated on 25.75 acres of largely undeveloped land (property)
owned by Westchester Religious Institute. The Mamaroneck Village Code
permits private schools to operate in “R-20 Districts” if the Zoning Board
of Appeals of the Village of Mamaroneck (ZBA or zoning board) grants
them a special permit.
As a Jewish private school, Westchester Day School provides its
students with a dual curriculum in Judaic and general studies. Even general
studies classes are taught so that religious and Judaic concepts are
reinforced. Thus, the school strives to have every classroom used at times
for religious purposes, whether or not the class is officially labeled Judaic.
A Jewish day school like WDS exists, at least in part, because Orthodox
Jews believe it is the parents’ duty to teach the Torah to their children.
Since most Orthodox parents lack the time to fulfill this obligation fully,
they seek out a school like WDS.
By 1998 WDS believed its current facilities inadequate to satisfy the
school’s needs. The district court’s extensive findings reveal the day
school’s existing facilities are deficient and that its effectiveness in
providing the education Orthodox Judaism mandates has been significantly
hindered as a consequence. In October 2001 the day school submitted to
the zoning board an application for modification of its special permit to
enable it to proceed with this $12 million expansion project. On February
7, 2002 the ZBA voted unanimously to issue a “negative declaration,”
which constituted a finding that the project would have no significant
adverse environmental impact and thus that consideration of the project
could proceed. After the issuance of the negative declaration, a small but
vocal group in the Mamaroneck community opposed the project. As a
result of this public opposition, on August 1, 2002 the ZBA voted 3-2 to
rescind the negative declaration. [After earlier litigation on this issue, the
ZBA] proceeded to conduct additional public hearings to consider the
merits of the application. The ZBA had the opportunity to approve the
application subject to conditions intended to mitigate adverse effects on
public health, safety, and welfare that might arise from the project. Rather,
on May 13, 2003 the ZBA voted 3-2 to deny WDS’s application in its
entirety.
The stated reasons for the rejection included the effect the project
would have on traffic and concerns with respect to parking and the
intensity of use. Many of these grounds were conceived after the ZBA
closed its hearing process, giving the school no opportunity to respond.

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The district court found the stated reasons for denying the application were
not supported by evidence in the public record before the ZBA, and were
based on several factual errors. It surmised that the application was in fact
denied because the ZBA gave undue deference to the public opposition of
the small but influential group of neighbors who were against the school’s
expansion plans. It also noted that the denial of the application would
result in long delay of WDS’s efforts to remedy the gross inadequacies of
its facilities, and substantially increase construction costs.
On May 29, 2003 the school filed [a complaint raising claims under the
Religious Land Use and Institutionalized Persons Act (RLUIPA), 42
U.S.C. §2000cc et seq., and other statutes]. A seven-day bench trial began
on November 14, 2005 and resulted in the March 2006 judgment. The
district court ordered the Village to issue WDS’s special permit
immediately.

Application of RLUIPA
RLUIPA prohibits the government from imposing or implementing a
land use regulation in a manner that

imposes a substantial burden on the religious exercise of a person, including

a religious assembly or institution, unless the government demonstrates that
imposition of the burden on that person, assembly, or institution (A) is in
furtherance of a compelling governmental interest; and (B) is the least
restrictive means of furthering that compelling governmental interest. 42
U.S.C. §2000cc(a)(1).

A. Religious Exercise
Religious exercise under RLUIPA is defined as “any exercise of
religion, whether or not compelled by, or central to, a system of religious
belief.” §2000cc-5(7)(A). Further, using, building, or converting real
property for religious exercise purposes is considered to be religious
exercise under the statute. §2000cc-5(7)(B). To remove any remaining
doubt regarding how broadly Congress aimed to define religious exercise,
RLUIPA goes on to state that the Act’s aim of protecting religious exercise
is to be construed broadly and “to the maximum extent permitted by the
terms of this chapter and the Constitution.” §2000cc-3(g).
[T]o get immunity from land use regulation, religious schools need to
demonstrate more than that the proposed improvement would enhance the
overall experience of its students. For example, if a religious school wishes
to build a gymnasium to be used exclusively for sporting activities, that
kind of expansion would not constitute religious exercise. Or, had the ZBA

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denied the Westchester Religious Institute’s 1986 request for a special
permit to construct a headmaster’s residence on a portion of the property,
such a denial would not have implicated religious exercise. Nor would the
school’s religious exercise have been burdened by the denial of a permit to
build more office space.
[The] district court made careful factual findings that each room the
school planned to build would be used at least in part for religious
education and practice, finding that Gordon Hall and the other facilities
renovated as part of the project, in whole and in all of their constituent
parts, would be used for “religious education and practice.” In light of
these findings, amply supported in the record, the expansion project is a
“building [and] conversion of real property for the purpose of religious
exercise” and thus is religious exercise under §2000cc-5(7)(B).

B. Substantial Burden
Supreme Court precedents teach that a substantial burden on religious
exercise exists when an individual is required to “choose between
following the precepts of her religion and forfeiting benefits, on the one
hand, and abandoning one of the precepts of her religion . . . on the other
hand.” Sherbert v. Verner, 374 U.S. 398, 404 (1963). A number of courts
use this standard as the starting point for determining what is a substantial
burden under RLUIPA. When a municipality denies a religious institution
the right to expand its facilities, it is difficult to speak of substantial
pressure to change religious behavior, because in light of the denial the
renovation simply cannot proceed. Accordingly, when there has been a
denial of a religious institution’s building application, courts appropriately
speak of government action that directly coerces the religious institution to
change its behavior, rather than government action that forces the religious
entity to choose between religious precepts and government benefits. See,
e.g., [Midrash Sephardi, Inc. v. Town of Surfside, 366 F.3d 1214, 1227
(11th Cir. 2004)] (“[A] substantial burden is akin to significant pressure
which directly coerces the religious adherent to conform his or her
behavior accordingly.”). Here, WDS contends that the denial of its
application in effect coerced the day school to continue teaching in
inadequate facilities, thereby impeding its religious exercise.
Yet, when the denial of a religious institution’s application to build is
not absolute, such would not necessarily place substantial pressure on the
institution to alter its behavior, since it could just as easily file a second
application that remedies the problems in the first. As a consequence,
rejection of a submitted plan, while leaving open the possibility of

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approval of a resubmission with modifications designed to address the
cited problems, is less likely to constitute a “substantial burden” than
definitive rejection of the same plan, ruling out the possibility of approval
of a modified proposal. Of course, a conditional denial may represent a
substantial burden if the condition itself is a burden on free exercise, the
required modifications are economically unfeasible, or where a zoning
board’s stated willingness to consider a modified plan is disingenuous.
However, in most cases, whether the denial of the application was absolute
is important; if there is a reasonable opportunity for the institution to
submit a modified application, the denial does not place substantial
pressure on it to change its behavior and thus does not constitute a
substantial burden on the free exercise of religion.
We recognize further that where the denial of an institution’s
application to build will have minimal impact on the institution’s religious
exercise, it does not constitute a substantial burden, even when the denial
is definitive. There must exist a close nexus between the coerced or
impeded conduct and the institution’s religious exercise for such conduct
to be a substantial burden on that religious exercise. Imagine, for example,
a situation where a school could easily rearrange existing classrooms to
meet its religious needs in the face of a rejected application to renovate. In
such case, the denial would not substantially threaten the institution’s
religious exercise, and there would be no substantial burden, even though
the school was refused the opportunity to expand its facilities.
Note, however, that a burden need not be found insuperable to be held
substantial. When the school has no ready alternatives, or where the
alternatives require substantial “delay, uncertainty, and expense,” a
complete denial of the school’s application might be indicative of a
substantial burden.
We are, of course, mindful that the Supreme Court’s free exercise
jurisprudence signals caution in using effect alone to determine substantial
burden. This is because an effect focused analysis may run up against the
reality that “[t]he freedom asserted by [some may] bring them into
collision with [the] rights asserted by” others and that “[i]t is such conflicts
which most frequently require intervention of the State to determine where
the rights of one end and those of another begin.” Braunfeld v. Brown, 366
U.S. 599, 604 (1961). Accordingly, the Supreme Court has held that
generally applicable burdens, neutrally imposed, are not “substantial.” See
Jimmy Swaggart Ministries v. Bd. of Equalization, 493 U.S. 378, 389-91
(1990).
This reasoning helps to explain why courts confronting free exercise
challenges to zoning restrictions rarely find the substantial burden test

669
satisfied even when the resulting effect is to completely prohibit a
religious congregation from building a church on its own land. A number
of our sister circuits have applied this same reasoning in construing
RLUIPA’s substantial burden requirement. For example, the Seventh
Circuit has held that land use conditions do not constitute a substantial
burden under RLUIPA where they are “neutral and traceable to municipal
land planning goals” and where there is no evidence that government
actions were taken “because [plaintiff] is a religious institution.” Vision
Church v. Vill. of Long Grove, 468 F.3d 975, 998-99 (7th Cir. 2006).
Similarly, the Ninth Circuit has held that no substantial burden was
imposed, even where an ordinance “rendered [plaintiff] unable to provide
education and/or worship” on its property, because the plaintiff was not
“precluded from using other sites within the city” and because “there [is
no] evidence that the City would not impose the same requirements on any
other entity.” [San Jose Christian College v. City of Morgan Hill, 360 F.3d
1024, 1035 (9th Cir. 2004).] The Eleventh Circuit has also ruled that
“reasonable ‘run of the mill’ zoning considerations do not constitute
substantial burdens.” Midrash Sephardi, 366 F.3d at 1227-28 & n.11.
The same reasoning that precludes a religious organization from
demonstrating substantial burden in the neutral application of legitimate
land use restrictions may, in fact, support a substantial burden claim where
land use restrictions are imposed on the religious institution arbitrarily,
capriciously, or unlawfully. The arbitrary application of laws to religious
organizations may reflect bias or discrimination against religion. Where
the arbitrary, capricious, or unlawful nature of a defendant’s challenged
action suggests that a religious institution received less than even-handed
treatment, the application of RLUIPA’s substantial burden provision
usefully “backstops the explicit prohibition of religious discrimination in
the later section of the Act.” [Saints Constantine & Helen Greek Orthodox
Church, Inc. v. City of New Berlin, 396 F.3d 895, 900 (7th Cir. 2005).]
Accordingly, we deem it relevant to the evaluation of WDS’s
particular substantial burden claim that the district court expressly found
that the zoning board’s denial of the school’s application was “arbitrary
and capricious under New York law because the purported justifications
set forth in the Resolution do not bear the necessary substantial relation to
public health, safety or welfare,” and the zoning board’s findings are not
supported by substantial evidence. Although the Village disputes this
finding, we conclude that it is amply supported by both the law and the
record evidence.
[T]he zoning board denied WDS’s application based, in part, on an
accusation that the school made “a willful attempt” to mislead the zoning

670
board. In fact, the accusation was unsupported by the evidence and based
on the zoning board’s own error with respect to certain relevant facts. The
ZBA’s allegations of deficiencies in the school’s traffic study were also
unsupported by the evidence before it. The concern about lack of adequate
parking was based on the zoning board’s own miscalculation. In each of
these instances, the ZBA’s assumptions were not only wrong; they were
unsupported by its own experts.
[T]wo other factors drawn from our earlier discussion must be
considered in reaching such a burden determination: (1) whether there are
quick, reliable, and financially feasible alternatives WDS may utilize to
meet its religious needs absent its obtaining the construction permit; and
(2) whether the denial was conditional. These two considerations matter
for the same reason: when an institution has a ready alternative — be it an
entirely different plan to meet the same needs or the opportunity to try
again in line with a zoning board’s recommendations — its religious
exercise has not been substantially burdened.
Here, the school could not have met its needs simply by reallocating
space within its existing buildings. The architectural firm it hired
determined that certain essential facilities would have to be incorporated
into a new building, because not enough space remained in the existing
buildings to accommodate the school’s expanding needs. Further, experts
hired by WDS determined that the planned location for Gordon Hall was
the only site that would accommodate the new building.
In examining the second factor we believe the denial of WDS’s
application was absolute. First, we observe that the ZBA could have
approved the application subject to conditions intended to mitigate adverse
effects on public health, safety, and welfare. Yet the ZBA chose instead to
deny the application in its entirety. Second, were WDS to prepare a
modified proposal, it would have to begin the application process anew.
This would have imposed so great an economic burden as to make the
option unworkable. Third, the district court determined that ZBA members
were not credible when they testified they would give reasonable
consideration to another application by WDS. When the board’s expressed
willingness to consider a modified proposal is insincere, we do not require
an institution to file a modified proposal before determining that its
religious exercise has been substantially burdened.

C. Least Restrictive Means to Further a Compelling State Interest

Under RLUIPA, once a religious institution has demonstrated that its
religious exercise has been substantially burdened, the burden of proof

671
shifts to the municipality to prove it acted in furtherance of a compelling
governmental interest and that its action is the least restrictive means of
furthering that interest. §2000cc-2(b). Compelling state interests are
“interests of the highest order.” Church of the Lukumi Babalu Aye, Inc. v.
City of Hialeah, 508 U.S. 520, 546 (1993). The Village claims that it has a
compelling interest in enforcing zoning regulations and ensuring residents’
safety through traffic regulations. However, it must show a compelling
interest in imposing the burden on religious exercise in the particular case
at hand, not a compelling interest in general.
The district court’s findings reveal the ZBA’s stated reasons for
denying the application were not substantiated by evidence in the record
before it. The court stated the application was denied not because of a
compelling governmental interest that would adversely impact public
health, safety, or welfare, but was denied because of undue deference to
the opposition of a small group of neighbors.
Further, even were we to determine that there was a compelling state
interest involved, the Village did not use the least restrictive means
available to achieve that interest. The ZBA had the opportunity to approve
the application subject to conditions, but refused to consider doing so.

Notes and Questions

1. Congress versus the courts on religious freedom. The first and
fourteenth amendments to the U.S. Constitution protect the “free exercise”
of religion. In Employment Division v. Smith, 494 U.S. 872 (1990), the
Supreme Court held that no violation of the free exercise clause occurs
when a neutral and generally applicable regulatory law places a burden on
an individual’s religion. With several narrow exceptions, only laws that
prohibit specific religious practices or coerce individuals to engage in
religious practices raise constitutional issues of free exercise. Responding
to Smith, in 1993 Congress passed the Religious Freedom Restoration Act
(RFRA), 42 U.S.C. §§2000bb-1 to 2000bb-3, granting exemptions from
government regulations that substantially burden the free exercise of
religion unless the government could show a compelling governmental
interest for the regulation and that the interest could not be achieved in a
manner less restrictive of religious practice. In 1997, the Supreme Court
held RFRA unconstitutional as applied to state governments because
Congress’s power under the fourteenth amendment to regulate the states to
protect religious “liberty” could not go beyond the protections afforded by
the first amendment. City of Boerne v. Flores, 521 U.S. 507 (1997).
Because Congress was, in effect, trying to expand federal protection for

672
religious freedom beyond what the Court believed was encompassed by
the first amendment, and because it was attempting to regulate the states, it
exceeded its powers.14
City of Boerne generated a number of legislative responses. At the state
level, a number of states enacted their own versions of RFRA. Alabama,
for example, amended its constitution to do so. Ala. Const. amend. 622,
§V. Other states that passed such laws by statute include Arizona, Ariz.
Stat. §41-1493.01; Connecticut, Conn. Gen. Stat. §52-571b; Florida, Fla.
Stat. §§761.01-761.05; Idaho, Idaho Code §73-402; Illinois, 775 Ill. Comp.
Stat. 35/1-99; New Mexico, N.M. Stat. §§28-22-1 to 28-22-5; Oklahoma,
Okla. Stat. tit. 51, §§251-258; Rhode Island, R.I. Gen. Laws §§42-80.1-1
to 42-80.1-4; South Carolina, S.C. Code §§1-32-10 to 1-32-60; and Texas,
Tex. Civ. Prac. & Rem. Code §§110.001-110.012.
At the federal level, Congress responded by passing the Religious Land
Use and Institutionalized Persons Act of 2000 (RLUIPA), 42 U.S.C.
§§2000cc to 2000cc-5. More limited in scope, RLUIPA protects the
religious exercise rights of prisoners and prohibits governments from
“impos[ing] or implement[ing] a land use regulation in a manner that
imposes a substantial burden on the religious exercise of a person,
including a religious assembly or institution” unless the regulation furthers
“a compelling governmental interest” and “is the least restrictive means of
furthering that compelling governmental interest.” 42 U.S.C. §2000cc.
To meet the constitutional requirements set out in City of Bourne, the
statute applies only if (a) the affected activity receives federal funds, (b)
either the substantial burden or the removal of the burden would affect
“interstate commerce,” or (c) the burden is imposed in the course of
governmental procedures that involve “individualized assessments of the
proposed uses for the property involved.” Id. §2000cc(a)(2). The statute
further provides that no government “shall impose or implement a land use
regulation that (A) totally excludes religious assemblies from a
jurisdiction; or (B) unreasonably limits religious assemblies, institutions,
or structures within a jurisdiction.” Id. §2000cc(b)(3).
The Supreme Court has held that the “institutionalized persons”
aspects of RLUIPA do not violate the constitution’s establishment clause,
see Cutter v. Wilkinson, 544 U.S. 709 (2005), but has yet to address the
act’s land use provisions.
2. Religious exercise. Westchester Day School noted how broadly
Congress defined religious exercise under §§2000cc-5(7) and 3(g), but
nonetheless gave several examples of uses related to the religious school
that would not have qualified, such as a gymnasium for students or a

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residence for the headmaster. Do you agree with this interpretation? Why
does a given portion of a facility have to be directly used for religious
education to constitute “religious exercise”? What if a church believes that
part of its ministry includes social gatherings for its members and seeks to
build a facility that is used for gatherings, but not worship?
Many faiths include strictures relating to relieving suffering and
alleviating poverty and, as a result, many religious institutions offer social
services, such as soup kitchens, homeless shelters, and housing. If a
religious institution offers a social service or a service that looks like a
commercial activity as part of its mission, is this the “exercise of
religion”? See, e.g., Greater Bible Way Temple v. City of Jackson, 733
N.W.2d 734 (Mich. 2007) (proposed assisted living facility for elderly and
disabled people claimed to be part of a church’s mission was not
considered religious exercise). Why might courts limit the scope of the
kinds of services that might constitute religious exercise?
Courts can also take a narrow view of claims that uses that support a
religious mission are themselves the exercise of religion. See, e.g.,
Cathedral Church of the Intercessor v. Village of Malverne, 353 F. Supp.
2d 375 (E.D.N.Y. 2005) (no RLUIPA claim when expansion of church’s
administrative offices was blocked); Scottish Rite Cathedral v. City of
L.A., 67 Cal. Rptr. 3d 207, 215-216 (Ct. App. 2007) (holding that “a
burden on a commercial enterprise used to fund a religious organization
does not constitute a substantial burden on ‘religious exercise’ within the
meaning of RLUIPA”).
3. How substantial does the burden have to be? As Westchester Day
School pointed out, some courts hold that land use restrictions are not a
substantial burden where such conditions are “neutral and traceable to
municipal land planning goals.” Vision Church v. Village of Long Grove,
468 F.3d 975, 998-999 (7th Cir. 2006). In passing RLUIPA, Congress was
responding to the Supreme Court’s holding in Smith that the free exercise
clause is not violated when a neutral and generally applicable regulatory
law burdens an individual’s religion. Does that suggest that even neutral
and generally applicable zoning laws might create a substantial burden on
religious exercise?
Courts have taken varying approaches to evaluating whether a land use
regulation constitutes a substantial burden on religious exercise. In contrast
to the standard the Second Circuit applied in Westchester Day School, for
example, the Seventh Circuit has held that “a land-use regulation that
imposes a substantial burden on religious exercise is one that necessarily
bears direct, primary, and fundamental responsibility for rendering

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religious exercise — including the use of real property for the purpose
thereof within the regulated jurisdiction generally — effectively
impracticable.” City League of Urban Believers v. Chicago, 342 F.3d 752,
761 (7th Cir. 2003). For a discussion of the primary factors that courts
have looked to in approaching the question of substantial burden, see Karla
L. Chaffee & Dwight H. Merriam, Six Fact Patterns of Substantial Burden
in RLUIPA: Lessons for Potential Litigants, 2 Alb. Govt. L. Rev. 437,
453-474 (2009) (noting that courts evaluate, among other factors, the level
of financial hardship and inconvenience imposed by a regulation, whether
current facilities are adequate for religious exercise or other property is
available, and whether a regulation treats religious institutions differently
than secular ones).
4. Compelling governmental interest. One of the more difficult
questions RLUIPA poses is what constitutes a “compelling governmental
interest” in the zoning context. In Westchester Day School, the court
avoided this question by holding that the interest asserted was
disingenuous. Other courts approach this question by focusing on whether
a purported interest is being advanced by the least restrictive means. See,
e.g., Covenant Christian Ministries, Inc. v. City of Marietta, 654 F.3d 1231
(11th Cir. 2011) (complete prohibition on religious assemblies in
residential zones is not the least restrictive means). But are traditional land
use policy rationales such as the separation of incompatible uses, orderly
development, and pedestrian and traffic safety “compelling”?
In International Church of the Foursquare Gospel v. City of San
Leandro, 634 F.3d 1037 (9th Cir. 2011), a municipality justified its denial
of rezoning and a conditional use permit to a church on the ground that the
parcel at issue was located in an industrial park zoning district that did not
allow for any “assembly uses” such as churches, clubs, and lodges. The
parcel was also situated in a “focus area” designated by the city’s general
plan for industrial and technological activity, and the area contained
several manufacturing plants and other industrial and light-industrial uses
that brought a present and future presence of hazardous materials and
activities. The Ninth Circuit held that preserving the land for industrial or
technology uses was not a compelling governmental interest. Id. at 1048-
1049.
If keeping large congregations from regularly gathering in the middle
of an active industrial zone that is in the vicinity of hazardous wastes is not
a “compelling governmental interest” under RLUIPA, would any of the
kinds of separation of uses cited by the Supreme Court in Euclid v. Ambler
Realty, see §1.2, supra, qualify? Is this a justifiable limitation on local-

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government authority? How should courts decide which public purposes in
land use regulation are “compelling”?
5. Discrimination and exclusion claims. In addition to the prohibition
on placing a substantial burden on religious exercise in 42 U.S.C.
§2000cc(a), RLUIPA also prohibits “[d]iscrimination and exclusion” in
§2000cc(b). This encompasses three distinct provisions:

(1) Equal terms. No government shall impose or implement a land use

regulation in a manner that treats a religious assembly or institution on less
than equal terms with a nonreligious assembly or institution.
(2) Nondiscrimination. No government shall impose or implement a land
use regulation that discriminates against any assembly or institution on the
basis of religion or religious denomination.
(3) Exclusions and limits. No government shall impose or implement a
land use regulation that —
(A) totally excludes religious assemblies from a jurisdiction; or
(B) unreasonably limits religious assemblies, institutions, or structures
within a jurisdiction.

Much recent RLUIPA litigation has focused on the equal terms

provision, which tends to arise in instances where a church or other
religious institution can point to some nonreligious use, such as secular
meeting hall, that has received more favorable treatment. The circuit courts
have divided in interpreting this provision. See Centro Familiar Cristiano
Buenas Nuevas v. City of Yuma, 651 F.3d 1163, 1169 n.25 (9th Cir. 2011).
Most circuits have held that the appropriate focus is whether a religious
institution is similarly situated to a nonreligious institution in terms of the
given regulatory purpose of the land use provision at issue. See id. at 1172-
1173. In Kingdom Ministries v. Village of Hazel Crest, 611 F.3d 367 (7th
Cir. 2010) (en banc), the court added the caveat that the comparison must
be made with respect to “accepted zoning criteria,” but found that a
restriction on churches allegedly intended to reserve a commercial area for
revenue-generating businesses met the test because secular businesses that
did not generate revenue, such as libraries and community centers, were
banned as well. The Eleventh Circuit, by contrast, has held that if a statute
or zoning ordinance facially differentiates between religious and
nonreligious assemblies or institutions, it must survive strict scrutiny.
Midrash Sephardi, Inc. v. Town of Surfside, 366 F.3d 1214 (11th Cir.
2004).
6. Remedies under RLUIPA. Under RLUIPA, a litigant “may assert a
violation of this chapter as a claim or defense in a judicial proceeding and

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obtain appropriate relief against a government.” §2000cc-2(a). The
Supreme Court has held that “appropriate relief” does not include money
damages in suits by prisoners against states because Congress did not
abrogate state sovereign immunity. Sossamon v. Texas, 131 S. Ct. 1651,
1655 (2011). Justice Sotomayor pointed out in dissent, however, that the
land use provisions of the statute may yield a different conclusion. Id. at
1668 n.5. Several circuit courts have held that money damages are
available under RLUIPA against local governments, such as municipalities
and counties, which do not share the same immunity as states. See, e.g.,
Centro Familiar, 651 F.3d at 1168-1169; Lighthouse Institute for
Evangelism, Inc. v. City of Long Branch, 510 F.3d 253, 260-261 (3d Cir.
2007).
7. Disaster relief and religious land uses. In the wake of Hurricane
Sandy, a 2012 storm that devastated wide areas of New Jersey, New York,
Connecticut, and other northeastern states, the U.S. House of
Representatives passed a bill that would allow federal disaster relief to be
provided to churches, synagogues, mosques, temples, and other religious
establishments. See H.R. 592 (2013). Currently, under the Robert T.
Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. §5121 et
seq., disaster aid can be provided to religious entities that are performing
“essential services of governmental nature.” 42 U.S.C. §§5122(11)(B),
5172(a)(3); see also Federal Emergency Management Agency, Disaster
Assistance Policy 9521.3(7)(4)(3) (“Space dedicated to or primarily used
for religious, political, athletic, recreational, or vocational purposes, is not
eligible for Public Assistance Program assistance under the governing
statutes and regulations.”). The case law on whether governmental grants
to religious institutions violate the establishment clause is complicated, but
in general, the Supreme Court has allowed funding to flow to religious
entities through neutral programs that do not single out such organizations.
See, e.g., Zelman v. Simmons-Harris, 536 U.S. 639 (2002) (educational
voucher program that allowed recipients to attend religiously affiliated
schools did not violate establishment clause); Mitchell v. Helms, 530 U.S.
793, 836 (O’Connor, J., concurring) (2000) (federal and state school aid
programs that applied to parochial schools did not violate the
establishment clause). Do disaster relief funds provided to houses of
worship that are not tied to specific services those facilities provide violate
the establishment clause? What are the best arguments on both sides?

Problems
1. A city zoning law prohibits structures more than two stories tall in a

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residential subdivision otherwise composed entirely of single-family
homes. A church seeks to renovate its facility to obtain more space. It
plans to construct a seven-story tower to accommodate both its religious
services and other activities, including a soup kitchen and a homeless
shelter that will accommodate 30 people. Is the church entitled to do this
under the terms of RLUIPA?
2. A church allows homeless persons to sleep on its landing and front
steps. The city seeks to prevent this on the ground that it provides shelters
for the homeless where they will be safer than they would be sleeping
outside. Some homeless persons refuse to go to the shelters either because
the shelters are dangerous or because they value the freedom of being
outside a facility. The church claims that it has a first amendment right to
the free exercise of religion that allows it to grant sanctuary to the poor.
See Fifth Avenue Presbyterian Church v. City of New York, 293 F.3d 570
(2d Cir. 2002) (holding that there may be such a right). If the city had an
ordinance requiring homeless shelters to obtain permits to operate and
denied the church the power to allow people to sleep on its steps in
violation of local anti-loitering ordinances, does the church have a right
under RLUIPA to continue its practices?
3. A church seeks a special use permit to build a large structure to
enable it to expand its operations to both operate a day care center and to
create a new kindergarten to eighth grade religious elementary school. The
town denies the permit because it insists on reducing the size of the
structure and the number of students attending the school. The church has
to shut down its day care center because it does not have enough space for
it along with its other activities. Is the denial of the special use permit a
“substantial burden” on the church’s religious exercise under RLUIPA?
4. A religious organization seeks to build a Sikh temple on land zoned
for residential purposes. The city refuses to grant a conditional use permit
based on citizens’ voiced fears that noise and traffic would interfere with
the surrounding neighborhood. The organization seeks a second permit to
build the facility on land zoned for agricultural purposes. Neighbors again
complain, and the permit is denied. Another Sikh temple exists in the
community. Has the city placed a “substantial burden” on the
organization’s “religious exercise”? As attorney for the Sikh organization,
what questions would you ask your client to attempt to show a substantial
burden? As attorney for the city, how would you respond to those claims?

§7 ENVIRONMENTAL REGULATIONS AND

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 LAND USE
The use of real property is regulated not only by local zoning laws but
also by a variety of state and federal laws, many of which seek to protect
the environment. The interplay between environmental law and land use
regulation raises a host of legal and practical issues and real property
lawyers are increasingly becoming experts in areas of law that include
wetlands regulation, protection for endangered species, air quality
standards, clean water, and others. This section addresses three examples
of this interplay: liability for hazardous wastes, environmental impact
assessment, and planning for climate change.

§7.1 Owner Liability for Hazardous Wastes

CERCLA. In 1980, Congress passed the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA), and
in 1986 followed with the Superfund Amendments and Reauthorization Act
(SARA), 42 U.S.C. §§9601-9675. These statutes authorize the
Environmental Protection Agency (EPA) to respond to or to require others
to respond to imminent and substantial danger to the public health or
welfare or the environment caused by release of a hazardous substance
from a facility. CERCLA imposes liability on persons who either owned or
operated a facility when hazardous substances were released and on some
present owners and operators of such facilities. This liability is strict,
meaning that fault is not at issue. Courts have also held that liability under
CERCLA is joint and several where harm cannot be accurately
apportioned, and the Supreme Court has indicated triggering this
apportionment requires only a reasonable estimate of each party’s share.
See Burlington Northern & Santa Fe Railway Co. v. United States, 556
U.S. 599 613-619 (2009). Each person found liable may go after other
potential defendants to share the cost of the cleanup, but if other
responsible parties cannot be found, or their companies have dissolved or
are insolvent, and it is not feasible to apportion harms, then any
responsible party may be saddled with the entire cost.
Defenses under CERCLA are minimal. Parties are not responsible for
(1) acts of God; (2) acts of war; and (3) acts or omissions of third parties
with whom the defendant had no contractual relationship, if the defendant
shows that it exercised due care and took all reasonable precautions
against foreseeable acts of the third party. SARA and the Small Business
Liability Relief and Brownfields Revitalization Act, Pub. L. No. 107-118,
115 Stat. 2356 (2002), commonly known as the Brownfields Act, clarified

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the so-called innocent owner defense. To claim this defense, which is
based on the theory that contamination is the result of third-party acts or
omissions, an owner must have made good faith efforts to determine
whether the land was polluted and must not have discovered any
preexisting hazardous substances before purchasing the property. As a
result, environmental assessment has become a standard aspect of most
large-scale land acquisitions. If the owner later discovers that the property
is contaminated, the owner may not transfer the property without
disclosing this fact to the purchaser. Failure to disclose causes the seller to
be liable for the cleanup even if the seller did not cause the contamination.
State hazardous waste statutes. Most states have adopted legislation
designed to encourage or compel property owners to clean up toxic waste
sites. Some states require that the presence of hazardous waste be made
known to buyers, allowing the sale to be rescinded if notice is not
provided. Ind. Code §13-25-3-2. Other states impose strict liability on
property owners to clean up their property or to reimburse the state for
cleanup costs. To ensure payment for the cleanup, these states impose a
“superlien” on the property, which takes priority over all or most other
debts. New Jersey’s Industrial Site Recovery Act, the most stringent in the
country, prohibits certain owners from transferring their property until they
either certify that no hazardous substances remain on the property or
execute an approved cleanup plan. N.J. Stat. §13:1k-6 et seq.
Brownfield redevelopment and environmental covenants. CERCLA
and related federal and state statutes have focused attention on reclaiming
contaminated property, often called brownfields, for productive use. Fear
of liability can be a significant deterrent to the redevelopment of sites,
particularly in urban areas that have an industrial history but are ripe for
productive use. In many instances, it would not be feasible or cost
effective to eliminate all hazardous wastes, but it can make sense to
perform a limited cleanup as long as the use of the site will be controlled
in the future. Thus, a retail store on a former industrial site might require
less remediation than a future playground or subdivision. This approach is
known as “risk-based” cleanup because the level of remediation is tied to
an assessment of the likelihood of harm in the future, rather than absolute
safety. See Roger D. Schwenke, Applying and Enforcing Institutional
Controls in the Labyrinth of Environmental Requirements — Do We Need
More Than the Restatement of Servitudes to Turn Brownfields Green?, 38
Real Prop., Prob. & Trust J. 295 (2003).
Brownfield sites are thus increasingly being reclaimed subject to
institutional controls that are meant to limit future uses and put the public

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on notice of the extent — and limits — of any remediation that has been
done on the site. Environmental covenants have become a common
technique for these purposes. Such covenants are recorded and intended to
bind future owners.
Questions of the status and enforceability of environmental covenants
led the National Conference of Commissioners on Uniform State Laws to
adopt the Uniform Environmental Covenants Act (UECA) in 2003. The
UECA, which has been adopted in about 25 jurisdictions, is intended to
make clear that notwithstanding potential state common law impediments
to the contrary, environmental covenants that involve responsible public
agencies are enforceable and will not be eliminated through tax lien
foreclosures, adverse possession, or the application of marketable title
statutes.15 (Prior interests will take priority, unless subordinated.) The
UECA does not change the substantive standards for liability and
remediation, but does provide a tool to allow owners, regulators,
purchasers, and the public to record and enforce controls on brownfield
sites.

§7.2 Environmental Impact Assessment

Environmental assessment. Modeled after the National
Environmental Policy Act of 1969, 42 U.S.C. §4321 (NEPA), a number of
states have passed environmental policy acts designed to provide
information to allow policymakers to evaluate the environmental impact of
policy decisions. These state statutes are generally referred to as little
NEPAs or SEPAs. NEPA applies to actions by the federal government but
many of the state analogues apply to private development if there are
discretionary state or local actions involved in approving such
development. See Friends of Mammoth v. Board of Supervisors, 502 P.2d
1049 (Cal. 1972) (establishing the application of the California
Environmental Quality Act of 1970 to private projects).
SEPAs require proponents of a project to identify the project’s effects,
evaluate the costs and benefits of alternative approaches, and consider
ways to mitigate the identified environmental impact. These statutes are
primarily procedural, rather than substantive, which is to say that they do
not dictate the outcome of a given land use decision or policy, but instead
seek to improve decision making by making information available that
would otherwise get less attention.
The details of the process under SEPAs vary from state to state, but
generally involve two stages. In the first, officials have to determine
whether a given project is even subject to environmental assessment.

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Many kinds of routine or small-scale projects are exempt, so that, for
example, a homeowner doing a renovation will not have to go through any
kind of environmental review when she applies for a building permit. For
much larger-scale development, however, an initial environmental
assessment (EA) will be required to determine whether the project’s
impact will be significant. If it is determined that a project will likely have
significant impact on the environment, then a full environmental impact
statement or report (EIS or EIR) will be required.
Courts are regularly confronted with cases that challenge compliance
with SEPA requirements at each of these stages. For example, many cases
involve the question whether a determination that a project will not have a
significant impact, and thus will not have to undertake an EIS, was
properly made by the relevant agency. See, e.g., Communities for a Better
Environment v. South Coast Air Quality Management District, 226 P.3d
985 (Cal. 2010). Opponents of development frequently challenge the
sufficiency of the EIS itself, on the ground that particular required
elements were left out or that what was included in the EIS was not
adequate. See, e.g., Develop Don’t Destroy (Brooklyn), Inc. v. Empire
State Development Corp., 94 A.D.3d 508 (N.Y. App. Div. 2012) (rejecting
the final environmental impact statement for the Atlantic Yards Arena
Redevelopment Project, which includes a sports arena and 16 high-rise
buildings, because it erroneously assumed a 10-year build-out rather than
the 25 years the developer contemplated to complete the project).
What does the requirement for environmental impact assessment
suggest about the potential shortcomings of the process through which real
estate development otherwise takes place?
Physical versus non-physical impacts. Some state environmental
policy acts define “environment” very broadly to include the impact of a
proposed project on social and economic conditions. In the seminal case
Chinese Staff & Workers Association v. City of New York, 502 N.E.2d 176
(N.Y. 1986), New York’s highest court evaluated the sufficiency of a
decision that a proposed high-rise luxury condominium in a low-income
neighborhood would have no significant effect on the environment. The
agencies that reviewed the special permit application had evaluated the
project’s impact on the physical environment and indicated that if certain
mitigating steps were taken, the developer would not have to undertake a
full EIS. New York’s SEPA defined “environment” as “ ‘the physical
conditions which will be affected by a proposed action, including land, air,
water, minerals, flora, fauna, noise, objects of historic or aesthetic
significance, existing patterns of population concentration, distribution, or

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growth, and existing community or neighborhood character.’ ” Id. at 179
(quoting ECL 8-0105[6]; CEQR 1[f]). In light of this definition, the court
held that “the potential displacement of local residents and businesses is an
effect on population patterns and neighborhood character which must be
considered in determining whether the requirement for an EIS is
triggered.” Id. at 180.
NIMBYs, LULUs, and process. One recurring challenge in land use
regulation is finding a balance between the need for meaningful public
participation and the reality that communities can sometimes oppose
unpopular, but necessary, projects under the banner of “not in my
backyard” (NIMBY). Environmental review has been a particular
flashpoint in controversies over this balance. Proponents highlight
environmental review’s ability to force decision makers to consider the
ecological and social costs of development and the leverage such review
can provide for public input. Critics, on the other hand, voice concerns
about approval processes raising the costs of development and replicating
dynamics where communities with more resources can avoid locally
undesirable land uses (or LULUs), such as affordable housing and
environmentally hazardous projects, making LULUs more likely to be
sited in low-income areas, particularly in communities of color.

§7.3 Climate Change and Land Use Planning: Mitigation and

Adaptation
Perhaps the most significant emerging development in terms of the
intersection of land use regulation and environmental law is a growing
focus by planners, local government officials, and advocates on climate
change. See John R. Nolon, Land Use for Energy Conservation and
Sustainable Development: A New Path Toward Climate Change
Mitigation, 27 J. Land Use & Envtl. L. 295 (2012). Residential and
commercial buildings account for over 40 percent of energy consumption
in the United States, id. at 299. A significant portion of remaining
greenhouse gas production is influenced by the density and location of
development, which influences the need for transportation, particularly
with automobiles.
Land use regulation relating to climate change falls into two broad
categories: mitigation and adaptation. Mitigation involves efforts to
reduce greenhouse gas emissions through changes to the built
environment. Examples include building codes that seek to limit energy
use, reduce water consumption, and the generation of wastes in new
developments. Mitigation can also involve planning and land use

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regulatory approaches that increase density and reduce the need for
transportation.
By contrast, adaptation involves efforts to respond to changes in the
environment unleashed by climate change. These can include
strengthening building codes to respond to the rise in weather events once
considered extreme as well as changes to siting and other land use
decisions to take development out of the path of disaster. See Tara Siegel
Bernard, Rebuilding After Sandy, but with Costly New Rules, N.Y. Times,
May 11, 2013, at B-1; see generally Jacqueline Peel & Hari M. Osofsky,
Sue to Adapt?, 99 Minn. L. Rev. 2177 (2015) (tracking the emergence of
“adaptation planning suits” that seek redress for climate-related species
loss, harms arising from disasters and coastal hazards, and disaster
planning).
At the federal level, the Environmental Protection Agency has
authority under the Clean Air Act, 42 U.S.C. §7521, to regulate greenhouse
gases, see Massachusetts v. Environmental Protection Agency, 549 U.S.
497 (2007), but much of the regulatory response so far has taken place at
the state and local level. For example, California in 2006 passed AB 32,
the Global Warming Solutions Act, codified at Cal. Health & Safety Code
§38501 et seq. The statute seeks to reduce the state’s emissions of
greenhouse gases such as carbon dioxide to 1990 levels by 2020. One
element of the regulatory regime it introduced focuses on reducing vehicle
miles traveled. A later companion statute, Stats. 2008, c.728 (S.B.375), §2,
requires regions in California to plan for more compact development in
line with regional targets for emissions reductions. Regulations under the
act also now provide guidance for evaluating greenhouse gas emissions
and formulating feasible mitigation measures to reduce their impacts for
purposes of the California Environmental Quality Act. Cal. Code Regs.,
tit. 14, §15064.4, 15126.4. Cf. Rialto Citizens for Responsible Growth v.
City of Rialto, 146 Cal. Rptr. 3d 12, 44-45 (Ct. App. 2012).

§8 NATURAL RESOURCES REGULATION

§8.1 Regulating Property in Natural Resources
Land is an important resource, but the use and exploitation of a range
of other natural resources are regulated as well. “Natural resources” is a
capacious concept that can encompass almost any product of nature, In re
Tortorelli, 66 P.3d 606, 610 (Wash. 2003), including water, oil, gas,
minerals, forests, rangelands, wildlife, wetlands, and other aspects of the
natural landscape. Like land, natural resources more broadly are governed

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by a combination of common law doctrines and federal, state, and local
statutes and regulations. This body of law for many natural resource
conflicts reflects the inherently public aspects of such resources given our
common interests in their preservation and wise management. See Joseph
Sax, The Public Trust Doctrine in Natural Resource Law: Effective
Judicial Intervention, 68 Mich. L. Rev. 471 (1970); Michael C. Blumm &
Aurora Paulsen, The Public Trust in Wildlife, 2013 Utah L. Rev. 1437
(2013). Scale is also an important aspect of natural resources regulation,
with natural systems rarely conforming to political jurisdictions.
Just as property in intangibles reflects certain characteristics that are
inherent to ideas and information, see Chapter 3, §1.1, the law of natural
resources has been shaped by the nature of the relevant resources it
governs. The rules for the ownership and use of water, for example, have a
lot to do with the fact that water moves and can be reused by many
claimants. By contrast, the rules for trees and many kinds of hard-rock
minerals reflect the fact that they begin fixed in a certain place and tend to
be exhausted when used. For every natural resource, however, some
common questions arise: How should the law balance productive use and
conservation, protect investment and expectations while preventing
monopoly, and distribute rights fairly between multiple owners with
competing interests?
These are difficult values to balance, and our legal system has
traditionally preferred consumption over sustainability. As Professor
Joseph Sax has written:

For two centuries [in the development of the American continent], virtually
nothing of the economy of nature was intentionally saved. That is well
known. What is perhaps not so well recognized (though it has been
extensively documented by legal historians), is that the law was constructed
and reconstructed to drive this process forward. The rules of landownership
were shaped in order to incentivize transformation to the new economy and
to discourage retention of nature’s economy. For example, there was no
economic reason to leave water in a river, or to refrain from damming it, nor
was there any such reason to leave land unfenced so as to permit the passage
of wildlife or to leave land uncultivated as habitat. On the contrary, leaving
water in a river was considered waste. Even those who wanted to obtain a
right to keep waters flowing in-stream were prevented from doing so. The
old preindustrial rules mandating retention of the natural flow of rivers were
abolished so that rivers could be dammed to generate hydropower, the open
range fenced, and bounties paid to exterminate predators such as wolves.
That was the logic of the transformative economy, and the law of property
rights was its obedient servant.

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Joseph L. Sax, Ownership, Property, and Sustainability, 31 Utah Envtl. L.
Rev. 1, 6 (2011); see also John G. Sprankling, The Antiwilderness Bias in
American Property Law, 63 U. Chi. L. Rev. 519 (1996).
Although still highly contested terrain, contemporary perspectives
about natural resources regulation are beginning to reflect ideas of
stewardship and an ethos that values wilderness for its own sake. Cf. Aldo
Leopold, A Sand County Almanac and Sketches Here and There 224-225
(1949) (advocating for a “land ethic” that holds that an action is right if it
“tends to preserve the integrity, stability, and beauty of the biotic
community” and “wrong when it tends otherwise”). This perspective has
deep roots in American law as well, and has begun to gain greater
recognition in our legal system with the rise of the conservation movement
and increasing ecological awareness. Eric T. Freyfogle, The Land We
Share: Private Property and the Common Good (2003). As with every
other aspect of property law, moreover, climate change is beginning to
alter the landscape of natural resources regulation, a trend that is likely to
accelerate as the effects of climate change deepen. A. Dan Tarlock,
Takings, Water Rights, and Climate Change, 36 Vt. L. Rev. 731 (2012).
Natural resources and environmental protection. A number of
federal and state statutes regulate specific natural resources in order to
limit pollution. Among the most prominent of these regimes are the Clean
Air Act, 42 U.S.C. §7401 et seq. (CAA), and the Clean Water Act, 33
U.S.C. §1251 et seq. (CWA). The Environmental Protection Agency
(EPA) is empowered by the CWA and the CAA to restrict pollution in
order to improve air and water quality. See 42 U.S.C. §7401(b)-(c); 33
U.S.C. §1251. This authority impacts natural resources by defining air
quality criteria and control techniques, e.g., 42 U.S.C. §§7408-7409, which
States must implement in plans submitted to the EPA, 42 U.S.C. §7410,
and creating water quality surveillance systems, 33 U.S.C. §1254(a)(5).
Despite an express disavowal in the CAA against infringement of local
government authority over land use, 42 U.S.C. §7431, controlling
pollution necessarily limits the exploitation of natural resources.
The federal Endangered Species Act, 16 U.S.C. §1531 et seq. (ESA),
protects animals and plants that are either endangered or threatened.
“Endangered” means that a species is in danger of extinction, while a
“threatened” species is one that is likely to become endangered. Id.
§§1532(6), (20). The ESA makes it illegal to “take” endangered species,
id. §1538(a)(1)(B), and the meaning of take includes “harm,” id.
§1532(19). Harm, in turn, encompasses “significant habitat modification
or degradation where it actually kills or injures wildlife by significantly

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impairing essential behavioral patterns, including breeding, feeding, or
sheltering.” 50 C.F.R. 17.3; see also Babbitt v. Sweet Home Chapter of
Communities for a Great Oregon, 515 U.S. 687 (1995) (upholding the
regulatory definition of “take” to include habitat modification). As a result,
the ESA can have significant impacts on land use and natural resource
regulation, which has generated a great deal of litigation, both challenging
federal enforcement of the act as well as challenging federal agencies to do
more to protect endangered species, sometimes in the same case. See, e.g.,
In re Polar Bear Endangered Species Act Listing and Section 4(d) Rule
Litig. — MDL No. 1993, 709 F.3d 1 (D.C. Cir. 2013).
Public lands and planning for natural resource management. The
federal government holds title to about 28 percent of the land in the United
States, a landmass of roughly 635 to 640 million acres, and subsurface
rights to hundreds of millions of acres more. See Ross W. Gort et al.,
Congressional Research Service, Federal Land Ownership: Overview and
Data Summary (2012). Individual states have large holdings as well,
forming a mosaic of public lands that contains a significant portion of the
nation’s natural resources.
Federal public lands are managed primarily by four federal agencies,
the Bureau of Land Management (BLM), the National Park Service (NPS),
the U.S. Forest Service (USFS), and the U.S. Fish and Wildlife Service’s
National Wildlife Refuge (NWR).16 Each of these agencies operates under
statutes that balance in distinctive ways competing interests in the use of
the resources they manage, including extraction, recreation, and
preservation. Among the more important of these framework regimes are
the Federal Land Policy Management Act of 1976, 43 U.S.C. §1701 et seq.
(FLPMA), which governs BLM lands; the National Forest Management
Act of 1976, 16 U.S.C. §1600 et seq., which governs USFS land; and, for
the NPS, a series of individual park organic statutes, see, e.g., 16 U.S.C.
§§221-228j (establishing the Grand Canyon National Park); 16 U.S.C. §21
(establishing Yellowstone National Park). A number of statutes designate
particularly sensitive or important public lands for protection, including
the Wilderness Act of 1964, 16 U.S.C. §1131 et seq., which created the
National Wilderness Preservation System; the Antiquities Act of 1906, 16
U.S.C. §431 et seq., which allows the president to designate National
Monuments; as well as the National Wild and Scenic Rivers Act, 16 U.S.C.
§1271 et seq., the National Scenic Trails Act, 16 U.S.C. §1244, and
National Conservation Areas designated by individual statutes, see, e.g.,
Red Cliffs National Conservation Area, 16 U.S.C. §460www; Beaver Dam
Wash National Conservation Area, 16 U.S.C. §460xxx.

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 As with land use, planning is central to the management of natural
resources on public lands. Some federal lands have a primary purpose, as
with wilderness areas and military bases; most public lands, however, are
multi-use and federal statutes prescribe the process through which
agencies have to plan for balancing those often conflicting uses. For
example, FLPMA directs the BLM to manage public lands to:

protect the quality of scientific, scenic, historical, ecological, environmental,

air and atmospheric, water resource, and archaeological values; that, where
appropriate, will preserve and protect certain public lands in their natural
condition; that will provide food and habitat for fish and wildlife and
domestic animals; and that will provide for outdoor recreation and human
occupancy and use.

43 U.S.C. §1701(a)(8). To meet this mandate, FLPMA requires the BLM

to “prepare and maintain . . . an inventory of all public lands and their
resource and other values (including, but not limited to, outdoor recreation
and scenic values), giving priority to areas of critical environmental
concern.” Id. §1711(a). Based on this inventory, the BLM develops and
maintains plans for each BLM area under a principle of “multiple use and
sustained yield.” Id. §§1712(a), 1712(c)(1), 1732(a). The agency has wide
discretion in implementing these plans, Norton v. Southern Utah
Wilderness Alliance, 542 U.S. 55 (2004), but this statutory planning
regime attempts to bring public participation and transparency to the
process of prioritizing often deeply contentious conflicts over the use of
natural resources.

§8.2 Water Law

Water has attributes that make it as much a common resource as the
subject of individual ownership. A single river, as it snakes from high
mountains to the ocean, can supply water for fishing, white water rafting,
farming, generating hydroelectric power, flushing industrial wastes, and
filling the many needs of small towns and big cities. It can also support the
biodiversity of the fish that live in it, the plants that border it, and the
ecosystems that depend on it. Similarly, aquifers — underground water
reservoirs — can hold vast quantities of water beneath the lands of
hundreds or thousands of surface owners putting that water to any number
of uses. The Ogallala Aquifer, one of the world’s largest, stretches under
roughly 174,000 square miles from Texas up to South Dakota, and is
estimated to hold nearly three billion acre-feet of water.17 V.L. McGuire,
U.S. Geological Survey, Water-Level and Storage Changes in the High

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Plains Aquifer, Predevelopment to 2011 and 2009-11 (2013).
Water law combines common law doctrines with constitutional,
statutory, and administrative regulations. Generally, water rights can be
established by a diversion of water, an administrative permit, or a court
decree. Much of the law of water governs competing claims to water as
conditions or the needs of users change. Consider the following case.

State Department of Ecology v. Grimes

852 P.2d 1044 (Wash. 1993)

Map: Marshall Lake, Pend Oreille

County, Washington

CHARLES Z. SMITH, Justice.

This matter is before the court upon direct review, raising the question
of the legal definition of “reasonable use” of water as an element of
“beneficial use” under the Water Code of 1917, Wash. Rev. Code §90.03,
the Water Resources Act of 1971, Wash. Rev. Code §90.54, and other
related statutes. Appellants Clarence E. and Peggy V. Grimes (Grimeses)
appeal from a decree adjudicating water rights pursuant to Wash. Rev.
Code §90.03.200 entered by the Pend Oreille County Superior Court.
Respondents are Leonard B. and Elsie E. Magart and the State of
Washington Department of Ecology (Ecology). We affirm the Superior
Court.
In September 1981, the Department of Ecology filed a petition in the
Pend Oreille County Superior Court for clarification of existing rights to
divert, withdraw, or otherwise make beneficial use of the surface and
ground waters of the Marshall Lake and Marshall Creek drainage basin
(Marshall Lake basin). Ecology investigated the Marshall Lake basin and
the locality served by it and found that the interests of the public and users
of the surface and ground waters would be served by an adjudication and
determination of the relative rights of all claimants to the use of these
waters.
Donald W. Moos, Director of Ecology, appointed William R. Smith as
referee to take testimony and report his recommendations to the Superior
Court. The Grimeses [filed a] claim for the use of waters for domestic
supply, irrigation and recreational purposes. The Grimeses requested an

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instantaneous flow rate of 3 cubic feet per second (c.f.s.) for irrigation
purposes, and a storage right of 1,520 acre feet of water in the Marshall
Lake reservoir. The referee recommended that this claim be confirmed, but
limited it to an instantaneous flow of 1.5 c.f.s. during irrigation season, and
a storage right of 183 acre feet plus 737 acre feet for evaporative loss, for a
total storage right of 920 acre feet.
[T]he Grimeses filed exceptions to the report of the referee in the
superior court [relating to] (1) the right to store 183 acre feet of water and
the period of storage in Marshall Lake; and (2) the establishment of a
minimum level of Marshall Lake for measuring waters to be stored under
the Grimeses’ storage right. On January 5, 1990, the Superior Court
entered its “Decree Adjudicating Water Rights Pursuant to [Wash. Rev.
Code §]90.03.200.” Based upon stipulations between the parties, the
decree stated that the natural level of Marshall Lake, for the purposes of a
measurement of the storage right, is 2,722.62 feet above mean sea level,
rather than 2,720 as recommended by the referee.
[The Grimeses appealed. The Court of Appeals issued an order of
certification, which allows an appeal directly to the Supreme Court, stating
that “[t]he decision of this [case] is of broad public import as it will impact
at least 35 irrigation districts, water companies and municipalities who in
turn represent thousands of water users in the Yakima River basin.”]

General Adjudication
A general adjudication is a special form of quiet title action to
determine all existing rights to the use of water from a specific body of
water. The provisions for adjudication in the Water Code, Wash. Rev.
Code §90.03.110-.245, may not be used to lessen, enlarge or modify
existing water rights. An adjudication of water rights is only for the
purpose of determining and confirming those rights. The surface water
rights of the Grimeses in this case are pre-1917 rights, established 11 years
before adoption of the Water Code of 1917 and 65 years before adoption
of the Water Resources Act of 1971. To confirm existing rights, the referee
must determine two primary elements of a water right: (1) the amount of
water that has been put to beneficial use and (2) the priority of water rights
relative to each other.

The Doctrine of Prior Appropriation18

The law of prior appropriation was established in this state by the
Territorial Legislature in 1873 and recognized by this court in 1897.
Benton v. Johncox, 49 P. 495 (Wash. 1897). This court in Neubert v.

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Yakima-Tieton Irrigation District, 814 P.2d 199, 201 (Wash. 1991), said
that “[t]he appropriated water right is perpetual and operates to the
exclusion of subsequent claimants.” In that case we said appropriative
water rights require that:

Once appropriated, the right to use a given quantity of water becomes

appurtenant to the land. The appropriated water right is perpetual and
operates to the exclusion of subsequent claimants. The key to determining
the extent of plaintiffs’ vested water rights is the concept of “beneficial use.”
. . . An appropriated water right is established and maintained by the
purposeful application of a given quantity of water to a beneficial use upon
the land. [Id. at 201-202.]

Beneficial use refers to the quantity of water diverted by the appropriator,

not to its availability in the source of supply. “The underlying reason for
all this constitutional, legislative and judicial emphasis on beneficial use of
water lies in the relation of available water resources to the ever-increasing
demands made upon them.” [1 Waters and Water Rights §19.2, at 87 (R.
Clark ed. 1967).]
“Beneficial use” is a term of art in water law, and encompasses two
principal elements of a water right. First, it refers to the purposes, or type
of activities, for which water may be used. Use of water for the purposes
of irrigated agriculture is a beneficial use. The Grimeses’ use of water to
irrigate alfalfa fields is not at issue in this case. Second, beneficial use
determines the measure of a water right. The owner of a water right is
entitled to the amount of water necessary for the purpose to which it has
been put, provided that purpose constitutes a beneficial use. To determine
the amount of water necessary for a beneficial use, courts have developed
the principle of “reasonable use.” Reasonable use of water is determined
by analysis of the factors of water duty and waste.
In his findings establishing the measure of the Grimeses’ water right,
the referee stated that:

[A] valid right for irrigation purposes only exists for the benefit of these
claimants and such right is derived from the original 1906 Linsley notice. It
is, therefore, recommended that a right be confirmed to these defendants,
with a July 13, 1906 priority for the irrigation of 73 acres from Marshall
Lake. Quantification of the amount of water to which this right is entitled
creates somewhat of a problem in that there has been no direct testimony
regarding the amount of water placed to beneficial use other than a reference
in the state’s investigatory report that 56 sprinklers are utilized in the system
. . . . Therefore, the Referee will allow the standard duty of water which

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 would be 1.2 cubic feet per second plus an additional 25 percent for
transportation loss, thus making an aggregate amount of 1.5 cubic feet per
second identified with this right. . . .
A second element concerning this right is the amount of storage of water
to which these claimants are entitled. . . . [T]hese waters also have
recreational benefits, not only to the riparian owners around the lake but also
to the general public through the use of resort facilities located on the lake. . .
. Therefore, the Referee recommends that a related but separate right be
confirmed to these defendants for the storage of 920 acre-feet in Marshall
Lake for irrigation and recreation purposes. The priority shall be fixed as of
July 13, 1906. The period during which waters may be stored shall be
identified as those periods of the year which do not include the April 1 to
October 31 irrigation season.

The Grimeses challenge the referee’s “consideration of the evidence”

and his application of the law in making these findings.

Water Duty
“[Water duty is] that measure of water, which, by careful management
and use, without wastage, is reasonably required to be applied to any given
tract of land for such period of time as may be adequate to produce
therefrom a maximum amount of such crops as ordinarily are grown
thereon. It is not a hard and fast unit of measurement, but is variable
according to conditions.” In re Steffens, 756 P.2d 1002, 1005-06 (Colo.
1988).
The referee based his determination of the volume of water necessary
for irrigation in the Marshall Lake basin on a Washington State University
Research Bulletin entitled “Irrigation Requirements for Washington —
Estimates and Methodology” (Irrigation Report), and on the expert
testimony of Jim Lyerla, the District Supervisor for seven Eastern
Washington counties, including Pend Oreille County, in the Water
Resources Program of the Department of Ecology. Mr. Lyerla testified that
as a part of his work in assigning water quantities to new water permittees,
he relied on the Irrigation Report to determine the “water duty” for a
proposed use of water. The Irrigation Report provides information for
water requirements for specific crops, given in inches per acre per
irrigation season, in 40 locations around the state, including Newport,
Washington, 5 miles south of Marshall Lake.
Based on the testimony of Mr. Lyerla and the Irrigation Report, the
referee determined that an irrigated alfalfa crop grown in the Marshall
Lake area requires 21 inches or 1.75 acre feet of water per acre during the

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irrigation season. The referee then applied an efficiency factor and
increased this water duty to 2.5 acre feet per acre per year. The referee
found this water duty to be “approximately commensurate with the duty
utilized by the Department of Ecology in its quantity allocations in this
geographic area under the water right permit system.”
Because water rights are characterized in both total yearly allowance
and instantaneous flow, the referee also established the maximum rate of
diversion at 0.0166 c.f.s. per acre under irrigation. The referee first
calculated a standard flow of 1 c.f.s. of water per 60 acres as a reasonable
instantaneous flow for alfalfa irrigation in the Marshall Lake basin. In
considering the Grimeses’ claim, he determined that the Grimeses were
entitled to sufficient flow to irrigate 73 acres, or a minimum of 1.21 c.f.s.
He then calculated in an efficiency factor to increase this flow by 25
percent and awarded the Grimeses an instantaneous flow of 1.5 c.f.s.
The referee observed that a larger water duty could be awarded to any
claimant with specific information proving a right to a larger amount. The
2.5 acre feet/0.0166 c.f.s. water duty was applied when “quantitative
evidence of the rate and volume of a right was neither submitted nor made
clear during testimony.” The referee also observed that “the use of water
under all irrigation rights is, however, limited to the amount of water that
can be beneficially applied to that number of acres identified in the water
right.” The referee did not indiscriminately award this water duty to any
claim for an irrigation right, but required claimants to prove the number of
acres historically irrigated.
The referee’s determination of a generic water duty for irrigation of
alfalfa in the Marshall Lake basin is supported by a preponderance of the
evidence and will not be disturbed by this court.

Waste
From an early date, courts announced the rule that no appropriation of
water was valid where the water simply went to waste. Those courts held
that the appropriator who diverted more than was needed for the
appropriator’s actual requirements and allowed the excess to go to waste
acquired no right to the excess. A particular use must not only be of
benefit to the appropriator, but it must also be a reasonable and economical
use of the water in view of other present and future demands upon the
source of supply. The difference between absolute waste and economical
use has been said to be one of degree only.
Appellant Clarence E. Grimes acknowledged in his testimony that his
existing irrigation system required a water flow of up to 3 cubic feet per

693
second in order to deliver 1 cubic foot per second to the field, and that this
system was highly inefficient, causing one-half to two-thirds loss of water.
Mr. Grimes also testified that uncertainties and ongoing litigation
concerning the stability and safety of the irrigation dam had prevented
continuous irrigation of his alfalfa acreage.
While an appropriator’s use of water must be reasonably efficient,
absolute efficiency is not required. The referee determined that, pursuant
to Wash. Rev. Code §90.14.160, the uncertainties concerning the irrigation
dam constituted sufficient cause not to find a complete abandonment of the
Grimeses’ water right. He resolved the conflicting testimony by limiting
the irrigable acreage to the 73 acres recommended by Ecology. Relying on
a standard efficiency factor for irrigation sprinkler systems found in the
irrigation report, he confirmed in the Grimeses a water right with one-
fourth conveyance loss for a total of 1.5 cubic feet per second. There was
at least sufficient evidence for the referee to determine the maximum
acreage to which the Grimeses’ water right applied, and in limiting the
allowable loss for system inefficiency in establishing their instantaneous
flow.

The Reasonable Efficiency Test

In limiting the Grimeses’ vested water right, the referee balanced
several factors, including the water duty for the geographical area and crop
under irrigation, the claimants’ actual diversion, and sound irrigation
practices. In his report, the referee described his method of calculating the
Grimeses’ water right as a “reasonable efficiency” test.
While the referee stated that he relied on this test, and while he did in
fact consider some of its elements, he did not actually utilize the test in its
entirety. Therefore, we will review the factors he did consider to determine
whether his analysis remained within the boundaries of prior appropriation
law. In his discussion of the basis for his recommendation concerning the
Grimeses’ claim, the referee stated that he would “balance [the water duty]
against not only the actual amount of water diverted from the lake for
irrigation purposes but also against the concepts of beneficial use of water
and sound irrigation practices.”
Amici curiae urge this court to hold that only “the established means of
diversion and application according to the reasonable custom of the
locality” may be considered in defining reasonable use. This court has
consistently held that rights of users of water for irrigation purposes are
vested rights in real property. Amici curiae assert that the “local custom”
test has been employed historically to determine whether given

694
applications of water are wasteful, within the meaning of beneficial use,
and that courts should now apply it in the setting of general adjudications.
This is the established law in this state.
Decisions of courts throughout the western states provide a basis for
defining “reasonable efficiency” with respect to irrigation practices. While
customary irrigation practices common to the locality are a factor for
consideration, they do not justify waste of water. As this court stated in a
case predating the Water Code of 1917:

[W]hen rights in such an important element as water is in the arid regions

are to be measured by the courts, we cannot lay down a rule that would give
to the user an arbitrary right to use water at will. [An irrigator’s] rights are to
be measured by his necessities . . . and not by any fanciful notion of his own.
...
. . . [C]ustom can fix the manner of use of water for irrigation only when it
is founded on necessity . . . [and] an irrigator is entitled to use only so much
as he can put to a beneficial use, for the public policy of the people of the
United States will not tolerate waste of water in the arid regions. [Shafford v.
White Bluffs Land & Irrigation Co., 114 P. 883, 884-886 (1911).]

Local custom and the relative efficiency of irrigation systems in

common use are important elements, but must be considered in connection
with other statutorily mandated factors, such as the costs and benefits of
improvements to irrigation systems, including the use of public and private
funds to facilitate improvements.
In limiting the Grimeses’ water use by a requirement of reasonable
efficiency, the referee properly considered the irrigation report, the
Grimeses’ actual water use, and their existing irrigation system. The
referee alluded to a test incorporating factors that consider impacts to the
water source and its flora and fauna. While consideration of these impacts
is consonant with the State’s obligations under Wash. Rev. Code
[§]§90.03.005 and 90.54.010(1)(a) and (2), these factors cannot operate to
impair existing water rights. Other laws may, however, operate to define
existing rights in light of environmental values.
There is some confusion in the record as to the legal standard used by
the referee in determining beneficial use. [I]n a footnote [in his
supplemental report,] the referee set forth a detailed “test of reasonable
efficiency” which he purportedly used in determining beneficial use. That
“test” is stated as follows:

(1) [C]ustomary delivery and application practices in the area, (2) technology
and “practices” improvements feasible and available to reduce water

695
 consumptions and financial needs associated with implementation thereof,
and (3) impacts of improvements of existing facilities and practices, if
initiated, upon (a) the water source from which the diversion takes place, (b)
the existing flora and fauna within the area of diversion, conveyancy and
actual uses, (c) other water rights from said water source, and (d) other water
users on other water sources.

There is nothing in the record to support the referee’s statement that he

employed the reasonable efficiency test. Nowhere in the record does he
discuss application of the elements of the so-called “test.” If he had in fact
applied the “test,” it would be necessary for this court to reverse and
remand. That test is without statutory authorization in an adjudication
proceeding which relates exclusively to confirmation of water rights
established or created under “other provisions of state law or under federal
laws.” The suggested test would be contrary to the vested rights of water
users. Included in the vested rights is the right to diversion, delivery and
application “according to the usual methods of artificial irrigation
employed in the vicinity where such land is situated.” Wash. Rev. Code
§90.03.040.
While we reject use of the specific test suggested by the referee, we
affirm because (1) there is no indication in the record that he in fact
applied the factors stated in the “test,” and (2) he applied the actual
beneficial use made by Grimes, taking into account the actual needs and
use and the methods of delivery and application in the vicinity. The
adjudication and confirmation of a water right in an amount less than
claimed by Grimes does not result from application of the so-called test.
Rather, as the referee makes clear:

Quantification of the amount of water to which this right is entitled creates

somewhat of a problem in that there has been no direct testimony regarding
the amount of water placed to beneficial use other than a reference in the
state’s investigatory report that 56 sprinklers are utilized in the system.

In the absence of such proof, the referee nevertheless confirmed the

right by using a normal duty of water for the type of crops raised and
specifically added 25 percent for transportation loss. Making the best of
inadequate proof by the claimant, it appears from the record that the
referee applied the usual methods of irrigation employed in the vicinity
where the Grimeses’ land is located.

Notes and Questions

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 1. Water rights. What rights did the Grimeses have in the Marshall
Lake basin? How were these rights determined?
2. Water law fundamentals. There have historically been different
rules for surface water, such as lakes, rivers, and streams, and
groundwater, such as aquifers and percolating water. However,
increasing understanding of the connections between these two water
sources has led to some merging of the doctrines. Robert Haskell Abrams,
Legal Convergence of East and West in Contemporary Water Law, 42
Envtl. L. 65, 69-80 (2012); cf. Kobobel v. Department of Natural
Resources, 249 P.3d 1127 (Colo. 2011) (groundwater users had no takings
claim against state for prohibiting withdrawal that would affect prior
surface water users).
a. Groundwater. Rules for allocation of groundwater were initially
adopted from England. Based in part on the difficulty of predicting the
location and movement of groundwater, England followed an absolute
ownership or free use rule, permitting all surface estate owners to
withdraw as much groundwater as they could from their land,
regardless of the harm to other owners above the aquifer. In Acton v.
Blundell, 152 Eng. Rep. 1223, 1234 (Exch. 1843), for example, the
court rejected the claims of a mill owner against his neighbor, whose
excavations for coal depleted the common aquifer, leaving insufficient
water to run his mill. The court justified its decision in the following
way:

[I]f the man who sinks the well in his own land can acquire by that act an
absolute and indefeasible right to the water that collects in it, he has the
power of preventing his neighbour from making any use of the spring in
his own soil which shall interfere with the enjoyment of the well. Further,
the advantage on one side, and the detriment to the other, may bear no
proportion. The well may be sunk to supply a cottage, or a drinking-place
for cattle; whilst the owner of the adjoining land may be prevented from
winning metals and minerals of inestimable value.

While a few U.S. states still follow the absolute ownership rule,
most have rejected it. In its stead, most states follow the reasonable
use rule, considering both the interests of the surface estate owners and
the interests of society as a whole, particularly given the risk of
depletion and the effect of one owner’s extraction on other owners. 6
Thompson on Real Property, Thomas Editions §50.11(f); see also
Restatement (Second) of Torts §858 (1979) (liability for unreasonable
harm to other surface owners). A few states follow the correlative

697
rights doctrine, allowing each surface estate owner to withdraw an
equitable (“fair and just”) portion of the groundwater, perhaps in
proportion to what percentage of the aquifer underlies their property.
Still other states, particularly those in the arid West, have adopted the
prior appropriation doctrine for groundwater, effectively allocating
rights according to the point in time when property owners begin
withdrawing the water.
In all jurisdictions, municipal and state governments increasingly
intervene in water allocation to ensure predictable and fair allocation of
rights, and conservation and protection of the resource. This regulation
began early in the twentieth century, but has grown much more
intensive in the face of greater competition for scarce resources,
growing knowledge about the interconnectedness of water systems, and
faster climatological change. What are the rights of owners in the
existing water allocations? The Texas Supreme Court held that state
deprivation of the right to use some of the groundwater under one’s
property could constitute a taking for which the U.S. and Texas
constitutions require compensation. Edwards Aquifer Authority v. Day,
369 S.W.3d 814 (Tex. 2012). Texas is one of the few states to still
follow the absolute ownership rule for groundwater. Would the issue
be resolved differently under a reasonable use or correlative rights test?
b. Surface water. In the United States, surface water has historically
been allocated according one of two dominant rules. The riparian
doctrine, adopted by most American jurisdictions, allocates those
owning land bordered the body of water (the “riparian owners”)
rights to the water flowing past their land. Disputes between riparian
owners are allocated according to a reasonableness test that takes into
account the relative costs and benefits of the various uses, harms to
competing claimants to the water, and other factors. Most western
states, where water was scarce, adopted instead the prior
appropriation or appropriation doctrine, prioritizing the rights of
those first to make productive beneficial use of the water against later
users. See 6 Thompson on Real Property, Thomas Editions §§50.08-
50.09. Several states have “hybrid” systems that began as riparian but
then shifted to appropriation. Id. §50.10. Appropriation was thought
more appropriate for a “dry and thirsty land.” Yunker v. Nichols, 1
Colo. 551, 553, 555 (1872).
Both systems propertize water to a certain extent, but do so quite
differently, with riparian jurisdictions dividing rights among
landowners and appropriation jurisdictions allocating rights based on
priority of use. The trend in both jurisdictions, moreover, is to treat

698
 water as a common resource to be regulated by public agencies to
ensure water is used in the common interest. A number of riparian
jurisdictions have turned to regulated riparianism, administrative
permit systems allocating time-limited licenses to use specified
amounts of water for specified purposes. Abrams, supra, at 68; Joseph
W. Dellapenna, The Evolution of Riparianism in the United States, 95
Marq. L. Rev 53 (2011). Similarly, statutes in appropriation
jurisdictions explicitly declare water to be a public resource, and
administer the priority system by agencies that consider public interest
in regulating use, providing some protection for the interests of junior
users, and preserving and efficiently using the water system. Abrams,
supra, at 91.
3. Waste, abandonment, and stress on water rights. Traditionally,
water rights in prior appropriation jurisdictions, once established, have
been considered vested, but there are limitations to this principle. Two
important limitations are waste and abandonment. As Grimes illustrated,
a water right in a prior appropriation state is limited to beneficial use,
Joyce Livestock Co. v. United States, 156 P.3d 502, 520 (2007) (“A water
right does not constitute the ownership of the water; it is simply a right to
use the water to apply it to a beneficial use”); this right, in turn, is limited
by the requirement that the beneficial user not waste the water. See, e.g., In
re Application for Water Rights in Rio Grande County, 53 P.3d 1165
(Colo. 2002). Abandonment, by contrast, involves the relinquishment of a
water right, see Okanogan Wilderness League, Inc. v. Town of Twisp, 947
P.2d 732, 738 (Wash. 1997), and generally requires both non-use and the
intent to abandon. Courts have also applied doctrines of non-use,
forfeiture, and estoppels to terminate water rights acquired by
appropriation.
Demand for water in the West is highly stressed and facing new
demands, such as significantly increasing urban uses. See Marc Reisner,
Cadillac Desert: The American West and Its Disappearing Water (1993).
How would you expect this to change water doctrine?
4. Justifying prior appropriation. Some scholars argue that regimes
such as prior appropriation developed in the West to privilege the efficient
use of water, particularly through privatization and the protection of
productive use. See, e.g., Terry L. Anderson & P.J. Hill, The Evolution of
Property Rights: A Study of the American West, 18 J.L. & Econ. 163, 177-
178 (1975). By contrast, others argue that appropriation doctrine was
primarily concerned with equity and distributive justice. See, e.g., David
Schorr, The Colorado Doctrine: Water Rights, Corporations and

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Distributive Justice on the American Frontier (2012). Focusing on the
Colorado Supreme Court’s landmark case of Coffin v. Left Hand Ditch, 6
Colo. 443 (1882), David Schorr notes that adopting a riparian regime in
the western United States could have fostered monopolies and fueled
speculation. In this way, appropriation was subsidiary to a “sufficiency”
principle that actually limited use through doctrines such as beneficial use
and forfeiture for non-use, to ensure the widespread distribution of water
rights. Are economic efficiency and distributional accounts of the rejection
of riparianism in the American West necessarily mutually exclusive?

Problem
Two neighboring farmers in a prior appropriation state each have rights
to divert water from a nearby river through a series of ditches. If the first
neighbor ceases beneficial use of the water to which he is entitled, and the
second neighbor diverts that water to his own use, should the water rights
go back to other users, or can the second neighbor claim title by adverse
possession? See Archuleta v. Gomez, 200 P.3d 333 (Colo. 2009) (adverse
possession of a water right requires a demonstration that the claimant
“exclusively, hostilely, and adversely made an actual beneficial
consumptive use of all or a portion of” another’s “deeded irrigation water
right interests” for the required period of 18 years; however if the original
user of the water right abandoned the right, it would go back to the river
for other uses).

1. Most zoning ordinances specify use and area districts and identify where they
fit on the zoning map. Sometimes, however, more flexibility is desired. In some
cases, municipalities create planned unit developments in which the zoning board
or its planning staff work to establish overall density requirements and then work
directly with developers of a particular area to construct a rational scheme that
mixes uses (such as commercial and residential) in a desirable way. The plan is
then approved by an administrative zoning board, usually after public hearings
with public participation. Similarly, floating zones set forth detailed use
requirements but are not attached to a specific location — hence they
metaphorically “float” — until a specific proposal is brought forward and the zone
is designated on the zoning map by the local legislative body.
2. Form-based codes bear some resemblance to performance zoning, which has
been an important part of zoning for the past half-century. Performance zoning
shifts the focus of regulation from classifying uses to establishing standards for the
impacts of kinds of development. Industrial performance zoning, for example,
might set limits on issues such as emissions or noise, and only allow uses that meet
these standards. Julian Conrad Juergensmeyer & Thomas E. Roberts, Land Use

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Planning and Development Regulation Law §4.19, at 90 (3d ed. 2013).
3. N.J. Stat. §40:55D-5 defines a “nonconforming use” as “a use or activity
which was lawful prior to the adoption, revision or amendment of a zoning
ordinance, but which fails to conform to the requirements of the zoning district in
which it is located by reason of such adoption, revision, or amendment.” — EDS.
4. But see Pheasant Ridge Assocs. Ltd. P’ship v. Burlington, 506 N.E.2d 1152,
1157 (Mass. 1987) (where undisputed evidence “requires” conclusion that town’s
exercise of eminent domain had been bad faith attempt to contravene State’s
affordable housing law, Mass. Gen. Laws ch. 40B, land taking could be
invalidated). The Pheasant Ridge case, decided under a different statute intended
to limit rather than grant municipal power, is inapposite to the question at hand.
5. As the Land Court judge recognized, in the circumstance where the town
meeting is the governmental body charged with the responsibility for approving or
denying a zoning bylaw, it is difficult to imagine how there could be an agreement
in advance of the vote to approve such an action.
6. A municipality’s decision to amend its zoning bylaw is also constrained by
the State’s “reserved powers doctrine,” which bars a legislative body from
bargaining away its police powers. Some forms of “contract zoning” are “suspect
because of the concern that a municipality will contract away its police power to
regulate on behalf of the public in return for contractual benefits offered by a
landowner whose interest is principally served by the zoning action.” McLean
Hosp. Corp. v. Belmont, 778 N.E.2d 1016, 1020 (Mass. App. Ct. 2002). There was
no evidence, however, that the town bargained away its police power in this case.
The town merely acted on an offer by IDC; its power to approve or reject the
proposed zoning amendment remained unencumbered, as did its power to rezone
the property in the future if circumstances made it necessary for the protection of
the public health, safety, or general welfare to do so.
7. Promoting economic development is a proper basis for a town’s exercise of its
zoning power.
8. Owners who disagree with conditions imposed or sought through a
discretionary land use regulatory process may challenge such conditions as
unconstitutional “exactions.” For the standards that govern such challenges, see
Chapter 15, §6.
9. As we discussed in Stadsvold, “[t]here are two types of variances: use
variances and area variances. ‘A use variance permits a use or development of land
other than that prescribed by zoning regulations.’ An area variance controls ‘lot
restrictions such as area, height, setback, density and parking requirements.’ ” 754
N.W.2d at 329.
10. “ ‘Hardship’ as used in connection with the granting of a variance means the
property in question cannot be put to a reasonable use if used under the conditions
allowed by the official controls; the plight of the landowner is due to circumstances
unique to the property not created by the landowner; and the variance, if granted,
will not alter the essential character of the locality.” Minn. Stat. §394.27, subd. 7.
11. While most jurisdictions use the phrase “unnecessary hardship” rather than

701
“undue hardship” as the applicable standard, many jurisdictions appear to require
that the variance applicant establish real hardship if the variance is denied rather
than simply requiring that the applicant show the reasonableness of the proposed
use.
12. The record is replete with uncontradicted evidence that, factually, low and
moderate income housing cannot be built without some form of contribution,
concession or incentive by some level of government. Such, under various state
and federal methods, may take the form of public construction or some sort of
governmental assistance or encouragement to private building. Multi-family rental
units, at a high density, or, at most, low cost single-family units on very small lots,
are economically necessary and in turn require appropriate local land use
regulations.
13. While, as the trial court found, Mount Laurel’s actions were deliberate, we
are of the view that the identical conclusion follows even when municipal conduct
is not shown to be intentional, but the effect is substantially the same as if it were.
14. RFRA may still be constitutional as applied to federal statutes and
administrative actions. See, e.g., Hankins v. Lyght, 441 F.3d 96, 109 (2d Cir. 2006).
15. To cover a variety of bases, §5(b) of the UECA provides that “[a]n
environmental covenant that is otherwise effective is valid and enforceable even if:

(1) it is not appurtenant to an interest in real property;

(2) it can be or has been assigned to a person other than the original
holder;
(3) it is not of a character that has been recognized traditionally at
common law;
(4) it imposes a negative burden;
(5) it imposes an affirmative obligation on a person having an interest in
the real property or on the holder;
(6) the benefit or burden does not touch or concern real property;
(7) there is no privity of estate or contract;
(8) the holder dies, ceases to exist, resigns, or is replaced; or
(9) the owner of an interest subject to the environmental covenant and the
holder are the same person.”

16. The U.S. Department of Defense oversees roughly 19 million acres of land
owned by the federal government. Gort et al., supra.
17. One “acre foot” is the amount of water that would cover an acre of surface
area, one foot deep, and represents about 325,851 gallons of water.
18. The Grimeses argue that they are entitled to their claimed water rights on the
basis of their riparian ownership. Each of their original claims, however, were
based on appropriation law. Because of this, we need not decide whether riparian
rights to Marshall Lake have been eliminated because of its artificial elevation.

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CHAPTER 8

Servitudes: Rules Governing

Contractual Restrictions on Land Use

§1 SERVITUDES
How can the law help coordinate use of different parcels of land?
Owners can bring nuisance suits against each other. Governments can
impose zoning laws to determine how land can be used. But what if
owners want to make private agreements to restrict each other’s uses, or to
gain limited use or access rights for themselves? For example, neighbors
may want to agree that they will only use their property for residential
purposes, or one neighbor may want the right to pass over another’s land
to access a public road. More idiosyncratically, an owner using solar
power may want to prevent her neighbors from developing their land so as
to block sun to her solar panels. Cf. Prah v. Maretti, supra, Chapter 6, §3.
Owners can of course enter contracts with each other, but how can they
bind future possessors of the land? To do this, they need to create a
servitude.
A servitude is a right or an obligation that “runs with the land,”
meaning that it automatically passes to subsequent owners or possessors of
the land. Restatement (Third) of Property (Servitudes) §1.1 (2000).
Servitudes are often necessary to enjoy and secure expectations with
respect to land. Access to utilities, such as telephone, electricity, and cable
service, may depend on granting utility companies rights to run lines over
your property and the property of your neighbors. The utilities would not
invest in those lines if, when you sold your property, the next owner could
simply revoke the agreement. Similarly, the explosion of condominiums
and other common interest residential communities depends upon
numerous determinations as to how the owners will use their property and
contribute to the maintenance of common elements like landscaping and
recreation facilities.
Servitudes may be either affirmative or negative. Affirmative
servitudes are rights to use another’s land for a limited purpose.
Affirmative servitudes are usually called easements. The most common
kind of easement is the right of way, the right to use another’s land for

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ingress or egress. Examples include the right of a railroad to run tracks
over land, or the right of a landowner to cross over neighboring land to
access a public road, body of water, or other amenity. Another distinctive
form of easement, the profit à prendre, or profit, allows non-owners to
collect resources from the land, such as coal, water, or timber.
Negative servitudes are restrictions with respect to what owners can
do with their own land. Residential property may be subject to servitudes
not to use the property for commercial or multifamily purposes;
commercial property may be subject to servitudes not to use the property
for businesses that compete with the servitude’s beneficiary; undeveloped
or agricultural land may be subject to servitudes to keep the land in its
undeveloped state. Negative servitudes go by many names — e.g.,
negative easements, real covenants, and equitable servitudes — but the
modern trend is to call all negative servitudes covenants. Courts originally
viewed negative servitudes with suspicion, resulting in significant
restrictions on their creation and enforcement. As negative servitudes have
become more common, and indeed essential to many modern forms of
ownership, these restrictions have eased. A number of traditional
restrictions still remain, however, and legislatures are creating new
restrictions to deal with new problems.
The resulting law of servitudes is confusing. Professor Susan French,
the Reporter for the American Law Institute’s Restatement (Third) of
Property (Servitudes), has called it “the most complex and archaic body of
American property law remaining in the twentieth century. Others have
described it more colorfully ‘as an unspeakable quagmire,’ ‘confounding
intellectual experiences,’ and an area of the law full of ‘rigid categories,
silly distinctions, and unreconciled conflicts over basic values.’ ” Susan
French, Servitudes Reform and the New Restatement of Property: Creation
Doctrines

704
 Servitudes diagram (drafted by Katya Stassen)

and Structural Simplification, 73 Cornell L. Rev. 928 (1988). Don’t be

discouraged. The problem is not with you; it lies in the confused doctrines.
Affirmative and negative servitudes share some common vocabulary.
Land subject to the burden of a servitude is called the burdened or
servient estate. If the right to benefit from a servitude automatically passes
to the owners of a particular parcel of land, that land is called the
benefited or dominant estate. If there is a benefited estate, the servitude is
known as an appurtenant servitude. Many servitudes are appurtenant; the
right to cross over a parcel of land from another parcel of land, for
example, is generally appurtenant, as is the right of one neighbor to
prevent certain uses of neighboring land. Servitudes may also be in gross,
meaning that the benefit of the servitude is held by a particular individual
or entity rather than running with a parcel of land. Servitudes to run utility
lines on land, for example, are typically in gross. The utility company that
owns the benefit of the servitude may move its headquarters and still enjoy
the servitude right.
Both traditional and modern servitude doctrines respond to a common
set of problems. Servitudes allocate use and governance rights among
owners and non-owners. As such, they can coordinate land use, secure
expectations and identity interests in land, encourage investment, and
encourage alienation of land. But they may also burden land with useless
or outdated restrictions, undermine broader policy goals, or unfairly
surprise and undermine expectations of new purchasers of the land.
Servitudes may also result in new coordination problems, as holders of the
benefit and burden of the servitude disagree as to how the land should be

705
used.
One can evaluate servitude law according to how successfully it
balances these conflicting policy concerns. Do formal requirements for
creation of servitudes help ensure that the parties creating the servitude
truly intend to bind the land and that future owners have notice of the
servitude’s existence? Do rules for interpretation of ambiguous servitudes
further the presumed intent of the parties, prevent unfair surprise, and
ensure that the land serves public interests? Do substantive restrictions on
servitudes ensure that they increase land value and do not undermine other
important policy goals? Finally, do rules for termination end servitudes
that no longer serve party intent or other interests or that unduly burden the
land? As you learn the rules that govern servitudes, consider whether the
rules do serve these goals, and whether they do so effectively.

§2 EASEMENTS
§2.1 Definition and Background
Easements, or affirmative servitudes, are nonpossessory rights to use
another’s land that run with the land. Easements are likely as old as
property law itself. Aspects of the English law of easements were
borrowed from the laws of ancient Rome. Medieval English agriculture
depended on a system of easements through which individuals had rights
to grow crops on particular strips of land, but village residents as a whole
had rights to graze their flock on the lands when not under cultivation.1
Although enclosure of agricultural lands between the sixteenth and
nineteenth centuries ended this open-field system, the idea of common
access rights remained engrained in England, perhaps leading to the
extensive public access rights to private lands still seen throughout Great
Britain.2
Early English immigrants to North America brought the system of
common pasturage with them; its remnants may be seen in town commons
throughout New England. Although common pasturage is not a
meaningful feature of modern law, easements for utilities burden virtually
all property, and much other land is subject to rights of way allowing
others to cross over it, and profits allowing easement holders to collect
resources from the land.
Easements must be distinguished from leases and licenses. Leases,
discussed further in Chapter 11, are possessory rights to use a defined
space for all uses not explicitly or implicitly prohibited in the lease.

706
Easements, however, are nonpossessory, meaning that they give the holder
only the right to use the land for limited purposes, and the right need not
be for a defined space.
Licenses are limited rights to enter or use land that do not run with the
land and are usually revocable at will by the grantor. Possessors of real
property constantly grant non-owners permission to enter their property;
you do so every time you invite someone over for dinner. No writing is
required to create a license, and many licenses are implied by the
circumstances. For example, a store open to the public conveys a clear
message that members of the public are invited to enter the property for
the purpose of browsing or shopping. Entering a store during business
hours would not be deemed a trespass because entry onto the property is
based on implied consent. The entry becomes a trespass only when the
licensee refuses to leave after being asked to do so. Revocable licenses are
not transferable, they cannot be inherited or left by will, and they are not
property interests protected by the takings clause of the U.S. Constitution
or subject to the Statute of Frauds.
Although licenses may be created without a writing, while easements
are subject to the Statute of Frauds, licenses are frequently formalized in
writing and courts will recognize oral easements under certain
circumstances. And while licenses are generally not transferrable, some
licenses, such as movie or theater tickets, may be transferred to others.
Finally, although licenses are frequently said to be revocable at will,
revocation is limited in a number of circumstances. First, a license granted
in return for consideration may become a contract, so that revocation is
subject to damages and other contract remedies. Second, a license to enter
land and remove personal property purchased by the license holder is a
license coupled with an interest, and cannot be revoked for a reasonable
time to permit the property to be removed. State and federal civil rights
law may prohibit revocation of a license to enter property open to the
public on the basis of a customer’s race or other prohibited purposes.3 In
addition, as discussed in §2.3[A] when a license is granted under
circumstances that would make it unfair to revoke it, courts may find it has
become an easement by estoppel.
In other words, the features that are said to distinguish easements from
licenses — penalties for revocation, transferability, creation in writing —
are often present in licenses as well. The modern trend is to focus on
whether the parties intended to create a temporary or permanent right and
whether other policy considerations support or forbid creation of the
easement; formal differences are important evidence in answering these
questions. Paul v. Blakeley, 51 N.W.2d 405, 407 (Iowa 1952); see also

707
Alfred F. Conard, An Analysis of Licenses in Land, 42 Colum. L. Rev. 809,
827-829 (1942).

§2.2 Creation by Express Agreement

Most easements are created by express agreement between the owners
of the burdened and benefited land. Sometimes an easement is created by a
deed that conveys the easement by itself; an owner, for example, may sell
to his neighbor a right of way across the owner’s own land. At other times,
the easement is created at the same time a parcel of property burdened or
benefited by the easement is sold; for example, the grantor may sell part of
her land by a deed reciting that, in addition to granting ownership of the
parcel to the grantee, the grantor also conveys to the grantee an easement
of passage over the land remaining with the grantor.

A. Writing (Statute of Frauds)

As interests in land, the Statute of Frauds requires easements to be in

writing to be enforceable.4 Statutes of Frauds have been adopted in all 50
states. To satisfy the Statute of Frauds, the easement must be contained in
a writing signed by the grantor and sufficiently describe the easement and
the grantee. Some states also require the writing to state the consideration
for transfer of the easement. Here are the real property portions of two
typical state Statutes of Frauds:

California Statute of Frauds

West’s California Civil Code §1624

(a) The following contracts are invalid, unless they, or some note or
memorandum thereof, are in writing and subscribed by the party to be
charged or by the party’s agent:
...
(3) An agreement for the leasing for a longer period than one year, or
for the sale of real property, or of an interest therein; such an agreement, if
made by an agent of the party sought to be charged, is invalid, unless the
authority of the agent is in writing, subscribed by the party sought to be
charged.

New York Statute of Frauds

McKinney’s New York General Obligations Law §5-703

708
 2. A contract for the leasing for a longer period than one year, or for
the sale, of any real property, or an interest therein, is void unless the
contract or some note or memorandum thereof, expressing the
consideration, is in writing, subscribed by the party to be charged, or by
his lawful agent thereunto authorized by writing.

B. Limits on Negative Easements

Restrictions held by another on what an owner can do with her land are
sometimes called negative easements. Courts traditionally limited the
negative easements that could be created by contract to three kinds: (1) the
right to lateral support of one’s building, (2) rights to prevent both light
and air from being blocked by construction on neighboring land, and (3)
the right to prevent interference with the flow of an artificial stream such
as an aqueduct. The law of covenants, covered later in this chapter,
developed to get around the limitations on negative easements. Negative
easement language still appears in modern law, however, particularly in
discussions of conservation easements (preventing development of land
for environmental purposes), historic preservation easements
(preventing destruction or alteration of buildings that have historical or
architectural importance), and solar easements (to protect access to
sunlight for solar energy). Most of these new easements have been created
or recognized by statute. See, e.g., Alaska Stat. §§34.17.010-34.17.060
(conservation easements). The Uniform Laws Commission chose to label
conservation easements “easements” largely because lawyers were
comfortable with easements, but a little scared of covenants. Prefatory
Note, Uniform Conservation Easement Act of 1981. Because these
servitudes are usually authorized by statute, they have properties that differ
from both covenants and easements.

C. Running with the Land

As with all servitudes, a central question about easements concerns the

circumstances under which they run with the land. This is really two
separate questions. The first is whether the burden runs with the servient
estate. Must a future owner of the land allow the easement owner
continued access to or control over her land under the terms of the original
easement? The second question is whether the benefit runs with the
dominant estate. Is the easement owned by the person to whom it was
originally granted or by whoever happens to own the parcel of land it was
intended to benefit? If the benefit runs with a particular parcel of land, the

709
easement is appurtenant to the land. If the benefit attaches to a person or
entity rather than a parcel of land, the easement is in gross.5 A common
modern kind of easement in gross is a right of way for utility lines over
property.

ELEMENTS FOR EXPRESS EASEMENTS TO RUN WITH THE LAND

An express easement will run with the burdened or benefited estate if

1. it is in writing;
2. for the burden to run, there was notice to the servient estate holder of the
easement; and
3. it was intended to run with that estate.

Easements created by an express agreement run with the land only if

(1) the easement is in writing, (2) subsequent owners of the servient estate
had notice of the easement at the time of purchase of the servient estate,
and (3) the original grantor who created the easement intended the
easement to run with the land.
1. Writing. The required writing is the original writing creating the
easement. The writing must be one complying with the Statute of Frauds.
Sales literature, for example, will not satisfy this requirement, although it
may, as we will see, provide evidence for an easement by implication or
estoppel. The easement does not have to be mentioned in subsequent
deeds. It is good legal practice, however, to include a specific reference to
existing easements when either the dominant or servient estate is
transferred.
2. Notice. Easements are binding on subsequent owners of the servient
estate only if they have notice of them. Three kinds of notice exist. First, if
the subsequent owners in fact know about the existence of the easement,
they have actual notice. Second, if there are visible signs of use by non-
owners, such as telephone poles, above-ground utility lines, or a path
across the property, the owner may be put on inquiry notice. This means
that a reasonable buyer would do further investigation to discover whether
an easement exists. Third, if the deed conveying the easement is recorded
in the proper registry of deeds in the proper place, and if a reasonable
search of the registry would lead to discovery of the deed, then subsequent
owners are deemed to be on constructive notice. This means that, whether

710
they actually knew or did not know about the easement, they should have
known.
3. Intent. Easements bind future owners of the servient estate (or
benefit future owners of the dominant estate) only if the grantor intends
them to be bound (or benefited). Intent may be clearly stated, as when the
deed creating the easement states that the easement “is intended to run
with the [benefited and/or burdened] land,” or that the easement passes to
the owner’s “heirs and assigns.” If the conveyance is ambiguous as to the
grantor’s intent, intent may be inferred from the circumstances. If, for
example, the easement is one that is likely to have been intended to be
limited to the two parties, such as a right given by a landowner to a friend
to swim in a pond on her property, courts will typically hold that the
benefit is limited to the friend and that it was not intended to bind future
owners of the burdened parcel.

§2.3 Interpretation of Ambiguous Easements

A. Appurtenant or In Gross

What happens when a grantor’s intent is not unambiguously stated in

the deed? The next case deals with this question.

Green v. Lupo

647 P.2d 51 (Wash. Ct. App. 1982)

JOHN A. PETRICH, Acting Chief Judge.
The plaintiffs, Don Green and his wife Florence, initiated this suit to
specifically enforce an agreement to grant an easement. From a decree
which determined that the contemplated easement was personal rather than
appurtenant to their land as claimed, plaintiffs appeal. We reverse.
The issue raised on appeal is whether parol evidence is admissible to
construe an easement as personal to the grantees where the easement is
agreed in writing to be for ingress and egress for road and utilities
purposes but the writing does not expressly characterize the easement as
either personal or appurtenant. We believe that parol evidence was
properly admitted here but the conclusion that the easement is personal to
plaintiffs was erroneous.

Terms:

711
 A real estate contract, also called a real estate installment contract, is a
contract for sale of real estate in which title remains in the seller until the full
purchase price is paid. Without title, the Lupos could not use the land as
collateral for a loan until the Greens agreed to transfer title to part of the
property early.

The parties involved are adjoining landowners. The plaintiffs, once the
owners of the entire tract, now retain several acres located south of the
defendants’ property. The defendants purchased their parcel (the north
tract) from the plaintiffs by real estate contract. While they were still
paying on that contract, the defendants requested a deed release to a small
section of the north tract to allow financing for the construction of a home.
The plaintiffs agreed in return for the promise of an easement along the
southern 30 feet of the north tract when the defendants eventually obtained
title. The express terms of the promised easement were contained in a
written agreement which was executed in the form required for the
conveyance of an interest in real property. Wash. Rev. Code §64.04.
The plaintiffs’ development of their land for mobile home occupancy
caused tension between the landowners. Apparently some of the occupants
of plaintiffs’ mobile home development used the easement as a practice
runway for their motorcycles. When the defendants obtained title to the
north tract they refused to formally grant the easement as promised. They
also placed logs along the southern boundary of the easement to restrict
access from the plaintiffs’ property. The plaintiffs brought this action to
obtain specific performance of the promise to grant an easement and to
enjoin any interference with their use of the easement.
Evidence was admitted describing a single-family cabin or residence
built by or for the plaintiffs in the northeast corner of the plaintiffs’ tract. It
was defendants’ contention, and they so testified, that the purpose of the
easement was to serve the plaintiffs in their personal use and occupancy of
this cabin or home. They claimed the easement was not intended to serve
the plaintiffs’ entire tract, part of which had been developed as a mobile
home site, and which had access by other existing roads.
The trial court concluded that an easement was granted for the use and
benefit of the plaintiffs alone and could not be assigned or conveyed. The
court ordered the plaintiffs’ use to be limited to ingress and egress for their
own home or cabin and prohibited the passage of motorcycles.
It was the duty of the court in construing the instrument which created
the easement to ascertain and give effect to the intention of the parties. The
intention of the parties is determined by a proper construction of the
language of the instrument. Where the language is unambiguous other

712
matters may not be considered; but where the language is ambiguous the
court may consider the situation of the property and of the parties, and the
surrounding circumstances at the time the instrument was executed, and
the practical construction of the instrument given by the parties by their
conduct or admissions. Simply stated parol evidence may always be used
to explain ambiguities in written instruments and to ascertain the intent of
the parties.
The pivotal issue in deciding the propriety of admitting parol evidence
is whether the written instrument is ambiguous. A written instrument is
ambiguous when its terms are uncertain or capable of being understood as
having more than one meaning.
The written instrument promised the easement specifically to the
plaintiffs, to “Don Green and Florence B. Green,” and described the
easement as “for ingress and egress for road and utilities [purposes].” The
designation of named individuals as dominant owners evidences an intent
that the easement be personal to the named parties. The grant of an
easement for ingress, egress and utilities to the owners of adjacent land is
evidence of an intent that the easement benefit the grantees’ adjacent land.
We find that the instrument was ambiguous as to whether the easement
granted was personal to the plaintiffs or appurtenant to their land. We
therefore conclude that parol evidence was properly admitted.
The trial court’s findings of fact are supported by competent evidence
and are not assigned as error; they must be considered as verities on
appeal. The court’s findings do not, however, support the conclusion that
the easement was personal. The court found that the easement was granted
for ingress, egress, for road and utilities purposes. As we have noted, the
grant of such an easement supports the conclusion that the easement was
intended to be an easement appurtenant. In addition, the trial court found
“the use of the easement by the plaintiff was to obtain access to the land,
retained by plaintiff, for the construction and habitation by plaintiff in a
cabin.” (Italics ours.) This finding also supports the conclusion that the
easement was intended to benefit plaintiffs’ land.
The trial court’s conclusion that the easement was personal to the
plaintiffs was erroneous. There is a strong presumption in Washington that
easements are appurtenant to some particular tract of land; personal
easements, easements in gross, are not favored. An easement is not in
gross when there is anything in the deed or the situation of the property
which indicates that it was intended to be appurtenant to land retained or
conveyed by the grantor. Viewed in this light, the court’s factual findings
mandate the conclusion that the easement was intended to be appurtenant
to plaintiffs’ property.

713
 Easements appurtenant become part of the realty which they benefit.
Unless limited by the terms of creation or transfer, appurtenant easements
follow possession of the dominant estate through successive transfers. The
rule applies even when the dominant estate is subdivided into parcels, with
each parcel continuing to enjoy the use of the servient tenement. The terms
of the easement promised do not limit its transfer. The easement promised
the plaintiffs is appurtenant to their property and assignable to future
owners of that property.
The defendants request that equitable limitations be imposed on any
easement granted. A servient owner is entitled to impose reasonable
restraints on a right of way to avoid a greater burden on the servient
owner’s estate than that originally contemplated in the easement grant, so
long as such restraints do not unreasonably interfere with the dominant
owner’s use.
Testimony presented at trial showed that youngsters who now live on
the dominant estate use their motorcycles on the easement in a fashion that
constitutes a dangerous nuisance which was not considered when the
easement was created. This evidence supports the imposition of equitable
restrictions on the dominant owners’ use, restrictions which will not
unreasonably interfere with that use.
The trial court enjoined the use of motorcycles on the easement. There
is insufficient evidence on the record to assess the impact of a complete
ban on motorcycle use on the dominant estate’s owners. Motorcycles are a
common means of transportation. On its face, the ban appears to
unreasonably interfere with the dominant owners’ use of the easement.
Although an equitable solution to the motorcycle problem is necessary, the
trial court abused its discretion in imposing a ban on motorcycles without
proper consideration of the ban’s effect on the dominant owners’ use of the
easement.
Reversed and remanded with directions to modify the decree so as to
declare the easement for ingress and egress for road and utility purposes to
be appurtenant to plaintiffs’ property and to devise reasonable restrictions
to assure that the easement shall not be used in such a manner as to create
a dangerous nuisance.

Notes and Questions

1. Running of the benefit. Because the court finds the easement to be
appurtenant, it can be used by anyone with a legal right to possess any part
of the dominant estate — not just the Greens, but the youths with
motorcycles residing in the mobile home park the Greens created. Do you

714
think that was the Lupos’ expectation when they agreed to transfer the
easement? Why then does the court find that the easement is appurtenant?
2. Distinguishing in gross from appurtenant easements. How can
you tell whether an easement is in gross or appurtenant? The primary
criterion is the intent of the grantor. Clear language in the deed conveying
the easement that describes it as in gross or appurtenant will ordinarily
answer the question — unless surrounding circumstances admissible under
the parol evidence rule show that the grantee was misled or otherwise
treated unfairly. What in the express language of the agreement between
the Greens and the Lupos creates ambiguity about whether the easement
was personal or appurtenant?
When the language in the deed is ambiguous, the court must look to
surrounding circumstances and to policy considerations. If the easement is
one that would be useful separate from ownership of neighboring land,
such as a utility easement, the courts are likely to hold that it was intended
to be in gross. Since utility easements, such as a right of way for telephone
lines, would be useful to the utility company apart from ownership of
neighboring property, they are likely to be deemed in gross. If the
easement has little or no utility separate from ownership of neighboring
land, and is useful to anyone who owns the parcel of land benefited by the
easement — such as the right of way in Green v. Lupo — courts are likely
to hold that the easement is appurtenant.
Most courts voice a constructional preference for appurtenant
easements. French v. Estate of Gutzan, 128 A.3d 657, 660 (Me. 2015)
(discussing Maine’s “strong preference for construing easements as
appurtenant”); Kinder v. Wescott, 107 A.3d 321, 325 (R.I. 2015)
(“presumption” that easements are appurtenant). But see Deane v. Kahn,
317 Conn. 157, 171-172 (2015) (discussing rebuttable presumption in
Connecticut that easements referring only to the grantee and not heirs and
assigns are personal not appurtenant). Courts have argued that appurtenant
easements are preferable because they limit the number of persons with
easements over the land to the number of neighboring parcels. They also
argue that because appurtenant easements are limited to owners of
neighboring or nearby property while easements in gross can be owned by
anyone, easements in gross create more uncertainty about land use rights
than appurtenant easements. One can check with the neighbors to see if
any appurtenant rights exist, but it is harder to check with the general
public to find owners of easements in gross. Can you think of a
counterargument to this reasoning?
3. Severability from the land. The courts generally hold that an

715
appurtenant easement cannot be severed from the land. An owner of the
dominant estate who sells the land cannot retain the benefit of the
servitude while giving up the land; nor can the beneficiary of the easement
transfer the benefit of the easement to another while retaining ownership
of the dominant estate. Appurtenant easements pass automatically to
whomever owns the dominant estate and cannot be severed from
ownership of that estate. Cricklewood on the Bellamy Condominium
Association v. Cricklewood on the Bellamy Trust, 805 A.2d 427 (N.H.
2002).
4. Transferability of easements. Appurtenant easements are
transferable by definition; when the dominant estate is sold or given away,
the new owner also owns the appurtenant easement attached to the land.
Easements in gross were traditionally not transferable but are generally
held to be transferable now, especially if they are commercial in nature,
such as utility easements. Restatement (Third) of Property (Servitudes)
§5.8 (2000); Grady v. Narragansett Electric Co., 962 A.2d 34, 42 n.4 (R.I.
2009) (discussing “now-widely-recognized” view that commercial
easements are assignable). Profits (rights to enter land to remove material
such as minerals or timber) were always presumed to be alienable. If an
easement in gross is for personal convenience or enjoyment — for
example, a right to swim in a private lake — courts may rule that the
grantor did not intend the easement to be transferable to others. Some
states retain the older rule, holding that easements in gross are not
transferable. King v. Lang, 42 P.3d 698, 702 (Idaho 2002) (easement for
fishing to “grantors and their immediate families” was in gross and not
transferrable).

Problem
Bruce and Martin own neighboring tracts of land. Bruce’s parcel
borders a natural lake, Lake Pescatarian, but Martin’s does not. At
Martin’s request, Bruce creates a deed providing as follows:

I, Bruce, on behalf of myself and my heirs and assigns, transfer to my friend

and neighbor, Martin, the right to enter my land to fish at Lake Pescatarian.
Martin dies, and his land is inherited by his obnoxious son, Charlie.
Charlie wants to continue fishing at the lake; Bruce does not want to let
him. What are the alternative arguments supporting their positions? Who
will succeed? How could Bruce have drafted the easement to avoid this
ambiguity?

716
 B. Scope and Apportionment

Cox v. Glenbrook Co.

371 P.2d 647 (Nev. 1962)

GORDON THOMPSON, Justice.
In this case Glenbrook Company, a family corporation, by complaint,
and Cox and Detrick, copartners, by answer and counterclaim, each
request a declaratory judgment as to the scope and extent of a certain right-
of-way herein referred to as the “Quill Easement,” granted Henry Quill by
the Glenbrook Company in 1938. The conveying instrument reads:

That said grantor, in consideration of the sum of ten dollars ($10.00), lawful
money of the United States of America, to it in hand paid by the grantee,
receipt whereof is hereby acknowledged, does by these presents grant,
bargain, sell and convey to the said grantee an easement and right-of-way,
with full right of use over the roads of the grantor as now located or as they
may be located hereafter (but such relocation to be entirely at the expense of
the grantor) from the State Highway known as U.S. Route 50 to the
following described property: [description of Quill property]. To have and to
hold said right-of-way and easement unto the said grantee, his heirs and
assigns forever.

1. The Facts
The relevant facts are not disputed. The Quill property contains 80
acres. Henry Quill died in 1943. In 1945 the administratrix of his estate
sold the property, with appurtenances, to Kenneth F. Johnson for $8,600.
In 1960 Johnson sold the property to Cox and Detrick for $250,000,
$50,000 down, with the balance secured by trust deed and payable over an
extended period.
Cox and Detrick propose to subdivide their property into parcels of one
acre or more, resulting in a minimum of 40 or a maximum of 60 separate
parcels. The building on each parcel is to be limited to a residence and a
guesthouse. Permanent, as distinguished from seasonal, homes are
planned. A commercial development of the property is not contemplated.
Zoning will permit the proposed development. An advertising program to
sell the individual parcels was commenced. Cox and Detrick anticipate a
fully developed subdivision in ten years. The 80 acres are said to be
surrounded on two sides by property owned by George Whittel, and on
two sides by the property of Glenbrook Company. The Quill Easement is
the only existing ingress to and egress from that tract.

717
 The property of Glenbrook Company fronts on Glenbrook Bay, Lake
Tahoe. For more than 25 years it has operated a resort business. Its
facilities consist of a beach, approximately 30 guest cottages, a tennis
court, riding stables, foot paths for hiking, horse trails for riding, a golf
course, a post office, a rodeo area, a service station, a bar, and a dining
room and lounge at the Glenbrook Inn. The golf course may be used by
nonguests upon paying a higher green fee. The bar is open to the public, as
is the dining room when not completely reserved by guests. There is no
gambling. Glenbrook is operated on a seasonal basis from mid-June
through September and is widely known as a beautiful summer vacation
resort for families, many of whom return year after year. The atmosphere
sought to be maintained is that of peace, seclusion and quiet. The roads
through the property are generally unpaved except for the main road from
U.S. Highway 50 to the golf course. At the entrance to the main road is a
sign stating that permission to pass over is revocable at any time. The main
road is the only way in or out from the Glenbrook properties. In years past,
from time to time, Glenbrook Company has sold small parcels of its
property to individuals. In each instance it has granted the purchaser a
right-of-way for ingress and egress.
The following rough sketch will, perhaps, be of some assistance.
To get to the Cox and Detrick property one may take either the “golf
course road” or the “back road.” Before this action started, the “golf course
road” was fenced off. A portion of the “back road” was built in 1936 to
provide a way to water tanks which supplied water for the golf course. In
the late 1930s it was extended to the Quill (now Cox and Detrick)
properties. Glenbrook Company, because of friendship with Quill,
supplied the tractor and blade used in so extending the road. The road was,
and is, narrow and unpaved. In most places it is wide enough for only one
car. Trees, rocks and manzanita generally border it. There is an occasional
“turn out.” A worker, who extended the road to the Quill property in the
late 1930s, stated that Quill just wanted “a rough road, so that he could go
on up with a car.” Cox frankly stated that he would like to use the “back
road” if it “were passable,” and that he definitely wanted to widen the
road. That road has seldom been used by anyone except the four or five
families having homes along its course, and their guests.

718
 2. The Lower Court’s Judgment
After trial before the court without a jury, judgment was entered
declaring that the Quill Easement is limited in three respects: (a) “to such
uses as are and will be reasonably consistent with the use to which the
servient property is employed, that is, a conservative, family, mountain
resort operation, and is further limited, as to reasonable use, to the use
contemplated in the original grant to Quill, that is, access to and egress
from the entire dominant parcel by a single family in occupancy, and their
guests”; (b) “to use of the Glenbrook roads as those roads are presently
constructed and maintained, or as the Glenbrook Company by its own
action or by mutual agreement with interested parties, may hereafter locate
and construct roads in the Glenbrook estate”; and (c) that “The proposed
use of the so-called Quill Easement by the defendants herein, that is, the
use of the Glenbrook roads by purchasers of subdivided parcels of the
former Quill property, would constitute an illegal and unjustified burden
and surcharge upon the servient estate.”

5. Unwarranted Restrictions

719
 (A) We shall first discuss that portion of the judgment restricting the
use to ingress to and egress from the entire dominant parcel “by a single
family in occupancy and their guests.” Such a restriction, in our view,
destroys the appurtenant character of the easement. Yet, there can be no
question but that the Quill Easement was appurtenant to the 80 acre tract
then owned by him. The terms of the conveyance, “to have and to hold
said right-of-way and easement unto the said grantee, his heirs and assigns
forever,” make it clear that one who succeeds to the possession of the
dominant tenement, succeeds as well to the privileges of use of the
servient tenement authorized by the conveyance. Furthermore, those who
succeed to the possession of each of the parts into which the dominant
tenement may be subdivided, also succeed to such privileges of use, unless
otherwise provided by the terms of the conveyance. The Quill conveyance
does not contain a restriction that the easement granted is to be appurtenant
to the dominant estate only while such estate remains in single possession,
and none may be imposed by judicial declaration.
(B) The judgment further restricts the use of the easement to “use of
the Glenbrook roads as those roads are presently constructed and
maintained.” We are uncertain as to the precise meaning of this restriction.
If such language prohibits the owner of the dominant estate from making
any improvements or repairs of the way, it is too restrictive. As a general
rule, the owner of an easement may prepare, maintain, improve or repair
the way in a manner and to an extent reasonably calculated to promote the
purposes for which it was created. The owner may not, however, by such
action, cause an undue burden upon the servient estate, nor an unwarranted
interference with the independent rights of others who have a similar right
of use. The action of Cox and Detrick in leveling or “rough grading” the
“back road,” to the extent that it was confined to the area within the
exterior borders of the road as they existed when the easement was
originally granted, was an improvement reasonably calculated to promote
the purposes for which the easement was created. Such leveling or rough
grading as so confined, would not, in itself, cause an undue burden upon
the servient estate, nor constitute an unwarranted interference with the
easement rights of other private property owners.
However, their conduct in attempting to widen the way is another
matter. A careful study of the record makes it clear that the ultimate
intention of the subdividers is to widen the “back road” in order that two
cars going in opposite directions may pass comfortably at all points along
its course. The conveying instrument does not specify the width of the way
expressly; it does, however, refer to the “roads as now located.” The “back
road” as it existed at the time of the grant of easement, was described as a

720
“small road,” and wide enough for just one car. The record does not
disclose that the predecessors of Cox and Detrick ever sought or attempted
to widen the “back road.” There is no evidence tending to indicate that
either Glenbrook Company or Henry Quill contemplated or intended a
wider road than existed when the grant was made. When the width is not
specified, the conveying instrument must be construed in the light of the
facts and circumstances existing at its date and affecting the property, the
intention of the parties being the object of inquiry. Indeed, it is sometimes
held, as a matter of law, that where the width of a right-of-way is not
specified in the grant, it is limited to the width as it existed at the time of
the grant. We need not go that far. We believe that the intention of the
parties at the time of the grant, when there is evidence to indicate such
intention, controls as to width.
As already stated, the only evidence in the record with reference to the
“back road” indicates that Henry Quill desired a way wide enough for one
car; that such was the character of the “back road” at that time, with
occasional “turn outs.” We must conclude, therefore, that such was the
parties’ intention in 1938 when the grant was made. If the width of the
way is what the lower court had in mind when it restricted the easement to
“use of the Glenbrook roads as those roads are presently constructed and
maintained” (the record revealing no substantial change from 1938 to time
of trial, except for the work of Cox and Detrick before mentioned), then
we find ourselves in accord.

7. Area Wherein Judgment Is Premature

The judgment entered also declared that the proposed use of the Quill
Easement would constitute an illegal burden and surcharge upon the
servient estate. The announced intention by the owners of the dominant
estate as to their proposed future use of the easement does not, of itself,
constitute an unreasonable burden upon the servient estate. When the facts
concerning that use become known, an unreasonable burden upon the
servient estate may, or may not result. That determination must await the
presentation of evidence then in existence.
In our judgment the lower court erred in declaring that the proposed
use of the Quill Easement would constitute an unreasonable burden upon
the servient estate, in the absence of existing evidence. It should have done
no more than to announce, in general terms, the applicable legal principle
within which a subsequent factual determination could be made if occasion
therefore arises.

721
 10. Conclusions
From the foregoing it is apparent that the parties seek a declaration of
rights in the following respects:
First: The privilege of use of the Glenbrook roads as located on
January 7, 1938 (the date of the grant of easement) is not restricted by the
terms of the grant, and is appurtenant to the dominant estate, and may be
enjoyed by those who succeed to the possession of the dominant estate in
its entirety or by those who succeed to the possession of the parts into
which such estate may be subdivided.
Second: The owners of the easement may maintain, repair and improve
the way in a manner reasonably calculated to promote the purposes for
which the easement was created, provided, however, (a) such maintenance,
repair or improvement is confined to the area within the exterior borders of
the way as it existed on January 7, 1938 (the date of the grant of
easement); (b) that such maintenance, repair, or improvement will not
cause an undue burden upon the servient estate; (c) that such maintenance,
repair or improvement will not cause an unwarranted interference with the
independent rights of others who have a similar right of use.
Third: The owners of the easement may not widen the way, its width
being limited, by reason of the evidence introduced, to the width of the
way on January 7, 1938 (the date of the grant of easement); and, insofar as
the portion of the way herein referred to as the “back road” is concerned,
that width is sufficient only for one car with occasioned “turn outs.”
Fourth: The owner of the servient estate has the right to relocate the
way at its own expense, which right includes the right to barricade that
portion of the existing way herein referred to as the “golf course road.”
Fifth: The owners of the easement may not, by reason of their
proposed subdivision development, or otherwise, cause an undue burden
upon the servient estate, or an unwarranted interference with the
independent rights of others who have a similar right of use. Whether such
a burden or interference will occur cannot be conclusively declared upon
existing evidence. In the event the owners of the easement proceed with
their announced plan, their use of the way is limited to the extent herein
noted. We believe it proper, however, at this time, to note that, should they
proceed with their proposed plan, the trier of the facts in subsequent
litigation, if it occurs, might or might not determine upon evidence then
existing, that their use of the way causes an unreasonable burden upon the
servient estate or an unwarranted interference with the independent rights
of others who have a similar right of use; hence, any further action on their
part to develop their property in the manner proposed is subject to such

722
contingency.

Henley v. Continental Cablevision of St. Louis County, Inc.

692 S.W.2d 825 (Mo. Ct. App. 1985)

CARL R. GAERTNER, Judge.
Pursuant to an indenture recorded on April 8, 1922, plaintiffs’
predecessors as trustees, were expressly granted the right to construct and
maintain electric, telephone and telegraphic service on or over the rear five
feet of all lots in the subdivision, and to grant easements to other parties
for the purposes of creating and maintaining such systems. In July, 1922
and August, 1922, respectively, the trustees conveyed an easement to
Southwestern Bell Telephone Company to “construct, reconstruct, repair,
operate and maintain its lines for telephone and electric light purposes”
and similarly to Union Electric to “keep, operate and maintain its lines
consisting of cables, manholes, wires, fixtures and appurtenances thereto.”
Subsequently, in 1981 and 1982, defendant [Continental Cablevision of St.
Louis County, Inc.] exercised licenses acquired from both utilities to enter
upon these easements, and erected cables, wires and conduits for the
purpose of transmitting television programs.
Plaintiffs [as trustees of University Park subdivision] filed an action for
an injunction on December 29, 1983, seeking not only to enjoin a
continuing trespass and compel the removal of defendant’s wires and
cables, but also seeking $300,000 in damages and the reasonable value of
the use of plaintiffs’ property for defendant’s profit based upon quantum
meruit.
Both parties agree that the subject easements are easements in gross,
i.e., easements which belong to the owner independently of his ownership
or possession of other land, and thus lacking a dominant tenement. The
dispositive issue here is whether or not these easements are exclusive and
therefore apportionable by the utilities to, in this case, defendant
Continental Cablevision.
We believe the very nature of the 1922 easements obtained by both
utilities indicates that they were intended to be exclusive and therefore
apportionable. It is well settled that where the servient owner retains the
privilege of sharing the benefit conferred by the easement, it is said to be
“common” or non-exclusive and therefore not subject to apportionment by
the easement owner. Conversely, if the rights granted are exclusive of the
servient owners’ participation therein, divided utilization of the rights
granted are presumptively allowable. This principle stems from the
concept that one who grants to another the right to use the grantor’s land in

723
a particular manner for a specified purpose but who retains no interest in
exercising a similar right himself, sustains no loss if, within the
specifications expressed in the grant, the use is shared by the grantee with
others. On the other hand, if the grantor intends to participate in the use or
privilege granted, then his retained right may be diminished if the grantee
shares his right with others. Thus, insofar as it relates to the
apportionability of an easement in gross, the term “exclusive” refers to the
exclusion of the owner and possessor of the servient tenement from
participation in the rights granted, not to the number of different easements
in and over the same land.
Here, there is no claim that plaintiffs’ predecessors had at the time the
easements were granted, any intention to seek authority for, or any interest
whatsoever in using the five foot strips for the construction and
maintenance of either an electric power system or telephone and
telegraphic service. Moreover, at no time during the ensuing sixty-three
years have the trustees been authorized to furnish such services by any
certificate of convenience and necessity issued by the Public Service
Commission pursuant to Mo. Rev. Stat. §§392.260 and 393.170 (1978).
Accordingly, the easements granted to Southwestern Bell and Union
Electric were exclusive as to the grantors thereof and therefore
apportionable.
Plaintiffs also argue defendant could acquire no rights from the utilities
since their easements did not mention television cables, and that the cable
attachments themselves constituted an extra burden on the property. We
disagree. The owner of an easement may license or authorize third persons
to use its right of way for purposes not inconsistent with the principal use
granted. The 1922 easements granted to Union Electric expressly provided
the right of ingress and egress by Union Electric, its successors and
assigns, to “add to the number of and relocate all wires, cables, conduits,
manholes, adding thereto from time-to-time.” Similarly, the easement
conveyed to Southwestern Bell expressly contemplated the construction
and maintenance of “all poles, cables, wires, conduits, lateral pipes, anchor
guys and all other fixtures and appurtenances deemed necessary at anytime
by [Southwestern Bell], its successors and assigns.” It can hardly be said
that the addition of a single coaxial cable to the existing poles for the
purpose of transmitting television images and sound by electric impulse
increases the burden on the servient tenement beyond the scope of the
intended and authorized use.
Although this is a case of first impression in Missouri, courts in other
jurisdictions have addressed the legal effect of adding coaxial cables for
television transmission to existing electric and telephone poles erected on

724
easements without the consent of the owners of the fees. These courts have
uniformly rejected arguments identical to those made by plaintiffs herein
and have reached a conclusion similar to ours.
In Jolliff v. Hardin Cable Television Co., 269 N.E.2d 588 (Ohio 1971),
an easement granted to a power company for the transmission of electric
power, including telegraph or telephone wires, was held to be an
apportionable easement in gross by reason of the express language of the
conveyance authorizing the grantee to lease some portion of its interest to
third parties. In addressing the question of an additional burden on the
servient tenements, the court noted that the attachment of a television
coaxial cable to existing poles constituted no more of a burden than would
installation of telephone wires, a burden clearly contemplated at the time
of the grants.
In Crowley v. New York Telephone Company, 363 N.Y.S.2d 292 (Dist.
Ct. 1975) it was held that the failure to make specific mention of cable
television in a 1949 easement to locate telephone poles and wires on
plaintiff’s property could not be so narrowly interpreted as to prohibit the
addition of television cables to the telephone poles. “Just as we must
accept scientific advances, we must translate the rights of parties to an
agreement in the light of such developments.” 363 N.Y.S.2d at 294.
In Hoffman v. Capitol Cablevision System, Inc., 383 N.Y.S.2d 674
(App. Div. 1976), the court concluded that the rights granted to two
utilities were exclusive vis-à-vis the landowner, and were, therefore
apportionable by the grantees. The addition of cable and equipment to
already existing poles was held to constitute no additional burden since the
defendant was doing only what the utilities were enabled to do. The court
noted the general rule that easements in gross for commercial purposes are
particularly alienable and transferable. For these reasons, the court held the
failure to foresee and specifically refer to cable television in the grant was
of no consequence.
The reasoning of the Hoffman court has recently been found persuasive
by the California court in Salvaty v. Falcon Cable Television, 212 Cal.
Rptr. 31 (Ct. App. 1985). The court stated:

In the case at bench, the addition of cable television equipment on surplus

space on the telephone pole was within the scope of the easement. Although
the cable television industry did not exist at the time the easement was
granted, it is part of the natural evolution of communications technology.
Installation of the equipment was consistent with the primary goal of the
easement, to provide for wire transmission of power and communication. We
fail to see how the addition of cable equipment to a pre-existing utility pole
materially increased the burden on appellant’s property. 212 Cal. Rptr. at 34-

725
 35.

The unsurprising fact that the drafters of the 1922 easements did not
envision cable television does not mandate the narrow interpretation of the
purposes of the conveyance of rights and privileges urged by plaintiffs.
The expressed intention of the predecessors of plaintiff trustees was to
obtain for the homeowners in the subdivision the benefits of electric power
and telephonic communications. Scientific and technological progress over
the ensuing years have added an unforeseen dimension to such
contemplated benefits, the transmission by electric impulse of visual and
audio communication over coaxial cable. It is an inescapable conclusion
that the intention of plaintiffs’ predecessors was the acquisition and
continued maintenance of available means of bringing electrical power and
communication into the homes of the subdivision. Clearly, it is in the
public interest to use the facilities already installed for the purpose of
carrying out this intention to provide the most economically feasible and
least environmentally damaging vehicle for installing cable systems.

Notes and Questions

1. Scope. Three issues arise in determining whether the owner of an
easement is misusing it by going beyond the scope of activities
contemplated by the grantor: (a) whether the use is of a kind contemplated
by the grantor, (b) whether the use is so heavy that it constitutes an
unreasonable burden on the servient estate not contemplated by the
grantor, and (c) whether the easement can be subdivided.
2. Kinds of uses encompassed by the easement. Conflicts over use
may concern what kinds of activities are encompassed by the easement.
For example, can a general right of way initially used for road purposes be
used to place utility lines? Many courts hold that a general right of way
may be used for any reasonable purpose. Weeks v. Wolf Creek Industries,
Inc., 941 So. 2d 263, 270 (Ala. 2006); Cannata v. Berkshires Natural
Resources Council, 901 N.E.2d 1250, 1255 (Mass. App. Ct. 2009).
Where, as in Henley, the easement is for a particular purpose, the
question is whether the use is reasonably included within that purpose.
Absent clear evidence of the parties’ intent, most courts will find that the
manner of use of an easement may “change over time to take advantage of
developments in technology and to accommodate normal development of
the dominant estate or enterprise benefited by the servitude,” so long as it
does not unreasonably burden the servient estate. Restatement (Third) of
Property (Servitudes) §4.10. Thus most courts will agree with Henley that

726
an easement for electric and telephone purposes can be used for cable
transmission. More recent decisions have reached similar results with
respect to use of telephone and electricity easements for wireless telephone
equipment and fiber optic cable. See Zhang v. Omnipoint Communication
Enterprises, 866 A.2d 588 (Conn. 2005); Municipal Electric Authority of
Georgia v. Gold-Arrow Farms, Inc., 625 S.E.2d 57 (Ga. Ct. App. 2005).
The Texas Supreme Court in Marcus Cable Associates v. Krohn, 90
S.W.3d 697, 699 (Tex. 2002), however, found that an easement for “an
electric transmission or distribution line or system” did not allow the
holder to install cable television lines. Courts have also differed on
whether a utility easement acquired by prescription, which is fixed by the
prescriptive use, may be used for cable purposes. Compare Heydon v.
MediaOne, 739 N.W.2d 373 (Mich. Ct. App. 2007) (yes) with Jackson v.
City of Auburn, 971 So. 2d 696 (Ala. Civ. App. 2006) (no).
Grantors retain whatever rights they do not give away, but the question
is what rights the grantor gave away when it granted the initial easement.
Should easements be interpreted broadly or narrowly? Should the owner of
a general right of way who acquired the easement initially for road
purposes be allowed to use the road for other purposes such as phone or
electric utility lines? What result is most likely to effectuate the intent of
the parties? What result is more likely to promote the alienability of
property? Should alienability of property be the preeminent goal? If not,
what should be? Note that had the easement not been found to include
cable with Henley, Cablevision would have to negotiate with and
compensate University Park rather than the utility companies in order to
run its cable lines. Is anything wrong with that result?

CONTEXT

Rails to Trails Litigation

In the nineteenth and early twentieth centuries, railroads built tracks across the
country with rights of way from state and federal grants and eminent domain.
As rail traffic decreased after the 1960s, railroads began to shut down their
lines. To protect the federal interest in the rights of way, the Rails-to-Trails Act
authorized the rights of way to be converted into public trails. Thousands of
miles of trails have been created under the program. But many owners of the
land around the tracks have claimed that the conversion takes their interests in
the property. These cases involve several questions of interpretation. First, is
the right of way a grant of land itself or just of an easement to use the land? If
the grant creating the right of way conveyed the land itself, there is no basis for
neighboring landowners to challenge the conversion. But if it is an easement, a

727
 second question arises: has the railroad abandoned the right of way, so that it
reverts to the servient landowner? Third, if the easement is not abandoned, can
it be used as a recreational trail, or only for railroad purposes? Finally, even if a
trail is within the scope of the easement, does its use unduly burden the servient
estate? The resolution of these questions often turns on the specific language
and history of the right of way at issue. See, e.g., Marvin M. Brandt Revocable
Trust v. United States, 134 S. Ct. 1257 (2014) (right of way was easement and
was terminated by abandonment); Chevy Chase Land Co. v. United States, 733
A.2d 1055 (Md. 1999) (right of way was an easement, but it could be converted
to trail, and would not unduly burden servient estate); Lawson v. State, 730
P.3d 1308 (Wash. 1986) (easement was for railroad purposes only; conversion
to trail constituted abandonment).

3. Unreasonable additional burden. The owner of an easement may

be clearly engaged in the kind of activity contemplated by the easement
but the degree or intensity of use may still constitute an unreasonable
burden. For example, the court in Green v. Lupo, although allowing
motorcycle use over the road, stated that such use could be limited and
regulated to protect the legitimate interests of the owner of the servient
estate. Similarly, the court in Cox required the trial court to determine
whether subdivision of the dominant estate would impose an unreasonable
additional burden on the servient estate.
When the grantor’s intent is ambiguous with respect to the changed
use, courts must balance the interests of the easement owner in freedom to
develop his property against the interests of the servient estate owners in
security from having their property overly burdened in a way they should
not have had to anticipate. Compare Peterson v. Town of Oxford, 459 A.2d
100 (Conn. 1983) (use of drainage easement for subdivision so that water
from brook overflowed and eroded servient estate was unreasonable
burden), and Bassett v. Harrison, 807 A.2d 695 (Md. Ct. Spec. App. 2002)
(use of general right of way to haul sand and gravel was unreasonable
burden), and Davis v. Bruk, 411 A.2d 660 (Me. 1980) (paving a country
road would cause unreasonable burden by increasing speed and safety
issue with cars near defendant’s home), with Hayes v. Aquia Marina, Inc.,
414 S.E.2d 820 (Va. 1992) (expanding marina on dominant estate from 84
to 230 boat slips and paving road to the marina would not unreasonably
burden servient estate).
4. Divisibility. The question of divisibility of appurtenant easements
generally arises when the owner of the dominant estate subdivides the
property and attempts to transfer to new owners rights to use the easement

728
to obtain access to their property. Most courts hold that “the benefits of an
appurtenant easement move to each portion of the dominant parcel upon
its subdivision and transfer of the various pieces.” Gerald Korngold,
Private Land Use Arrangements: Easements, Real Covenants, and
Equitable Servitudes §5.05, at 213 (2d ed. 2004). The first Restatement on
Property notes:

Wallkill Valley Rail Trail. Blekky Schorr, Creative Commons License.

[D]ominant tenements are ordinarily divisible and their division is so

common that it is assumed that the possibility of their division is
contemplated in their creation. Hence, unless forbidden by the manner or
terms of its creation, the benefit of an easement appurtenant accrues upon a
subdivision of a dominant tenement to the benefit of each of the parts into
which it is subdivided.

Restatement of Property §488 cmt. c (1944). The Restatement (Third)

maintains this rule, §§4.6 & 5.9, but elsewhere suggests that using an
easement over a 20-foot dirt road initially established between two farms
for a 100-unit subdivision later built on the dominant estate would
constitute an unreasonable burden on the servient estate. §4.10, illus. 26.

729
Are these positions consistent?
5. Apportionability. With easements in gross, the question of
divisibility of the easement is referred to as the issue of apportionability.
When an easement in gross is nonexclusive — meaning the grantor, or
owner of the servient estate, has reserved for herself the right to use the
easement in conjunction with the grantee — the easement is generally held
to be nonapportionable; the grantor herself could sell further rights to
others so long as those new easements did not interfere with the use of the
existing easement by the first grantee. The courts presume that under these
circumstances, the grantor would want to retain the right to obtain the
economic benefits of any future easements. When, however, the easement
is exclusive — meaning the grantor has no right to use the easement in
conjunction with the grantee — the easement is generally held to be
apportionable. Since the grantor has no right to grant other easements, the
grantee is not interfering with any rights the grantor might have to sell or
lease use of the easement to others.
The Restatement (Third) provides instead that easements in gross can
be divided unless this is contrary to the intent of the parties who created
the easement or “unless the division unreasonably increases the burden on
the servient estate.” Id. §5.9. This appears to be consistent with the trend in
the law, which is to answer the question by reference to the intent of the
grantor. William B. Stoebuck & Dale A. Whitman, The Law of Property
§8.11, at 465 (3d ed. 2000).
6. Width of the road. The court in Cox concludes that the grantor
intended to allow the dominant estate to be subdivided but that the road
was intended to be limited to a one-car width with existing “turn-abouts.”
Is this consistent? It is unlikely to be practicable to subdivide the dominant
estate unless the easement is widened to at least two lanes. If the owner of
the dominant estate has the right to subdivide his land, and each of his
grantees will have a right to use the easement (so long as this collective
use does not constitute an unreasonable additional burden on the servient
estate), how can it be that the dominant estate owner has no right to a
wider road? If the grantor could contemplate that the dominant estate
would be subdivided, wouldn’t the grantor also be able to foresee and
contemplate the need for a wider road? How would Justice Thompson
answer this question?
7. Changing location of the easement. Can the owner of the servient
estate change the location of the easement? The traditional rule prevents
this; the owner of the servient estate must obtain the consent of the
easement holder to relocate it. Herren v. Pettengill, 538 S.E.2d 735 (Ga.

730
2000); Koeppen v. Bolich, 79 P.3d 1100 (Mont. 2003). However, some
recent cases and the Restatement (Third) of Property (Servitudes) §4.8(3)
(2000), allow the owner of the servient “reasonable changes in the location
or dimensions of an easement, at the servient owner’s expense, to permit
normal use or development of the servient estate, but only if the changes
do not (a) significantly lessen the utility of the easement, (b) increase the
burdens on the owner of the easement in its use and enjoyment, or (c)
frustrate the purpose for which the easement was created,” id. §4.8(3); see
M.P.M. Builders, LLC v. Dwyer, 809 N.E.2d 1053 (Mass. 2004). Several
courts have adopted middle positions. One court allowed the servient
estate owner to relocate the easement so long as damages were paid to the
dominant estate owner, Umphres v. J.R. Mayer Enterprises, Inc., 889
S.W.2d 86 (Mo. Ct. App. 1994), while another allowed relocation only
after finding that relocation would not harm the easement owner, Roaring
Fork Club L.P. v. St. Jude’s Co., 36 P.3d 1229 (Colo. 2001). Other courts
have rejected the Restatement (Third)’s position, calling it “a threat to the
certainty of property rights and real estate transactions, as a catalyst for
increased litigation, and as a means for purchasers of servient estates to
reap a windfall at the expense of owners of dominant estates.” AKG Real
Estate, LLC v. Kosterman, 717 N.W.2d 835, 842 (Wis. 2006); see
Cottonwood Duplexes, LLC v. Barlow, 149 Cal. Rptr. 3d 235 (Ct. App.
2012) (court could not reduce scope of easement from 60 feet to 15 feet
although size of existing easement was not necessary for its purposes and
inhibited development). What do you think?
8. Extension of the use. What if the easement holder wants to use the
easement to obtain access to the dominant estate but also to reach a
subsequently acquired lot on the other side of the dominant estate? The
rule in most jurisdictions prohibits this extension of the use absent contrary
evidence of the intent of the parties. See Christensen v. City of Pocatello,
124 P.3d 1008 (Idaho 2005); Bateman v. Board of Appeals of Georgetown,
775 N.E.2d 1276 (Mass. App. Ct. 2002). In adopting this rule, the
Restatement (Third) comments that it “reflects the likely intent of the
parties by setting an outer limit on the potential increase in use of an
easement brought about by normal development of the dominant estate,”
and “avoids otherwise difficult litigation over the question whether
increased use unreasonably increases the burden on the servient estate.”
Restatement (Third) §4.11 cmt. b. Should the rule be waived if the
easement holder can prove it will cause no additional burden? Cf. Brown v.
Voss, 715 P.2d 514 (Wash. 1986) (denying an injunction where the
defendant sought to use the easement for a single-family house on the

731
combined parcel).

Problems
1. Should the defendant owners of the dominant estate in Cox have the
right to widen the road to accommodate a subdivision of 40 homes? Would
this exceed the scope of the easement?
a. What arguments could you make for the plaintiff that the width of
the road should be set at the historical width existing at the time of the
original conveyance?
b. What arguments could you make for defendants that they have a
right to widen the road to accommodate the subdivision of the
dominant estate?
c. How should the case be adjudicated, and why?
2. Assume now that the original easement was a two-lane road so there
is no need to widen it. Would subdividing the dominant estate and building
40 homes constitute an unreasonable additional burden on the servient
estate?
a. What arguments could you make for the plaintiff that the
subdivision would exceed the scope of the original easement and
constitute an unreasonable additional burden on the servient estate?
b. What arguments could you make for defendants that the
subdivision would not constitute an unreasonable additional burden on
the servient estate?
c. How should the case be adjudicated, and why?

§2.4 Creation of Easements by Implication

The purposes of Statutes of Frauds are to protect individuals from
fraudulent claims that they made oral promises, or false claims about the
essentials of those promises. As applied to property, Statutes of Frauds
also help protect later purchasers from unexpected claims regarding their
land. When an oral promise has been made, however, the refusal to
enforce it because it was not in writing effectively allows the promisor to
perpetrate a fraud. Insisting on a writing may also violate expectations
created in other ways. Courts have therefore recognized at least four ways
in which easements may be created without being described in a writing
complying with the Statute of Frauds.
1. Easements by estoppel may be found when a landowner grants the
claimant permission to use the property, and the claimant so changes
position in reasonable reliance on the continuation of the permission, that

732
it would create substantial injustice to revoke it.
2. Easements by prescription are created through adverse and open
use of the land continuously until the expiration of the statute of
limitations for trespass. Jurisdictions vary on the kind of adversity and
exclusivity required. See Chapter 5, §3.
3. Easements implied by prior use may be found when a parcel of
land is divided or severed, and prior to severance one part of the estate
used the other part of the estate, the use was obvious or apparent, and is
reasonably necessary for enjoyment of the estate.
4. Easements by necessity may arise when an estate is severed and
upon severance one part of the estate becomes landlocked, requiring a
right of way over the other part of the severed estate to access a public
road.
What different interests are served by these diverse exceptions to the
writing requirement? Although the four forms of implied easements may
appear quite different, plaintiffs often raise more than one of these theories
to support their claims.

A. Easements by Estoppel

Lobato v. Taylor

71 P.3d 938 (Colo. 2002) (en banc)

Chief Justice MARY MULLARKEY delivered the Opinion of the Court.
The history of this property rights controversy began before
Colorado’s statehood, at a time when southern Colorado was part of
Mexico; at a time when all of the parties’ lands were part of the one
million acre Sangre de Cristo grant, an 1844 Mexican land grant. Here, we
determine access rights of the owners of farmlands in Costilla County to a
mountainous parcel of land now known as the Taylor Ranch. As
successors in title to the original settlers in the region, the landowners
exercised rights to enter and use the Taylor Ranch property for over one
hundred years until Jack Taylor fenced the land in 1960 and forcibly
excluded them. These rights, they assert, derive from Mexican law . . . and
an express or implied grant, and were impermissibly denied when the
mountain land was fenced.
In 1844, the governor of New Mexico granted two Mexican nationals a
one million-acre land grant, located mainly in present-day southern
Colorado (Sangre de Cristo grant), for the purpose of settlement. The
original grantees died during the war between the United States and
Mexico. The land was not settled in earnest until after the cessation of the

733
war, and Charles (Carlos) Beaubien then owned the grant.
In 1848, the United States and Mexico entered into the Treaty of
Guadalupe Hidalgo, ending the war between the two countries. Treaty of
Peace, Friendship, Limits, and Settlement (Treaty of Guadalupe Hidalgo),
February 2, 1848, U.S.-Mex., 9 Stat. 922. Pursuant to the treaty, Mexico
ceded land to the United States, including all of California, Nevada, and
Utah; most of New Mexico and Arizona; and a portion of Colorado. The
United States agreed to honor the existing property rights in the ceded
territory. Congress confirmed Carlos Beaubien’s claim to the Sangre de
Cristo grant in the 1860 Act of Confirmation. 12 Stat. 71 (1860).
In the early 1850s, Beaubien successfully recruited farm families to
settle the Colorado portion of the Sangre de Cristo grant. He leased a
portion of his land to the United States government to be used to establish
Fort Massachusetts and recruited farmers to settle other areas. The
settlement system he employed was common to Spain and Mexico: strips
of arable land called vara strips were allotted to families for farming, and
areas not open for cultivation were available for common use. These
common areas were used for grazing and recreation and as a source for
timber, firewood, fish, and game.
In 1863, Beaubien gave established settlers deeds to their vara strips.
That same year, Beaubien executed and recorded a Spanish language
document that purports to grant rights of access to common lands to
settlers on the Sangre de Cristo grant (Beaubien Document). In relevant
part, this document guarantees that “all the inhabitants will have
enjoyment of benefits of pastures, water, firewood and timber, always
taking care that one does not injure another.”
A year later, Beaubien died. Pursuant to a prior oral agreement, his
heirs sold his interest in the Sangre de Cristo grant to William Gilpin, who
was Colorado’s first territorial governor. The sales agreement (Gilpin
agreement) stated that Gilpin agreed to provide vara strip deeds to settlers
who had not yet received them. The agreement further stated that Gilpin
took the land on condition that certain “settlement rights before then
conceded . . . to the residents of the settlements . . . shall be confirmed by
said William Gilpin as made by him.”
In 1960, Jack Taylor, a North Carolina lumberman, purchased roughly
77,000 acres of the Sangre de Cristo grant (mountain tract) from a
successor in interest to William Gilpin. Taylor’s deed indicated that he
took the land subject to “claims of the local people by prescription or
otherwise to right to pasture, wood, and lumber and so-called settlement
rights in, to, and upon said land.”
Despite the language in Taylor’s deed, he denied the local landowners

734
access to his land and began to fence the property. The current case began
in 1981. In that year a number of local landowners filed suit in Costilla
County District Court. The landowners asserted that they had settlement
rights to the Taylor Ranch and that Taylor had impermissibly denied those
rights.
After the trial, the court made a finding of fact that the landowners or
their predecessors in title had “grazed cattle and sheep, harvested timber,
gathered firewood, fished, hunted and recreated on the land of the
defendant from the 1800s to the date the land was acquired by the
defendant, in 1960.” The trial court further found that the community
referred to Taylor Ranch as “open range,” and that prior to 1960, the
landowners “were never denied access to the land.” The court also stated
that it did “not dispute” that the settlers could not have survived without
use of the mountain area of the grant. Despite these findings, the court
determined that the landowners had [no rights in the Taylor Ranch.] The
court of appeals affirmed.
The parties, at various points in the voluminous briefing of this twenty-
one year-old litigation, agree that the rights at issue are most appropriately
characterized as profits à prendre. A profit à prendre — in modern
parlance, a profit — “is an easement that confers the right to enter and
remove timber, minerals, oil, gas, game, or other substances from land in
the possession of another.” Restatement (Third) of Property: Servitudes
§1.2(2) (1998) [hereinafter Restatement]. Thus, a profit is a type of
easement.
An easement can be in gross or appurtenant. An easement in gross
does not belong to an individual by virtue of her ownership of land, but
rather is a personal right to use another’s property. An easement
appurtenant, on the other hand, runs with the land. It is meant to benefit
the property, or an owner by virtue of her property ownership. An
easement is presumed to be appurtenant, rather than in gross.
In this case, the landowners allege that the settlement rights were to be
used in connection with their land. They argue that the firewood was used
to heat their homes, the timber to frame their adobe houses, and the
grazing necessary to the viability of their farms. The landowners also
assert that the settlement rights were granted to their predecessors in title
by virtue of their interest in their vara strips and were in fact a necessary
incentive for settlement in the area.
We conclude that the rights the landowners are claiming are best
characterized as easements appurtenant to the land. We reach this
conclusion from the evidence that under Mexican custom access to
common land was given to surrounding landowners, the evidence that this

735
access was used to benefit the use of the land, and the presumption in
favor of appurtenant easements.

B. Sources of the Rights

The landowners argue that their settlement rights stem from three
sources: Mexican law, prescription, and an express or implied grant from
Beaubien.
Regarding the Mexican law claim, the landowners claim that
community rights to common lands not only are recognized by Mexican
law, but also are integral to the settlement of an area. The landowners
further point out that in the Treaty of Guadalupe Hidalgo, the United
States government agreed that the land rights of the residents of the ceded
territories would be “inviolably respected.”
[T]he landowners cannot claim rights under Mexican law. Their
predecessors in title did not settle on the Sangre de Cristo grant until after
the land was ceded to the United States and thus their use rights developed
under United States law. Mexican land use and property law are highly
relevant in this case in ascertaining the intentions of the parties involved,
see infra. However, because the settlement of the grant occurred after the
land was ceded to the United States, we conclude that Mexican law cannot
be a source of the landowners’ claims.
As evidence of a grant of rights from Carlos Beaubien, the landowners
rely primarily on the Beaubien Document. The document was written by
Beaubien in 1863, one year before his death.
One English translation of the document reads, in part:
Plaza of San Luis de la Culebra, May 11, 1863.

It has been decided that the lands of the Rito Seco remain uncultivated for
the benefit of the community members (gente) of the plazas of San Luis, San
Pablo and Los Ballejos and for the other inhabitants of these plazas. The
vega, after the measurement of three acres from it in front of the chapel, to
which they have been donated, will remain for the benefit of the inhabitants
of this plaza and those of the Culebra as far as above the plaza of Los
Ballejos. . . . Those below the road as far as the narrows will have the right to
enjoy the same benefit. . . . [No one may] place any obstacle or obstruction
to anyone in the enjoyment of his legitimate rights. . . . Likewise, each one
should take scrupulous care in the use of water without causing damage with
it to his neighbors nor to anyone. According to the corresponding rule, all the
inhabitants will have enjoyment of benefits of pastures, water, firewood and
timber, always taking care that one does not injure another.

(Emphases added.)

736
 We agree that the Beaubien Document does not meet the formal
requirements for an express grant of rights. However, we find that the
document, when taken together with the other unique facts of this case,
establishes a prescriptive easement, an easement by estoppel, and an
easement from prior use.
A court can imply an easement created by estoppel when 1) the owner
of the servient estate “permitted another to use that land under
circumstances in which it was reasonable to foresee that the user would
substantially change position believing that the permission would not be
revoked,” 2) the user substantially changed position in reasonable reliance
on that belief, and 3) injustice can be avoided only by establishment of a
servitude. Whether reliance is justified depends upon the nature of the
transaction, including the sophistication of the parties.
An easement implied from prior use is created when 1) the servient and
dominant estates were once under common ownership, 2) the rights
alleged were exercised prior to the severance of the estate, 3) the use was
not merely temporary, 4) the continuation of this use was reasonably
necessary to the enjoyment of the parcel, and 5) a contrary intention is
neither expressed nor implied. The rationale for this servitude is as
follows:

The rule stated in this section is not based solely on the presumed actual
intent of the parties. It furthers the policy of protecting reasonable
expectations, as well as actual intent, of parties to land transactions.
Restatement, supra, §2.12 cmt. a.

[T]he court of appeals in this case rejected the land-owners’ claims of

an implied easement [finding] that, although easements in the form of
access rights could be implied, easements in the form of profits could not.
Although this court has not addressed implied profits for over thirty-five
years, there is a modern trend to apply the same rules to easements of
access and to profits.
The Restatement explains that, although some profits such as mineral
and water rights have specific rules, generally as between easements in the
form of access rights and easements in the form of profits, “there are no
doctrinal differences between them.” Restatement, supra, §1.2 reporter’s
note. Easements and profits are treated equally because the same public
policy and practical considerations that underlie implied rights of access
also underlie implied profits. A recognition that parties do not always
comply with strict rules of express conveyance, a desire to effectuate the
intent of the parties, and the aim of fairness apply equally to easements and

737
profits.

i. Prescriptive Easement
Because Taylor’s deed indicates that Taylor’s ownership of the land is
subject to the landowners’ prescriptive rights, we begin with an application
of the law of prescriptive easements. [The court found that the plaintiffs
had established a prescriptive easement under the theory that a continuous
use under an intended but ineffective grant is adverse. Easements by
prescription are discussed more fully in Chapter 5, §3.]

ii. Easement by Estoppel

The landowners have . . . established every element of an easement by
estoppel. First, Taylor’s predecessors in title “permitted [the settlers] to use
[the] land under circumstances in which it was reasonable to foresee that
the [settlers] would substantially change position believing that the
permission would not be revoked.” Restatement, supra, §2.10. The
settlers’ reliance was reasonable because rights were expected, intended,
and necessary. It was expected because of the Mexican settlement system
discussed above. Also discussed above, this settlement system, combined
with the actual practices and the deeds associated with the Taylor Ranch,
show that rights were intended.
The rights were also necessary. The plaintiffs’ expert, Dr. Marianne
Stoller, testified that access to wood was necessary to heat homes, access
to timber was necessary to build homes, and access to grazing was
necessary for maintaining livestock.
The second element, that the user substantially change position in
reasonable reliance on the belief, is easily found. The landowners’
predecessors in title settled Beaubien’s grant for him. They moved onto the
land and established permanent farms.
The third element, the avoidance of injustice, is also undeniably
present. The original Sangre de Cristo grant was given on the condition
that it be settled. Indeed, under Mexican law, the grant would have been
revoked if settlement did not succeed. The settlers, then, fulfilled the
condition of the grant that made Beaubien fee owner of one million acres
of land.
Beaubien attracted settlers to the area by convincing them that he
would provide them with the rights they needed for survival. Beaubien
knew that families would rely on his promises and leave their homes to
travel hundreds of miles on foot or horseback to establish new homes.
A condition of the conveyance of Beaubien’s land, from Gilpin down

738
to Taylor, was that the owner honor these rights. Although these promised
rights were exercised for over one hundred years, although these rights
were necessary to the settlers’ very existence, and although Taylor had
ample notice of these rights, Taylor fenced his land over forty years ago. It
is an understatement to say that this is an injustice.
The landowners have established each element of an easement by
estoppel.

iii. Easement from Prior Use

Lastly, every element of an easement from prior use has been shown.
First, both Taylor’s and the landowners’ lands were originally under the
common ownership of Beaubien who owned the entire Sangre de Cristo
grant before settlement.
Second, the rights were exercised prior to the severance of the estate.
As discussed above, many of the rights the landowners claim were needed
and expected for life in the San Luis Valley. This necessity existed from
the first days of settlement — indicating that these rights were exercised
prior to severance of title.
The third and fourth prongs — that the use was not merely temporary
and is reasonably necessary to the enjoyment of the land — are also easily
established. The trial court’s findings of fact establish that the rights were
exercised from the time of settlement until Taylor came on the scene.
Moreover, as discussed above, the rights were reasonably necessary.
Lastly, no contrary intention is expressed or implied; thus, the fifth
element is present. Custom, expectation, practice, and language in the
documents and deeds surrounding the Taylor ranch property indicate not
only that a contrary intention did not exist, but that the parties
affirmatively intended for these rights to exist.
All five elements of an easement from prior use have been established.

C. Extent of the Rights

Having found that the landowners have implied profits in the Taylor
Ranch, we now must address the scope of those rights. We imply the rights
memorialized in the Beaubien Document. Accordingly, we hold that the
landowners have implied rights in Taylor’s land for the access detailed in
the Beaubien Document — pasture, firewood, and timber. These
easements should be limited to reasonable use — the grazing access is
limited to a reasonable number of livestock given the size of the vara
strips; the firewood limited to that needed for each residence; and the
timber limited to that needed to construct and maintain residence and farm

739
buildings located on the vara strips. We reject the landowners’ claims for
hunting, fishing, and recreation.

Justice ALEX MARTINEZ, dissenting only as to part II.C.

[T]his case involves the settlement rights of people who have been
largely dispossessed of their rights in land when Taylor fenced the
property. There is little dispute that the settlers enjoyed extensive rights in
the lands that comprise the Taylor Ranch for about one hundred years.
Rather, the dispute concerns the extent of the rights, if any, that survive
when we construe settlement rights conceived in a different era pursuant to
contemporary standards. In short, the difficulty of this case is that we must
address the grave injustices imposed upon the settlers’ successors in
interest by interpreting documents from a different era, intended to reflect
Beaubien’s intent, through the perspective of modern property law.
Nonetheless, equitable principles in our modern jurisprudence, properly
construed and applied, permit us to recognize the rights of the settlers and
their successors in interest.
I would apply the reasoning of the majority opinion . . . to conclude
that the landowners have also established access rights for fishing, hunting,
and recreation.
The trial court made strong findings that “[t]he plaintiffs’ predecessors
in title grazed cattle and sheep, harvested timber, gathered firewood,
fished, hunted and recreated on the land of the defendant from the 1800s to
the date the land was acquired by the defendant, in 1960.” The trial court
also found that, prior to 1960 when Taylor fenced the land, the landowners
referred to that land as “open range” and that the landowners were “never
denied access to the land for grazing of cattle, sheep, harvesting timber,
gathering firewood, fishing, hunting, or recreating.” My review of the
record reveals that the trial court’s findings of fact that fishing, hunting,
and recreation were included in the settlement rights contemplated by the
Beaubien document are correct.

Justice REBECCA LOVE KOURLIS, dissenting.

Although I have great sympathy for the historic and present plight of
the landowners in this action, I cannot support the majority opinion for two
reasons. First, it is my view that in 1863 Charles Beaubien attempted to
make a community grant for the benefit of the inhabitants of the plazas of
San Luis, San Pablo, and Los Ballejos. The law in effect at the time did not
recognize such a grant and instead required individual identification of
grantees. Hence, the Beaubien Document had no legal effect.
There were two types of grants of land from the government [of

740
Mexico]: private grants to individuals who would own the land and who
could sell it after they met a requirement of establishing possession of the
land; and community grants.6
In 1863, the year Charles Beaubien executed the Beaubien Document,
under Colorado Territorial law, a document conveying any interest in real
estate had to meet several formal requirements, including the requirements
that it incorporate an accurate description of the property and the names of
the grantees:

[T]he christian and surnames of the . . . grantees . . . and . . . an accurate

description of the premises, or the interest in the premises intended to be
conveyed, and shall be subscribed by the party or parties making the same,
and be duly proved or acknowledged, before some officer authorized to take
the proof or acknowledgment of deeds, or by his, her or their attorney in fact.

Territorial Laws of Colo., 1st Sess., An Act Concerning Conveyances of

Real Estate, 64, 64, §2 (1861). The requirement that the document identify
grantees by name is indicative of the territorial legislature’s overt decision
not to honor community grants that failed to mention specific grantees.
The Beaubien Document flatly fails to meet that requirement. The
Beaubien Document does not give the christian and surnames of the
grantees, instead only referring generally to the “community members”
and “inhabitants” of specified villages.
[T]he Beaubien Document, like every other real property transfer, must
be held to the standards of the law in effect at the time it was executed in
order to protect the certainty and marketability of property interests. The
Document does not comport with those laws, and it, therefore, has no
validity as to the landowners here.
The Document intended to create a grant to the members of a
community: such a grant was in contravention of the applicable statutes
and was, therefore, invalid.
I would also decline to apply principles of easement by estoppel,
because there is no showing here of misrepresentation or concealment of
material facts by Beaubien or any of his successors in interest. . . . There
has been no showing in this case that Beaubien or Gilpin either
misrepresented material facts or intended the landowners to rely to their
detriment upon a parol agreement. Indeed, to my knowledge, the only
context in which such a doctrine has been applied to the acquisition of
easements has involved ditches and ditch rights, an area in which rights are
so firmly entrenched as to be included within the Colorado Constitution.

741
 Notes and Questions
1. Background and aftermath. Lobato v. Taylor illustrates the power
of running with the land. Here, rights allegedly acquired in the 1800s are
found to pass down through several owners of the servient estate, the
Mountain Tract and generations of owners of the dominant estate, the
Costilla County residents, to still exist in 2002. The immediate conflict
leading to Lobato v. Taylor began in 1960, when a North Carolina
lumberman, Jack Taylor, purchased the 77,000-acre Mountain Tract for
what he considered the bargain price of $500,000. Although the sellers
warned him of the practices of the Costilla County residents, he enclosed it
in barbed wire, hired guards to patrol the area, and confiscated rifles and
other equipment from those he found on the land. Taylor also immediately
filed a lawsuit seeking a judicial declaration that he had title to the land
free from any other claims. Relying on diversity jurisdiction, he filed the
action in federal district court some 200 miles away from the county. The
federal court found for Taylor, holding that any rights that the county
residents might have had under Mexican law were extinguished. Sanchez
v. Taylor, 377 F.2d 733 (10th Cir. 1967).

ELEMENTS OF EASEMENTS BY ESTOPPEL

1. Permission from the owner to use the land;

2. foreseeable and reasonable reliance on continuation of the permission;
3. changed position by the claimant (usually through significant expenditures) in
reliance on continuation; and
4. finding an easement is necessary to prevent injustice.

The dispute continued, fueled in part by resentment of Taylor’s

“attitude,” evidenced by television interviews in which Taylor dismissed
the Latino county residents’ opposition as the result of “an inferiority
complex. They know they’re not equal, mentally or physically to a white
man, and that’s why they stick together so.” Calvin Trillin, U.S. Journal,
Costilla County: A Little Cloud on the Title, The New Yorker 122, 128,
Apr. 26, 1976. The federal judgment would usually have barred the later
state action, but the Colorado Supreme Court found that Taylor failed to
provide the Costilla residents with adequate notice, as he had served them
only by publication of the federal action. Lobato v. Taylor, 70 P.3d 1152

742
(Colo. 2003). After remand, the Colorado Supreme Court held that the
easement rights belonged to any resident who could trace title to the land
of the original settlers under Beaubien.
2. Communal land grants. Although the majority holds that the
Beaubien Grant was not legally effective in itself, it relies on the grant in
finding that the plaintiffs had easements by estoppel. Justice Kourlis
argues in dissent that the grant did not simply fail to comply with
formalities; instead, it attempted to create a communal property right,
something recognized under Mexican law but deliberately prohibited by
the new Colorado Territory. Why might Colorado have forbidden the
communal land grant system? If Justice Kourlis was correct that the
territory did forbid communal land grants, what effect should that have on
the recognition of informally created easements today?
3. Easements by estoppel. Easements by estoppel may be found in
three different kinds of circumstances. Some courts may apply the doctrine
to only some of these circumstances; some may even reject the doctrine
entirely, rigidly enforcing the Statute of Frauds in this context. See Kitchen
v. Kitchen, 641 N.W.2d 245 (Mich. 2002).
a. Noncompliance with the Statute of Frauds. In the first
circumstance, the parties intended to create an easement but failed to
comply with the requisite formalities, such as a writing, seal, or
adequate description of the property. If the claimant substantially
invested in reasonable reliance on the agreement, courts may find an
easement by estoppel. Restatement (Third) §2.09; see, e.g., Kluger v.
Kubick, 954 A.2d 262 (Conn. App. Ct. 2008) (plaintiff and defendant
walked property line and agreed on location of new driveway before
defendant built driveway running over plaintiff’s property). This is
consistent with the general equitable exception to the Statute of Frauds.
In the absence of a writing, however, it is often difficult to determine
whether the parties intended to create a permanent easement or a
temporary license, so cases often turn on one of the other grounds for
estoppel.
b. Reasonable reliance on continuation of consent. Courts also
sometimes find estoppel even in the absence of proof of the grantor’s
intent to create an easement when “the owner or occupier permitted
another to use that land under circumstances in which it was reasonable
to foresee that the user would substantially change position believing
that the permission would not be revoked, and the user did
substantially change position in reasonable reliance on that belief.”
Restatement (Third) §2.10(1). The permission may either be express or

743
implicit from acquiescence in the continued use.
In Holbrook v. Taylor, 532 S.W.2d 763 (Ky. 1976), for example, the
alleged easement, an old mine road, was the only existing road to the
appellees’ property. The appellees re-graded the road, transported
construction materials along it, and built their home in reliance on
permission to use the road. Although there was no proof of express
consent by the owner of the servient estate, the court found that an
irrevocable easement by estoppel had been created. Id.; see also
Cleaver v. Kundiff, 203 S.W.3d 373 (Tex. App. 2006) (finding “the
jury could reasonably infer that the Armstrongs would not have built
their house without some reliable means of access and would not have
expended time and money maintaining a road over which they had no
claim”). In contrast, the Maine Supreme Court found that a claimant
simply had a temporary license to allow transportation of construction
materials, even though the claimant paid to pave the turnaround, and
building a driveway to the public road over the claimant’s own
property would be very difficult. Woods v. Libby, 635 A.2d 960 (Me.
1993).
c. Fraud or misrepresentation. Some courts will only find an
easement by estoppel when there has been fraud or misrepresentation
about the existence of or intent to grant an easement. See Flaig v.
Gramm, 983 P.2d 396 (Mont. 1999) (no easement by estoppel where
parties jointly invested in building and maintaining well based upon
mistaken belief that it was on their common boundary); Jones v.
Stamper, 297 S.W.3d 73, 77 (Ky. Ct. App. 2009) (no easement by
estoppel after landowner’s death although neighbors paid landowner
$500 for agreement that they could access the highway over his land
and then paid to construct a road over the land). This was the position
Justice Kourlis advocated in dissent in Lobato v. Taylor. Even in
jurisdictions where fraud is not a necessary element of the claim, fraud
plus investment in reliance on the fraud is an alternate ground for
finding an easement by estoppel. See Restatement (Third) §2.10(2).
Other courts find that letting an individual substantially invest in
reliance on a reasonable belief that the permission to enter the land will
be permanent is itself a kind of fraud. In Stoner v. Zucker, 83 P. 808
(Cal. 1906), for example, plaintiff granted defendant a revocable
license to enter plaintiff’s property to construct a ditch for carrying
water. Defendant constructed the ditch at the expense of $7,000 (about
$180,000 in today’s dollars). The court found that “it would
countenance a fraud to allow the plaintiff to revoke permission to use
the ditch.” Id. at 809-810. In contrast, Harber v. Jensen, 97 P.3d 57

744
 (Wyo. 2004), held that expenditures in reliance on unwritten
permission extending over 70 years was not evidence of fraud where
the owners (the children of the original licensees) did not seek express
permission and the defendants did not know that the expenditures were
being made. Can you distinguish these cases?
4. Constructive trust. Rights to use land titled in another may also be
created through a constructive trust. An express trust is an arrangement in
which one person or entity, the trustee, has title to some property for the
express benefit of another, the beneficiary. A constructive trust, in
contrast, is an equitable exception to the Statute of Frauds. It may be found
when “legal title to property has been obtained through actual fraud,
misrepresentations, concealments, taking advantage of one’s necessities, or
under circumstances otherwise rendering it unconscionable for the holder
of legal title to retain beneficial interest in property.” Snider v. Arnold, 289
P.3d 43 (Idaho 2012) (finding constructive trust on cabin permitted in
brother’s name in favor of sister); Goggin v. Goggin, 267 P.3d 885, 892
(Utah 2011) (imposing constructive trust on horse farm titled in ex-
husband’s name that ex-wife had helped to develop under understanding of
partnership). In Rase v. Castle Mountain Ranch, Inc., 631 P.2d 680 (Mont.
1981), for example, the court imposed a constructive trust in favor of
individuals who had built cabins and summer cottages and used them for
over 50 years with the written license from the ranch owner, who wanted
company and extra security but did not want to sell title to the land
because of concerns about water rights. When the ranch was sold, the
purchaser asked the rancher to terminate the licenses, and he refused. The
new owner then immediately notified the cabin owners that their licenses
were terminated. The court found that the new owner, given its knowledge
of the semi-permanent nature of the cabin owner’s license, engaged in
fraud in buying the land then terminating the cabin owner’s rights. It
imposed a constructive trust on the land in favor of the cabin owners, but
only for 15 years after the sale.

Problem
In 1860, Peter Feeley purchased a family burial plot in Mount Auburn
Cemetery in Cambridge, Massachusetts. Under existing law, the purchase
of a burial plot in a cemetery owned by another was an easement for burial
of one’s dead. The purchase agreement was not impressed with a seal,
which was necessary to create a formal easement under the Statute of
Frauds at the time. Peter Feeley buried a child in the plot in 1860, and his
wife there in 1898. After Mr. Feeley’s death in 1904, the superintendent of

745
the cemetery opened Mrs. Feeley’s grave to ascertain who was in there,
and then, finding that the grave was not deep enough to bury Mr. Feeley as
well, “flattened down” Mrs. Feeley’s casket and bones to make room. The
Feeleys’ surviving children learned about this after they found a plate that
the superintendent had removed from their mother’s grave and left lying
on the ground. They brought a trespass action against the superintendent of
the cemetery. Because licenses cannot give rise to an action for trespass
and cannot usually be inherited, to succeed they had to show that Mr.
Feeley had a burial easement in the plot. What exceptions to the Statute of
Frauds for easements could they assert? Should they succeed? (Facts, but
not solution, taken from Feeley v. Andrews, 77 N.E. 766 (Mass. 1906).)

B. Easements Implied from Prior Use

Granite Properties Limited Partnership v. Manns

512 N.E.2d 1230 (Ill. 1987)

Map: Area between Rou des Chateaux

& S. Prairie Street & E. Bethalto
Drive, Bethalto, Illinois

Justice HOWARD C. RYAN delivered the opinion of the court:

The plaintiff, Granite Properties Limited Partnership, brought this suit
in the circuit court of Madison County, seeking to permanently enjoin the
defendants, Larry and Ann Manns, from interfering with the plaintiff’s use
and enjoyment of two claimed easements over driveways which exist on
the defendants’ property. One driveway provides ingress to and egress
from an apartment complex and the other to a shopping center. Both the
apartment complex and the shopping center are situated on the plaintiff’s
property.

746
 As indicated [in the map above] the parcels which are the subject of
this appeal are adjoining tracts located to the south of Bethalto Drive and
to the north of Rou des Chateaux Street in Bethalto, Illinois. The plaintiff
and its predecessors in title owned all of the subject properties from 1963
or 1964 until 1982, at which time the parcel labeled “B” was conveyed by
warranty deed to the defendants. The plaintiff currently owns the parcels
labeled “A” and “E,” which are on the opposite sides of parcel B. The
shopping center situated on the parcel designated “A” extends from lot line
to lot line across the east-west dimension of that property. To the north of
the shopping center is an asphalt parking lot with approximately 191 feet
of frontage on Bethalto Drive. To the east of the shopping center on the
parcel labeled “D” is a separately owned health club. To the south of
parcel A on the parcel denominated “C” are five four-family apartment
buildings. The distance between the back of the shopping center and the
property line of parcel C is 50 feet. The shopping center’s underground
utility facilities are located in this area. An apartment complex, known as
the Chateau des Fleurs Apartments, is located on the parcel labeled “E.”
Both of the plaintiff’s properties were developed prior to the time parcel B
was sold to the defendants. Parcel B remains undeveloped.
The first claimed easement provides access to the rear of the shopping

747
center which is located on parcel A. The center, which was built in 1967,
contains several businesses, including a grocery store, a pharmacy, and
doctors’ offices. The rear of the center is used for deliveries, trash storage
and removal, and utilities repair. To gain access to the rear of the shopping
center for these purposes, trucks use a gravel driveway which runs along
the lot line between parcel A and parcel B. A second driveway, located to
the east of the shopping center on parcel D, enables the trucks to circle the
shopping center without having to turn around in the limited space behind
the stores.
Robert Mehann, the owner of the Save-A-Lot grocery store located in
the shopping center, testified on direct examination that groceries, which
are delivered to the rear of the store, are loaded by forklift on a concrete
pad poured for that purpose. Mehann indicated that there are large, double
steel doors in the back of the store to accommodate items which will not fit
through the front door. Mehann testified that semitrailer trucks make
deliveries to the rear of the grocery store four days a week, with as many
as two or three such trucks arriving daily. An average of 10 to 12 trucks a
day, including semitrailer trucks, make deliveries to the grocery store.
Mehann further explained on direct examination that because the area
behind the Save-A-Lot building extends only 50 feet to the rear property
line, it would be difficult, if not impossible, for a semitrailer truck to turn
around in the back and exit the same way it came in. In response to a
question as to whether it would be feasible to have trucks make front-door
deliveries, Mehann suggested that such deliveries would be very
disruptive; pallets that would not fit through the front door would have to
be broken down into parts, requiring extra work, and there would not be
adequate space in the front of the store to do such work during business
hours. Mehann admitted on cross-examination that he had not investigated
the cost of installing a front door which would be big enough for pallets of
groceries to be brought in by forklift. Further cross-examination revealed
that there would not be enough space to manipulate the forklift around the
front of the store, although it could be run between the shelves of food to
the back of the store.
Also called as a witness for Granite Properties Limited Partnership was
Darrell Layman, a limited partner. Layman noted that the shopping center
had been in continuous operation since 1967 and that the pattern for
deliveries had always been to the rear of the individual stores. When asked
whether he had “ever seen a semi back up in the rear of the shopping
center and go out the way it came in,” Layman responded, “That would be
impossible.” On cross-examination, however, Layman admitted that,
although it was very difficult, he had seen semitrailer trucks exit the same

748
way they came in. Layman also acknowledged on cross-examination that
he had not investigated the cost of expanding the size of the front doors of
the building. He also claimed that it “would seem impossible” to him to
put in any kind of a hallway or passageway which would allow equipment
to bring supplies into the stores from the front. On redirect examination,
Layman explained that the delivery trucks follow no set schedule and,
therefore, their presence may overlap at times. He stated that he had seen
as many as four or five delivery trucks backed up. Layman opined that
there was “no way” the trucks could back up and turn around when there
were multiple trucks present.
The other claimed easement concerns ingress and egress over a
driveway which leads into the parking area of the apartment complex
situated on parcel E. The complex, which was erected in the 1960s prior to
the conveyance of parcel B to the defendants, consists of three buildings
containing 36 units. The parking lot, which is situated to the rear of the
buildings, provides 72 parking spaces. The only access to the parking lot is
by a driveway from Rou des Chateaux, a public street located to the south
of the properties. The driveway, which cuts across a small panhandle on
the southwestern corner of parcel B, has been in existence since the
apartment complex was constructed. The terrain around the apartment
complex is flat, including the area in front of the buildings along Prairie
Street to the west.
Limited partner Darrell Layman testified at trial that if the area in front
of the apartment complex, measuring 300 feet along Prairie Street and 30
feet deep, were to be converted into a parking lot, then there would be
room for only 30 parking spaces. He admitted on direct examination that
he had not investigated the cost of rocking or asphalting this area for that
purpose. Although there was a distance of 20 feet between the apartment
buildings, Layman opined that it would not be enough “usable space” to
accommodate a driveway from Prairie Street to the existing parking lot
because such driveway would interfere with stairways which lead to the
basement apartments. Although he admitted that he did not investigate the
cost of installing a driveway either between the buildings or adjacent to the
end building on the north, Layman concluded that, based on his experience
in the layout and design of apartment buildings, “it would be a dangerous
situation” for the tenants of the apartments if a driveway were to be run
between the buildings or next to their sides. Layman concluded his
testimony by claiming that the plaintiff was unaware of any easement
problems as to the driveways in question at the time parcel B was deeded
to the defendants; otherwise, he asserted, “it would not have been deeded.”
The defendant, Larry Manns, stated that he purchased parcel B from

749
the plaintiff in the summer of 1982. Shortly afterwards, he had a survey
made of the property. The survey indicated possible encroachments by the
plaintiff as to the driveways in question. Finding no recorded easements
following a title search, Manns stated that he notified the plaintiff to
discontinue its use of the driveways. On cross-examination, Manns
admitted that he saw the two driveways before he bought the subject
property.
The plaintiff contends in this court that it acquired, by implied
reservation, easements over the driveways which provide access to the rear
of the shopping center located on parcel A and to the parking lot of the
apartment complex situated on parcel E. Plaintiff alleges that parcels A, B
and E were held in common ownership by the plaintiff and its predecessors
in title until 1982, at which time the defendants received a warranty deed
to parcel B, that the driveways in question were apparent and obvious,
permanent, and subject to continuous, uninterrupted, and actual use by the
plaintiff and its predecessors in title until the time of severance of unity of
ownership, and that the driveways are highly convenient and reasonably
necessary for the beneficial use and enjoyment of the shopping center and
the apartment complex. Therefore, the plaintiff maintains that, upon
severance of unity of title, the defendants took parcel B subject to the
servitudes then existing, as the parties are presumed to convey with
reference to the existing conditions of the property.
On the merits, the crucial issue is whether, in conveying that portion of
its property now owned by the defendants (parcel B), the plaintiff retained
easements by implication over the driveways in question.
There are two types of implied easements — the easement by necessity
and the easement implied from a preexisting use. The easement by
necessity usually arises when an owner of land conveys to another an inner
portion thereof, which is entirely surrounded by lands owned either by the
grantor or the grantor plus strangers. Unless a contrary intent is
manifested, the grantee is found to have a right-of-way across the retained
land of the grantor for ingress to, and egress from, the landlocked parcel.
Similarly, an easement is implied by way of necessity in the deed when the
owner of lands retains the inner portion, conveying to another the balance.
The easement implied from a prior existing use, often characterized as
a “quasi-easement,” arises when an owner of an entire tract of land or of
two or more adjoining parcels, after employing a part thereof so that one
part of the tract or one parcel derives from another a benefit or advantage
of an apparent, continuous, and permanent nature, conveys or transfers
part of the property without mention being made of these incidental uses.
In the absence of an expressed agreement to the contrary, the conveyance

750
or transfer imparts a grant of property with all the benefits and burdens
which existed at the time of the conveyance of the transfer, even though
such grant is not reserved or specified in the deed. This court has stated on
numerous occasions that an easement implied from a preexisting use is
established by proof of three elements: first, common ownership of the
claimed dominant and servient parcels and a subsequent conveyance or
transfer separating that ownership; second, before the conveyance or
transfer severing the unity of title, the common owner used part of the
united parcel for the benefit of another part, and this use was apparent and
obvious, continuous, and permanent; and third, the claimed easement is
necessary and beneficial to the enjoyment of the parcel conveyed or
retained by the grantor or transferor.
As the above discussion indicates, easements created by implication
arise as an inference of the intention of the parties to a conveyance of land.
This inference, which is drawn from the circumstances surrounding the
conveyance alone, represents an attempt to ascribe an intention to parties
who had not thought or had not bothered to put the intention into words, or
to parties who actually had formed no intention conscious to themselves.
To fill these common gaps resulting in incomplete thought, courts find
particular facts suggestive of intent on the part of the parties to a
conveyance. In the case of an easement implied from a preexisting use,
proof of the prior use is evidence that the parties probably intended an
easement, on the presumption that the grantor and the grantee would have
intended to continue an important or necessary use of the land known to
them that was apparently continuous and permanent in its nature. Where
an easement by necessity is claimed, however, there is no requirement of
proof of a known existing use from which to draw the inference of
intention. This leaves proof of necessity alone to furnish the probable
inference of intention, on the presumption that the grantor and the grantee
do not intend to render the land unfit for occupancy.
This essentially is the position taken by the Restatement of Property
§474 (1944). The Restatement operates on the basis of eight “important
circumstances” from which the inference of intention [to create or reserve
an easement] may be drawn: whether the claimant is the conveyor or the
conveyee; the terms of the conveyance; the consideration given for it;
whether the claim is made against a simultaneous conveyee; the extent of
necessity of the easement to the claimant; whether reciprocal benefits
result to the conveyor and the conveyee; the manner in which the land was
used prior to its conveyance; and the extent to which the manner of prior
use was or might have been known to the parties. Restatement of Property
§476 (1944). These eight factors vary in their importance and relevance

751
according to whether the claimed easement originates out of necessity or
for another reason.
In applying the Restatement’s eight important circumstances to the
present case, the fact that the driveways in question had been used by the
plaintiff or its predecessors in title since the 1960s, when the respective
properties were developed, that the driveways were permanent in
character, being either rock or gravel covered, and that the defendants
were aware of the driveways’ prior uses before they purchased parcel B
would tend to support an inference that the parties intended easements
upon severance of the parcels in question. Although the prior uses which
the plaintiff seeks to continue existed during the common ownership of the
parcels in question, under circumstances where the defendants were fully
informed by physical appearance of their existence, the defendants,
nevertheless, argue that there are two factors which overwhelmingly
detract from the implication of an easement: that the claimant is the
conveyor and that the claimed easement can hardly be described as
“necessary” to the beneficial use of the plaintiff’s properties. Relying on
the principle that a grantor should not be permitted to derogate from his
own grant, the defendants urge this court to refuse to imply an easement in
favor of a grantor unless the claimed easement is absolutely necessary to
the beneficial use and enjoyment of the land retained by the grantor. The
defendants further urge this court not to cast an unreasonable burden over
their land through imposition of easements by implication where, as here,
available alternatives affording reasonable means of ingress to and egress
from the shopping center and the apartment complex allegedly exist.
While the degree of necessity required to reserve an easement by
implication in favor of the conveyor is greater than that required in the
case of the conveyee, even in the case of the conveyor, the implication
from necessity will be aided by a previous use made apparent by the
physical adaptation of the premises to it. Moreover, the necessity
requirement will have a different meaning and significance in the case
involving proof of prior use than it will in a case in which necessity alone
supports the implication; otherwise, proof of prior use would be
unnecessary. Thus, when circumstances such as an apparent prior use of
the land support the inference of the parties’ intention, the required extent
of the claimed easement’s necessity will be less than when necessity is the
only circumstance from which the inference of intention will be drawn.
While some showing of necessity for the continuance of the use must be
shown where a prior use has been made, to the extent that the prior use
strengthens the implication, the degree or extent of necessity requisite for
implication is reduced. As one treatise concludes:

752
 If a previous use is continuous and apparent, an easement may be created by
implication even though the need for the use to be made is not sufficiently
great to meet the test of necessity as applied in the absence of such a
previous use. Hence, the test is phrased in terms of reasonable necessity
rather than in terms of unqualified necessity. A use is necessary, it is often
said, when without it no effective use could be made of the land to be
benefited by it. Where, because of a continuous and apparent previous use,
the test of necessity becomes that of reasonable necessity, it is said that a use
is reasonably necessary when it is reasonably convenient to the use of the
land benefited. In fact, however, reasonable necessity too is a flexible test.
The more pronounced a continuous and apparent use is, the less the degree
of convenience of use necessary to the creation of an easement by
implication. (Emphasis added.) 2 American Law of Property §8.43 (A.J.
Casner ed. 1952).

Professor Powell . . . suggests that in a case with proof of prior use, the
word “necessity” should be replaced by the phrase “important to the
enjoyment of the conveyed quasi-dominant [or quasi-servient] parcel.” 3
R. Powell, The Law of Real Property §411[2] (P. Rohan ed. 1987).
[T]he authorities agree that the degree or extent of necessity required
to create an easement by implication differs in both meaning and
significance depending on the existence of proof of prior use. Hence, given
the strong evidence of the plaintiff’s prior use of the driveways in question
and the defendants’ knowledge thereof, we must agree with the appellate
court majority that the evidence in this case was sufficient to fulfill the
elastic necessity requirement.
For the above reasons, the judgment of the appellate court is affirmed.

Notes and Questions

1. Easements implied from prior use, also called quasi-easements or
easements by implication, permit a use to continue after severance of one
parcel into two if the prior use was apparent before severance, and
reasonably necessary or convenient for the enjoyment of the severed
estate. NAMN, LLC v. Morello, 867 N.W.2d 545 (Neb. 2015); see
Restatement (Third) §2.12. The Restatement (Third) also provides that a
use for underground utility or sewer lines may qualify for an easement by
implication even when it is not visible to the parties. Id.; see Villancourt v.
Motta, 986 A.2d 985 (R.I. 2009) (finding easement by implication for
sewer lines under neighboring condominium). The general test is whether
the parties had reason to expect that the use would continue despite
severance of the parcel. In Lobato v. Taylor, the court finds an easement
implied by prior use because the use for timber and grazing was necessary

753
to support oneself on the land, so that when Carlos Beaubien divided the
land into vara strips, Beaubien would already have been relying on the
land for these purposes, and the settlers had reason to expect that the use
would not terminate. As the attorney for Taylor, how could you challenge
this finding?

ELEMENTS OF EASEMENTS IMPLIED FROM PRIOR USE

1. Two parcels were previously owned by a common grantor;

2. one parcel was previously used for the benefit of the other parcel in a manner
that was apparent and continuous; and
3. the use is “reasonably necessary” or “convenient” for enjoyment of the
dominant estate.

2. “Reasonably necessary” use. What kinds of uses are sufficiently

“necessary” to continue after severance as an easement by implication
from prior use? Most easements by implication are rights of way for the
passage of people or vehicles to get to the property. But easements implied
by prior use have also been found to give subdivision residents access to
an artificial lake created by the developer, Russakoff v. Scruggs, 400
S.E.2d 529 (Va. 1991), to create direct access from the thirteenth to the
fourteenth hole of a golf course, Williams Island Country Club, Inc. v. San
Simeon at the California Club, Ltd., 454 So. 2d 23 (Fla. Dist. Ct. App.
1984), and to give subdivision residents access to a boat ramp, Polhemus
v. Cobb, 653 So. 2d 964 (Ala. 1995). The question is often whether the use
is sufficiently apparent and significant to enjoyment of the property that
the parties likely believed it was part of their bargain.

C. Easements by Necessity

Finn v. Williams

33 N.E.2d 226 (Ill. 1941)

FRANCIS S. WILSON, Justice.
February 16, 1895, Charles H. Williams owned a tract of land in
Salisburg township, in Sangamon county, consisting of approximately 140
acres. On the day named, Williams conveyed 39.47 acres to Thomas J.

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Bacon. In 1937, the plaintiffs, Eugene E. Finn and Curtis Estallar Finn,
acquired the title to this tract. The defendant, Zilphia Jane Williams,
inherited the remaining 100 acres. By their complaint filed in the circuit
court of Sangamon county, plaintiffs charge that the nearest and only
available means of egress from and ingress to their land to a highway and
to any market for their livestock and crops is by means of a right of way
over defendant’s tract immediately to the north; that their tract is not
located or situated on any public highway and is entirely surrounded by
land of strangers and the defendant’s tract; that prior to and during all the
time the 40 acres and the 100 acres constituted one tract and were owned
by defendant’s husband, the only means of ingress and egress to and from
the single tract to a highway was by right of way in a northerly direction
through a third tract of land north and adjacent to the present tract of
defendant, and that this open road is still used by defendant as her only
means of egress and ingress from and to the highway. The relief sought
was the declaration of a right of way easement of necessity from the north
line of plaintiffs’ tract through the defendant’s tract, to the beginning of
the right of way road through the third tract mentioned. Answering, the
defendant admitted that plaintiffs’ land is not located or situated on any
public highway but averred that since its severance from her land it is and
has been located on a private road leading to the south to a public
highway. This averment, plaintiffs denied.

Quick Review:
Between 1895 and 1939, the plaintiffs and their predecessors had accessed the
road via other surrounding land. Could they claim an easement by prescription
over the land? Why didn’t they claim an easement by necessity over that land?

Private permissive ways of ingress and egress over the land of

strangers both to the east and to the south have been available to the
successive owners, including plaintiffs, of the 40-acre tract since its
severance from the 100-acre tract of the defendant in 1895, but each of the
private ways over the lands of the adjoining strangers has been closed and,
as defendant concedes, these permissive means of ingress and egress do
not now exist. Two witnesses for defendant who had lived near the
property in controversy for about sixty years testified to roads leading to
the south and to the east from the 40-acre tract over the land of strangers.
These roads were private roads over the property of strangers, and are now
closed. Nathan Woodrum, defendant’s son-in-law, testified that he had
until recently lived on the 100-acre tract, and that a road through

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defendant’s land connects with the road through the tract at the north, and
that the road through this third tract is the only mode of access to the
highway unless permission be obtained to go through the land of strangers.
Since May, 1939, defendant has refused to permit plaintiff to travel further
over the right of way through her tract. As a result of defendant’s action,
the plaintiffs have been unable to take their livestock and farm products to
market, have had no means of egress from or ingress to their 40 acres on
which they live, and have had to walk to the township highway, a distance
of about three-quarters of a mile carrying such produce as they could.
The evidence does not sustain defendant’s averment that plaintiffs
have the use of a private road leading to the south to a public highway and
defendant, by her concession that a present necessity exists, has apparently
abandoned this claim. She maintains, however, that the necessity has
arisen by reason of changed circumstances since the severance of the two
tracts. Firmly established principles control. Where an owner of land
conveys a parcel thereof which has no outlet to a highway except over the
remaining lands of the grantor or over the land of strangers, a way by
necessity exists over the remaining lands of the grantor. If, at one time,
there has been unity of title, as here, the right to a way by necessity may
lay dormant through several transfers of title and yet pass with each
transfer as appurtenant to the dominant estate and be exercised at any time
by the holder of the title thereto. Plaintiffs’ land is entirely surrounded by
property of strangers and the land of the defendant from which it was
originally severed. A right of way easement of necessity was necessarily
implied in the conveyance severing the two tracts in 1895, and passed by
mesne conveyances to plaintiffs in 1937. The fact that the original grantee
and his successors in interest have been permitted ingress to and egress
from the 40 acres over the land owned by surrounding strangers is
immaterial. When such permission is denied, as in the present case, the
subsequent grantees may avail themselves of the dormant easement
implied in the deed severing the dominant and servient estates.

756
 Notes and Questions
1. Easements by necessity. The policies underlying the doctrine of
easement by necessity are (a) to effectuate the intent of the parties and (b)
to promote the efficient utilization of property. Sometimes these policies
go together. Ordinarily, we can expect buyers not to agree to buy
landlocked property unless they have guaranteed access to it by an
easement over neighboring land. Thus granting a right of access both
promotes land utilization and the intent of the parties. As the Idaho
Supreme Court explained in Burley Brick and Sand Company v. Cofer,
629 P.2d 1166, 1168 (Idaho 1981):

ELEMENTS FOR EASEMENTS BY NECESSITY

1. The dominant and servient estates were formerly one parcel; and
2. at the time of severance the dominant estate became landlocked.

757
 A way of necessity is an easement arising from an implied grant or implied
reservation; it is of common-law origin and is supported by the rule of sound
public policy that lands should not be rendered unfit for occupancy or
successful cultivation. Such a way is the result of the application of the
presumption that whenever a party conveys property, he conveys whatever is
necessary for the beneficial use of that property and retains whatever is
necessary for the beneficial use of land he still possesses. Thus, the legal
basis of a way of necessity is the presumption of a grant arising from the
circumstances of the case.

Courts split, however, on what to do when these policies conflict.

Many courts (perhaps most courts today) hold that the ultimate purpose of
the rule is to effectuate the intent of the grantor. Thus no easement of
necessity will be recognized if it is clear that the grantor intended to sell,
and the grantee knew she was buying, a landlocked parcel. The
Restatement (Third) takes this view. Restatement (Third) of Property
(Servitudes) §2.15 (2000); see also Kitras v. Town of Aquinnah, 49 N.E.3d
198 (Mass. 2016) (no easement by necessity because Wampanoag custom
of access when lots were divided suggested no intent to create easement);
Yellowstone River, LLC v. Meriwether Land Fund, LLC, 264 P.3d 1065,
1079 (Mont. 2011) (public policy justification only supports easement by
necessity where intent to create one can be inferred from the
circumstances).
In contrast, in Frederick v. Consolidated Waste Services, Inc., 573
A.2d 387, 389 (Me. 1990), the Maine Supreme Judicial Court held that

An easement created by strict necessity [arises] when a grantor conveys a lot

of land from a larger parcel, and that conveyed lot is “landlocked” by the
grantor’s surrounding land and cannot be accessed by a road or highway.
Because of the strict necessity of having access to the landlocked parcel, an
easement over the grantor’s remaining land benefitting the landlocked lot is
implied as a matter of law irrespective of the true intent of the common
grantor.

573 A.2d at 389. The Vermont Supreme Court similarly held in Traders,
Inc. v. Bartholomew, 459 A.2d 974, 978 (Vt. 1983), that easements by
necessity “often thwart[] the intent of the original grantor or grantee,”
because “the demands of our society prevent any man-made efforts to hold
land in perpetual idleness as would result if it were cut off from all access
by being completely surrounded by lands privately owned.” Accord, Swan
v. Hill, 855 So. 2d 459, 464 (Miss. Ct. App. 2003) (“The concern of the

758
court is only whether alternative routes exist.”).
Which approach is better? Should an easement by necessity be granted
to the buyer to prevent the buyer’s land from becoming landlocked when it
is clear that the grantor did not intend to grant such an easement over the
grantor’s retained land? What arguments can you make on both sides of
this question?
2. Statutory regulation of landlocked parcels. Some states have
enacted statutes empowering the owner of a landlocked parcel to obtain an
easement over neighboring land for access to a public road by application
to a public official and payment of compensation to the landowner whose
property is burdened by the easement. Washington State’s statute reads as
follows:

An owner . . . of land which is so situated with respect to the land of another

that it is necessary for its proper use and enjoyment to have and maintain a
private way of necessity . . . across, over or through the land of such other, . .
. may condemn and take lands of such other sufficient in area for the
construction and maintenance of such private way of necessity.

Wash. Rev. Code §8.24.010; see also Ala. Code §18-3-20; Ark. Stat. §27-
66-401; Mass. Gen. Laws ch. 82, §24; Miss. Code §65-7-205; Or. Rev.
Stat. §376.180. Recently, such statutes have faced challenges that they are
unconstitutional on the grounds that they permit taking of property for
private purposes rather than public use. See In re Opening a Private Road
ex rel. O’Reilly, 5 A.3d 246 (Pa. 2010) (remanding to determine whether
application for condemnation of private road to provide access from
landlocked land served a public purpose sufficient to sustain its
constitutionality); Tolksdorf v. Griffith, 626 N.W.2d 163 (Mich. 2001)
(private roads act unconstitutional taking of property for a “predominantly
private purpose” when it allowed owner to get access to landlocked parcel
by buying easement over neighboring land).

Problems
1. Adam owns property bordered to the east by a river, to the west and
north by private property, and to the south by a public road. Along the
river is a one-lane public street. Adam divides the property into northern
and southern parcels, selling the northern parcel to Barbara. After some
years, increasingly violent storms begin causing regular flooding and
destruction of the one-lane street. The government decides to stop
maintaining and rebuilding it, and soon the street is no more. Barbara’s

759
parcel is now landlocked. Can she assert an easement by necessity over
Adam’s land?
2. The doctrine of easement by necessity applies when land has no
access to a public road. Should it apply when property is physically
located along a public road but the cost of creating useable access to that
road is prohibitively expensive? Compare Schwab v. Timmons, 589
N.W.2d 1 (Wis. 1999) (no easement by necessity granted merely because
the cost of building a road over a bluff to a public road was $700,000);
Harkness v. Butterworth Hunting Club, 58 So. 3d 703 (Miss. Ct. App.
2011) (no easement by necessity where alternative access was available by
building a road over several deep ravines) abrogating Mississippi Power
Co. v. Fairchild, 791 So. 2d 262 (Miss. Ct. App. 2001) (power company
entitled to easement by necessity if the only access to a public road was
over a river because the cost of bridge construction would be prohibitive)
with Thompson v. Whinnery, 895 P.2d 537 (Colo. 1995) (“great necessity”
rather than absolute necessity, was the standard in Colorado, but standard
was not met when part of parcel across canyon used for recreational and
grazing purposes could be accessed by horseback).
3. Relatedly, what if the only access to the land is by water? In Berge
v. State, 915 A.2d 189 (Vt. 2006), the court held that the fact that plaintiff
could access a public road via boat from his property did not defeat an
easement by necessity. Although the test in Vermont was that there must
be “strict necessity,” the majority found that “since the easement is based
on social considerations encouraging land use, its scope ought to be
sufficient for the dominant owner to have the reasonable enjoyment of his
land for all lawful purposes.” 915 A.2d at 192. Access by water did not
allow a modern owner “reasonable enjoyment” of his land. The dissent
argued that water access was reasonable for property such as the
plaintiff’s, which was used for seasonal outdoor recreation, and that the
majority had forgotten that “[t]he public’s interest in access to landlocked
property must be balanced against the serious consequences inherent in
granting one landowner an uncompensated interest in the property of a
neighbor.” 915 A.2d at 196 (Reinhardt, J. dissenting). Who is right?

§2.5 Modifying and Terminating Easements

Easements last forever unless they are terminated (1) by agreement in
writing (release of the easement by the holder); (2) by their own terms —
for example, if the deed conveying the easement expressly states that it is
to last for ten years; (3) by merger, when the holder of the servient estate

760
becomes the owner of the dominant estate; (4) by abandonment, if it can
be shown that the owner of the easement, by her conduct, indicated an
intent to abandon the easement; or (5) by adverse possession or
prescription by the owner of the servient estate or by a third party.
Sometimes courts terminate easements (6) because of frustration of
purpose. “Traditional doctrine terminates obsolete easements either by a
liberal application of the abandonment principle, or by finding that the
purpose of the easement has become impossible to accomplish, or that the
easement no longer serves its intended purpose . . . .” Restatement (Third)
of Property (Servitudes) §7.10 (2000). See Boissy v. Chevron, 33 A.3d
1109, 1114 (N.H. 2011) (easement to get water from well terminated once
well could no longer be located). The Restatement (Third) proposes
changing this doctrine by permitting modification rather than termination
when modification would permit accomplishment of the purpose of the
easement, id., but few courts have as yet adopted this position.
Many states have enacted “marketable title acts,” which may require
that easements, along with other encumbrances on property interests, be
re-recorded periodically (generally every 30 to 50 years) to be binding on
future purchasers. The purpose of these statutes is to limit how far back a
buyer must look in the chain of title to determine the validity of the seller’s
title and the existence of encumbrances on the land. However, they also
have the effect of making unenforceable those interests that were put in
place a long time ago and were of insufficient importance to anyone to be
re-recorded in compliance with the statute. Failure to comply with the
marketable title act by re-recording the easement may leave the easement
owner unprotected from a subsequent purchaser of the servient estate who,
depending on the language in the statute, may be entitled to buy the
property free of the burden of the easement.

§3 COVENANTS
§3.1 Definition and Background
Negative servitudes, commonly called covenants, are restrictions on
use of land or obligations regarding land held by one who does not own
the land. For example, a neighbor may have the right to prevent you from
building over a certain height on your land, or the right to require you to
mow your grass regularly. Common law originally placed many
restrictions on covenants running with the land; modern law generally
eases these restrictions, but may create other restrictions to further public
policy goals.

761
 At early common law, restrictions on land held by others were called
negative easements. But because a restriction on land use is not visible to
a purchaser in the way an affirmative easement, like a driveway, might be,
courts were concerned about notice to subsequent owners. In addition,
because English law permitted negative easements to be acquired by
prescription, there was concern that prescriptive rights in the status quo
would prevent useful development of land. Therefore courts limited
negative easements to three categories: (1) rights to lateral support of one’s
buildings; (2) rights to free flow of light and air; and (3) rights to water
from an artificial stream.
Landowners entered into contractual arrangements to get around these
limitations.7 Contract rights, however, generally did not bind or benefit
subsequent purchasers of the benefited or burdened parcels. Individuals
had to be in privity of contract, or parties to the original contract, to be
either bound by the contract or entitled to enforce its benefits. How could
agreements regarding land benefit or burden future possessors of the land?
The concept of real covenants developed to address this problem. In
Spencer’s Case, 77 Eng. Rep. 72 (1583), the court held that an agreement
would bind successors in interest to the land if it was (1) in writing, (2)
intended to be binding on future tenants, (3) touched and concerned the
land, meaning that it affected the use of the land itself, and (4) if there was
privity of estate, or mutual ownership of land, between the covenanting
parties. For the English courts, “privity of estate” meant simultaneous
privity, that the parties had simultaneous interests in the same parcel of
land. Landlords and tenants were in simultaneous privity because they had
rights in the same parcel at the same time. But buyers and sellers of land
were not; once the land was sold, the seller would not share a simultaneous
interest in the land with the buyer.
However, England had two court systems: the law courts, which
awarded damages, and the equity courts, which provided equitable
injunctive or declaratory relief in cases in which the harsh common law
rule would create injustice. In Tulk v. Moxhay, 41 Eng. Rep. 1143 (1848),
the chancellor of the equity courts created the concept of equitable
servitudes, covenants that could be enforced by injunction despite the lack
of privity. If the covenant met the writing, intent, and touch and concern
requirements, and the current owner had purchased with notice of the
restriction, the owner of the burdened estate could be enjoined from
violating the covenant. “Of course,” the court opined, “the price would be
affected by the covenant, and nothing could be more inequitable than that
the original purchaser should be able to sell the property the next day for a
greater price, in consideration of the assignee being allowed to escape

762
from the liability which he himself had undertaken.” Id. Real covenants
and equitable servitudes thus differed both in the requirements for running
with the land and in the remedies available to enforce them. A real
covenant (requiring privity) was necessary to get damages, while an
equitable servitude (requiring notice) was necessary for an injunction.
Courts in the United States adopted both real covenants and equitable
servitudes law. The law of real covenants expanded the definition of
privity. Some states did this by expanding the concept of simultaneous
privity from the landlord-tenant relationship to situations in which one
owner owns an easement in the property of the other and/or both owners
have mutual easements in each other’s property. Most courts expanded the
privity concept by adopting the doctrine of instantaneous privity, finding
privity if a covenant was created during the legal transfer of land. Thus a
covenant included in a deed of sale restricting use of the parcel might bind
future owners of the property conveyed. The fiction was that at the
moment the deed passes from seller to buyer, the parties have a fleeting
simultaneous interest in the property.
Over the twentieth century, developers initiated vast expansions of the
use of the covenant form. Large residential developments in which unit
owners had common restrictions and privileges were a key part of the rise
of suburbs in the wake of World War II. The proliferation of shopping
plazas and shopping malls, in which numerous retail businesses share
facilities bound by common rules, followed soon after. Private agreements
regarding land use that ran with the land were no longer viewed as
idiosyncratic obstacles to development, but as necessary aids to
increasingly dense and interconnected land use. In addition, concerns
about notice to subsequent buyers were never as significant in the United
States, where registries of deeds had recorded restrictions on land since
colonial times. Many courts relaxed restrictions on the covenant form,
merging the law of real covenants and equitable servitudes, and modifying
or even abolishing touch and concern and privity requirements.

763
 The massive Levittown development, on Long Island, New York, was one of the
most famous of the new subdivisions expanding the use of the covenant form in the
wake of World War II. Tony Linck, for Life Magazine, Aerial View of Levittown,
June 1948

Despite these trends, many courts still adhere to some of the traditional
technical requirements and distinctions. It is therefore important to
understand both the traditional rules for real covenants and their modern
modifications. The table below sets forth the traditional rules for real
covenants and equitable servitudes as well as the Restatement (Third)
approach to help make the alternatives clearer. These elements are further
discussed in the notes below. Remember, however, that most courts follow
a doctrine somewhere between the traditional and Restatement (Third)
rules.

764
 §3.2 Creation of Covenants

A. The Traditional Test

Neponsit Property Owners’ Association v. Emigrant Industrial

Savings Bank

15 N.E.2d 793 (1938)

IRVING LEHMAN, Judge.
[The plaintiff, the Neponsit Property Owners’ Association, brought an
action against defendant Emigrant Industrial Savings Bank to foreclose a
lien created by a covenant on land owned by the Emigrant Industrial
Savings Bank. The Neponsit Realty Company had developed the land as a
residential community in 1911. In 1917, it sold property in the
development to Robert and Charlotte Deyer. Emigrant Savings Bank
bought the Deyers’ land at a foreclosure sale in 1935. After selling the
parcels, the Neponsit Realty Company assigned its rights under the
covenant to the Neponsit Property Owners’ Association. The deed to the

765
Deyers included the following covenant:]

And the party of the second part for the party of the second part and the
heirs, successors and assigns of the party of the second part further covenants
that the property conveyed by this deed shall be subject to an annual charge
in such an amount as will be fixed by the party of the first part, its successors
and assigns, not, however exceeding in any year the sum of four ($4.00)
Dollars per lot 20x100 feet. The assigns of the party of the first part may
include a Property Owners’ Association which may hereafter be organized
for the purposes referred to in this paragraph, and in case such association is
organized the sums in this paragraph provided for shall be payable to such
association. [S]aid charge shall . . . become a lien on the land and shall
continue to be such lien until fully paid. Such charge shall be payable to the
party of the first part or its successors or assigns, and shall be devoted to the
maintenance of the roads, paths, parks, beach, sewers and such other public
purposes as shall from time to time be determined by the party of the first
part, its successors or assigns. And the party of the second part by the
acceptance of this deed hereby expressly vests in the party of the first part, its
successors and assigns, the right and power to bring all actions against the
owner of the premises hereby conveyed or any part thereof for the collection
of such charge and to enforce the aforesaid lien therefor.
These covenants shall run with the land and shall be construed as real
covenants running with the land until January 31st, 1940, when they shall
cease and determine.

Every subsequent deed of conveyance of the property in the

defendant’s chain of title, including the deed from the referee to the
defendant, contained, as we have said, a provision that they were made
subject to covenants and restrictions of former deeds of record.
There can be no doubt that Neponsit Realty Company intended that the
covenant should run with the land and should be enforceable by a property
owners association against every owner of property in the residential tract
which the realty company was then developing. The language of the
covenant admits of no other construction. Regardless of the intention of
the parties, a covenant will run with the land and will be enforceable
against a subsequent purchaser of the land at the suit of one who claims the
benefit of the covenant, only if the covenant complies with certain legal
requirements. These requirements rest upon ancient rules and precedents.
The age-old essentials of a real covenant, aside from the form of the
covenant, may be summarily formulated as follows: (1) It must appear that
grantor and grantee intended that the covenant should run with the land;
(2) it must appear that the covenant is one “touching” or “concerning” the
land with which it runs; (3) it must appear that there is “privity of estate”

766
between the promisee or party claiming the benefit of the covenant and the
right to enforce it, and the promisor or party who rests under the burden of
the covenant.
The covenant in this case is intended to create a charge or obligation to
pay a fixed sum of money to be “devoted to the maintenance of the roads,
paths, parks, beach, sewers and such other public purposes as shall from
time to time be determined by the party of the first part [the grantor], its
successors or assigns.” It is an affirmative covenant to pay money for use
in connection with, but not upon, the land which it is said is subject to the
burden of the covenant. Does such a covenant “touch” or “concern” the
land? These terms are not part of a statutory definition, a limitation placed
by the State upon the power of the courts to enforce covenants intended to
run with the land by the parties who entered into the covenants. Rather
they are words used by courts in England in old cases to describe a
limitation which the courts themselves created or to formulate a test which
the courts have devised and which the courts voluntarily apply. Cf.
Spencer’s Case, Coke, vol. 3, part 5, 16a; Mayor of Congleton v. Pattison,
10 East 130. In truth such a description or test so formulated is too vague
to be of much assistance and judges and academic scholars alike have
struggled, not with entire success, to formulate a test at once more
satisfactory and more accurate. “It has been found impossible to state any
absolute tests to determine what covenants touch and concern land and
what do not. The question is one for the court to determine in the exercise
of its best judgment upon the facts of each case.” Clark on Covenants and
Interests Running with Land, p. 76.
It has been suggested that a covenant which runs with the land must
affect the legal relations — the advantages and the burdens — of the
parties to the covenant, as owners of particular parcels of land and not
merely as members of the community in general, such as taxpayers or
owners of other land. That method of approach has the merit of realism.
The test is based on the effect of the covenant rather than on technical
distinctions. Does the covenant impose, on the one hand, a burden upon an
interest in land, which on the other hand increases the value of a different
interest in the same or related land?
A promise to pay for something to be done in connection with the
promisor’s land does not differ essentially from a promise by the promisor
to do the thing himself, and both promises constitute, in a substantial
sense, a restriction upon the owner’s right to use the land, and a burden
upon the legal interest of the owner. On the other hand, a covenant to
perform or pay for the performance of an affirmative act disconnected with
the use of the land cannot ordinarily touch or concern the land in any

767
substantial degree. Thus, unless we exalt technical form over substance,
the distinction between covenants which run with land and covenants
which are personal, must depend upon the effect of the covenant on the
legal rights which otherwise would flow from ownership of land and
which are connected with the land. The problem then is: Does the
covenant in purpose and effect substantially alter these rights?
Looking at the problem presented in this case, it seems clear that the
covenant may properly be said to touch and concern the land of the
defendant and its burden should run with the land. True, it calls for
payment of a sum of money to be expended for “public purposes” upon
land other than the land conveyed by Neponsit Realty Company to
plaintiff’s predecessor in title. By that conveyance the grantee, however,
obtained not only title to particular lots, but an easement or right of
common enjoyment with other property owners in roads, beaches, public
parks or spaces and improvements in the same tract. For full enjoyment in
common by the defendant and other property owners of these easements or
rights, the roads and public places must be maintained. In order that the
burden of maintaining public improvements should rest upon the land
benefited by the improvements, the grantor exacted from the grantee of the
land with its appurtenant easement or right of enjoyment a covenant that
the burden of paying the cost should be inseparably attached to the land
which enjoys the benefit. It is plain that any distinction or definition which
would exclude such a covenant from the classification of covenants which
“touch” or “concern” the land would be based on form and not on
substance.
Another difficulty remains. Though between the grantor and the
grantee there was privity of estate, the covenant provides that its benefit
shall run to the assigns of the grantor who “may include a Property
Owners’ Association which may hereafter be organized for the purposes
referred to in this paragraph.” The plaintiff has been organized to receive
the sums payable by the property owners and to expend them for the
benefit of such owners. Various definitions have been formulated of
“privity of estate” in connection with covenants that run with the land, but
none of such definitions seems to cover the relationship between the
plaintiff and the defendant in this case. The plaintiff has not succeeded to
the ownership of any property of the grantor. It does not appear that it ever
had title to the streets or public places upon which charges which are
payable to it must be expended. It does not appear that it owns any other
property in the residential tract to which any easement or right of
enjoyment in such property is appurtenant. It is created solely to act as the
assignee of the benefit of the covenant, and it has no interest of its own in

768
the enforcement of the covenant.
The arguments that under such circumstances the plaintiff has no right
of action to enforce a covenant running with the land are all based upon a
distinction between the corporate property owners association and the
property owners for whose benefit the association has been formed. If that
distinction may be ignored, then the basis of the arguments is destroyed.
The corporate plaintiff has been formed as a convenient instrument by
which the property owners may advance their common interests. We do
not ignore the corporate form when we recognize that the Neponsit
Property Owners’ Association, Inc., is acting as the agent or representative
of the Neponsit property owners. As we have said in another case: when
Neponsit Property Owners’ Association, Inc., “was formed, the property
owners were expected to, and have looked to that organization as the
medium through which enjoyment of their common right might be
preserved equally for all.” Matter of City of New York, Public Beach,
Borough of Queens, 269 N.Y. 64, 75, 199 N.E. 5, 9. Only blind adherence
to an ancient formula devised to meet entirely different conditions could
constrain the court to hold that a corporation formed as a medium for the
enjoyment of common rights of property owners owns no property which
would benefit by enforcement of common rights and has no cause of
action in equity to enforce the covenant upon which such common rights
depend. In substance if not in form the covenant is a restrictive covenant
which touches and concerns the defendant’s land, and in substance, if not
in form, there is privity of estate between the plaintiff and the defendant.
[Affirmed.]

Notes and Questions

1. Defining the issue. Neponsit Property Owners Association, decided
in 1938 just before the explosion of residential common interest
developments, considered whether the Neponsit Property Owners
Association could enforce a covenant to pay four dollars per lot annually
for the maintenance of roads, parks, beach, and other public amenities of
the Neponsit development against the Emigrant Savings Bank. Because
neither the plaintiff nor the defendant was an original signatory to the
covenant, the question is whether the covenant ran with the land to bind or
benefit succeeding owners of the property. In holding that the covenant
could be enforced, the court decided two enormously important questions
for residential developments: first, whether affirmative covenants to pay
fees for the benefit of common amenities in the development touched and
concerned the land; and second, whether property owners associations

769
(rather than individual owners themselves) were in privity of estate and
could enforce the restrictions.
Let’s first lay out the history of the covenants and the land. The
Neponsit Realty Association owned and developed the area on Rockaway
Peninsula as a 38-block, 1,600-home high-end residential community
between 1910 and 1920. See Stewart E. Sterk, Neponsit Property Owners
Association v. Emigrant Savings Bank, Property Stories 384 (2009).
Robert and Charlotte Deyer purchased their home from the Realty
Association in 1917. Their deed, like all others in the community, included
numerous covenants, including the one at issue in the case. The Realty
Association assigned its ability to enforce the covenants to the Neponsit
Property Owners Association, to which all property owners in Neponsit
automatically became members. In 1935, in the aftermath of the Great
Depression, the Deyers lost their home to foreclosure, and Emigrant
Savings Bank purchased it at a foreclosure sale.

CONTEXT

The residents of Neponsit have included well-known figures such as New York
Mayor Abe Beame and, for a time, Judy Garland.

What would have happened if Deyer had stopped paying the

maintenance fees before the transfer from Neponsit Realty to the Neponsit
Property Owners? The answer is simple: Deyer is bound by normal
contract law to Neponsit Realty. However, both owners transferred their
interests. Two issues appear. First, are the original covenanting parties still
bound and benefited by the promise? Second, are their successors bound
and benefitted by the promise?
2. Rights and obligations of original covenanting parties. In general,
the original parties to a covenant will no longer have rights or obligations
under a covenant after they have sold the land the covenant concerns.
a. Benefit of covenants held in gross. First, does Neponsit Realty
have the power to enforce the covenant once it sells all its land in the
development? The answer is probably no for two reasons. First, a court
will likely interpret the covenant to benefit the current owner of the
land and not prior possessors, unless the agreement contains explicit
language to the contrary. Waikiki Malia Hotel, Inc. v. Kinkai
Properties Limited Partnership, 862 P.2d 1048, 1057-1059 (Haw.
1993).

770
 Second, even when the language of the covenant is clear, courts have
traditionally refused to impose the burden of a covenant on future
owners of the servient estate if the benefit of the covenant is held in
gross, meaning that it benefits an individual or entity rather than land.
An important exception is that many jurisdictions, by common law or
statute, permit enforcement of covenants in gross when the covenant is
held by a government entity or by a charity, like a land conservation
trust or a historic preservation trust. See Uniform Conservation
Easement Act (adopted in more than 20 states); Bennett v.
Commissioner of Food & Agriculture, 576 N.E.2d 1365 (Mass. 1991).
b. Enforceability against original covenantor after the land is
transferred. Are the Deyers, the original promisors, still bound to
ensure by the present performance of the covenant? The answer is
almost certainly no. A prior owner is not legally responsible for the
actions of the subsequent owners of the burdened land.
Had the Deyers simply leased the land to Emigrant Savings Bank,
the answer would probably be yes. Leases are treated differently from
sales because landlords may include the covenant in any lease and end
the leasehold and evict the tenant if the tenant violates the lease. The
landlord’s failure to include such a covenant or to exercise the right to
enforce such a covenant constitutes an independent breach of the
covenant.
3. Obligations of successors in interest. Can the successor owners of
the dominant estate (the owners of the other parcels in the Neponsit
development) obtain relief against Emigrant Savings Bank, the subsequent
possessor of the servient estate? The answer will be yes only if both the
benefit and the burden run with the land. In addition, to determine what
kind of relief is available, we must apply both the law of real covenants
and the law of equitable servitudes. If the court follows traditional
distinctions, damages are only available for real covenants, while
injunctive relief is only available for equitable servitudes.
Under the law of real covenants, land use restrictions run with the
land when (1) the covenant is in writing; (2) the grantor intended the
restriction to run with the land on both sides, binding future owners of the
servient estate and benefiting future owners of the dominant estate; (3) the
restriction touches and concerns both the dominant and servient estates;
and (4) privity of estate exists between the original covenanting parties
(horizontal privity) and between those parties and succeeding owners
(vertical privity). Equitable servitudes law contains most of these
elements, but replaces privity of estate with notice of the covenant to the

771
owner of servient estate. Notice was not originally required to enforce a
real covenant, but almost all courts today require notice for enforcement of
a real covenant as well. The Restatement (Third), which substantially
modifies the privity and touch and concern requirements, is discussed
separately in §3.2.B.
Four of the five requirements are formalities, while only one (the touch
and concern test) is substantive. Formal requirements regulate the manner
in which a right or obligation is created; individuals who wish to create the
right or obligation may do so as long as they adhere to the formalities.
They are not designed to prevent or discourage particular behavior; rather,
they are rules designed to ensure that actors communicate their intentions
clearly, both to each other and to the judges who are empowered to enforce
their agreements. Duncan Kennedy, Form and Substance in Private Law
Adjudication, 89 Harv. L. Rev. 1685, 1691 (1976). Substantive
requirements, on the other hand, limit the ability of individuals to create
certain rights. They “prevent people from engaging in particular activities
because those activities are morally wrong or otherwise flatly
undesirable.” Id. No amount of careful planning will enable an owner to
avoid such a requirement. We will start with the formal requirements
(writing, notice, intent, and privity) and then discuss the substantive touch
and concern test.
4. Writing complying with the Statute of Frauds. Like all transfers
of property interests lasting more than a year, the covenant must be created
in a writing signed by the grantor and otherwise complying with the
Statute of Frauds to be valid. Once the covenant is created, the writing
need not be repeated in subsequent transfers of the land. Here, the written
covenant in the deed transferring the land from Neponsit Realty to the
Deyers clearly satisfies the writing requirement.
Developers of residential subdivisions may also record a declaration of
restrictions applicable to the entire subdivision and/or a plat (a detailed
map showing the restrictions) before any lot is sold. Some states may
require that the restriction be specifically mentioned in the deed or lease
when individual lots are sold, even if only by reference to the earlier
recorded declaration or plat. Most states, however, find that a covenant in
a prior-recorded declaration or plat meets the writing requirement. Conway
v. Miller, 232 P.3d 390 (Mont. 2010) (plat showing a “building restriction
line” was sufficient although deeds did not reference the restriction);
Citizens for Covenant Compliance v. Anderson, 906 P.2d 1314 (Cal.
1995).
As discussed earlier in this chapter, easements can be created by

772
implication. Can covenants? The short answer is yes, but more rarely.
Where a seller fraudulently promises that there are covenants on the land,
and the buyers rely to their detriment on the promise, courts have
sometimes applied the equitable doctrine of estoppel to enforce the false
representations. See, e.g., Prospect Development Co., Inc. v. Bershader,
515 S.E.2d 291 (Va. 1999) (preventing development of wooded lot next to
plaintiffs’ home when developers’ maps designated lot as “preserved
land,” charged a premium for lot next to land, repeatedly told buyers that
lot would not be developed, and the bird-loving buyers had designed their
home to get the best view of the wooded lot); PMZ Oil Co. v. Lucroy, 449
So. 2d 201 (Miss. 1984) (enjoining construction of townhouse
condominiums in development when the developer had told all lot
purchasers that its 16-lot subdivision would be restricted to “one quality
single-family dwelling per lot” and showed them an unrecorded plat noting
the restrictions). But see Bennett v. Charles Corp., 226 S.E.2d 559 (W. Va.
1976) (allowing a developer to convert remaining unsold lots in a
subdivided tract into a cemetery, despite the developer’s oral promise to
develop a tract as a residential subdivision, finding no fraudulent or
inequitable conduct).
5. Notice. The notice requirement is intended to protect the owner of
the servient estate, so the question is whether the owner of the burdened
estate knew or should have known the parcel was restricted when she
purchased the land. Notice may be actual, inquiry, or constructive.
a. A buyer or lessee is on actual notice of the covenant if he was
actually told about it or was otherwise made aware of it. In Neponsit, it
is unclear whether Emigrant Savings Bank was on actual notice of the
covenant when it purchased the property at a foreclosure sale.
b. The buyer or lessee is on inquiry notice, sometimes called actual
implied notice, if the condition of the premises would make a
reasonable purchaser inquire about the existence of a covenant. Inquiry
notice of covenants is less likely than inquiry notice of easements, such
as rights of way, which a buyer can often visually observe. Some
courts have found, however, that a uniform pattern of residential
development places a reasonable buyer on notice of the potential
presence of restrictive covenants. See, e.g., Sanborn v. McLean, 206
N.W. 496 (Mich. 1925). In Winn-Dixie Stores, Inc. v. Dolgencorp, Inc.,
964 So. 2d 261 (Fla. Dist. Ct. App. 2007), the court found that a
corporation with 7,800 stores in shopping plazas across America was
on inquiry notice that the anchor tenant likely had a covenant
preventing competing grocery stores in the plaza. Is this finding

773
 justified? In most cases, however, the primary inquiry is likely to be
conducted by researching the registry of deeds to find any relevant
recorded restrictions. That brings us to constructive notice.
c. A buyer or lessee is said to be on constructive notice if the
restriction was recorded within the registry of deeds and could be
found via a reasonable search of the records prior to sale. A reasonable
purchaser is expected to search the title to find out whether the
property is burdened by any land use restrictions. The facts of Neponsit
state that every deed in Emigrant Savings Bank’s chain of title
provided that the conveyances were “subject to covenants and
restrictions of former deeds of record,” implying that the Deyer deed
was recorded, so Emigrant Savings Bank was on constructive notice.
What if the covenant was recorded in the deed between the seller,
Neponsit Realty, and a prior purchaser of adjoining land? Neponsit
Realty might have, for example, pledged to a prior purchaser to restrict
all its remaining land in the development to single-family residences,
but only recorded the covenant with that purchaser’s deed. States
disagree on whether a subsequent purchaser is on notice of the
covenant. The majority of courts hold that a reasonable record search
includes all grants made by the original owner regarding nearby or
contiguous land while the grantor owned the property. Because title
searches in the United States are typically made by looking under the
name of the grantor, rather than the specific location of the property,
these courts hold that purchasers are on constructive notice of
restrictions by the grantor recorded regarding other property. A
substantial minority of courts, however, hold that the purchaser is only
bound by those restrictions appearing in the chain of title for the
burdened property itself.
6. Intent to run with the land. Intent to run with the land may be
made explicit, as it is in the Neponsit deed, with language declaring that it
is on behalf of the owner’s “successors or assigns” or that the covenant
“runs with the land.” What happens if the deed or lease does not include
such language? Courts generally hold that appurtenant covenants — those
benefitting some land — are presumptively intended to run with the
benefited and burdened land. See Sun Oil Co. v. Trent Auto Wash, Inc.,
150 N.W.2d 818 (Mich. 1967) (holding that a covenant prohibiting use of
land to operate a gas station was intended to run with the land); Runyon v.
Paley, 416 S.E.2d 177, 185-187 (N.C. 1992) (presuming that the benefit
was intended to run with the land if it is clear the burden was intended to
run with the land). However, some courts require clear evidence of intent

774
to run. Charping v. J.P. Scurry & Co., 372 S.E.2d 120 (S.C. 1988);
Tennsco Corp. v. Attea, 2002 WL 1298808 (Tenn. Ct. App. 2002).
7. Privity of estate. The concept of privity of estate contains the core
principle of servitudes law: one piece of property is burdened for the
benefit of another (so-called horizontal privity) and these benefits and
burdens run to succeeding owners of both parcels (vertical privity). At the
same time, the law of privity developed maddeningly complicated
technical limitations that were unrelated to any legitimate policy concerns.
The modern trend is to relax or do away with the privity requirement, but a
number of states still retain it. See Beeren & Barry Investments, L.L.C. v.
AHC, Inc., 671 S.E.2d 147 (Va. 2009); Cunningham v. City of
Greensboro, 711 S.E.2d 477 (N.C. Ct. App. 2011). Although privity was
not traditionally required to obtain injunctive relief for a covenant as an
equitable servitude, courts that maintain the requirement may not make
this distinction, or may require privity to enforce obligations to pay
assessments, as in Neponsit.
a. Horizontal privity. Horizontal privity regulates the relationship
between the original covenanting parties. Because land use restrictions
both limit the free use of land and may make it less alienable, they
were traditionally thought to be unjustified unless the burden on land
was outweighed by a compensating benefit to some other property
owner. The horizontal privity requirement served to promote this
purpose.
Most courts in the United States adopted an instantaneous privity
test, finding horizontal privity when the covenant is created at the
moment the owner of one parcel sells or transfers rights in the other
parcel. Thus, a covenant contained in a deed of sale transferring a
property interest will satisfy the horizontal privity requirement.
Similarly, a covenant in a lease (transferring a leasehold) or a mortgage
(transferring a lien or right to foreclose) will satisfy the horizontal
privity requirement.
What kinds of relationships does horizontal privity exclude? The two
most important are (1) agreements between neighbors that are not part
of a simultaneous conveyance of another property right; (2) agreements
between grantors and grantees that are not made at the same time as the
conveyance of the property interest burdened or benefited by the
covenant.8 An example of the first problem is a contract among all the
owners in a neighborhood to restrict the property to residential uses.
Because the neighbors already own their land, they are not in privity of
estate. An example of the second problem is a covenant made one

775
week after the sale of a parcel; this does not satisfy the privity
requirement because at that moment the grantor no longer owns the
property of the grantee.
b. Vertical privity. Vertical privity means that the original
covenanting parties transferred their interests to the subsequent
possessors of the parcel. It would include, for example, sale, lease,
inheritance, and foreclosure, but not adverse possession, because the
prior owner did not formally transfer her interest. Some states follow a
strict vertical privity standard, requiring that the grantor does not
retain any future interests in the land. Thus vertical privity would be
present when an owner sells her property but not when she leases it.
See Winn-Dixie Stores, Inc. v. Dolgencorp, LLC, 746 F.3d 1008 (11th
Cir. 2014) (finding that Missouri law required strict vertical privity, so
Winn-Dixie could not enforce its covenant with shopping center
against lessees in shopping center). Others follow a relaxed vertical
privity standard, which would allow covenants to run to all to those
assigned possession, such as lessees.
In Whitinsville Plaza v. Kotseas, 390 N.E.2d 243 (Mass. 1979), for
example, the Kosteas brothers divided their land into two parcels, and
conveyed one to 122 Trust. In the deed, the Kostseas covenanted not to
use their remaining parcel for a “discount store,” but only for certain
purposes, which included a “drug store.” 122 Trust then sold its parcel
to Whitinsville Plaza, and Whitinsville established a discount store on
the land. The Kotseas subsequently leased part of their abutting land to
a CVS. Whitinsville claimed the CVS was a discount store, not just a
drug store, violating the covenant. Under a relaxed vertical privity
standard, Whitinsville could demand damages from both the Kotseas
and CVS, but under a strict standard, it could demand damages only
from the Kosteas, and not their lessee.

776
 8. Substantive requirements: the “touch and concern” test. Courts
have traditionally allowed covenants to run with the land only if they
“touch and concern” the land, meaning that they affect the use or value of
the land itself. The test is intended to identify the kinds of obligations that
should attach to the land rather than the individuals making the agreement.
“Where the burdens and benefits created by the covenant may exist
independently from the parties’ ownership interests in land, the covenant
does not touch and concern the land and will not run with the land.”
Runyon v. Paley, 416 S.E.2d 177, 183 (N.C. 1992); see Vulcan Materials
Co. v. Miller, 691 So. 2d 908, 914 (Miss. 1997) (“A covenant that imposes
a burden on real property for the benefit of the grantor personally does not
follow the land into the possession of an assignee”); 7 Thompson on Real
Property, Thomas Editions, §61.04; Restatement of Property §537 (1944).
On the burden side, an obligation touches and concerns the burdened
estate if it affects the use and enjoyment of the land. On the benefit side,
an obligation touches and concerns a dominant estate if it improves
enjoyment of that land or increases its market value. Restrictive covenants
that limit land use, such as covenants limiting the land to residential
purposes or prohibiting the sale of liquor on the land will generally touch
and concern both the dominant and servient estates. They touch and
concern the servient estate because they restrict the use of the land; they
touch and concern the dominant estate because the restriction is intended
to benefit the owners of the dominant estates whoever they happen to be
and because most purchasers of the dominant estates would consider the

777
right to enforce the covenant as increasing the value or attractiveness of
the benefited land.
The traditional refusal to enforce covenants when the benefit is held in
gross (note 2.a, supra) is an application of the touch and concern test.
Covenants that restrict land use interfere with both the right of free use of
property and the marketability of the property. This cost is thought to be
justified if there is a sufficient compensating benefit to other land. But
when no land is benefited this presumption falls away, and the autonomy
interests of current owners trumps the power of the “dead hand” of prior
owners to control the property. See Garland v. Rosenshein, 649 N.E.2d
756 (Mass. 1995); Lakewood Racquet Club, Inc. v. Jensen, 232 P.3d 1147
(Wash. App. 2010).
Affirmative obligations to pay fees, like that in Neponsit, have often
caused problems for the courts. Payment of money may appear to be more
in the realm of contract law than an obligation that should attach to the
land itself. As the court recognized in Neponsit, however, when the fees
are used to maintain the common elements of a community, it does touch
and concern the land by preserving the value of the properties in a
community.
Although the obligation to pay property owners association dues is
now well established, other cases are more controversial. For example, in
Castlebrook, Limited v. Dayton Properties Limited Partnership, 604
N.E.2d 808 (Ohio Ct. App. 1992), the court held that a covenant to return a
tenant’s security deposit did not touch and concern the land and hence was
not binding on a successor landlord. In Chesapeake Ranch Club, Inc. v.
C.R.C. United Members, Inc., 483 A.2d 1334 (Md. Ct. Spec. App. 1984),
the court held that a covenant to pay dues to belong to a recreational
facility did not touch and concern the land. The current trend, however, is
to enforce such obligations. See Nickerson v. Green Valley Recreation,
Inc., 265 P.3d 1108, 1115-1116 (Ariz. Ct. App. 2011) (enforcing covenant
to pay membership fees and collecting similar cases). Should a
homeowner in a subdivision be bound by a covenant that requires the
owner to pay dues to a health club? Would your answer change if the club
admits anyone as a member (not just homeowners in the neighborhood), is
profitable, and charges $1,000 a year while the owner has no interest in
using the facilities?

B. The Restatement (Third) and Its Influence

The Restatement (Third) of Property (Servitudes) was adopted by the

American Law Institute (ALI) in 1998 and published in final form in 2000.

778
Recognizing that covenants are now indispensable tools of land use
development, it seeks to merge and simplify the law of covenants and
easements and further the trend of easing restrictions on covenants running
with the land. Restatements are not authoritative sources of law, but they
are often cited in court opinions as persuasive indications of the direction
in which courts are or should be moving. No jurisdiction has adopted the
Restatement (Third) in its entirety, although several courts have relied on
aspects of it.
The Restatement (Third) proposes to abolish the distinction between
real covenants and equitable servitudes; abolish the privity requirement;
permit enforcement of covenants in gross; and replace the touch and
concern test with a review for reasonableness that more explicitly
incorporates policy concerns. As you will see, however, the substance of
these factors still plays a limited role in the Restatement (Third), and many
courts continue to rely on traditional requirements.
1. Abolishing the distinction between negative easements, real
covenants, and equitable servitudes. The Restatement (Third) drops the
terms “real covenant” and “equitable servitudes” and “negative easement,”
encompassing all within the category of “covenants running with the
land.” §§1.2-1.4. Although some courts have embraced this change, see
Dunning v. Buending, 247 P.3d 1145 (N.M. Ct. App. 2010), other courts
still commonly use the terms “negative easement” and “equitable
servitude.” See Nordbye v. BRCP/GM Ellington, 266 P.3d 92, 102 (Or. Ct.
App. 2011) (holding that if covenant to maintain a property as low-income
housing was not enforceable as a real covenant, it would be enforceable as
an equitable servitude because owners had notice of the restriction);
Conway v. Miller, 232 P.3d 390 (Mont. 2010) (analyzing a building
restriction as a “negative easement”).
2. Abolishing the horizontal privity requirement. The Restatement
(Third) of Property §2.4 (2000) would abolish the horizontal privity
requirement entirely. The drafters argue that although the requirement may
have helped to ensure intent and notice of the restriction, the intent and
notice requirements serve these interests more directly. Id. The
abolishment of the horizontal privity requirement followed several
jurisdictions that were critical of the rule. Nevertheless, some courts
continue to demand horizontal privity before finding an enforceable
covenant. See, e.g., Cunningham v. Greensboro, 711 S.E.2d 477, 485-486
(N.C. Ct. App. 2011) (refusing to enforce utility agreements that were
created without horizontal privity).
3. Abolishing the touch and concern requirement. The Restatement

779
(Third) seeks to “permit innovative land-development practices using
servitudes without the sometimes irrational impediments imposed by the
touch and concern doctrine.” Supra §3.2. The Restatement proposes
abolishing the touch and concern requirement, and shifting the burden to
those challenging enforcement to prove that the requirement violates
public policy for reasons that include, but are not limited to, that the
servitude (1) is arbitrary, spiteful, or capricious; (2) unreasonably burdens
a fundamental constitutional right; (3) imposes an unreasonable restraint
on alienation under §3.4 or §3.5; (4) imposes an unreasonable restraint on
trade or competition under §3.6; or (5) is unconscionable under §3.7. Id.
§3.1. In some places, however, the Restatement (Third) seems to
reintroduce the touch and concern element through the back door by
providing that burdens having “nothing to do with ownership, occupancy,
or use of the land” may be invalidated as arbitrary or capricious, id. §3.2
cmt. e, or unreasonable indirect restraints on alienation of land. Id. §3.5.
Similarly, the Restatement (Third) specifically provides that the benefit of
covenants need not touch and concern the land, id. §2.6, but requires that
the beneficiary of the covenant is reasonably identifiable, id. §7.13, and
has a “legitimate interest” in enforcing it. Id. §8.1.
Despite the Restatement (Third), many courts still retain some version
of the touch and concern requirement. Dunning v. Buending, 247 P.3d
1145 (N.M. Ct. App. 2010); Midsouth Golf v. Fairfield Harbourside
Condominium Association, 652 S.E.2d 378 (S.C. 2007) (recreation fees
were invalid because they did not touch and concern the land); Deep Water
Brewing, LLC v. Fairway Resources Limited, 215 P.3d 990 (Wash. Ct.
App. 2009) (height restriction to preserve view was valid because it
touched and concerned burdened and benefitted land); see also Nickerson
v. Green Valley Athletic Association, 265 P.3d 1108 (Ariz. App. 2011)
(although 2008 statute appeared to abolish touch and concern requirement
for residential development covenants, requirement still applied to
covenants created before its enactment). Many states, however, have
abolished or modified the prohibition on benefits in gross. See, e.g., El
Paso Refinery, LP v. TRMI, 302 F.3d 343 (5th Cir. 2002) (finding Texas
may have abandoned the touch and concern requirement for the benefit of
a covenant, but not the burden); Wykeham Rise, LLC v. Federer, 52 A.3d
702, 717 (Conn. 2012) (“[B]enefits in gross may validly be created.”);
Lynch v. Town of Pelham, 104 A.3d 1047, 1057 (N.H. 2014) (adopting
Restatement rule that covenant in gross could be enforced if holder had a
legitimate interest in enforcement).
4. Changing interpretive presumptions. Courts traditionally

780
interpreted ambiguous covenants in the manner that would be the least
burdensome to the free use of land, and some still do. Wetlands America
Trust, Inc. v. White Cloud Nine Ventures, L.P., 782 S.E.2d 121, 137-138
(Va. 2016) (holding that strict construction rule applied to conservation
easements); City of Bowie v. MIE Properties, Inc., 922 A.2d 509, 522 (Md.
2007); Neufairfield Homeowners Association v. Wagner, 42 N.E.3d 941,
944 (Ill. Ct. App. 2015) (applying strict construction rule to find home day
care business did not violate covenant). There is a longstanding trend,
however, of recognizing that covenants may in fact enhance land value,
and abandoning strict construction to interpret covenants to fulfill the
intent of the parties. See Powell v. Washburn, 125 P.3d 373, 376-377
(Ariz. 2006) (“Arizona’s rule that courts should enforce the intent of the
parties to a restrictive covenant in the absence of ambiguity reaches back
to the 1930s.”); Joslin v. Pine River Development Corp., 367 A.2d 599,
601 (N.H. 1976) (“The former prejudice against restrictive covenants
which led courts to strictly construe them is yielding to a gradual
recognition that they are valuable land use planning devices.”); Viking
Properties, Inc. v. Holm, 118 P.3d 322, 326 (Wash. 2005) (discussing
abandonment of strict construction rule). The Restatement (Third) follows
this trend, providing that covenants should be interpreted to further the
intent of the parties, carry out their purposes, and avoid violating public
policy. Restatement (Third) §4.1.

Problems
1. Writing.
a. A developer creates a residential subdivision and offers lots within
it for sale. The brochures for the subdivision describe it as a “premier
residential community,” to have “restrictive covenants to fulfill the
purposes of the community.” Neither the deeds nor the recorded
subdivision map, however, refer to any restrictive covenants. The
developer sells some of the lots, but is unable to sell more to people
interested in them for residential purposes, and sells the remainder to a
buyer who plans to build a big box store. Is there a writing sufficient to
create a restrictive covenant on the land?
b. In 1872, a developer recorded a subdivision map showing
proposed lots and streets and parks in a seaside vacation community on
Martha’s Vineyard in Massachusetts. The map included three parcels
labeled “Prospect Park,” “Webster Park,” and “Plaza.” These parcels
were about five times the size of the proposed residential lots, and were
irregularly shaped. The rest of the parcels in the subdivision were sold

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 to individual homeowners; the deeds did not mention any rights with
respect to the park parcels specifically, but all referred to the recorded
subdivision map. More than a hundred years later, the owners of the
lots, the heirs of the original developer, sought to sell the undeveloped
park parcels to buyers who wanted to build residences on them.
Owners of other homes in the subdivision claim that the parcels are
subject to an equitable servitude prohibiting development. Is there a
sufficient writing to create a covenant preventing development?
Compare Reagan v. Brissey, 844 N.E.2d 672 (Mass. 2006) (yes) and
Agua Fria Save the Open Space Association v. Rowe, 255 P.3d 390
(N.M. 2011) (no).
2. Intent to run. AHC, Inc., a developer of low-income housing, sells
a home to a couple with financing. The financing agreement includes a
deed of trust from the couple providing that “[i]n the event of Grantor’s
death or in the event that Grantor elects to sell the property secured hereby
at any time within thirty (30) years from the date of the Trust, AHC, Inc.,
its successors or assigns shall have the option to purchase the property at
the Purchase Price as hereinafter defined. . . .” The couple later refinances
the home with Option One Mortgage, and defaults on the refinanced loan.
Option One initiates a foreclosure sale on the property, at which an
investment company purchases the home. Does the option to purchase run
to subsequent owners like the investment company? What does the
language suggest? Why might a developer of low-income housing include
such an option? Beeren & Barry Investments, L.L.C. v. AHC, Inc., 671
S.E.2d 147 (Va. 2009), discusses this problem.
3. Horizontal privity.
a. A sells land to B; the deed specifies that the land can only be used
for residential purposes. Is there simultaneous horizontal privity (the
old English test)? Is there instantaneous horizontal privity (the
common American test)?
b. A and B are neighbors; A plans to install solar panels and wants to
make sure B does not build to block them. B agrees to enter into a
covenant restricting her from building so as to obstruct the flow of
sunlight to the solar panels. Is there horizontal privity under the
common American test? Assume that C purchases B’s land knowing of
the covenant. May A enforce the covenant against C? Under traditional
rules, what remedies may A seek?
4. Vertical privity. A sells land to B with a covenant that B may not
block the flow of a natural stream from B’s land to A’s land. Is there

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vertical privity in the following situations? With or without vertical
privity, should the covenant be enforceable by or against the subsequent
owner of the land?
a. A sells his land to C.
b. B’s land is foreclosed and sold at a foreclosure sale to D.
c. B leases her land to E.
d. B loses her land by adverse possession to F.
e. A dies and G inherits his land.
5. Notice. O sells a residential lot to A within a subdivision. The deed,
like all other deeds in the subdivision, provides that A can only paint the
home in certain approved “southwestern” shades: sand, adobe, cactus, and
sandia. The deed is recorded. B later purchases the home, without any
actual knowledge of the restriction. She paints the property hunter green.
What different arguments can you make that she has legal notice of the
restriction?
6. Touch and concern. Do the following covenants touch and concern
the burdened land? Do they touch and concern some benefited land (i.e.,
are these restrictions appurtenant or in gross)? Would they be upheld under
Restatement (Third) public policy analysis?
a. The covenants for a condominium development provide that unit
owners may not have dogs. How would the analysis change for a
restriction preventing cats?
b. The deed for a historic house provides that the owners must
always hang a portrait of the original owner.
c. An owner of two supermarkets two miles apart sells one with the
covenant that the land may never be used for supermarket purposes.
d. The covenants upon sale of an oil refinery provide that the grantee
“shall never, directly or indirectly, attempt to compel Grantor to clean
up, remove or take remedial action or any other response with respect
to any of the buried sludge sites, the waste pile site, the Active
Hazardous Waste Storage Sites, the underground liquid petroleum and
petroleum vapors (including, without limitation, any leaching
therefrom or contamination of the air, ground or the ground water
thereunder or any effects related thereto), or any and all waste water
treatment ponds or treatment systems on or in the vicinity of said
premises or seek damages therefor. This covenant shall run with the
land and shall bind Grantee’s successors, assigns and all other
subsequent owners of the property.” See El Paso Refinery, LP v. TRMI,
302 F.3d 343 (5th Cir. 2002). The court found that Texas law did not

783
 necessarily require that a covenant benefit land in order to run (i.e., that
covenants in gross were permissible) but that it must touch and concern
the burdened land. Does the covenant touch and concern the burdened
land?

C. Remedies

Should covenants normally be enforced by damages or injunctive

relief? Traditional contract law holds that damages are the usual remedy
for breach of contract while injunctions are awarded only when damages
are inadequate. Property law, however, represents one of the most
important areas in which damages are often thought inadequate because of
the unique value attached to the location of land and the desire to use
particular unique structures. The granting of an injunction, however, has
always been discretionary.
Consider Judge Richard Posner’s explanation for the predilection for
injunctions in a case involving breach of an anticompetitive covenant. In
Walgreen Co. v. Sara Creek Property Co., 966 F.2d 273 (7th Cir. 1992), a
shopping center landlord (Sara Creek) breached an anticompetitive
covenant in a lease with a tenant pharmacy (Walgreens) by arranging for a
department store containing a pharmacy (Phar-Mor) to replace an anchor
tenant whose business was doing badly. The issue was whether the
covenant could be enforced by an injunction ordering the landlord not to
allow a competitor to operate in the center or whether an injunction would
be denied and the plaintiff relegated to damages. The Seventh Circuit
upheld the trial court’s decision to issue an injunction.
Judge Posner explained that damages are normally the remedy for
breach of contract because the promisee receives damages to compensate
for losing the benefit of the bargain, making the promisee indifferent as
between performance and breach, while the promisor who is relieved from
the promise can obtain the benefit of a more profitable bargain with
another party, thereby shifting resources to a more valuable use without
harming the promisee. If “the value of Phar-Mor’s occupancy of the
anchor premises may exceed the cost to Walgreen of facing increased
competition[, . . . ] society will be better off if Walgreen is paid its
damages, equal to that cost, and Phar-Mor is allowed to move in rather
than being kept out by an injunction.” Id. at 274. However, Judge Posner
concluded that in this case, an injunction was more likely to achieve the
efficient result than damages. First, he noted that injunctive relief ordering
compliance with the covenant would not necessarily end the matter; the
parties could bargain for a contrary result. In contrast, damages are set by

784
the court or by a jury rather than by the parties through private bargaining.
Unless transaction costs block private bargaining, a number reached by the
parties is more likely to represent the actual value of the entitlements in
question than a number reached by a third party. If the parties can reach an
agreement at an amount chosen by them, both will be better off. “A battle
of experts is a less reliable method of determining the actual cost to
Walgreen of facing new competition than negotiations between Walgreen
and Sara Creek over the price at which Walgreen would feel adequately
compensated for having to face that competition.” Id. at 276.
At the same time, Judge Posner noted that transaction costs might
block negotiation between the parties since they were in a situation of
“bilateral monopoly” in which “two parties can deal only with each other:
the situation that an injunction creates. . . . Walgreen can ‘sell’ its
injunctive right only to Sara Creek, and Sara Creek can ‘buy’ Walgreen’s
surrender of its right to enjoin the leasing of the anchor tenant’s space to
Phar-Mor only from Walgreen.” Id.

The lack of alternatives in bilateral monopoly creates a bargaining range, and

the costs of negotiating to a point within that range may be high. Suppose the
cost to Walgreen of facing the competition of Phar-Mor at the Southgate
Mall would be $1 million, and the benefit to Sara Creek of leasing to Phar-
Mor would be $2 million. Then at any price between those figures for a
waiver of Walgreen’s injunctive right both parties would be better off, and
we expect parties to bargain around a judicial assignment of legal rights if
the assignment is inefficient. R.H. Coase, The Problem of Social Cost, 3 J.L.
& Econ. 1 (1960). But each of the parties would like to engross as much of
the bargaining range as possible — Walgreen to press the price toward $2
million, Sara Creek to depress it toward $1 million. With so much at stake,
both parties will have an incentive to devote substantial resources of time and
money to the negotiation process. The process may even break down, if one
or both parties want to create for future use a reputation as a hard bargainer;
and if it does break down, the injunction will have brought about an
inefficient result. All these are in one form or another costs of the injunctive
process that can be avoided by substituting damages.

Id. at 276. Thus, both damages and injunctions have both costs and
benefits. The benefits of an injunction are that the parties get to bargain to
determine who values the entitlement the most and to set the appropriate
price; they also avoid the time and expense of litigation and the inaccuracy
of damage awards set by a third party who is less knowledgeable about the
benefits of anticompetitive covenants and their value to the parties than the
parties themselves. The benefits of damages are that litigation can produce

785
a result where transaction costs might prevent the parties from bargaining
to a mutually beneficial result; indeed, the possibility that a jury would
determine the appropriate level of damages might be an incentive to get
the parties to agree to an appropriate resolution, thereby promoting rather
than discouraging bargaining. In any event, Judge Posner concluded that
the trial judge appropriately determined that “the costs (including forgone
benefits) of the damages remedy would exceed the costs (including
forgone benefits) of an injunction.” Id. at 278.
Professor Ward Farnsworth criticizes the kind of reasoning presented
by Judge Posner by noting that in nuisance cases he examined, the parties
never bargained to rearrange the results reached by the court both because
the winning party believed it deserved to win and because of hard feelings
generated by the dispute, making the parties unwilling to compromise and
transfer property rights even if this would otherwise have been in their
mutual best interest. Ward Farnsworth, Do Parties to Nuisance Cases
Bargain After Judgment? A Glimpse Inside the Cathedral, 66 U. Chi. L.
Rev. 373 (1999). This may suggest that significant transaction costs may
bar bargaining between the owners of the servient and dominant estates.
Courts have also had trouble with affirmative covenants that require
owners to continue particular uses, although some courts have enforced
such covenants. Compare Shalimar Association v. D.O.C. Enterprises,
Inc., 688 P.2d 682 (Ariz. Ct. App. 1984) (requiring an owner to continue
operating a golf course to comply with an affirmative covenant) with
Oceanside Community Associates v. Oceanside Land Co., 195 Cal. Rptr.
14 (Ct. App. 1983) (refusing to grant an injunction ordering an owner to
renovate and operate a golf club but imposing a lien on the property for
lost value to the dominant estates resulting from the failure to comply with
the covenant).

§4 COVENANTS IN RESIDENTIAL
SUBDIVISIONS, CONDOMINIUMS, AND
OTHER MULTIPLE OWNER
DEVELOPMENTS
The covenants typical under early English law were agreements between a
few individual owners. Today, covenants may bind hundreds, thousands,
and even tens of thousands of people. The power of these covenants in
creating shared rights and obligations is reflected in the name of the
developments they create — “common

786
interest developments.” Although they include commercial developments
such as shopping centers, these materials will focus on residential
developments. This expansion of the covenant form raises many new
questions. What is necessary to bind unit owners to common covenants?
What are the rights of unit owners to enforce the covenants against each
other? What are the rights of the unit owners against the developer?
Finally, what are the boundaries on what either developers or unit owners
can demand of an owner? The doctrine of implied reciprocal negative
servitudes responds to some of these questions, while the statutes and
common law that govern common interest developments respond to others.
Finally, substantive limitations on the enforcement of covenants in
general, discussed in §5, have had to adapt to the growth of common
interest developments.

§4.1 Implied Reciprocal Negative Servitudes in Residential

Subdivisions
An owner of a large tract of land wants to subdivide it and sell 100
lots. She wants to ensure that the lots are restricted to residential use and
each lot to a single-family home. To accomplish this, she places covenants
in each deed by which the purchaser agrees for herself, her heirs and
assigns, to restrict the property to use as a single-family home. Does this
accomplish her purpose under either the law of real covenants or equitable
servitudes? For perhaps surprising reasons, the answer is no.
To illustrate this, imagine the following situation. O subdivides a
parcel, and sells lots to Buyers 1, then Buyer 2, then Buyer 3, then Buyer
4. In the deeds with lots 1, 2, and 3, the buyers covenant to O to only use
the land for residential purposes. The covenants are presumed to benefit
O’s remaining land. Each buyer who purchases O’s land after the covenant
is made, therefore, gets the benefit of the covenants already made
benefitting O’s land, and can enforce them against the earlier buyers. But
earlier purchasers could not: O simply received a promise, but did not

787
make a promise to restrict its remaining land. Buyer 3, for example, could
prevent Buyer 1 from using the land for nonresidential purposes, but Buyer
1 could not restrain Buyer 3. Nobody, moreover, could stop Buyer 4 from
using that parcel as she wished, because the parcel was sold without a
covenant.
The doctrine of implied reciprocal negative servitudes (also called
implied reciprocal negative easements) solves both problems by implying
that when a owner sells a number of parcels with evidence of intent to
create a common plan or scheme of development then (1) covenants
made to the seller benefit all parcels within the plan; and (2) all parcels
within the plan are bound by the covenants. The courts reasoned that
owners of other parcels within the common plan area were intended third-
party beneficiaries of the agreements made with the developer, and that it
would be unjust to permit owners to violate the covenants despite the lack
of restrictions in their chain of title. As the cases below illustrate, the
question then becomes what is sufficient evidence of intent to create a
common plan, and what land comes within the plan.
Statutes and regulations in many states now require developers to file a
declaration prior to selling individual lots subject to a common plan. The
declaration describes the area covered by the common plan and recites the
covenants applicable to the lots. Buyers are on constructive notice of the
restrictions in the declaration if it is recorded prior to their purchase and
are deemed to impliedly agree to abide by the restrictions; these grantee
covenants are deemed to be made for the benefit of all lots in the plan. The
declaration also constitutes a promise by the developer to restrict the
remaining lots when they are sold; this constitutes a grantor covenant. If a
declaration is filed, an earlier buyer who sues a later buyer for violating a
covenant can base her claim on both the grantor covenant and the grantee
covenant.

Evans v. Pollock

796 S.W.2d 465 (Tex. 1990)

Map: Hornsby Hill Road, Austin,

Texas

C.L. RAY, Justice.

788
 The doctrine of implied reciprocal negative easements applies when an
owner of real property subdivides it into lots and sells a substantial number
of those lots with restrictive covenants designed to further the owner’s
general plan or scheme of development. The central issue is usually the
existence of a general plan of development. The lots retained by the owner,
or lots sold by the owner from the development without express
restrictions to a grantee with notice of the restrictions in the other deeds,
are burdened with what is variously called an implied reciprocal negative
easement, or an implied equitable servitude, or negative implied restrictive
covenant, that they may not be used in violation of the restrictive
covenants burdening the lots sold with the express restrictions. A
reasonably accurate general statement of the doctrine has been given as
follows:

[W]here a common grantor develops a tract of land for sale in lots and
pursues a course of conduct which indicates that he intends to inaugurate a
general scheme or plan of development for the benefit of himself and the
purchasers of the various lots, and by numerous conveyances inserts in the
deeds substantially uniform restrictions, conditions and covenants against the
use of the property, the grantees acquire by implication an equitable right,
variously referred to as an implied reciprocal negative easement or an
equitable servitude, to enforce similar restrictions against that part of the tract
retained by the grantor or subsequently sold without the restrictions to a
purchaser with actual or constructive notice of the restrictions and covenants.
Minner v. City of Lynchburg, 129 S.E.2d 673, 679 (Va. 1963).

Facts
In September of 1947 Stanley and Sarah Agnes Hornsby (the
Hornsbys), together with Charles and Bernice McCormick (McCormicks)
platted a subdivision around Lake Travis from their commonly owned
property in Travis County. They named the subdivision “Beby’s Ranch
Subdivision No. 1.” The plat itself did not state any restrictions on land-
use. The plat divided the property into seven blocks designated
alphabetically “A” through “G.” The plat did not further subdivide blocks
C, D, E, and F, but blocks A, B, and G were divided into thirty-one lots.
The subdivision is on a peninsula-like tract that extends into the lake, so
that much of it has lake frontage. All of the platted lots are lakefront lots.
Block G is located on the point of the peninsula. Block F is located on a
hill and is surrounded by lakefront lots.
Block F is also referred to as the “hilltop.”

789
 In October of 1947, before selling any lots other than two lots sold
prior to the platting discussed below, the Hornsbys and McCormicks
partitioned Beby’s No. 1 between themselves. By partition deed the
McCormicks received title to all of Blocks A, B, and C, and the Hornsbys
got Blocks D, E, F, and G. Over the next several years, the Hornsbys and
the McCormicks conveyed twenty-nine parcels of land from Beby’s No. 1
to third parties or one another. Stanley Hornsby, a real estate attorney, and
his law partner Louise Kirk, handled most of the legal work relating to the
sale of lots, and the McCormicks made most of the sales. A real estate
agent advertised some of the lakefront lots for sale in 1955, describing
them as in “a restricted subdivision.” Each deed from the Hornsbys and the
McCormicks contained substantially the same restrictive covenants,
including, among others, covenants: (1) prohibiting business or
commercial use of the land conveyed; (2) restricting the land to residential
use with only one dwelling per lot; and (3) providing that the restrictions
could be changed by ¾ of the property owners within the subdivision

790
“voting according to front footage holdings on the 715 contour line” of the
lake. In 1946 the McCormicks had conveyed two of the lakefront lots
unburdened by any deed restrictions. When the original grantee conveyed
the two lots to third parties in 1954, he had Hornsby draft the deeds. The
deeds contained the restrictions that the property could not be used for any
business or commercial purposes and that the restrictions could be altered
by the “¾ vote” along the 715 contour. Thus all lots conveyed ended up
with substantially similar restrictions. All were lakefront lots, and voting
rights under the restrictive covenants apparently were limited to lots with
lake frontage.
The Hornsbys retained ownership of lots 4 through 8 in Block G and
all of Block F. Both Hornsbys are now deceased, and the retained property
passed to their devisees. The present dispute arose when the Hornsby
devisees contracted to sell Thomas R. Pollock all of Block F and lots 4 and
5 in Block G for the purpose of building a marina, private club, and
condominium development. Charles Evans and other owners whose deeds
contained the restrictive covenants sued for equitable relief under the
implied reciprocal negative easement doctrine. They sought declaration
that the restrictive covenants enumerated above expressly imposed by deed
upon their property were implied upon the Hornsby retained property.
They further sought an injunction to prevent the Hornsby devisees from
conveying the property without such deed restrictions.
Trial was to the court. The testimony sharply conflicted as to Stanley
Hornsby’s oral representations of his intentions for the retained property.
The evidence ranged from testimony that could reasonably be interpreted
to mean that Hornsby intended all the subdivision property to be restricted,
to testimony lending itself to the conclusion that Hornsby intended the
retained property to be unrestricted in all respects.
[The trial court held that the original subdividers, Stanley and Sarah
Agnes Hornsby and Charles and Bernice McCormick, intended the
restrictions to apply to all the lakefront lots but not to the hilltop. The court
of appeals reversed, holding that none of the retained lots were restricted,
on the ground that for the implied reciprocal negative easement doctrine to
apply, the original grantors must have intended that the entire subdivision
be similarly restricted.]

The Scope of a “Restricted District”

Provisions in restrictive covenants that the restrictions may be waived
or modified by the consent of three-fourths of the lot owners constitute
strong evidence that there is a general scheme or plan of development

791
furthered by the restrictive covenants. The voting rights in the present case
clearly attached only to lakefront lots. It was reasonable for the trial court
to conclude that the restrictions were meant to apply only to the lakefront
lots. The legal question is whether all the tracts in the development must
be intended to be subject to the restrictions for the implied reciprocal
negative easement doctrine to apply to any of the retained lots. We find it
immaterial whether the question is phrased as whether the plan may be that
some tracts are unrestricted while others are restricted, or whether the plan
need only apply to certain similarly situated lots. We hold that the general
plan or scheme may be that the restrictions only apply to certain well-
defined similarly situated lots for the doctrine of implied reciprocal
negative easements to apply as to such lots. Logical extensions of Texas
decisions, as well as decisions from sister states, support our conclusion.
[Particularly] in point is the Kentucky case of Bellemeade Co. v.
Priddle, 503 S.W.2d 734 (Ky. Ct. App. 1974). There the owners had
platted and recorded sections I, II, III, IV and V of the Bellemeade
subdivision. Sections I, II, III and IV had been marketed as restricted to
one-family residential uses, but section V was a tract of approximately 12
acres adjacent to a major United States highway, different in character
from the other sections. When the plat of section I went to record, there
was a contract with the real estate firm marketing the subdivision which
gave it the exclusive right to sell residential lots, but there was a separate
provision giving those agents the exclusive right to sell, lease or develop
section V as multi-family duplex housing, a shopping center and parking
area. There was evidence of negotiations about section V with prospective
buyers or developers for commercial enterprises both before and after the
platting of the subdivision. After reviewing the marketing evidence, the
court concluded there was no evidence that any lots in section V were
offered for sale for residential purposes or evidence of confusion as to the
developers’ intent. The court held that the implied reciprocal negative
easement doctrine applied as to retained lots in sections I through IV, but
that section V was not part of the restricted area and could be sold for
construction of a proposed Holiday Inn motel.
We have reviewed the record and find there is some evidence to
support all trial court findings that were attacked in the court of appeals.
Because there were factual sufficiency points raised in the court of appeals
upon which that court has not ruled, we remand this cause to the court of
appeals for further consideration consistent with this opinion.
Sanborn v. McLean, 206 N.W. 496 (Mich. 1925). Defendant
Christina McLean owned land on which she and her husband sought to

792
build a gas station. It would be located behind their house in a “high grade
neighborhood” on Collingwood Avenue in Detroit, Michigan. All of the
lots fronting on that portion of the road had once been owned by a single
owner who imposed restrictive covenants on 53 of the 91 lots, limiting
them to residential purposes. No restrictions appear in the chain of title to
the McLean lot. The court held that the McLeans were on constructive
notice of the restrictions in the deeds to neighboring properties and that the
uniform residential character of the surrounding properties also put the
McLeans on inquiry notice to determine whether there were restrictive
covenants on neighboring lots that might be interpreted to create a plan to
restrict the entire neighborhood to residential uses. Since a majority of the
lots were restricted, the court inferred an intent to create a common plan
even though a great number of the properties did not have restrictions in
their line of title. Given evidence of an intent to create a common plan and
constructive or inquiry notice on purchasers like the McLeans, the court
imposed an implied reciprocal negative servitude restricting the McLean
lot to residential purposes.
Riley v. Bear Creek Planning Committee, 551 P.2d 1213 (Cal.
1976). Ernest and Jewel Riley built a “snow tunnel” or “covered walkway”
on their lot without first obtaining approval of the architectural control
committee empowered by a recorded declaration to regulate land use in the
area. The Rileys had purchased the first lot in the residential subdivision
upon the representation of the seller that the properties would be subject to
the recorded restrictions that they were given before buying the lot.
However, the declaration containing the restrictions was not recorded until
after they had purchased their lot; moreover, because of a mistake by the
title company, their deed did not mention the restrictions. Although it
appeared clear that buyers who purchased lots after the declaration was
recorded were subject to the restrictions, the California Supreme Court
ruled that the Rileys were not subject to the restrictions because there was
no writing in their deed limiting the use of their land and the intent of the
owner to impose those restrictions was not binding on them. Evidence of
their knowledge of the grantor’s intent to impose restrictions was not
admissible under the parol evidence rule (which excluded admission of
oral evidence that contradicts a writing in certain cases) and the Statute of
Frauds (which required interests in land to be in writing to be enforceable),
id. at 1221-1222:

[There] is a practical consideration favoring the rule. The grantee of property

subject to mutually enforceable restrictions takes not just a servient tenement
but, as owner of a dominant tenement, acquires a property interest in all other

793
 lots similarly burdened for the benefit of his property. That fact significantly
affects the expectations of the parties and inevitably enters into the exchange
of consideration between grantor and grantee. Even though the grantor omits
to include the mutual restrictions in deeds to parcels thereafter severed from
the servient tenement, those who take such property with notice, actual or
constructive, of the restrictions are bound thereby. Thus, the recording
statutes operate to protect the expectations of the grantee and secure to him
the full benefit of the exchange for which he bargained. Where, however,
mutually enforceable equitable servitudes are sought to be created outside the
recording statutes, the vindication of the expectations of the original grantee,
and for that matter succeeding grantees, is hostage not only to the good faith
of the grantor, but, even assuming good faith, to the vagaries of proof by
extrinsic evidence of actual notice on the part of grantees who thereafter take
a part of the servient tenement either from the common grantor or as
successors in interest to his grantees. The uncertainty thus introduced into
subdivision development would in many cases circumvent any plan for the
orderly and harmonious development of such properties and result in a crazy-
quilt pattern of uses frustrating the bargained-for expectations of lot owners
in the tract.

Justice Matthew Tobriner dissented, id. at 1222:

I cannot subscribe to the majority’s conclusion that a buyer of a

subdivision lot, who takes his deed with actual knowledge of a general plan
of mutual restrictions applicable to the entire subdivision and who conducts
himself for many years in a manner which demonstrates his belief that such
restrictions apply to his property, thereafter violate all such restrictions with
impunity simply because the restrictions were inadvertently omitted from his
individual deed. Contrary to the majority’s suggestion, we need not decree
this inequitable result in order to prevent fraud to maintain security in land
titles; the very antithesis — a ruling that a buyer with actual knowledge of
restrictions is thereby bound — ensures fairness and promotes security in
land transactions; it implements the intention of both the buyer and the seller.
The majority’s holding will permit plaintiffs in this case to ignore
restrictions designed to preserve natural beauty and property values in a
carefully planned residential community. Although the use of all other lots in
the community will continue to be restricted, plaintiffs will be free to
subdivide their land into any number of small building sites, construct
apartments or rent commercial space, ignore building lines and obstruct
views from neighboring lots, raise livestock, and strip the land by removing
trees and shrubs.
Common sense and substantive justice dictates that the plaintiffs should
not be free to violate such restrictions. At the time of purchase plaintiffs had
actual knowledge of those restrictions; the restrictions formed a part of the

794
 consideration exchanged by the parties. The restrictions continue to enhance
the value of plaintiffs’ individual lot because all other property owners in the
subdivision are bound thereby.
Accordingly, I would hold that the evidence offered by defendant
committee is admissible to establish the existence of building restrictions
binding upon plaintiffs.

Notes and Questions

1. Implied reciprocal negative servitudes. The doctrine of implied
reciprocal negative servitudes, or reciprocal negative easements, was
invented to deal with the intent, notice, and privity of estate issues that
arise when a developer imposes grantee covenants on all lots in a
residential subdivision and when the developer intentionally or
inadvertently leaves those restrictions off some of the lots.
A common plan can be shown by various factors, such as the presence
of restrictions in all or most deeds to property in the area, a recorded plat
(map) showing the restrictions; the presence of restrictions in the last deed
(since the grantor retains no land left to be benefited, the suggestion is that
the intended beneficiaries of the promise are the other lots in the
neighborhood); observance by owners of similar development of their land
and conformity to the written restrictions; language stating that the
covenants are intended to run with the land; and the recording of a
declaration stating that the covenants are intended to be mutually
enforceable. Gerald Korngold, Private Land Use Arrangements:
Easements, Real Covenants, and Equitable Servitudes §9.09, at 301-302
(1990). Evidence tending to show the absence of a common plan is that
some deeds are unrestricted and that the restrictions are nonuniform.
Some courts, however, reject the doctrine of implied reciprocal
negative servitudes applied in Evans v. Pollock, holding instead that
reciprocal covenants will be enforced only if deeds in the chain of title
themselves refer to the covenants or the developer records a declaration
containing the restrictions prior to the sale of the properties sought to be
burdened and benefited by them. Citizens for Covenant Compliance v.
Anderson, 906 P.2d 1314, 1326 (Cal. 1995).
2. The problem of unrestricted lots. What happens if the developer
fails to record a declaration or plat and imposes restrictive grantee
covenants in most, but not all, of the deeds to property in the subdivision,
and the grantor makes no promise to restrict the remaining lots? Can the
owners of lots restricted by grantee covenants enforce them against buyers
of the unrestricted lots? If the buyers of the remaining lots knew of the

795
restriction and orally promised to comply with it, one might apply
equitable estoppel doctrine in conjunction with third-party beneficiary
doctrine to allow enforcement by prior and later buyers. But what if no
oral statements are made by the buyers of the unrestricted lots promising to
abide by the covenants?
Most courts hold that buyers of unrestricted lots are on constructive
notice of covenants in other deeds in the vicinity sold by the same grantor.
Roper v. Camuso, 829 A.2d 589, 595 (Md. 2003). Sanborn v. McLean
went so far as to argue that a buyer in a residential neighborhood should be
on inquiry notice if there is a uniform pattern of development that might
suggest the existence of a common plan.
What evidence is sufficient to show a common plan? If too many of
the lots in the subdivision are sold without restrictions, the court may find
that no common scheme was in fact established, thus freeing all the
unrestricted lots from the duty to comply with the covenants in their
neighbors’ deeds. Petersen v. Beekmere, Inc., 283 A.2d 911 (N.J. Super.
Ct. Ch. Div. 1971). Sanborn v. McLean imposed restrictive covenants on
an entire neighborhood even though the covenants were included in only
53 of 91 deeds. Was this justified? Compare Forster v. Hall, 576 S.E.2d
746 (Va. 2003) (implied reciprocal negative servitude prohibiting mobile
homes was enforced against unrestricted lots when 93 percent of lots were
restricted).
What justifies limiting a property owner’s right to develop his land
when the deed he received from the seller neither had any restrictions in it
nor referred to the restrictions in deeds previously granted to others in the
subdivision? In Riley, the California Supreme Court rejected the ruling in
Sanborn by holding a lot cannot be restricted unless those restrictions
appear in the chain of title to that particular lot. Thus, the first buyers were
not restricted because they purchased prior to the recordation of the
declaration, even though they were on notice of the restrictions at the time
they purchased. Do you agree with the court’s ruling or with the dissenting
opinion of Justice Tobriner?
In 1995, the California Supreme Court clarified Riley by holding that
any buyer of a lot covered by a recorded declaration is bound by the
restrictions in the declaration even if his deed nowhere mentions the
declaration or the restrictions. Citizens for Covenant Compliance v.
Anderson, 906 P.2d 1314 (Cal. 1995). The terms of a recorded declaration
are impliedly included in the deeds to lots covered by the declaration. This
leaves standing the ruling in Riley that exempts lots purchased before the
declaration was recorded.

796
 3. Lots retained by the grantor. Suppose all the covenants in the
neighborhood contain grantee covenants restricting the property to single-
family use. Moreover, the developer files a declaration to that effect
describing all the property in the subdivision as restricted. The developer
owns property across the street from this subdivision; the property is left
undeveloped for several years after the subdivision is completed. The
developer then seeks to build on this property in a manner inconsistent
with the restrictions imposed on the subdivision. Can the developer do
this? The question arises whether the neighboring tract should be treated as
part of the common plan. If it was noted on the original plat, the courts are
likely to hold that it was part of the common plan. But suppose it was
never described on the plat or the declaration or orally as part of the
development. May the developer sell to commercial users in a manner that
does not constitute a common law nuisance but nonetheless interferes with
the common residential scheme by substantially changing the
environment? No promises of any kind were made to the buyers in the
subdivision that the developer would not do this. Most courts hold that
only parcels within the common scheme are restricted and that the
grantor’s intent to leave a tract or parcel out of the common scheme is
determinative.
In Duvall v. Ford Leasing Development Corp., 255 S.E.2d 470 (Va.
1979), a developer subdivided and built homes on a large tract in stages
over a 25-year period. Each of the subdivisions was restricted to residential
use. The developer then sold its remaining land, expressly providing in the
deed that a portion of it would remain free of restrictions of any kind. The
buyer of that land sold the unrestricted parcel to an owner who sought to
establish a car sales and service business. Relying on the piecemeal
development and the fact that it occurred over a long period of time, the
court held that the development consisted of separate subdivisions and that
the entire property was not subject to a single common plan. In contrast,
the court in Snow v. Van Dam, 197 N.E. 224 (Mass. 1935), concluded that
a lot across the street from the rest of a subdivision was intended to be in
the same common plan, although it was sold more than 15 years after the
first lot, because it was included in the description of the entire tract when
it was registered and the delay in sale was caused by the inability to sell
the property rather than an intent to exclude it from the restricted area. See
also Country Community Timberlake Village v. HMW Special Utility
District of Harris, 438 S.W.3d 661 (Tex. Ct. App. 2014) (holding that a
neighboring tract was not part of a common scheme with Timberlake
Village, so restrictions on tract could not be enforced by Timberlake
owners).

797
 When a developer that deliberately leaves some of its contiguous land
out of the common scheme attempts to develop the retained land in a
manner inconsistent with the common scheme, is there any argument for
constraining the developer’s ability to do this? Does it matter if the
unrestricted lots are located outside but adjacent to the subdivision or
inside it?

Problems
1. A developer sells 45 of 50 lots in a subdivision, with grantee
covenants restricting uses to single-family homes. The developer orally
assures the buyers that all the lots will be restricted. The developer,
however, has trouble selling the last five lots located on the edge of the
development. A buyer offers to purchase three of the lots if they can be
combined and an apartment building constructed with 25 apartments. The
price is lower than the developer hoped to get for the three properties, but
no other buyers seem ready to purchase the lots for use as single-family
homes at prices that would allow the developer to make a profit. Then
another buyer comes along who offers an extremely high price for the last
two lots so long as no covenant is included in the deed; this buyer wants to
build a gas station. Several of the owners of the restricted lots sue the
owners of the lots that are to be developed as an apartment building and a
gas station.
a. Can they enforce the restrictions against these owners under
current law? Should they be able to do so?
b. Now suppose the developer intended all along to sell the last five
lots as unrestricted lots, and the buyers can prove that the developer
intended to defraud them at the time of purchase, rather than merely
changing her mind when the market went soft. Does this change your
analysis?
2. A developer owns two large tracts located across the road from each
other. The area is rural and undeveloped. The developer constructs a
residential subdivision on one tract, with grantor and grantee covenants
restricting the property to single-family homes. The developer also
represents orally to the buyers that the area will be a pleasant residential
neighborhood. All the lots contain the covenants, and uniform
development occurs. Then the developer makes plans to turn the tract
across the street into a shopping center. Can she do so?

§4.2 Common Interest Developments and Property Owners

Associations

798
 As of 2011, some 62 million Americans lived in settings in which
multiple dwellings are joined by servitudes providing them with shared
rights in common elements such as roads and recreational facilities, or
shared obligations to contribute fees to an owners association that
maintains the common elements, enforces the covenants, and (in some
cases) enacts rules for the community. The Restatement (Third) and the
Uniform Laws Commission have called such residential settings “common
interest communities.” See Restatement (Third) §6.2; U.L.A., Uniform
Common Interest Owners Bill of Rights §2.6. The California Supreme
Court calls them “common interest developments” and “community
associations.” Nahrstedt v. Lakeside Village Condominium Association,
Inc., 878 P.2d 1275 (Cal. 1994). Do these terms strike you as appropriate
descriptions?
Part of the explosion of common interest developments in the 1970s
was tied to federal tax changes that made ownership of rental properties
less profitable, and gave unit owners tax credits similar to those for single-
family housing. See Henry Hansmann, Condominium and Cooperative
Housing: Transactional Efficiency, Tax Subsidies, and Tenure Choice, 20
J. Leg. Studies 25 (1991). Federal law still creates some differences
between common interest developments and single-family homes.
Hurricane Sandy drew attention to one: Common elements are generally
not eligible for FEMA disaster assistance given to single-family homes,
because property owners associations are considered businesses under the
law.
This section discusses some of the kinds of residential common interest
developments, and distinct legal and policy questions they pose.

A. Residential Subdivisions and Condominiums

Most common interest developments are either composed of separate

houses in a planned subdivision or are condominiums — attached
dwellings or units in an apartment building. The developer typically drafts
the initial covenants or CC&Rs (conditions, covenants, and restrictions)
for these communities and records them as a declaration or master deed
with the local recording office or register of deeds prior to sale of the first
unit. In buying their units, owners agree to abide by these covenants.
Owners individually own and obtain financing for their own units, but they
share ownership of the common elements of the community. Owners may
vote to amend the initial covenants, although a supermajority vote of
between 60 to 75 percent is usually required.
The declaration will typically create a homeowners association or

799
condominium association. Each of the owners is a member of the
association. Owners are empowered to vote for the members of a board,
called the board of trustees or board of managers, to manage the
association’s common interests. In addition to enforcing covenants,
homeowners associations may be empowered to collect dues and fees from
the owners to maintain common areas such as roads and recreational
facilities and rooftops and hallways of condominiums. They are also often
empowered to promulgate bylaws or rules governing use of common areas
and perhaps even the appearance and use of individual lots or units.
Unpaid dues or fines for rule violations often constitute liens on the
property empowering the owners association to foreclose.
In effect, these associations function like local governments, except
that votes are not based on “one person-one vote” but are based on
property ownership. Only owners have voting rights; tenants and other
family members are not entitled to vote in board elections; and owners of
more property in the community may have more votes. Just as
shareholders of corporations generally have votes based on the number of
shares they own, votes in homeowners associations may be unequal
because they may be based on lot sizes (or, as seen in Evans v. Pollock,
supra, lake frontage). Developers may also give themselves more than one
vote for each unit they own. See, e.g., Hughes v. New Life Development
Corporation, 387 S.W.3d 453 (Tenn. 2012) (upholding scheme in which
developer had five votes per lot owned); Evan McKenzie, Beyond
Privatopia: Rethinking Residential Private Government 11 (2011) (three
votes per unsold lot is typical). Unlike governments, owners associations
are generally not subject to federal or state constitutional restrictions. But
cf. Shelley v. Kraemer, infra (holding that enforcement of a racially
discriminatory covenant violated the fourteenth amendment).
State statutes regulate common interest developments by providing
basic ground rules for their organization. These statutes may define the
basic structure of the common interest development, requiring a
declaration, bylaws, and supermajority votes for amendment of covenants
and certain other decisions of the association.

B. Cooperatives

Condominiums must be distinguished from cooperatives. In a

cooperative arrangement, the entire building is owned by a single
nonprofit cooperative corporation. Individual owners buy shares in the
corporation and then lease their individual units from the corporation.
Since ownership is vested in the corporation, the costs of operating the

800
cooperative, including payments for the building’s mortgage (if there is
one), will be financed by the corporation itself. The monthly payment by
each owner (in the form of rent) covers that owner’s share of the mortgage
payment, as well as fees for upkeep and management. If an individual
owner fails to make her monthly payment to the corporation, other owners
must make up the difference in order to prevent foreclosure. Defaulting
tenants can be evicted by the corporation and lose their stock. The greater
financial interdependence of cooperative owners makes this a more fragile
structure than the condominium structure; it is therefore much less
common. Because of the financial interdependence of cooperative owners,
cooperatives often assume the power to approve or veto sales of particular
units to protect other cooperative members’ collective financial stake in
the building.

C. Community Land Trusts and Limited Equity Co-ops

Advocates for the poor have been creative in inventing new forms of
landholding tailored to low-income persons. Two widely used forms are
limited equity cooperatives and community land trusts. Although
structured differently, the purpose of these ownership forms is “to remove
land from the speculative market, create housing for low income people,
and keep that housing affordable.” Christopher Seeger, The Fixed Price
Preemptive Right in the Community Land Trust Lease: A Valid Response
to the Housing Crisis or an Invalid Restraint on Alienation?, 11 Cardozo
L. Rev. 471 (1989); see James J. Kelly, Land Trusts That Conserve
Communities, 59 DePaul L. Rev. 69 (2009).
Community land trusts. A community land trust is a nonprofit
corporation that buys and holds title to property, ordinarily by acquiring
inexpensive land located in a depressed area or land whose purchase is
subsidized by government loans, loan guarantees, or subsidies. The trust
retains title to the land, but sells residences on the land, whether as single-
family homes or condominiums, to lower-income purchasers at below
market rates. Although the purchasers own their units, they receive a
ground lease for the land. Such ground leases separate land and unit
ownership, and are common in commercial transactions involving large
office buildings. The ground lease ordinarily lasts for a long time — often
99 years — and may be renewable.
A crucial aspect of the arrangement is that the lessee-unit owners agree
to sell to either the community land trust, or another low-income
purchaser, at a below-market price that splits the equity in the property
between the landowner and the unit owner. This arrangement ensures that

801
the property will remain low cost and therefore available to other low-
income buyers. Community land trusts got their start in the 1960s as part
of the Civil Rights Movement, but have multiplied in recent decades in
response to rising property costs and federal and state recognition and
support. See Sarah Iline Stein, Wake Up, Fannie Mae, I Think I Got
Something to Say to You: Financing Community Land Trust Homeowners
Without Stripping Affordability Provisions, 60 Emory L.J. 209 (2010); 42
U.S.C. §12773 (authorizing federal support for community land trusts).
Limited equity cooperatives. A limited equity cooperative has a
purpose similar to a community land trust but is organized like a regular
cooperative. The purchaser buys shares in the cooperative and obtains a
lease to a particular unit. The contracts involved in this arrangement allow
sale of the owner’s shares at a fixed price, thus preventing the owner from
benefiting from increases in the market value of the unit. Judith Bernstein-
Baker, Cooperative Conversion: Is It Only for the Wealthy? Proposals
That Promote Affordable Cooperative Housing in Philadelphia, 61 Temp.
L. Rev. 393 (1988).

D. Competing Perspectives

The rise of the common interest development is a “quiet revolution in

the structure of community organization, local government, land-use
control, and neighbor relations.” Stephen E. Barton & Carol J. Silverman,
Preface, Common Interest Communities at xi (S. Barton & C. Silverman
eds. 1994). Common interest developments are no longer simply a U.S.
phenomenon, but have spread to every continent; in China, an estimated
250 million people live in privately governed communities. Evan
McKenzie, Beyond Privatopia: Rethinking Residential Private
Government x (2011). Developers often prefer them, because they can use
less space by providing common recreational facilities rather than a yard
for each home. But the phenomenon is no longer driven solely by the
market. Many municipalities either explicitly or in practice require new
construction to be bound by a property owners association in order to
offload the costs of providing public goods. McKenzie, supra, at 6-7;
Paula A. Franzese & Steven Siegel, The Common Interest Community as
Metaphor and Paradox, 72 Mo. L. Rev. 1111, 1119-1121 (2004). In many
of these developments, streets, infrastructure, parks, and recreation, are all
privately paid for and controlled by CC&Rs and the owners associations
that administer them. These developments also often perform police
functions, employing private security officers. They may also close off
their interior streets and erect walls or gates, becoming “gated

802
communities.” Governing associations, however, are not held to
constitutional norms and their directors are volunteers who often have little
training or support.
Some scholars laud this development. Proponents cite the explosion of
this housing form as evidence that Americans desire its benefits, see
Robert H. Nelson, Private Neighborhoods and the Transformation of
Local Government 7-8 (2005), and emphasize the “perfectly voluntary
nature of membership in a homeowners association.” Robert C. Ellickson,
Cities and Homeowners Associations, 130 U. Pa. L. Rev. 1519, 1520
(1982). Common interest developments, they argue, offer a voluntary,
market-based alternative to coercive governments, putting “[p]rivate profit
. . . at the service of devising a better system of local governance — at
least from the viewpoint of the homebuyers themselves.” Nelson, supra, at
14. Others praise the potential of the common interest development to
create communities that counter the atomization of modern life. See, e.g.,
Mark Fenster, Community by Covenant, Process, and Design: Cohousing
and the Contemporary Common Interest Community, 15 J. Land Use &
Envtl. L. 3 (1999) (critiquing the co-housing movement).
Others challenge the assertions of voluntariness and flexibility. They
point out that common interest developments are the only housing
available in many markets, claiming that their rise has been driven not by
owner demand but by developers and municipal zoning requirements.
Purchasers have no power to negotiate the restrictions on their homes, and
may not read or understand the many pages of legal language that
describes them. Critics also argue that the hoped-for diversity in housing
options has not appeared. Despite developments like Celebration and “co-
housing” communities that include cooperative elements, most CC&Rs are
largely boilerplate, copied from one community to another. This
boilerplate may be more restrictive than most purchasers would desire, as
developers seek to reassure early purchasers and avoid adverse selection
into the community by less desirable residents. Lee Anne Fennell,
Contracting Communities, 2004 U. Ill. L. Rev. 829. Many scholars express
concern about exclusionary conduct, oppressive micromanagement, and
the privatization of governmental functions by homeowners associations.
See Gerald E. Frug, Cities and Homeowners Associations: A Reply, 130 U.
Pa. L. Rev. 1589 (1982); Ellickson, supra, at 1533 (proposing a takings
clause for common interest developments); Stewart Sterk, Minority
Protection in Residential Private Governments, 77 B.U. L. Rev. 273
(1997). Newspapers regularly publish horror stories about owners
associations foreclosing on homes worth hundreds of thousands for unpaid
dues of a few hundred dollars; filing lawsuits against owners who paint

803
their mailboxes the wrong color, hang mezzuzahs on their doors, or park
their pickup trucks in the driveway; and putting senior citizens in jail for
failing to re-sod a brown lawn.

CONTEXT

Celebration or Stepford life?

The Disney-built development of Celebration, Florida seeks to replicate a small
town Main Street feel, paying employees to facilitate group activities, and
making fake snow (“snoap”) at Christmas. The development has won awards
from the Urban Land Institute and seen property values skyrocket, although
they’ve dipped significantly since the recession. Critics also abound, and they
were morbidly gleeful at news of the first murder, followed soon after by an
unrelated suicide, and stories of high divorce rates in the community.

So what do owners think? The Community Associations Institute, an

industry group representing owners associations, regularly conducts a
survey that finds that the overwhelming majority of owners like living in
their common interest development and would choose to live in one again.
Others critique the methodology of these surveys and point to an earlier
survey conducted in California finding that 84 percent of residents would
not choose to live a common interest development again. Barton &
Silverman, supra, at 137. Groups of disgruntled owners have secured
legislation in several states imposing state oversight and regulation over
owners associations. Nevertheless, these developments continue to spread
and people continue to buy into them. What do you think?

§4.3 Relationship Between Unit Owners and Developers

Appel v. Presley Cos.

806 P.2d 1054 (N.M. 1991)

Map: Vista Serena Lane SW,

Albuquerque, New Mexico

GENE E. FRANCHINI, Justice.

804
 Plaintiffs Daniel and Patricia Appel appeal from an order granting
summary judgment to defendants The Presley Company of New Mexico
(Presley) and Wolfe Company, Inc. (Wolfe). In their complaint, the Appels
asserted three claims: breach of restrictive covenants; negligent and
fraudulent misrepresentation; and unfair trade practices.

Facts
On January 3, 1979, Presley recorded with the Bernalillo County Clerk
a replat for the Vista Del Sandia subdivision. On October 8, 1982, Presley
recorded a set of restrictive covenants covering all the property shown on
the replat, including a tract in the subdivision arroyo. The covenants
regulated the land use, building type, quality, and size of the residential
single-family dwellings that were to be placed on the subdivision property.
In November 1982, the Appels met with Presley and its agents regarding
the possible purchase of a lot in the subdivision. The Appels allege certain
representations were made concerning lots in the subdivision and the
purpose of the restrictive covenants. The Appels further allege that the
restrictive covenants were used as a sales tool which they relied on in
purchasing a lot and constructing their home. On April 25, 1984, the
subdivision’s Architectural Control Committee, consisting of three
members who were all employees or officers of Presley, executed an
amendment of the restrictive covenants. This amendment deleted nine lots
from the effect of the restrictive covenants, including Lots 28-A and 30
which are involved in this appeal. Since the covenants were amended,
some of the lots have been subdivided into smaller lots and townhouses
have been constructed on them. Presley sold Lot 28-A to Wolfe in April
1988. Wolfe is replatting Lot 28-A into four lots for single family
residences. No development plans exist for Lot 30, the arroyo lot.

I. Restrictive Covenants
The Appels filed their complaint to enjoin Wolfe’s proposed replatting
and construction and to enjoin the construction of any buildings on Lot 30.
The following provisions contained in the restrictive covenants were relied
on by the trial court to authorize the amendments:

15. Architectural Control Committee: At any time, the then record owners
of the majority of the lots shall have the power, through a duly recorded
written instrument, to change the membership of the Committee or to
withdraw from the Committee, or restore to it any of its powers and duties.
17. Terms of covenants: These covenants are to run with the land and shall

805
 be binding on all parties and all persons claiming under them for a period of
thirty (30) years from the date these covenants are recorded, after which time
said covenants shall be automatically extended for successive periods of ten
(10) years, unless an instrument signed by a majority of the then lot owners
of the lots have been recorded, agreeing to change said covenants in whole or
in part.
20. Variance: A majority of the Architectural Control Committee, may
from time to time, make amendments and/or exceptions to these restrictions,
covenants and reservations without the consent of any of the owners of any
of the other lots in said subdivision.

In particular, the trial court emphasized the “amendments and/or

exceptions to these restrictions” language of paragraph 20 in the restrictive
covenants. The trial court found that the language was unambiguous and
that the covenant permitted the Architectural Control Committee to make
exceptions and remove individual lots from the covenants. This court has
recognized the importance of enforcing protective covenants where the
clear language of the covenants, as well as the surrounding circumstances,
indicates an intent to restrict use of land. In Montoya v. Barreras, 473 P.2d
363 (N.M. 1970), we refused to allow an individual lot to be removed from
the effect of a restrictive covenant in spite of a provision in the covenant
allowing change by majority approval. We held: “To permit individual lots
within an area to be relieved of the burden of such covenants, in the
absence of a clear expression in the instrument so providing, would
destroy the right to rely on restrictive covenants which has traditionally
been upheld by our law of real property.” Id. at 365. Here, the trial court
found the “amendments and/or exceptions to these restrictions” language
to be the clear expression required by Montoya.
We agree that the language permitted the Architectural Control
Committee to make amendments or exceptions to the restrictive covenant.
However, courts have determined that provisions allowing amendment of
subdivision restrictions are subject to a requirement of reasonableness. As
stated in 7 G. Thompson, Real Property, §3171 (repl. 1962), “A court of
equity will not enforce restrictions where there are circumstances that
render their enforcement inequitable.”
In Flamingo Ranch Estates, Inc. v. Sunshine Ranches Homeowners,
Inc., 303 So. 2d 665 (Fla. Dist. Ct. App. 1974), the court addressed a
similar clause reserving to the land developer the right to alter, amend,
repeal, or modify restrictions at any time in his sole discretion. The court
noted the inherent inconsistency between an elaborate set of restrictive
covenants, designed to provide for a general scheme or plan of
development, and a clause reserving in the grantor the power to change or

806
abandon any part of it. The court reconciled the inconsistency by reading
into the restrictive clause a requirement of reasonableness. Thus, the clause
allowing the owners the right to alter, amend, repeal, or modify these
restrictions at any time in its sole discretion is a valid clause so long as it is
exercised in a reasonable manner so as not to destroy the general scheme
or plan of development.
The Supreme Court of Alabama also imposed a test of reasonableness
when a developer exercised his reserved right to cancel or modify any of
the restrictive covenants. Moore v. Megginson, 461 So. 2d 993 (Ala.
1982). The court affirmed the trial court’s finding that the developer’s
“exercise of his right to cancel or modify the restrictive covenants ‘must be
reasonable, with due regard for the property rights and investments of the
persons who relied upon the residential covenants which were in full force
at the time of their purchase.’ ” Id.
A determination of whether the exceptions were reasonably exercised
or whether they essentially destroyed the covenants requires resolution of a
factual matter and, therefore, the summary judgment must be reversed and
testimony should be taken accordingly. Additionally, if it is found that the
exceptions were applied in an unreasonable manner, thereby breaching the
covenants, the trial court should apply the doctrine of relative hardships.
As we stated in Cunningham [v. Gross, 699 P.2d 1075 (N.M. 1985)],
any request for injunctive relief is directed to the sound discretion of the
trial court. “In determining whether such relief should issue, the court may
consider a number of factors and should balance equities and hardships
where required.” 699 P.2d at 1077. Factors for the trial court to consider
include, id. at 1078:

(1) [T]he character of the interest to be protected, (2) the relative adequacy to
the plaintiff of injunction in comparison with other remedies, (3) the delay, if
any, in bringing suit, (4) the misconduct of the plaintiff if any, (5) the interest
of third persons, (6) the practicability of granting and enforcing the order or
judgment, and (7) the relative hardship likely to result to the defendant if an
injunction is granted and to the plaintiff if it is denied.

In view of the foregoing, we reverse and remand on the trial court’s

order granting summary judgment on Claim I.

II. Misrepresentation and Unfair Trade Practices Act

The trial court erred . . . finding no material issue of fact regarding
misrepresentation and violation of the [Unfair] Trade Practices Act. The
trial court focused only on statements made by Presley representatives in

807
1982 about certain lots not being developable, ignoring other alleged
misrepresentations concerning the effect of the covenants. The Appels
produced sufficient evidence to raise factual questions as to whether
Presley misrepresented that Lot 30 would remain open space and that the
covenants would maintain the intended character of the subdivision.
Whether or not the statements made to the Appels about Lots 28-A and 30
were true or false at the time made are issues of fact to be determined at
trial, not by the court on summary judgment.
The order granting summary judgment by the trial court is reversed on
all three claims and the cause is remanded for reinstatement for trial upon
the court’s docket.

Notes and Questions

1. Developer control. The developer of a condominium initially owns
all the units and therefore controls the condominium association.
Declarations also frequently give developers multiple votes per unsold unit
or the right to appoint a majority of board members, permitting them to
maintain control even after most of the units are sold. The Uniform
Common Interest Ownership Act §3-103, as well as the laws of a number
of states that have not adopted the act, provide that developers must turn
over control to unit owners once 75 percent of the units are sold or two
years after units stop being sold in the ordinary course of business. See
also Restatement (Third) of Property (Servitudes) §6.19. Even these
protections, however, may leave a substantial period where the developer
can dominate the property owners association and govern the interests of
unit owners.
2. Developer power to amend the declaration. The Restatement
(Third) §6.21 provides: “A developer may not exercise a power to amend
or modify the declaration in a way that would materially change the
character of the development or the burdens on the existing community
members unless the declaration fairly apprises purchasers that the power
could be used for the kind of change proposed.” In a case similar to Appel,
a Kansas court adopted this Restatement rule, holding that a developer’s
power to “amend” the covenants limiting land to single-family or duplex
homes did not include the power to “revoke” them entirely and build four-
unit housing. North Country Villas Homeowners Association v. Kokenge,
163 P.3d 1247 (Kan. Ct. App. 2007). The court noted that it was not
applying a “reasonableness test,” but holding that such an amendment
“would violate notice principles by materially changing the general
development plan of the subdivision without fair warning to purchasers.”

808
Id. at 1254.

CONTEXT

The recession highlighted the issue of developer control in the event of

developer bankruptcy — a particularly significant problem when the unit
owners want to sue the developer through their (developer controlled) owners
association. Some jurisdictions respond to this issue by interpreting filing for
bankruptcy as a de facto turnover of control. Larry Woodard, Representing a
Homeowners Association Facing Developer Bankruptcy, 24-AUG Prob. &
Prop. 36 (2010).

Hughes v. New Life Development Corp., 387 S.W.3d 453 (Tenn.

2012), reached the opposite result. As in Appel and North Country Villas,
the power to change the master plan was included in the original
declaration, which also provided developer with five votes for each unsold
unit it owned. Replacing the original developer after half of the platted
units had been sold, the new developer used its supermajority of votes to
amend the declaration to change a planned 80-residence community with
wilderness preserves and hiking into a 650-residence golf resort. The
Tennessee Supreme Court upheld these actions: “Contract law in
Tennessee plainly reflects the public policy allowing competent parties to
strike their own bargains. These contract principles, applied in the context
of a private residential development with covenants that are expressly
subject to amendment without substantive limitation, yield the conclusion
that a homeowner should not be heard to complain when, as anticipated by
the recorded declaration of covenants, the homeowners’ association
amends the declaration.” Id. at 475-476.
3. Management contracts. Developers may use their period of control
to arrange for management or other contracts in which the condominium
hires the developer to provide services in exchange for management fees.
Owners often have found these contracts are unfair either because the fees
charged by the developer-manager are exorbitant or because the contracts
last for so long that they prevent the unit owners from hiring someone else
if they become dissatisfied with the way the place is being run.
The Condominium and Cooperative Conversion Protection and Abuse
Relief Act, 15 U.S.C. §§3601-3616, authorizes condominiums and
cooperatives, by a two-thirds vote, to terminate without penalty
management contracts of more than three years entered into while the

809
developer had majority control of the condominium or cooperative. Id.
§3607(a). Many states have also passed statutes regulating developer-
created contracts, often providing that they can be rejected by a
supermajority vote. See, e.g., Comcast of Florida v. L’Ambiance Beach
Condominium Association, Inc., 17 So. 3d 839 (Fla. Dist. Ct. App. 2009)
(applying a Florida statute that allowed 75 percent or more of the unit
ownership rights to repudiate a contract permitting Comcast to provide and
manage cable services to the units).
4. Developer’s power to enforce covenants after sale of all units.
Recall the rule restricting the enforceability of covenants when the benefit
is held in gross. The declaration may give the developer the power to
enforce the covenants by bringing a lawsuit to compel compliance. When
the developer of a subdivision attempts to continue to enforce the covenant
after the last parcel is sold, the courts may deny the developer standing to
bring a suit to enforce the covenants because of the policies underlying the
rule prohibiting the benefit of covenants to be held in gross. The
developer’s legitimate interest in retaining control over development in the
subdivision is to increase the marketability of the lots; assuring prospective
buyers that the subdivision is restricted to residential use, or even single-
family homes, may increase the market value of the property and attract
buyers. Once the developer leaves, however, she is an outsider whose
legitimate interests have already been satisfied; continued control by the
developer is seen as meddling. There is therefore a strong, although not
universal, presumption against continued enforcement by absentee
developers who no longer own property in the neighborhood. Garland v.
Rosenshein, 649 N.E.2d 756 (Mass. 1995) (benefit of covenant held in
gross cannot be enforced); Smith v. First Savings of Louisiana, 575 So. 2d
1033 (Ala. 1991) (holding that a developer could not retain control of the
architectural review commission that approved building changes once the
last parcel was sold); Armstrong v. Roberts, 325 S.E.2d 769 (Ga. 1985)
(developer cannot waive a covenant after all parcels are sold and it has no
economic interest in the subdivision).
Some courts have allowed developers to continue to enforce covenants
when the declaration allows this, at least where the owners have the power
to amend the declaration and there is no showing that the developer
“retained unreasonable or imperious control over . . . decisions of
homeowners long after having completed the subdivision.” B.C.E.
Development, Inc. v. Smith, 264 Cal. Rptr. 55, 61 (Ct. App. 1989). Accord,
Christiansen v. Casey, 613 S.W.2d 906 (Mo. Ct. App. 1981). Although the
Restatement (Third) makes covenants enforceable when the benefit is held

810
in gross, id. §2.6(b), it still requires a legitimate interest in the party who
seeks enforcement, id. §2.6 cmt. d. What legitimate reasons, if any, could a
developer have for retaining the power to enforce the covenants once the
last unit is sold?
5. Private transfer fees. In recent years, a growing number of
developers and homeowners associations have inserted covenants
requiring owners to pay them a private transfer fee when the property is
sold. The fee may encumber the property for as long as 99 years and is
typically set at about 1 percent of the sale price. Developers claim that
these fees create an alternative source of financing, allowing them to create
developments less expensively, and that the savings are passed on to
purchasers. Because these fees are often not assessed against the original
purchaser, owners may not realize that they are in place. More than half of
the states now ban private transfer fees by statute and a 2012 federal
regulation prohibits Fannie Mae from purchasing loans on properties
burdened by such fees. 12 C.F.R. Part 1228. These laws exempt private
transfer fees to homeowners association if the fee is dedicated to
homeowners association activities, and they do not generally apply to
private transfer fees recorded before the laws were promulgated.

Problems
1. A famous architect develops a subdivision of 50 homes with an
unusual design for the houses. The design is popular, and the properties are
sold for high prices. Before the first home was sold, the developer
recorded a declaration that contained restrictive covenants preventing any
external changes to the structures or landscaping without consent of the
architectural review commission. The developer was identified by name in
the declaration as the sole member of the architectural review commission.
Every deed refers to the declaration.
a. Five years after the last home was sold, a homeowner seeks to
change the color of her house and to add a sunroom. The architect
refuses to allow the changes, although none of the neighbors objects to
them. The owner sues the architect, claiming that the covenant granting
the architect continued control of the architectural review commission
after the last unit was sold is unenforceable. The architect claims that
the design of the houses is akin to a work of art, that she has a right to
artistic control of the houses, and that the plaintiff voluntarily
consented to this arrangement. Some of the neighbors support the
architect’s position in order to maintain the value of their homes. Who
should win? Would your answer change if the problem arose 50 years

811
 after the last house was sold? Suppose the architect wrote a will
leaving her right of enforcement to her daughter at her death. Could the
daughter enforce the covenant?
b. Now suppose the declaration grants the architect complete control
of interior design, including furniture. A resident is paralyzed in an
automobile accident and wants to change the furniture and the kitchen
to make them wheelchair accessible. The architect refuses to agree to
the change. No owner in the neighborhood objects to her proposed
changes. The homeowner argues that the benefit of the covenant cannot
be held in gross. Who should win? Is there another basis to invalidate
the covenant? Should it be enforced?
2. On September 23, 2012, New York became the 37th state to ban
private transfer fees. The law finds that private transfer fees violate the
public policy of the state by “impairing the marketability and
transferability of real property and by constituting an unreasonable
restraint on alienation.” N.Y. Real Prop. Law §471. However, the law
declares that the ban on enforcement of such fees “shall not apply to a
private transfer fee obligation recorded or entered into prior to the
effective date of this section. This section shall not be deemed to require
that a private transfer fee obligation recorded, filed or entered into in this
state before the effective date of this section is presumed valid and
enforceable. It is the public policy of this state that no private transfer fee
obligation shall be valid or enforceable whenever entered into, recorded or
filed.” Id. §473.
The law resonates with an early New York case, De Peyster v.
Michael, 6 N.Y. 467 (1852), which invalidated a requirement that the
owner provide the original lessor of the land one quarter of the purchase
price upon every sale. The court held that the requirement was an invalid
restraint on alienation prohibited by New York’s rejection of feudalism:

If the continuance of the estate can be made to depend on the payment of a

tenth, or a sixth, or a fourth part of the value of the land at every sale, it may
be made to depend on the payment of nine-tenths, or the whole of the sale
money. It would be a bold assertion to say that the adoption of such a
principle would not operate as a fatal restraint upon alienation.
Restraints upon alienation of lands held in fee simple were of feudal
origin. A feoffment in fee did not originally pass an estate in the sense in
which we now understand it. The purchaser took only an usufructuary
interest, without the power of alienation in prejudice of the heir or of the
lord. In default of heirs the tenure became extinct and the land reverted to the
lord. This restraint on alienation was a violent and unnatural state of things,

812
 contrary to the nature and value of property, and the inherent and universal
love of independence.
[A]fter a careful examination of the grounds on which these restraints on
alienations in fee were originally sustained in England; of the change in the
law there by statute nearly 600 years ago; of the mode in which that change
was wrought; and finding that the same change has taken place here by our
own statutes, we cannot entertain a doubt that the condition to pay sale
money on leases in fee, is repugnant to the estate granted, and therefore void
in law.

6 N.Y. at 496-498, 505. A developer seeks to enforce a 1 percent private

transfer fee to the developer included in a covenant signed and recorded
long before the New York statute was enacted. What arguments can you
make for the developer? For the owner?

§5 SUBSTANTIVE LIMITATIONS ON CREATION

AND ENFORCEMENT OF COVENANTS
Covenants give private individuals and associations significant power
over how others use their land. While early covenant law often restricted
this power, today courts and legislatures generally permit and encourage
such agreements to allow people to structure land use to best meet their
needs. But enforcement of covenants may undermine other societal or
individual interests. This section considers different grounds for
challenging covenants: first, general review for reasonableness and public
policy violations; second, assertion of constitutional violations; third,
claims of discrimination under the Fair Housing Act; fourth, review of
restrictions on alienability; and fifth, claims of unreasonable restraint of
trade.

§5.1 Review for Reasonableness and Public Policy Violations

A. Covenants

Public policy concerns have always been a part of covenant law,

particularly for injunctive relief, which is an equitable remedy. Although
the overriding policy concern was that covenants violated a policy
favoring free use of land, more specific concerns also came into play. The
touch and concern test was often used as the way to invalidate covenants,
even those like restrictions on competing uses by a neighboring business
that clearly touched and concerned the land. In 1988, Susan French noted,

813
“When a court invalidates a covenant obligation on the ground that it does
not touch and concern the land, it makes a substantive judgment that the
obligation should not be permitted to run with the land. The real reasons
for the invalidation are seldom, if ever given.” Susan French, Servitudes
Reform and the New Restatement of Property: Creation Doctrines and
Structural Simplification, 73 Cornell L. Rev. 928, 939-940 (1988).
Modern law tends to address public policy concerns more directly,
invalidating covenants that are “unreasonable.” Rules and bylaws enacted
by common interest development associations may also be reviewed for
reasonableness. Reasonableness is a deliberately flexible standard, taking
into account and balancing many factors. Will a reasonableness standard
be more likely to find covenants valid or invalid than the traditional touch
and concern test? See the next cases.

Davidson Brothers, Inc. v. D. Katz & Sons, Inc.

643 A.2d 642 (Super. Ct. App. Div. 1994), on remand from 579 A.2d 288 (N.J.
1990)

Map: 263-271 George Street;

Elizabeth
Street, New Brunswick, New
Jersey

WILLIAM M. D’ANNUNZIO, J.A.D.

Plaintiff Davidson Bros., Inc. (Davidson) appeals from a trial court
judgment entered after a bench trial held on remand from the Supreme
Court. Davidson Bros., Inc. v. D. Katz & Sons, Inc., 579 A.2d 288 (N.J.
1990). Applying the reasonableness test formulated by the Supreme Court,
the trial court determined that a covenant prohibiting the use as a
supermarket of a property in downtown New Brunswick, New Jersey, was
unenforceable. We now affirm.
Davidson operated a number of supermarkets in New Jersey. In 1952,
it opened a supermarket of 10,000 square feet on George Street in
downtown New Brunswick. In June 1978, Davidson took over an existing
supermarket located at Elizabeth Street, also in New Brunswick but
approximately two miles from the George Street store (hereinafter George
Street), near the border with North Brunswick. Davidson paid $315,000

814
for the assets of the Elizabeth Street store (hereinafter Elizabeth Street),
not including inventory, and made a substantial additional investment for
improvements. Davidson leased the Elizabeth Street real property.
Davidson closed George Street in February 1979 because its volume
had decreased after Davidson acquired Elizabeth Street. It sold George
Street in September 1980 to defendant D. Katz & Sons, Inc. (Katz), a rug
merchant. The deed to Katz contained the covenant in issue:

The lands and premises described herein and conveyed hereby are conveyed
subject to the restriction that said lands and premises shall not be used as and
for a supermarket or grocery store of a supermarket type, however
designated, for a period of forty (40) years from the date of this deed. This
restriction shall be a covenant attached to and running with the lands.

The closing of George Street as a supermarket created a hardship for

downtown residents, most of whom did not own or have ready access to
motor vehicles. In response to their plight, the city government sought to
attract another supermarket operator to the downtown area. The city’s
efforts culminated in the acquisition of George Street from Katz by the
defendant New Brunswick Housing Authority, and the leasing of the
property, for one dollar a year, to defendant C-Town, on condition that C-
Town invest at least $10,000 for improvements and operate George Street
as a supermarket.
Davidson commenced this action to enforce the covenant. Davidson
appealed from an adverse summary judgment and we affirmed in an
unreported opinion, utilizing traditional “touch and concern” analysis
applicable to covenants alleged to run with the land.
Our Supreme Court granted Davidson’s petition for certification and
reversed and remanded for a trial. In doing so, the Court determined that
“rigid adherence” to the “touch and concern” requirement was no longer
warranted. It held that enforceability of a covenant would depend on its
reasonableness, and that the principle of “touch and concern” is “but one
of the factors.” The Court then described eight factors to be considered in
resolving the reasonableness issue:
1. The intention of the parties when the covenant was executed, and
whether the parties had a viable purpose which did not at the time interfere
with existing commercial laws, such as antitrust laws, or public policy.
2. Whether the covenant had an impact on the considerations
exchanged when the covenant was originally executed. This may provide a
measure of the value to the parties of the covenant at the time.

815
 3. Whether the covenant clearly and expressly sets forth the
restrictions.
4. Whether the covenant was in writing, recorded, and if so, whether
the subsequent grantee had actual notice of the covenant.
5. Whether the covenant is reasonable concerning area, time or
duration. Covenants that extend for perpetuity or beyond the terms of a
lease may often be unreasonable.
6. Whether the covenant imposes an unreasonable restraint on trade or
secures a monopoly for the covenantor. This may be the case in areas
where there is limited space available to conduct certain business activities
and a covenant not to compete burdens all or most available locales to
prevent them from competing in such an activity.
7. Whether the covenant interferes with the public interest.
8. Whether, even if the covenant was reasonable at the time it was
executed, “changed circumstances” now make the covenant unreasonable.
On remand, Davidson no longer sought injunctive relief. [Davidson
sold its] Elizabeth Street store to another supermarket operator in 1989 for
$687,500. Davidson limited its claim to damages consisting of lost sales
and profits during the two year period it competed with C-Town, and the
reduced value of its Elizabeth Street store due to C-Town’s competition.

Quick Review:
If the covenant was analyzed under traditional tests, would it pass? Was there
notice? Privity? Intent to run? Did it touch and concern the burdened land? Did
it touch and concern or benefit other land? Could Davidson Bros. get an
injunction and/or damages against the New Brunswick Authority? Against C-
Town?

Davidson’s accountant testified that sales at Elizabeth Street for 1988

and 1989 were $1,452,000 less than they would have been had the George
Street store not reopened. He calculated the lost profit on those sales to be
$350,000. He also opined that due to the lower sales volume, Davidson
sold the Elizabeth Street store for $567,000 less than it should have sold
for. Defendants’ accountant disagreed. He testified that although Elizabeth
Street may have lost sales due to C-Town’s operation of George Street,
those lost sales would not have been profitable. Defendants’ accountant
also testified that the Elizabeth Street store did not lose value as a result of
C-Town’s competition.

816
 After a lengthy trial, the trial court rendered an oral opinion. Applying
the eight factors announced by the Supreme Court, the court found that the
40-year term was unreasonably long (factor 5); that the covenant imposed
an unreasonable restraint of trade (factor 6); and that it was contrary to the
public interest (factor 7). Regarding factor seven, the court ruled that the
covenant adversely impacted the public interest because “there is a
substantial public need for the supermarket under the circumstances of this
case.”
The trial court deemed the damages issue to be moot because of its
determination that the covenant was unreasonable and unenforceable.
However, the court announced that it was unable to determine from the
evidence that Davidson had sustained damages due to C-Town’s
competition.
We now affirm on the ground that the covenant was so contrary to
public policy that it should not be recognized as a valid, enforceable
obligation.
The proofs established that New Brunswick is a small city which
continues to suffer from many of the maladies affecting the larger cities of
New Jersey and the nation, especially in its core downtown area. This area,
where George Street is located, has been the focus of a large scale
redevelopment and revitalization effort measured in decades. Although
this effort’s emphasis has been on commercial projects primarily, the
downtown area is also the site of many low to moderate income housing
projects of the New Brunswick Housing Authority. These were federally
funded projects, and many of their residents depended on George Street for
their shopping requirements before Davidson closed the store. George
Street is within two blocks of four of those housing projects with a total of
726 units.
The testimony of New Brunswick’s Director of Policy, Planning and
Economic Development, and his report which was introduced into
evidence, provided a demographic profile of the city. There are a total of
3,148 households in the downtown area. Twenty-six percent of those
households are below the poverty level, compared with seventeen percent
in the balance of the city. Of the “family households” downtown, twenty-
eight percent are female householders with children, compared with
fourteen percent in the balance of the city. Of the female headed
households, fifty-four percent are below the poverty level, which is
consistent with the balance of the city. Thirty-seven percent of the
downtown housing units have no vehicle, almost twice as many as the
balance of the city. Seven hundred and forty-three downtown units are
occupied by persons sixty-five years and older; twenty-one percent of

817
those seniors are below the poverty level, almost double the proportion in
the rest of the city. The downtown area, therefore, contains the city’s
greatest concentration of disadvantaged persons.
Davidson’s closing of George Street further disadvantaged them. No
other supermarket was within walking distance. For those who lacked
access to motor vehicles, buses, taxis and dependence on others replaced a
walk to the supermarket. The problem was especially difficult for female
heads of household who used to send their children to the store or have
their children accompany them. With the elimination of George Street,
getting to the supermarket was a particularly difficult exercise in logistics
and child care.
But inconvenience was not the only cost. Dr. James J. O’Connor
testified for defendants as an expert in food marketing and distribution. Dr.
O’Connor’s experience involved hands-on management of his family’s
wholesale and retail food businesses, followed by academic and
government experience in food distribution issues. Shortly before his
testimony in this case, Dr. O’Connor had completed a study for the United
States Department of Agriculture regarding supermarkets in United States
cities. According to Dr. O’Connor, the absence of a supermarket in a low-
income city neighborhood makes food more expensive and has a negative
impact on diet and, therefore, on the inner city population’s health.
Dr. O’Connor also stated that the absence of a supermarket contributes
to inner city decay, because a supermarket is a retail anchor that attracts
other retail operations. Withdrawal of a supermarket tends to force other
merchants to leave the same neighborhood. The resulting vacuum is filled
by convenience stores or “ma and pa” groceries. They are more expensive
and lack variety. They rarely have produce and, if they do have it, it is of
poor quality. Moreover, selection of poultry and fish is very limited and
very expensive. Dr. O’Connor opined that there is a general lack of inner
city supermarkets in the nation, which poses a significant social policy
problem.
Dr. O’Connor’s uncontradicted testimony is consistent with the
conclusions reached by a congressional committee. House Select Comm.
on Hunger, 100th Cong., 1st Sess., Obtaining Food: Shopping Constraints
on the Poor (Comm. Print 1987) (hereinafter Report). The committee
concluded that “low-income consumers are unable to maximize their
limited expendable resources for a basic need — food — because of the
barriers of the [sic] location and transportation. Hence, the grip of hunger
and poverty tightens around the low-income consumer.” Id. at 1.
The committee recognized the exacerbating impact of “supermarket
migration” on this problem, id. at 4:

818
 During the late 1970’s and early 1980’s major supermarkets migrated
away from the inner cities and low-income areas, toward the suburbs. Major
reasons cited for the migration by the food industry include: high insurance
rates, employment and security problems, and outmoded and understocked
inner-city stores — conditions which keep profits low. The exodus to the
suburbs provided cheaper land, better control over operational hazards and,
in general, greater profits. According to the Food Marketing Institute, in
1981, 90 percent of the conventional grocery stores, located in low-income
neighborhoods, [that] either closed voluntarily or went out of business, did so
to relocate into the suburbs. These were the stores that had traditionally
served low-income areas. During the same year, over one-half the new stores
that opened were super stores locating in the suburbs and other higher-
income areas.
As these trends continue, low-income urban and rural consumers are faced
with fewer food markets in the immediate vicinity of their homes and the
greater expense in accessing reasonably priced foods. This migration has
increased the economic drain on the urban and rural low-income consumer’s
already limited food budget, reducing, and in some cases, removing the
opportunity for low-income households to shop competitively.

The committee also recognized the impact of the inner city consumers’
limited shopping choices: “You have this perverse irony that the poorest
have to pay more for a basic necessity of life.” Id. at 3.
In its Report, the committee noted that experts and organizations
addressing the problems of urban living recommended the provision of
incentives to bring supermarkets back into the cities. The committee
recommended, among other policy options, that “State and local
governments should implement tax breaks and other incentives to . . .
small- and medium-sized grocer[ies], and supermarket chains to encourage
their expansion and/or relocation in low-income communities.” Id. at 10.
New Brunswick’s initial efforts to respond to the problem were
unsuccessful. It attempted to provide and organize transportation, an
option that proved to be ineffective. It also sought to find a downtown
property easily adaptable to supermarket use and to attract another
supermarket operator to run it. Other than the George Street store,
however, there was none available.
Senator John Lynch, the Mayor of New Brunswick during the relevant
period, testified that initial approaches to supermarket operators were
unsuccessful because too much capital was required to rehabilitate and
convert other buildings to supermarket use. According to Senator Lynch
the “problem was making the bottom line work because of assembling the
property, providing relocation costs, dealing with [environmental] laws, all

819
of those things that add cost to the bottom line.” Moreover, many
properties that had conversion potential were unavailable or had other
problems.
On the other hand, George Street, the former supermarket, was capable
of being easily reconverted to supermarket use.
New Jersey courts have refused to enforce contracts that violate public
policy. See Vasquez v. Glassboro Service Ass’n, Inc., 415 A.2d 1156 (N.J.
1980) (contract requiring migrant farmworker to leave barracks
immediately upon discharge violates public policy). “No contract can be
sustained if it is inconsistent with the public interest or detrimental to the
common good.” Id. at 98.
“The sources of public policy include federal and state legislation and
judicial decisions.” Id. The rehabilitation of our inner cities is a public
policy of this State often expressed in relevant legislation.
The New Jersey Economic Development Authority Act (EDA),
N.J.S.A. 34:1B-1 to -21, is intended to promote economic development
generally throughout the State. As part of the EDA, the Legislature
determined that the “provision of buildings, structures and other facilities
to increase opportunity for employment in manufacturing, industrial,
commercial, recreational, retail and service enterprises in the State is in the
public interest.” N.J.S.A. 34:1B-2b. The Legislature also specifically
addressed the developmental problems of inner cities when it found:

By virtue of their architectural and cultural heritage, their positions as

principal centers of communication and transportation and their
concentration of productive and energy efficient facilities, many
municipalities are capable of ameliorating the conditions of deterioration
which impede sound community growth and development; and that building
a proper balance of housing, industrial and commercial facilities and
increasing the attractiveness of such municipalities to persons of all income
levels is essential to restoring such municipalities as desirable places to live,
work, shop and enjoy life’s amenities.

[N.J.S.A. 34:1B-2f (emphasis added).]

Similarly, in enacting the New Jersey Urban Enterprise Zones Act,
N.J.S.A. 52:27H-60 to -89, the Legislature determined that “there persist
in this State, particularly in its urban centers, areas of economic distress
characterized by high unemployment, low investment of new capital,
blighted conditions, obsolete or abandoned industrial or commercial
structures, and deteriorating tax bases.” N.J.S.A. 52:27H-61a. The
Legislature also noted that revitalization of those areas required
“application of the skills and entrepreneurial vigor of private enterprise;

820
and it is the responsibility of government to provide a framework within
which encouragement be given to private capital investment in these
areas, disincentives to investment be removed or abated, and mechanisms
be provided for the coordination and cooperation of private and public
agencies in restoring the economic viability and prosperity of these areas.”
N.J.S.A. 52:27H-61 (emphasis added).
In support of these objectives, the Legislature offered a rich variety of
subsidies and incentives to businesses operating in a designated enterprise
zone. The City of New Brunswick currently is eligible for Open
Competitive Urban Enterprise Zone Designation.
Other laws, too numerous to describe in detail, reveal how urban
rehabilitation is imbedded in public policy and the public interest.
Davidson’s withdrawal from George Street caused difficulties and
hardships of the nature mentioned earlier and made the downtown area a
less hospitable and desirable place. Davidson had the right to terminate its
George Street operation. In doing so, however, it imposed a restriction on
the use of its former property designed to impede the relocation of another
supermarket operation to the downtown area. The evidence supports the
conclusion that the George Street store was peculiarly suited for
supermarket use, and that there were no economically viable substitute
locations. Consequently, the covenant, if enforced through injunctive relief
or exposure to a judgment for damages, presented a formidable obstacle to
remediation of the harm caused by Davidson’s withdrawal. By harm, we
mean the personal hardship caused by the withdrawal of a supermarket as
well as the damage to the ongoing efforts of government and private
enterprise to revitalize the city. We are persuaded, therefore, that, in the
absence of any equivalent reciprocal benefit to the city, Davidson’s
scorched earth policy is so contrary to the public interest in these
circumstances that the covenant is unreasonable and unenforceable.
Affirmed.

Nahrstedt v. Lakeside Village Condominium Association, Inc.

878 P.2d 1275 (Cal. 1994)

JOYCE L. KENNARD, Justice.
A homeowner in a 530-unit condominium complex sued to prevent the
homeowners association from enforcing a restriction against keeping cats,
dogs, and other animals in the condominium development. The owner
asserted that the restriction, which was contained in the project’s
declaration recorded by the condominium project’s developer, was
“unreasonable” as applied to her because she kept her three cats indoors

821
and because her cats were “noiseless” and “created no nuisance.” Agreeing
with the premise underlying the owner’s complaint, the Court of Appeal
concluded that the homeowners association could enforce the restriction
only upon proof that plaintiff’s cats would be likely to interfere with the
right of other homeowners “to the peaceful and quiet enjoyment of their
property.”
Those of us who have cats or dogs can attest to their wonderful
companionship and affection. Not surprisingly, studies have confirmed this
effect. But the issue before us is not whether in the abstract pets can have a
beneficial effect on humans. Rather, the narrow issue here is whether a pet
restriction that is contained in the recorded declaration of a condominium
complex is enforceable against the challenge of a homeowner. As we shall
explain, the Legislature, in Civil Code section 1354, has required that
courts enforce the covenants, conditions and restrictions contained in the
recorded declaration of a common interest development “unless
unreasonable.”
Under this standard established by the Legislature, enforcement of a
restriction does not depend upon the conduct of a particular condominium
owner. Rather, the restriction must be uniformly enforced in the
condominium development to which it was intended to apply unless the
plaintiff owner can show that the burdens it imposes on affected properties
so substantially outweigh the benefits of the restriction that it should not be
enforced against any owner. Here, the Court of Appeal did not apply this
standard in deciding that plaintiff had stated a claim for declaratory relief.
Accordingly, we reverse the judgment of the Court of Appeal and remand
for further proceedings consistent with the views expressed in this opinion.

I
Lakeside Village is a large condominium development in Culver City,
Los Angeles County. It consists of 530 units spread throughout 12 separate
3-story buildings. The residents share common lobbies and hallways, in
addition to laundry and trash facilities.
The Lakeside Village project is subject to certain covenants, conditions
and restrictions (hereafter CC & R’s) that were included in the developer’s
declaration recorded with the Los Angeles County Recorder on April 17,
1978, at the inception of the development project. Ownership of a unit
includes membership in the project’s homeowners association, the
Lakeside Village Condominium Association (hereafter Association), the
body that enforces the project’s CC & R’s, including the pet restriction,
which provides in relevant part: “No animals (which shall mean dogs and

822
cats), livestock, reptiles or poultry shall be kept in any unit.”9
In January 1988, plaintiff Natore Nahrstedt purchased a Lakeside
Village condominium and moved in with her three cats. When the
Association learned of the cats’ presence, it demanded their removal and
assessed fines against Nahrstedt for each successive month that she
remained in violation of the condominium project’s pet restriction.
Nahrstedt then brought this lawsuit against the Association, its officers,
and two of its employees, asking the trial court to invalidate the
assessments, to enjoin future assessments, to award damages for violation
of her privacy when the Association “peered” into her condominium unit,
to award damages for infliction of emotional distress, and to declare the
pet restriction “unreasonable” as applied to indoor cats (such as hers) that
are not allowed free run of the project’s common areas. Nahrstedt also
alleged she did not know of the pet restriction when she bought her
condominium. [The Association demurred, and the trial court sustained the
demurrer and dismissed Nahrstedt’s complaint. A divided Court of Appeal
reversed, finding that whether the restriction was “unreasonable” depended
on the facts of her particular case.]

II
Today, condominiums, cooperatives, and planned-unit developments
with homeowners associations have become a widely accepted form of
real property ownership. These ownership arrangements are known as
“common interest” developments. The owner not only enjoys many of the
traditional advantages associated with individual ownership of real
property, but also acquires an interest in common with others in the
amenities and facilities included in the project. It is this hybrid nature of
property rights that largely accounts for the popularity of these new and
innovative forms of ownership in the 20th century.
[S]ubordination of individual property rights to the collective judgment
of the owners association together with restrictions on the use of real
property comprise the chief attributes of owning property in a common
interest development. Notwithstanding the limitations on personal
autonomy that are inherent in the concept of shared ownership of
residential property, common interest developments have increased in
popularity in recent years, in part because they generally provide a more
affordable alternative to ownership of a single-family home. One
significant factor in the continued popularity of the common interest form
of property ownership is the ability of homeowners to enforce restrictive
CC & R’s against other owners (including future purchasers) of project

823
units.
When restrictions limiting the use of property within a common
interest development satisfy the requirements of covenants running with
the land or of equitable servitudes, what standard or test governs their
enforceability? In California, as we explained at the outset, our Legislature
has made common interest development use restrictions contained in a
project’s recorded declaration “enforceable . . . unless unreasonable.”
(§1354, subd. (a), italics added.)
In states lacking such legislative guidance, some courts have adopted a
standard under which a common interest development’s recorded use
restrictions will be enforced so long as they are “reasonable.”
In Hidden Harbour Estates v. Basso (Fla. Dist. Ct. App. 1981) 393 So.
2d 637, the Florida court distinguished two categories of use restrictions:
use restrictions set forth in the declaration or master deed of the
condominium project itself, and rules promulgated by the governing board
of the condominium owners association or the board’s interpretation of a
rule. (Id. at p. 639.) The latter category of use restrictions, the court said,
should be subject to a “reasonableness” test, so as to “somewhat fetter the
discretion of the board of directors.” (Id. at p. 640.) Such a standard, the
court explained, best assures that governing boards will “enact rules and
make decisions that are reasonably related to the promotion of the health,
happiness and peace of mind” of the project owners, considered
collectively. (Ibid.)
By contrast, restrictions contained in the declaration or master deed of
the condominium complex, the Florida court concluded, should not be
evaluated under a “reasonableness” standard. (Hidden Harbour Estates v.
Basso, supra, 393 So. 2d at pp. 639-640.) Rather, such use restrictions are
“clothed with a very strong presumption of validity” and should be upheld
even if they exhibit some degree of unreasonableness. (Id. at pp. 639, 640.)
Nonenforcement would be proper only if such restrictions were arbitrary
or in violation of public policy or some fundamental constitutional right.
(Id. at pp. 639-640.)
Indeed, giving deference to use restrictions contained in a
condominium project’s originating documents protects the general
expectations of condominium owners “that restrictions in place at the time
they purchase their units will be enforceable.” (Note, Judicial Review of
Condominium Rulemaking, supra, 94 Harv. L. Rev. 647, 653); Ellickson,
Cities and Homeowners’ Associations (1982) 130 U. Pa. L. Rev. 1519,
1526-1527. This in turn encourages the development of shared ownership
housing — generally a less costly alternative to single-dwelling ownership
— by attracting buyers who prefer a stable, planned environment. It also

824
protects buyers who have paid a premium for condominium units in
reliance on a particular restrictive scheme.

III
In California, common interest developments are subject to the
provisions of the Davis-Stirling Common Interest Development Act
(hereafter Davis-Stirling Act or Act). (§1350 et seq.) The Act, passed into
law in 1985, consolidated in one part of the Civil Code certain definitions
and other substantive provisions pertaining to condominiums and other
types of common interest developments.
Pertinent here is the Act’s provision for the enforcement of use
restrictions contained in the project’s recorded declaration. That provision,
subdivision (a) of section 1354, states in relevant part: “The covenants and
restrictions in the declaration shall be enforceable equitable servitudes,
unless unreasonable, and shall inure to the benefit of and bind all owners
of separate interests in the development.” (Italics added.)
The provision’s express reference to “equitable servitudes” evidences
the Legislature’s intent that recorded use restrictions falling within section
1354 are to be treated as equitable servitudes. [W]hen enforcing equitable
servitudes, courts are generally disinclined to question the wisdom of
agreed-to restrictions. This rule does not apply, however, when the
restriction does not comport with public policy. Equity will not enforce
any restrictive covenant that violates public policy. (See Shelley v.
Kramer, 334 U.S. 1 (1948).) Nor will courts enforce as equitable
servitudes those restrictions that are arbitrary, that is, bearing no rational
relationship to the protection, preservation, operation or purpose of the
affected land.
With these principles of equitable servitude law to guide us, we now
turn to section 1354. [U]nder subdivision (a) of section 1354 the use
restrictions for a common interest development that are set forth in the
recorded declaration are “enforceable equitable servitudes, unless
unreasonable.” In other words, such restrictions should be enforced unless
they are wholly arbitrary, violate a fundamental public policy, or impose a
burden on the use of affected land that far outweighs any benefit.
When courts accord a presumption of validity to all such recorded use
restrictions and measure them against deferential standards of equitable
servitude law, it discourages lawsuits by owners of individual units
seeking personal exemptions from the restrictions. This also promotes
stability and predictability in two ways. It provides substantial assurance to
prospective condominium purchasers that they may rely with confidence

825
on the promises embodied in the project’s recorded CC & R’s. And it
protects all owners in the planned development from unanticipated
increases in association fees to fund the defense of legal challenges to
recorded restrictions.
Contrary to the dissent’s accusations that the majority’s decision
“fray[s]” the “social fabric,” we are of the view that our social fabric is
best preserved if courts uphold and enforce solemn written instruments
that embody the expectations of the parties rather than treat them as
“worthless paper” as the dissent would. Our social fabric is founded on the
stability of expectation and obligation that arises from the consistent
enforcement of the terms of deeds, contracts, wills, statutes, and other
writings. To allow one person to escape obligations under a written
instrument upsets the expectations of all the other parties governed by that
instrument (here, the owners of the other 529 units) that the instrument
will be uniformly and predictably enforced.

IV
Under the holding we adopt today, the reasonableness or
unreasonableness of a condominium use restriction that the Legislature has
made subject to section 1354 is to be determined not by reference to facts
that are specific to the objecting homeowner, but by reference to the
common interest development as a whole. As we have explained, when, as
here, a restriction is contained in the declaration of the common interest
development and is recorded with the county recorder, the restriction is
presumed to be reasonable and will be enforced uniformly against all
residents of the common interest development unless the restriction is
arbitrary, imposes burdens on the use of lands it affects that substantially
outweigh the restriction’s benefits to the development’s residents, or
violates a fundamental public policy.
We conclude, as a matter of law, that the recorded pet restriction of the
Lakeside Village condominium development prohibiting cats or dogs but
allowing some other pets is not arbitrary, but is rationally related to health,
sanitation and noise concerns legitimately held by residents of a high-
density condominium project such as Lakeside Village, which includes
530 units in 12 separate 3-story buildings.
Nahrstedt’s complaint alleges no facts that could possibly support a
finding that the burden of the restriction on the affected property is so
disproportionate to its benefit that the restriction is unreasonable and
should not be enforced. Also, the complaint’s allegations center on
Nahrstedt and her cats (that she keeps them inside her condominium unit

826
and that they do not bother her neighbors), without any reference to the
effect on the condominium development as a whole, thus rendering the
allegations legally insufficient to overcome section 1354’s presumption of
the restriction’s validity.
[Reversed and remanded.]

ARMAND ARABIAN, Justice, dissenting.

“There are two means of refuge from the misery of life: music and
cats.”10
I respectfully dissent. While technical merit may commend the
majority’s analysis, its application to the facts presented reflects a narrow,
indeed chary, view of the law that eschews the human spirit in favor of
arbitrary efficiency. In my view, the resolution of this case well illustrates
the conventional wisdom, and fundamental truth, of the Spanish proverb,
“It is better to be a mouse in a cat’s mouth than a man in a lawyer’s
hands.”
As explained below, I find the provision known as the “pet restriction”
contained in the covenants, conditions, and restrictions (CC & R’s)
governing the Lakeside Village project patently arbitrary and unreasonable
within the meaning of section 1354. Given the substantial benefits derived
from pet ownership, the undue burden on the use of property imposed on
condominium owners who can maintain pets within the confines of their
units without creating a nuisance or disturbing the quiet enjoyment of
others substantially outweighs whatever meager utility the restriction may
serve in the abstract.
Both recorded and unrecorded history bear witness to the
domestication of animals as household pets.11 In addition to these
historical and cultural references, the value of pets in daily life is a matter
of common knowledge and understanding as well as extensive
documentation. People of all ages, but particularly the elderly and the
young, enjoy their companionship. Those who suffer from serious disease
or injury and are confined to their home or bed experience a therapeutic,
even spiritual, benefit from their presence. Animals provide comfort at the
death of a family member or dear friend, and for the lonely can offer a
reason for living when life seems to have lost its meaning. While pet
ownership may not be a fundamental right as such, unquestionably it is an
integral aspect of our daily existence, which cannot be lightly dismissed
and should not suffer unwarranted intrusion into its circle of privacy.
What is gained from an uncompromising prohibition against pets that
are confined to an owner’s unit and create no noise, odor, or nuisance?
[T]he majority accept uncritically the proffered justification of

827
preserving “health and happiness” and essentially consider only one
criterion to determine enforceability: was the restriction recorded in the
original declaration? If so, it is “presumptively valid,” unless in violation
of public policy. Given the application of the law to the facts alleged and
by an inversion of relative interests, it is difficult to hypothesize any CC &
R’s that would not pass muster. Such sanctity has not been afforded any
writing save the commandments delivered to Moses on Mount Sinai, and
they were set in stone, not upon worthless paper.

CONTEXT

In 2000, the California legislature overturned the result in Nahrstedt by

adopting a statute providing that “[n]o governing documents shall prohibit the
owner of a separate interest within a common interest development from
keeping at least one pet within the common interest development, subject to
reasonable rules and regulations of the association.” Cal. Civ. Code §1360.5.
The statute does not apply to covenants entered into before its enactment.

Moreover, unlike most conduct controlled by CC & R’s, the activity at

issue here is strictly confined to the owner’s interior space; it does not in
any manner invade other units or the common areas. Owning a home of
one’s own has always epitomized the American dream. More than simply
embodying the notion of having “one’s castle,” it represents the sense of
freedom and self-determination emblematic of our national character.
Granted, those who live in multi-unit developments cannot exercise this
freedom to the same extent possible on a large estate. But owning pets that
do not disturb the quiet enjoyment of others does not reasonably come
within this compromise. Nevertheless, with no demonstrated or discernible
benefit, the majority arbitrarily sacrifice the dream to the tyranny of the
“commonality.”

Notes and Questions

1. Reasonableness and public policy. In Davidson and Nahrstedt,
state courts adopt a reasonableness test rather than more traditional tests
for evaluating covenants. But the test operates very differently in the hands
of the two courts. The reasonableness test as described by the New Jersey
Supreme Court adds additional tests on top of the traditional criteria: “We
do not abandon the ‘touch and concern’ test,” the New Jersey Supreme
Court stated, “but rather hold that the test is but one of the factors a court

828
should consider in determining the reasonableness of the covenant.”
Davidson, 579 A.2d at 295. As the court described, courts had previously
engaged in “illogical and contorted applications of the ‘touch and concern’
rules . . . because courts have been pressed to twist the rules of ‘touch and
concern’ in order to achieve a result that comports with public policy and a
free market.” Id. The New Jersey test seeks to make those public policy
concerns explicit.
In contrast, the California test cloaks all covenants with a strong
presumption of validity. Although the opinion construed a California
statute, as the Nahrstedt court noted, a number of other courts adopted a
similar test as a matter of common law.
Which test is better? Which better guarantees the stability and
enforceability of agreements? Which better serves the public interest? Are
there differences between commercial covenants and covenants governing
common interest developments that justify the differences? How would the
covenant in Davidson fare under the Nahrstedt test?
2. Restatement (Third). The Restatement (Third) adopts the position
that servitudes are presumptively valid unless they are “illegal or
unconstitutional or violate[] public policy.” Id. §3.1. The comments note
that this “applies the modern principle of freedom of contract to creation of
servitudes. Rooted in the notion that it is in the public interest to recognize
that individuals have broad powers to order their own affairs,’ ” the
principle is that parties are generally free to “ ‘contract as they wish, and
courts will enforce their agreements without passing on their substance.’ ”
Id. §3.1 cmt. a.
At the same time, the Restatement (Third) retains a substantial role for
the courts in regulating and invalidating covenants. In addition to
covenants that constitute unreasonable restraints on alienation and
competition, the Restatement (Third) provides that “[s]ervitudes that are
invalid because they violate public policy include, but are not limited to”
those that are “arbitrary, spiteful, or capricious” or “that unreasonably
burden[] a fundamental constitutional right” or are “unconscionable.” Id.
§3.1. Determining when a covenant violates public policy requires
consideration of a host of values.

Resolving public policy claims requires balancing interests. Resolving claims

that a servitude violates public policy requires assessing the impact of the
servitude, identifying the public interests that would be adversely affected by
leaving the servitude in force, and weighing the predictable harm against the
interests in enforcing the servitude. Only if the risks of social harm outweigh
the benefits of enforcing the servitude is the servitude likely to be held

829
 invalid. The policies favoring freedom of contract, freedom to dispose of
one’s property, and protection of legitimate expectation interests nearly
always weigh in favor of the validity of voluntarily created servitudes. A host
of other policies, too numerous to catalog, may be adversely impacted by
servitudes. Policies favoring privacy and liberty in choice of lifestyle,
freedom of religion, freedom of speech and expression, access to the legal
system, discouraging bad faith and unfair dealing, encouraging free
competition, and socially productive uses of land have been implicated by
servitudes. Other policies that become involved may include those protecting
family relationships from coercive attempts to disrupt them, and protecting
weaker groups in society from servitudes that exclude them from
opportunities enjoyed by more fortunate groups to acquire desirable property
for housing or access to necessary services.

Id. §3.1 cmt. l. How would the supermarket covenant in Davidson fare
under the Restatement (Third) test? How would Nahrstedt’s no pets
covenant?
3. Remedies and the public interest. In the New Jersey Supreme
Court ruling before remand in Davidson Brothers, Justice Pollock opined
that because the covenant touched and concerned the land, it should be
enforceable, but that equitable and public policy concerns suggested it
should be enforced with damages rather than an injunction. On remand,
the lower courts determined that the covenant should not be enforced at
all. What are the arguments in favor of each position?
4. Retroactive impact of covenant changes. Further questions arise
when covenants are amended or imposed after the owner purchases a unit.
Could a no pets covenant be enforced against an owner with pets who
purchased before it was in effect? Could a new no sex offenders covenant
be enforced to prevent an existing owner from having her son move in
with her? What about a no smoking covenant against an existing owner
who is a smoker? What are the competing arguments?
5. Reasonableness in implementation. Courts often impose a
reasonableness standard in implementation of covenants even where the
covenant itself does not provide for one.
For example, some developers impose covenants requiring owners to
obtain approval of an architectural review committee chosen by the
homeowners association when they seek to make structural changes to
their homes or even when they paint their shutters. In such cases, most
courts hold such committees to a standard of reasonableness even if the
covenants include no restrictions on the committee’s discretion. See, e.g.,
Portola Hills Community Association v. James, 5 Cal. Rptr. 2d 580 (Ct.

830
App. 1992) (holding that it would be unreasonable for a homeowners
association to ban a satellite dish when the dish would be located in the
backyard and would not be visible to the neighbors); Smith v. Butler
Mountain Estates Property Owners Association, 367 S.E.2d 401 (N.C. Ct.
App. 1988) (holding refusal to allow an owner to build a geodesic dome in
a community of otherwise flat plane roofs was reasonable); Riss v. Angel,
934 P.2d 669, 677-679 (Wash. 1997) (holding that power to approve plans
for new construction must be exercised “reasonably and in good faith”). In
contrast, the Supreme Court of Oregon held that an architectural
committee’s decisions were subject only to review for fraud, bad faith, or
lack of honest judgment when the covenants gave it “discretion” to make
such decisions and specifically provided that it be the “sole judge of the
suitability” of the height of improvements. Valenti v. Hopkins, 926 P.2d
813 (Or. 1996).
In a hopefully more sui generis case, a homeowners association
ordered an elderly veteran with Hodgkin’s disease to, among other things,
“clear his bed of all paper and books,” “not use his downstairs bathroom
for storage,” and suggested that he “throw out” or donate all “outdated
clothes that had not been worn in five years” to comply. Fountain Valley
Chateau Banc Homeowner’s Association v. Department of Veterans
Affairs, 79 Cal. Rptr. 2d 248, 251 (1998). (Would your bed or closet meet
these requirements?) Although the applicable covenants required owners
to maintain their properties in a “clean, sanitary, and attractive condition,”
the court found “it is virtually impossible to say the association acted
reasonably,” as the fire department had inspected the premises and found
that they did not pose a health or fire hazard. Id. at 256. “If it is indeed true
that homeowner’s associations can often function ‘as a second municipal
government’; then we have a clear cut case of a ‘nanny state’ — nanny in
almost a literal sense — going too far.” Id. at 256.

Problems
1. A 2008 Arizona statute provides that all covenants are “valid and
enforceable” so long as they do not violate any statutes or prior covenants,
and the owners of the property consented. Ariz. Rev. Stat. §33-440. Can
enforcement of a covenant be challenged on the grounds that it is
unreasonable or violates public policy?
2. What would violate the Nahrstedt test? Natore Nahrstedt declared
that her cats Boo Boo, Dockers, and Tulip “were like my children.”
Imagine that the covenant had actually prohibited children, and Natore had
moved in only to discover her actual children could not live with her.

831
Would the covenant be unreasonable under the Nahrstedt test?12 What if
the covenant prohibited watching television in one’s home?
3. In Mulligan v. Panther Valley Property Owners Association, 766
A.2d 1186 (N.J. Super. Ct. App. Div. 2001), a homeowners association in
a gated residential community of more than 2,000 homes (including
single-family homes, townhouses, and condominium units) voted to amend
applicable covenants to prohibit occupancy of any unit by a registered sex
offender. Is the covenant unreasonable under the Davidson test?
4. When developers sell homes with rights to use commonly owned
areas, such as a lake, recreational area, or road, there is normally a
declaration creating a homeowners association with the power to impose
assessments on owners to recover the costs of maintenance of those areas.
If a developer fails to create such an association or the declaration does not
initially give the association the power to tax owners to pay for
maintenance of common areas or common easements, can the homeowners
whose properties are appurtenant to the common areas or easements vote
to create a homeowners association and/or impose assessments on owners
who do not agree? The Restatement (Third) says yes (§6.3). But compare
Evergreen Highlands Association v. West, 73 P.3d 1 (Colo. 2003)
(association has power to add new declaration provisions including
provisions requiring membership in the homeowners association and
authorizing, for the first time, mandatory assessments to maintain common
areas), and Weatherby Lake Improvement Co. v. Sherman, 611 S.W.2d 326
(Mo. Ct. App. 1980) (power to create a homeowners association to manage
and maintain a commonly owned lake), with Wendover Road Property
Owners Association v. Kornicks, 502 N.E.2d 226 (Ohio Ct. App. 1985)
(owners cannot compel participation in the cost of improvements to
commonly owned easements in the absence of a declaration creating a
homeowners association with the power to impose such assessments). Cf.
Okla. Stat. tit. 11, §42-106.1 (60 percent of owners subject to covenants
can vote to create an association whose decisions will be binding on those
who agree to it and on successors in interest of existing owners).
5. A covenant limiting property to residential use and barring any
commercial use is interpreted to preclude operation of a family day care
center. Given the need for affordable, convenient day care, does this
covenant violate public policy? See Terrien v. Zwit, 648 N.W.2d 602
(Mich. 2002) (holding that it does not violate public policy, reversing
lower court rulings to the contrary).

832
 B. Rules and Bylaws

O’Buck v. Cottonwood Village Condominium Association, Inc.

50 P.2d 813 (Alaska 1988)

JAY A. RABINOWITZ, Chief Justice.
John and Janie O’Buck, plaintiffs and appellants in this case,
purchased a unit in the Cottonwood Village Condominiums in June 1981.
At that time, the unit was pre-wired for a central television antenna and for
Visions, an antenna-based cable system. It is impossible to watch
television in the unit without an outdoor antenna or cable because of bad
reception. The availability of an antenna was an important consideration
for the O’Bucks in deciding to purchase their unit because they have four
televisions and frequently watch different programs.
In 1984, the Board of Directors of the Cottonwood Village Association
(“the Board” or “the Association”) had to address a serious problem of
roof leakage in the condominiums. Among the several causes of leakage
were badly mounted antennae and foot traffic on the roof related to the
antennae. The Association paid $155,000 to have the roofs repaired. In
order to do the work, the contractors removed all the antennae from the
roofs. Before any of the antennae were reinstalled, the Board adopted a
rule prohibiting the mounting of television antennae anywhere on the
buildings. The purposes of this rule were to protect the roof and to enhance
the marketability of the condominium units. The Board further decided to
make the MultiVisions cable system available as an alternative to
antennae. The Board rejected other alternatives such as a satellite dish or
antennae mounted on the sides of the buildings. The Board offered to pay
the fifteen dollar hookup fee to MultiVisions and to pay for the depreciated
value of the old antennae. The O’Bucks were paid $284.20 for their
antenna, which had been damaged when contractors removed it from the
roof. The O’Bucks now have one television hooked up to MultiVisions.
Their other sets have no reception, and it would cost ten dollars per month
per set to hook them up.
The O’Bucks subsequently filed a complaint against the Association
seeking damages and an injunction against enforcement of the rule.
The O’Bucks challenge the Board’s authority to adopt the rule. We
conclude that the Board had authority to enact a rule banning television
antennae from buildings under either of two provisions in the Declaration
of Condominium, the “constitution” of the Association. See Alaska Stat.
§§34.07.010-.070.
First, article IX, section 4 of the Declaration authorizes the Board to

833
adopt rules and regulations governing the use of the common areas, which
include the roofs and walls of the buildings. That section provides:

Rules and Regulations. Rules and regulations may be adopted by the Board
of Directors concerning and governing the use of the general and limited
common areas providing such rules and regulations shall be furnished to
owners prior to the time they become effective and that such rules and
regulations shall be uniform and nondiscriminatory.

Second, article XIX, section 1(d) of the Declaration authorizes the

Board to require unit owners to take action to preserve a uniform exterior
appearance to the buildings. That section provides:

In order to preserve a uniform exterior appearance to the building, the Board

may require the painting of the building, decks and balconies, and prescribe
the type and color of paint, and may prohibit, require, or regulate any
modification or decoration of the building, decks and balconies undertaken or
proposed by any owner. This power of the Board extends to screens, doors,
awnings, rails or other visible portions of each condominium unit and
condominium building. The Board may also require use of a uniform color of
draperies or drapery lining for all units. (Emphasis supplied.)

Given these two provisions, the Board had authority to ban antennae either
on roof-protection grounds (under article IX, section 4) or on aesthetic
grounds (under either section), both of which were given as reasons for the
antennae rule.
The O’Bucks also cite several provisions of the Declaration and
Bylaws which explicitly prohibit or authorize the prohibition of other
things, such as pets, modification of buildings, and posting of bills. They
reason that since there is no explicit authorization to prohibit antennae, and
since the Declaration and Bylaws contemplate the existence of antennae, a
right to have an antenna is reasonably inferred and cannot be taken away
without amending the Declaration or Bylaws. They rely on Beachwood
Villas Condominium v. Poor, 448 So. 2d 1143, 1145 (Fla. Dist. Ct. App.
1984), which held: “provided that a board-enacted rule does not
contravene either an express provision of the declaration or a right
reasonably inferable therefrom, it will be found valid, within the scope of
the board’s authority.” (Emphasis supplied.)
We do not find the O’Bucks’ arguments persuasive.
The absence of any provision explicitly authorizing the Board to ban
antennae is not fatal to the Board’s right to do so. As noted in Beachwood
Villas, “[i]t would be impossible to list all restrictive uses in a declaration

834
of condominium.” 448 So. 2d at 1145. Thus, in that case the court upheld
board-enacted rules regulating unit rentals and the occupancy of units by
guests during the owner’s absence. The court refused to find a reasonably
inferable right and upheld the rules even in the absence of an express
provision authorizing them.
For these reasons, we hold that the Declaration and Bylaws granted the
Board the authority to enact the subject rule banning television antennae
on buildings.
Both parties agree that a condominium association rule will not
withstand judicial scrutiny if it is not reasonable. This standard of review
is supported by case law and legal commentary.
The superior court found that roof-mounted television antennae were
one of a number of causes of leaking roofs. This finding has ample support
in the record. The architect engaged by the Association to make
recommendations as to what to do about the problem testified that
television antennae caused problems on each of the twenty-two roofs in
the condominium project. Other problems causing the leaking were age of
the condominiums, their poor design, and problems of poor workmanship
which went into the construction of the condominium buildings. He also
testified that it was important to limit foot traffic on the roofs, as many
owners were apparently causing damage to the roofs when walking there
to adjust their antennae. The repairs to the roof cost the Association
$155,000. These facts clearly justified the Board’s action to limit or
prohibit television antennae and foot traffic on the roofs.
If the roof problems were the only justification for the rule, the
O’Bucks would have a stronger argument that the rule was unreasonable.
This is because they hired an architect who designed a method of installing
antennae on the sides of the buildings rather than the roofs. This method
would involve only brief work on the roof to connect the coaxial cable,
and the rest of the work could be done from a ladder or hydraulically
operated bucket. The availability of this relatively inexpensive alternative
would cast some doubt on the reasonableness of a blanket prohibition on
antennae if the only purpose of the rule was to protect the roofs.
However, it is clear that other legitimate considerations also motivated
the antenna ban. As discussed above, the Declaration specifically
authorized the prohibition of modifications or decorations to preserve a
uniform exterior appearance to the buildings. Numerous witnesses testified
that the Board was influenced by the unsightliness of the antennae. It was
estimated that each of the 104 units in the twenty-two buildings had an
antenna protruding from the roof. Witnesses testified that the Board felt
that the elimination of the forest of antennae combined with the

835
availability of a state-of-the-art cable system would enhance the
marketability of the units. This evidence is adequate to support the
superior court’s conclusion that aesthetics and improved marketability
were grounds for the antenna ban.
It is clear that the O’Bucks do not agree that the antenna ban improved
the exterior appearance of the buildings. They describe this goal as
“[nothing] more than a sop to personal prejudice or unarticulated personal
values.” However, this is a facet of the freedom they sacrificed when they
bought into a condominium association.
[C]ondominium owners consciously sacrifice some freedom of choice
in their decision to live in this type of housing. Unit owners may not rely
on the courts to strike down reasonable rules on the grounds of differences
in aesthetic tastes.

CONTEXT

The Federal Communications Commission later prohibited condo rules like

that in O’Buck pursuant to a 1996 congressional directive to “prohibit
restrictions that impair a viewer’s ability to receive video programming
services through devices designed for over-the-air reception of television
broadcast signals, multichannel multipoint distribution service, or direct
broadcast satellite services.” 47 U.S.C. §303 Note. Why would Congress enact
such a directive? Hint: It wasn’t because of the powerful couch potato lobby.

In evaluating the reasonableness of a condominium association rule, it

is necessary to balance the importance of the rule’s objective against the
importance of the interest infringed upon. In a case where a rule seriously
curtails an important civil liberty — such as, for example, freedom of
expression — we will look with suspicion on the rule and require a
compelling justification. The antenna ban in the instant case curtails no
significant interests. The only loss suffered is that the O’Bucks and the
other owners must now pay a small monthly fee to receive television, and
even this cost is offset to a degree by the savings from the lack of need to
install and maintain an antenna. In some cases, we might consider a
financial burden to be an important interest. However, the fee in this case
is small in view of the wherewithal of the members of the Association.13
For this reason, we find that the interests of the Association in improving
the exterior appearance of the buildings and enhancing the marketability of
the units more than adequately justify the small financial burden placed on
the owners.

836
 Neuman v. Grandview at Emerald Hills, Inc.

861 So. 2d 494 (Fla. Dist. Ct. App. 2003)

Map: 2800 N. 45th Avenue,

Hollywood, Florida

MARTHA C. WARNER, J.
The issue presented in this case is whether a condominium association
rule banning the holding of religious services in the auditorium of the
condominium constitutes a violation of Fla. Stat. §718.123, which
precludes condominium rules from unreasonably restricting a unit owner’s
right to peaceably assemble. We hold that the rule does not violate the
statute and affirm.
Appellee Grandview is a condominium association with 442 members,
appellants being two of the members. Appellants reside at Grandview
condominium during the winter months. The common elements of the
condominium include an auditorium that members can reserve for social
gatherings and meetings. Grandview enacted a rule governing the use of
the auditorium in 1982, which provided that the auditorium could be used
for meetings or functions of groups, including religious groups, when at
least eighty percent of the members were residents of Grandview
condominium. Generally, the only reservations made for the auditorium on
Saturdays were by individual members for birthday or anniversary
celebrations.
In January 2001, several unit owners reserved the auditorium between
8:30 and noon on Saturday mornings. While they indicated they were
reserving it for a party, they actually conducted religious services.
Approximately forty condominium members gathered for the services.
Upon discovering that religious services were being conducted on
Saturdays in the auditorium, several other members complained to the
Board of Directors (“Board”). The Board met in February to discuss
restrictions on the use of the auditorium and common elements for
religious services and activities. The meeting became very confrontational
between those members supporting the use of the auditorium for religious
services and those opposing such use. Based upon the controversial nature
of the issue, the Board’s desire not to have a common element tied up for
the exclusive use of a minority of the members on a regular basis, and to

837
avoid conflicts between different religious groups competing for the space,
the Board first submitted the issue to a vote of the owners. Seventy percent
of the owners voted in favor of prohibiting the holding of religious
services in the auditorium. The Board then voted unanimously to amend
the rule governing the use of the auditorium. The new rule provided that
“no religious services or activities of any kind are allowed in the
auditorium or any other common elements.”
Appellants filed suit against Grandview seeking injunctive and
declaratory relief to determine whether the rule violated their
constitutional rights or was in violation of §718.123, and whether the rule
was arbitrarily and capriciously enacted by the Board. Grandview
answered, denying that the rule was arbitrary or violated appellants’
statutory or constitutional rights. Appellants moved for a temporary
injunction alleging that Grandview was not only preventing the owners
from holding religious services, it was also prohibiting the use of the
auditorium for holiday parties, including Christmas and Chanukah, based
upon its prohibition against using the common elements “for religious
activities of any kind.” The court granted the motion as to the use of the
auditorium for religious activities of any kind but denied it as it applied to
the holding of religious services. Based upon the temporary injunction as
to religious activities, Grandview amended its rule to limit the prohibition
to the holding of religious services in the auditorium.
At a hearing on appellants’ motion for a permanent injunction against
the rule, the appellants relied primarily on §718.123, which prohibits
condominium associations from unreasonably restricting the unit owners’
rights to peaceable assembly. They argued that religious services fell into
the category of a “peaceable assembly,” and a categorical ban on the
holding of religious services was per se unreasonable. Grandview
maintained that it had the right to restrict the use of its common elements.
Because the right of peaceable assembly did not mandate a right to
conduct religious services, it had the right to poll its members and restrict
the use based upon the majority’s desires. As such, Grandview maintained
the exercise of this right was reasonable.
In its final order denying the injunction, the court determined that
because no state action was involved, the unit owners’ constitutional rights
of freedom of speech and religion were not implicated by Grandview’s
rule. The court determined that the rule did not violate §718.123, as the
condominium association had the authority to enact this reasonable
restriction on the use of the auditorium. Appellants challenge that ruling.
Chapter 718, Florida’s “Condominium Act,” recognizes the
condominium form of property ownership and “establishes a detailed

838
scheme for the creation, sale, and operation of condominiums.” Woodside
Vill. Condo. Ass’n v. Jahren, 806 So. 2d 452, 455 (Fla. 2002). Thus,
condominiums are strictly creatures of statute. The declaration of
condominium, which is the condominium’s “constitution,” creates the
condominium and “strictly governs the relationships among the
condominium units owners and the condominium association.” Id. at 456.
Under the declaration, the Board of the condominium association has
broad authority to enact rules for the benefit of the community.
In Hidden Harbour Estates, Inc. v. Norman, 309 So. 2d 180, 181-82
(Fla. Dist. Ct. App. 1975), this court explained the unique character of
condominium living which, for the good of the majority, restricts rights
residents would otherwise have were they living in a private separate
residence:

It appears to us that inherent in the condominium concept is the principle that

to promote the health, happiness, and peace of mind of the majority of the
unit owners since they are living in such close proximity and using facilities
in common, each unit owner must give up a certain degree of freedom of
choice which he might otherwise enjoy in separate, privately owned
property. Condominium unit owners comprise a little democratic sub society
of necessity more restrictive as it pertains to use of condominium property
than may be existent outside the condominium organization.
Section 718.123(1) recognizes the right of the condominium association to
regulate the use of the common elements of the condominium (emphasis
added):

All common elements, common areas, and recreational facilities serving any
condominium shall be available to unit owners in the condominium or
condominiums served thereby and their invited guests for the use intended
for such common elements, common areas, and recreational facilities, subject
to the provisions of §718.106(4). The entity or entities responsible for the
operation of the common elements, common areas, and recreational facilities
may adopt reasonable rules and regulations pertaining to the use of such
common elements, common areas, and recreational facilities. No entity or
entities shall unreasonably restrict any unit owner’s right to peaceably
assemble or right to invite public officers or candidates for public office to
appear and speak in common elements, common areas, and recreational
facilities.

The statutory test for rules regarding the operation of the common
elements of the condominium is reasonableness. The trial court found the
rule preventing use of the auditorium for religious services was reasonable
in light of the Board’s concern for a serious potential for conflict of use

839
which could arise among competing religious groups. Having polled the
members and determined that a majority of the members approved the ban,
the Board’s rule assured that the auditorium was “available to unit owners
in the condominium or condominiums served thereby and their invited
guests for the use intended” in accordance with the statute. §718.123(1).
The appellants’ main argument both at trial and on appeal suggests that
because the statute mandates that the Board may not “unreasonably restrict
any unit owner’s right to peaceably assemble,” §718.123(1), a categorical
prohibition of all religious services exceeds the Board’s powers, as the
right to meet in religious worship would constitute the right to peaceably
assemble. However, the right to peaceably assemble has traditionally been
interpreted to apply to the right of the citizens to meet to discuss public or
governmental affairs. See United States v. Cruikshank, 92 U.S. 542, 551-
555 (1875). Assuming for purposes of this argument that the right to
gather for religious worship is a form of peaceable assembly, the rule in
question bans this particular form of assembly, but not all right to
assemble. Certainly, a categorical ban on the right of members to use the
auditorium for any gathering would be contrary to statute. However, the
statute itself permits the reasonable regulation of that right. Prohibiting
those types of assembly which will have a particularly divisive effect on
the condominium community is a reasonable restriction. The Board found
that permitting the holding of regular worship services and the competition
among various religious groups for use of the auditorium would pose such
conflict. Where the condominium association’s regulations regarding
common elements are reasonable and not violative of specific statutory
limitations, the regulations should be upheld. The trial court found the
restriction reasonable under the facts. No abuse of discretion has been
shown.
The judgment of the trial court is affirmed.

Notes and Questions

1. Within the scope of board authority. To withstand review, bylaws
and other board actions must not only be reasonable, but must be within
the scope of the authority reasonably created by the declaration. As
O’Buck shows, the authority need not explicitly speak to the particular
rule. The determination of whether the restriction is within the scope of the
authority created by the covenants is affected by whether the jurisdiction
still interprets covenants strictly in favor of the free use of land or whether
it interprets them broadly to achieve the intent of the parties, and whether
court finds the bylaw affects an important right or reasonable reliance of

840
the owner. Compare Apple Valley Gardens Association v. MacHutta, 763
N.W.2d 126 (Wis. 2009) (holding that because covenants mentioned but
did not affirmatively permit renting of units, bylaw preventing leasing was
permissible) with Kiekel v. Four Colonies Homes Association, 162 P.3d 57
(Kan. Ct. App. 2007) (finding that rental restriction had to be enacted by
amendment to declaration rather than bylaw where declaration mentioned
even if it did not affirmatively permit leasing), and Apple Valley, 763
N.W.2d at 134-139 (Prosser, J., dissenting) (given importance of and
practice of leasing and rule that restrictions on property should be
construed strictly, prohibition on leasing should not be accomplished via
an amendment to the bylaws).
2. Standard of review. Once they have deemed a board’s actions to be
authorized, most courts review them for reasonableness. Others, however,
review board actions under the business judgment rule. Compare Lamden
v. La Jolla Shores Club-dominium Homeowners Association, 980 P.2d
940, 950 (Cal. 1999) (review for whether judgment is reasonable and in
good faith deferring to the board’s “authority and presumed expertise”)
with Committee for a Better Twin Rivers v. Twin Rivers Homeowners
Association, 929 A.2d 1060, 1074 (N.J. 2007) (business judgment rule).
This business judgment rule was created in the context of actions against
corporate boards and officers, and immunizes them from liability “so long
as the court determines that the process employed was either rational or
employed in a good faith effort to advance corporate interests.” In re
Caremark International Inc. Derivative Litigation, 698 A.2d 959, 967
(Del. Ch. 1996); see Chapter 10, §4. The leading case adopting the
business judgment rule is Levandusky v. One Fifth Avenue Apartment
Corp., 553 N.E.2d 1317, 1321 (N.Y. 1990). In Levandusky, Chief Justice
Judith Kaye acknowledged that “the broad powers of a cooperative board
hold potential for abuse through arbitrary and malicious decision-making,
favoritism, discrimination and the like,” but that generalized review for
reasonableness was inappropriate:

As this case exemplifies, board decisions concerning what residents may

or may not do with their living space may be highly charged and emotional.
A cooperative or condominium is by nature a myriad of often competing
views regarding personal living space, and decisions taken to benefit the
collective interest may be unpalatable to one resident or another, creating the
prospect that board decisions will be subjected to undue court involvement
and judicial second-guessing. Allowing an owner who is simply dissatisfied
with particular board action a second opportunity to reopen the matter
completely before a court, which — generally without knowing the property

841
 — may or may not agree with the reasonableness of the board’s
determination, threatens the stability of the common living arrangement.
Moreover, the prospect that each board decision may be subjected to full
judicial review hampers the effectiveness of the board’s managing authority.
The business judgment rule protects the board’s business decisions and
managerial authority from indiscriminate attack. At the same time, it permits
review of improper decisions, as when the challenger demonstrates that the
board’s action has no legitimate relationship to the welfare of the
cooperative, deliberately singles out individuals for harmful treatment, is
taken without notice or consideration of the relevant facts, or is beyond the
scope of the board’s authority.

Id. at 1321. Do you agree? Are there other differences between the
corporate setting and the property owner’s association that influence your
judgment?
3. American flag. Justice Clarence Thomas’s father-in-law, Donald
Lamp, hung an American flag outside the balcony of his condominium
unit. The condominium association had passed a rule prohibiting any
banners or flags outside units, including the American flag. It did so, it
seems, for aesthetic reasons and to preserve a uniform appearance of the
units. Lamp was asked to abide by the rule, but he refused. After
nationwide publicity, the association amended its policy to make an
exception for the American flag. In 2006, Congress passed the Freedom to
Display the American Flag Act, 4 U.S.C. §5 note (Pub. L. No. 109-243,
120 Stat. 572 (2006)), which guarantees the right to fly the American flag
on one’s property, regardless of any condominium or homeowners
association rule or covenant to the contrary. The statute appears to respond
directly to the Lamp case and oddly does not confer a similar entitlement
on tenants. Cf. Ark. Code §14-1-203 (granting a right to fly the American
flag, but this right does not extend to residential tenants in buildings with
fewer than 12 units). Imagine that a unit owner is prevented from flying
the Puerto Rican flag — may she challenge the statute as impermissible
content discrimination?
4. Political signs. Many association regulations restrict the signs
owners can post outside their units. Such restrictions have almost
universally been held not to constitute state action in violation of the U.S.
Constitution. See Committee for a Better Twin Rivers v. Twin Rivers
Homeowners Association, 929 A.2d 1060 (N.J. 2007). In Twin Rivers,
dissident members of a homeowners association sought to engage in
various kinds of speech activity to change the policies of the association.
They sued for relief from a rule that prohibited the placement of more than

842
one sign in a window and one sign in the front yard no more than three feet
from the home. Although the Supreme Court of New Jersey ruled that the
homeowners association was not a “state actor,” the New Jersey
constitution forbids private actions that unreasonably restrict speech. The
court found, however, that as the owners could still post some signs, their
rights were not unreasonably restricted. In a subsequent case, however, the
court held that a similar prohibition on all signs other than for sale signs
did violate the New Jersey constitution. Mazdabrook Commons
Homeowners’ Association v. Khan, 46 A.3d 507 (N.J. 2012). Would a
similar blanket restriction be invalid in a state that did not have such a
constitution?

Problems
1. Each unit in a five-story condominium complex has a porch. The
condominium association passes a rule that provides that “no owner shall
erect a structure on the porch.” One owner builds a sukkah, a temporary
structure used by Jews to celebrate the religious festival of Sukkot. The
condominium association believes the ramshackle structure is unsightly
and tells the owner to remove it and not to build any other structures like it
in the future, even though it will be up for less than two weeks. The unit
owner comes to you for advice. Is the restriction on use of the porch
reasonable and enforceable?
2. A professional violinist purchases a condominium unit. Her
neighbors complain that she disturbs them when she plays her violin. The
violinist agrees not to play before 10 A.M. or after 7 P.M., but her neighbors
are not satisfied. The condominium association passes a rule prohibiting
all owners from playing musical instruments in their apartments. Is the rule
reasonable and enforceable?
3. A homeowner installs a clothesline in her backyard to air dry her
laundry. The bylaws of the association applicable to her property prohibit
this, presumably for aesthetic reasons and because hanging laundry
outdoors is thought to lower property values. The owner argues that she is
an environmentalist who is trying to save energy by not using her clothes
dryer. She also feels an obligation to do so because of the rolling blackouts
experienced by California in recent memory. Is the bylaw reasonable?
Should a court enforce it?14 See Dusty Horwitt, The Right to Dry: Laundry
on the Line, Legal Aff., Jan./Feb. 2004.
4. A co-op board in a building at 180 West End Avenue, New York
City, banned all smoking inside the apartments by new owners. The rule

843
allowed existing owners to smoke but put new owners on notice that they
would not be free to smoke inside their own apartments. Is the ban
reasonable? Would it be reasonable if it were applied to existing owners as
well as new buyers? See Dennis Hevesi, Co-Op Board Bans Smoking in
Apartments by New Owners, N.Y. Times, Apr. 30, 2002.

§5.2 Constitutional Limitations

Does the Constitution place limits on covenants? Although
homeowners associations have been called “residential private
governments,” the U.S. Constitution only applies to covenant enforcement
or actions by homeowners associations if state action is found. Shelley v.
Kraemer, 334 U.S. 1 (1948), below, held that the fourteenth amendment
prohibited homeowner enforcement of a racially restrictive covenant. Why
did the Court find state action here?

Shelley v. Kraemer

334 U.S. 1 (1948)

Map: 4600 Labadie Avenue, St.

Louis, Missouri

Mr. Chief Justice FRED VINSON delivered the opinion of the Court.
These cases present for our consideration questions relating to the
validity of court enforcement of private agreements, generally described as
restrictive covenants, which have as their purpose the exclusion of persons
of designated race or color from the ownership or occupancy of real
property. Basic constitutional issues of obvious importance have been
raised.
The first of these cases comes to this Court on certiorari to the
Supreme Court of Missouri. On February 16, 1911, thirty out of a total of
thirty-nine owners of property fronting both sides of Labadie Avenue
between Taylor Avenue and Cora Avenue in the city of St. Louis, signed
an agreement, which was subsequently recorded, providing in part:

[T]he said property is hereby restricted to the use and occupancy for the term
of Fifty (50) years from this date, so that it shall be a condition all the time
and whether recited and referred to as [sic] not in subsequent conveyances

844
 and shall attach to the land, as a condition precedent to the sale of the same,
that hereafter no part of said property or any portion thereof shall be, for said
term of Fifty-years, occupied by any person not of the Caucasian race, it
being intended hereby to restrict the use of said property for said period of
time against the occupancy as owners or tenants of any portion of said
property for resident or other purpose by people of the Negro or Mongolian
Race.

The entire district described in the agreement included fifty-seven

parcels of land. The thirty owners who signed the agreement held title to
forty-seven parcels, including the particular parcel involved in this case. At
the time the agreement was signed, five of the parcels in the district were
owned by Negroes. One of those had been occupied by Negro families
since 1882, nearly thirty years before the restrictive agreement was
executed. The trial court found that owners of seven out of nine homes on
the south side of Labadie Avenue, within the restricted district and “in the
immediate vicinity” of the premises in question, had failed to sign the
restrictive agreement in 1911. At the time this action was brought, four of
the premises were occupied by Negroes, and had been so occupied for
periods ranging from twenty-three to sixty-three years. A fifth parcel had
been occupied by Negroes until a year before this suit was instituted.
On August 11, 1945, pursuant to a contract of sale, petitioners Shelley,
who are Negroes, for valuable consideration received from one Fitzgerald
a warranty deed to the parcel in question. The trial court found that
petitioners had no actual knowledge of the restrictive agreement at the
time of the purchase.

Quick Review:
Does the covenant here meet the common law requirements? Is there horizontal
privity? Vertical privity? Intent to run? Is there notice? Does it touch and
concern the plaintiffs’ land? Does it touch and concern the defendants’ land?
What do we have to assume to find that the covenant touches and concerns the
land here?

On October 9, 1945, respondents, as owners of other property subject

to the terms of the restrictive covenant, brought suit in Circuit Court of the
city of St. Louis praying that petitioners Shelley be restrained from taking
possession of the property and that judgment be entered divesting title out
of petitioners Shelley and revesting title in the immediate grantor or in
such other person as the court should direct. The trial court denied the

845
requested relief on the ground that the restrictive agreement, upon which
respondents based their action, had never become final and complete
because it was the intention of the parties to that agreement that it was not
to become effective until signed by all property owners in the district, and
signatures of all the owners had never been obtained.
The Supreme Court of Missouri sitting en banc reversed and directed
the trial court to grant the relief for which respondents had prayed. That
court held the agreement effective and concluded that enforcement of its
provisions violated no rights guaranteed to petitioners by the Federal
Constitution. At the time the court rendered its decision, petitioners were
occupying the property in question.
The second of the cases under consideration comes to this Court from
the Supreme Court of Michigan. The circumstances presented do not differ
materially from the Missouri case.
Petitioners have placed primary reliance on their contentions, first
raised in the state courts, that judicial enforcement of the restrictive
agreements in these cases has violated rights guaranteed to petitioners by
the Fourteenth Amendment of the Federal Constitution and Acts of
Congress passed pursuant to that Amendment.15 Specifically, petitioners
urge that they have been denied the equal protection of the laws, deprived
of property without due process of law, and have been denied privileges
and immunities of citizens of the United States. We pass to a consideration
of those issues.

846
 J.D. and Ethel Lee Shelley and their children. Photograph by George
Harris. Reprinted by permission of Black Star Publishing.

I
It is well, at the outset, to scrutinize the terms of the restrictive
agreements involved in these cases. In the Missouri case, the covenant
declares that no part of the affected property shall be “occupied by any
person not of the Caucasian race, it being intended hereby to restrict the
use of said property . . . against the occupancy as owners or tenants of any
portion of said property for resident or other purpose by people of the
Negro or Mongolian Race.” Not only does the restriction seek to proscribe
use and occupancy of the affected properties by members of the excluded
class, but as construed by the Missouri courts, the agreement requires that
title of any person who uses his property in violation of the restriction shall
be divested. The restriction of the covenant in the Michigan case seeks to
bar occupancy by persons of the excluded class. It provides that “This
property shall not be used or occupied by any person or persons except
those of the Caucasian race.”
It should be observed that these covenants do not seek to proscribe any

847
particular use of the affected properties. Use of the properties for
residential occupancy, as such, is not forbidden. The restrictions of these
agreements, rather, are directed toward a designated class of persons and
seek to determine who may and who may not own or make use of the
properties for residential purposes. The excluded class is defined wholly in
terms of race or color; “simply that and nothing more.”16
It cannot be doubted that among the civil rights intended to be
protected from discriminatory state action by the Fourteenth Amendment
are the rights to acquire, enjoy, own and dispose of property. Equality in
the enjoyment of property rights was regarded by the framers of that
Amendment as an essential pre-condition to the realization of other basic
civil rights and liberties which the Amendment was intended to guarantee.
Thus, §1978 of the Revised Statutes, derived from §1 of the Civil Rights
Act of 1866 [now codified at 42 U.S.C. §1982] which was enacted by
Congress while the Fourteenth Amendment was also under consideration,
provides:

All citizens of the United States shall have the same right, in every State and
Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease,
sell, hold, and convey real and personal property.

It is likewise clear that restrictions on the right of occupancy of the sort

sought to be created by the private agreements in these cases could not be
squared with the requirements of the Fourteenth Amendment if imposed
by state statute or local ordinance. We do not understand respondents to
urge the contrary.
But the present cases, unlike those just discussed, do not involve action
by state legislatures or city councils. Here the particular patterns of
discrimination and the areas in which the restrictions are to operate, are
determined, in the first instance, by the terms of agreements among private
individuals. Participation of the State consists in the enforcement of the
restrictions so defined. The crucial issue with which we are here
confronted is whether this distinction removes these cases from the
operation of the prohibitory provisions of the Fourteenth Amendment.
Since the decision of this Court in the Civil Rights Cases, 109 U.S. 3
(1883), the principle has become firmly embedded in our constitutional
law that the action inhibited by the first section of the Fourteenth
Amendment is only such action as may fairly be said to be that of the
States. That Amendment erects no shield against merely private conduct,
however discriminatory or wrongful.
We conclude, therefore, that the restrictive agreements standing alone

848
cannot be regarded as a violation of any rights guaranteed to petitioners by
the Fourteenth Amendment. So long as the purposes of those agreements
are effectuated by voluntary adherence to their terms, it would appear clear
that there has been no action by the State and the provisions of the
Amendment have not been violated.
But here there was more. These are cases in which the purposes of the
agreements were secured only by judicial enforcement by state courts of
the restrictive terms of the agreements. The respondents urge that judicial
enforcement of private agreements does not amount to state action; or, in
any event, the participation of the State is so attenuated in character as not
to amount to state action within the meaning of the Fourteenth
Amendment. Finally, it is suggested, even if the States in these cases may
be deemed to have acted in the constitutional sense, their action did not
deprive petitioners of rights guaranteed by the Fourteenth Amendment. We
move to a consideration of these matters.

II
That the action of state courts and of judicial officers in their official
capacities is to be regarded as action of the State within the meaning of the
Fourteenth Amendment, is a proposition which has long been established
by decisions of this Court.
One of the earliest applications of the prohibitions contained in the
Fourteenth Amendment to action of state judicial officials occurred in
cases in which Negroes had been excluded from jury service in criminal
prosecutions by reason of their race or color. These cases demonstrate,
also, the early recognition by this Court that state action in violation of the
Amendment’s provisions is equally repugnant to the constitutional
commands whether directed by state statute or taken by a judicial official
in the absence of statute. Thus, in Strauder v. West Virginia, 100 U.S. 303
(1880), this Court declared invalid a state statute restricting jury service to
white persons as amounting to a denial of the equal protection of the laws
to the colored defendant in that case.
The action of state courts in imposing penalties or depriving parties of
other substantive rights without providing adequate notice and opportunity
to defend, has, of course, long been regarded as a denial of the due process
of law guaranteed by the Fourteenth Amendment. Brinkerhoff-Faris Trust
& Savings Co. v. Hill, 281 U.S. 673 (1930); Pennoyer v. Neff, 95 U.S. 714
(1878).
In numerous cases, this Court has reversed criminal convictions in
state courts for failure of those courts to provide the essential ingredients

849
of a fair hearing. [Moore v. Dempsey, 261 U.S. 86 (1923); Frank v.
Mangum, 237 U.S. 309 (1915).]
But the examples of state judicial action which have been held by this
Court to violate the Amendment’s commands are not restricted to
situations in which the judicial proceedings were found in some manner to
be procedurally unfair. It has been recognized that the action of state
courts in enforcing a substantive common-law rule formulated by those
courts, may result in the denial of rights guaranteed by the Fourteenth
Amendment, even though the judicial proceedings in such cases may have
been in complete accord with the most rigorous conceptions of procedural
due process. Thus, in American Federation of Labor v. Swing, 312 U.S.
321 (1941), enforcement by state courts of the common-law policy of the
State, which resulted in the restraining of peaceful picketing, was held to
be state action of the sort prohibited by the Amendment’s guaranties of
freedom of discussion.
The short of the matter is that from the time of the adoption of the
Fourteenth Amendment until the present, it has been the consistent ruling
of this Court that the action of the States to which the Amendment has
reference, includes action of state courts and state judicial officials.
Although, in construing the terms of the Fourteenth Amendment,
differences have from time to time been expressed as to whether particular
types of state action may be said to offend the Amendment’s prohibitory
provisions, it has never been suggested that state court action is immunized
from the operation of those provisions simply because the act is that of the
judicial branch of the state government.

III
Against this background of judicial construction, extending over a
period of some three-quarters of a century, we are called upon to consider
whether enforcement by state courts of the restrictive agreements in these
cases may be deemed to be the acts of those States; and, if so, whether that
action has denied these petitioners the equal protection of the laws which
the Amendment was intended to insure.
We have no doubt that there has been state action in these cases in the
full and complete sense of the phrase. The undisputed facts disclose that
petitioners were willing purchasers of properties upon which they desired
to establish homes. The owners of the properties were willing sellers; and
contracts of sale were accordingly consummated. It is clear that but for the
active intervention of the state courts, supported by the full panoply of
state power, petitioners would have been free to occupy the properties in

850
question without restraint.
These are not cases, as has been suggested, in which the States have
merely abstained from action, leaving private individuals free to impose
such discriminations as they see fit. Rather, these are cases in which the
States have made available to such individuals the full coercive power of
government to deny to petitioners, on the grounds of race or color, the
enjoyment of property rights in premises which petitioners are willing and
financially able to acquire and which the grantors are willing to sell. The
difference between judicial enforcement and nonenforcement of the
restrictive covenants is the difference to petitioners between being denied
rights of property available to other members of the community and being
accorded full enjoyment of those rights on an equal footing.
The enforcement of the restrictive agreements by the state courts in
these cases was directed pursuant to the common-law policy of the States
as formulated by those courts in earlier decisions. In the Missouri case,
enforcement of the covenant was directed in the first instance by the
highest court of the State after the trial court had determined the agreement
to be invalid for want of the requisite number of signatures. In the
Michigan case, the order of enforcement by the trial court was affirmed by
the highest state court. The judicial action in each case bears the clear and
unmistakable imprimatur of the State. We have noted that previous
decisions of this Court have established the proposition that judicial action
is not immunized from the operation of the Fourteenth Amendment simply
because it is taken pursuant to the state’s common-law policy. Nor is the
Amendment ineffective simply because the particular pattern of
discrimination, which the State has enforced, was defined initially by the
terms of a private agreement. State action, as that phrase is understood for
the purposes of the Fourteenth Amendment, refers to exertions of state
power in all forms. And when the effect of that action is to deny rights
subject to the protection of the Fourteenth Amendment, it is the obligation
of this Court to enforce the constitutional commands.
Respondents urge, however, that since the state courts stand ready to
enforce restrictive covenants excluding white persons from the ownership
or occupancy of property covered by such agreements, enforcement of
covenants excluding colored persons may not be deemed a denial of equal
protection of the laws to the colored persons who are thereby affected.
This contention does not bear scrutiny. The parties have directed our
attention to no case in which a court, state or federal, has been called upon
to enforce a covenant excluding members of the white majority from
ownership or occupancy of real property on grounds of race or color. But
there are more fundamental considerations. The rights created by the first

851
section of the Fourteenth Amendment are, by its terms, guaranteed to the
individual. The rights established are personal rights. It is, therefore, no
answer to these petitioners to say that the courts may also be induced to
deny white persons rights of ownership and occupancy on grounds of race
or color. Equal protection of the laws is not achieved through
indiscriminate imposition of inequalities.
Nor do we find merit in the suggestion that property owners who are
parties to these agreements are denied equal protection of the laws if
denied access to the courts to enforce the terms of restrictive covenants
and to assert property rights which the state courts have held to be created
by such agreements. The Constitution confers upon no individual the right
to demand action by the State which results in the denial of equal
protection of the laws to other individuals. And it would appear beyond
question that the power of the State to create and enforce property interests
must be exercised within the boundaries defined by the Fourteenth
Amendment.
The historical context in which the Fourteenth Amendment became a
part of the Constitution should not be forgotten. Whatever else the framers
sought to achieve, it is clear that the matter of primary concern was the
establishment of equality in the enjoyment of basic civil and political
rights and the preservation of those rights from discriminatory action on
the part of the States based on considerations of race or color. Seventy-five
years ago this Court announced that the provisions of the Amendment are
to be construed with this fundamental purpose in mind. Upon full
consideration, we have concluded that in these cases the States have acted
to deny petitioners the equal protection of the laws guaranteed by the
Fourteenth Amendment. Having so decided, we find it unnecessary to
consider whether petitioners have also been deprived of property without
due process of law or denied privileges and immunities of citizens of the
United States.
For the reasons stated, the judgment of the Supreme Court of Missouri
and the judgment of the Supreme Court of Michigan must be reversed.

Notes and Questions

1. Background on racially restrictive covenants. Racially restrictive
covenants were widely used to exclude African Americans from
residential communities for much of the twentieth century. Covenants also
prohibited sales or rentals to American Indians, Jews, Asian Americans,
and Latinos. (Note that the covenant here excluded “people of the Negro
or Mongolian Race.” “Mongolian” was a term for Asians often used in

852
discriminatory laws in this period. Missouri added a prohibition on
marriages with Mongolians to its anti-miscegenation law in 1919, although
Asians were only .02 percent of the state’s population. Hrishi Karthikey &
Gabriel J. Chin, Preserving Racial Identity: Population Patterns and the
Application of Anti-Miscegenation Statutes to Asian Americans, 1910-
1950, 9 Asian L.J. 1 (2002).)
Private individuals and realtor associations initiated creation of these
covenants, a process that increased after the Supreme Court held that
racially restrictive zoning was unconstitutional in 1917. Buchanan v.
Warley, 245 U.S. 60 (1917). The United States, however, greatly
encouraged their spread. The Federal Housing Administration (FHA),
created by the National Housing Act of 1934, strongly encouraged such
covenants. The FHA Underwriting Manual, describing the kinds of
properties it would insure, declared, “If a neighborhood is to retain
stability, it is necessary that properties shall continue to be occupied by the
same social and racial classes.” The FHA would not guarantee mortgages
in integrated neighborhoods, and insisted on racially restrictive covenants
in housing developments it financed. Because FHA guarantees
transformed the mortgage market, these standards had tremendous
influence on the availability of financing. Although the FHA stopped
refusing to insure developments without such covenants after Shelley in
1948, it was not until 1962 that President Kennedy prohibited FHA
guarantees for properties with such covenants. See Adam Gordon, Note,
The Creation of Homeownership: How New Deal Changes in Banking
Regulation Simultaneously Made Homeownership Accessible to Whites
and Out of Reach for Blacks, 115 Yale L.J. 186 (2005).
Racially restrictive covenants helped to continue segregation long after
they became legally unenforceable because such restrictions signaled
racial exclusivity to potential buyers. See Richard Brooks & Carol Rose,
Saving the Neighborhood: Racially Restrictive Covenants, Law and Social
Norms (2013).
Today, covenants that prohibit sale or lease of dwellings to, or
occupancy by, persons on the basis of race violate federal civil rights
statutes, including the federal Fair Housing Act of 1968, 42 U.S.C. §3601
et seq., and the Civil Rights Act of 1866, 42 U.S.C. §§1981, 1982. Before
Shelley, however, only a minority of states, by common law or statute,
declared such covenants unenforceable. See, e.g., Gandolfo v. Hartman, 49
F. 181 (S.D. Cal. 1892) (finding covenant restricting Chinese occupancy
violated fourteenth amendment and Burlingame Treaty with China); Corin
v. Glenwood Cemetery, 69 A. 1083 (N.J. Super. Ct. Ch. Div. 1908)
(applying a state statute prohibiting racial discrimination by cemeteries).

853
 2. State action and Shelley v. Kraemer. The fourteenth amendment
provides: “[Nor] shall any State deprive any person of life, liberty, or
property, without due process of law, nor deny to any person within its
jurisdiction the equal protection of the laws.” U.S. Const. amdt. XIV. In
the Civil Rights Cases, 109 U.S. 3 (1883), the Supreme Court held that the
fourteenth amendment regulates the conduct of state government and state
officials but not the conduct of private or nongovernmental actors. Since
then, courts have attempted to draw the line between public and private
conduct — between those states of affairs legitimately attributable to the
state and those for which the state cannot legitimately be held legally
responsible.17
Why does the Court hold that enforcing the covenant against the
Shelleys would constitute state action? Does the decision mean that every
judicial enforcement of a private agreement results in state action
permitting constitutional scrutiny of its terms? Many legal scholars have
criticized the opinion for failing to adequately distinguish a private sphere
that is immune from control by the law. See Mark D. Rosen, Was Shelley
v. Kraemer Correctly Decided? Some New Answers, 95 Cal. L. Rev. 451,
453-454 (2007).
Others respond that Shelley demonstrates the artificiality of the state
action doctrine. The state is always involved in shaping, sanctioning, and
facilitating private choices. This is particularly true with respect to
property, in which recognizing a property right in one usually means
denying it for another. In this case, for example, a decision that Kraemer’s
covenant is enforceable is also a decision that the Shelleys’ deed is invalid
because of their race. Because the state usually has the power to prevent
discrimination, moreover, state inaction is also a decision to permit
discrimination. Many scholars, therefore, have advocated scrapping the
doctrine. See Erwin Chemerinsky, Rethinking State Action, 80 Nw. U. L.
Rev. 503 (1985); Stephen Gardbaum, The “Horizontal Effect” of
Constitutional Rights, 102 Mich. L. Rev. 387 (2003).
Scholars have also argued that Shelley is a case of state action in a
more limited sense, focusing on governmental support for racially
restrictive covenants, the distinctive judicial role in approval of covenants
running with the land, or the resemblance between enforcement of private
covenants and state zoning power. See Carol Rose, Shelley v. Kraemer, in
Property Stories 169, 195 (Gerald Korngold & Andrew P. Morriss eds.
2004); Thomas P. Lewis, The Meaning of State Action, 60 Colum. L. Rev.
1083, 1115 (1960). For a symposium issue discussing these questions, see
Symposium on the State Action Doctrine of Shelley v. Kraemer, 67 Wash.
U. L.Q. 673 (1989).

854
 3. Rise and fall of state action. Shelley was one of several cases
finding state action in the actions of private parties between the 1940s and
1960s. See, e.g., Terry v. Adams, 345 U.S. 461 (1953) (holding fifteenth
amendment prohibited pre-primary election procedures of private
Democratic club); Marsh v. Alabama, 326 U.S. 501 (1946) (holding first
amendment required private company town to permit leafleting by
Jehovah’s Witnesses); Amalgamated Food Employees Union v. Logan
Valley Plaza, Inc., 391 U.S. 308 (1968) (holding first amendment required
private shopping mall to permit picketing by union workers on its
premises). The Court has since retreated from expansive prior readings of
the state action doctrine. While Shelley v. Kraemer has not been overruled,
it is not clear what force it has outside of its facts. In Evans v. Abney, 396
U.S. 435 (1970) (Chapter 10, §4.3), for example, the Court considered
Baconsfield Park, which was built by the city of Macon, Georgia on land
willed to the city on condition that only white people be permitted to use
it. In an earlier case, the Court had held that Baconsfield was effectively a
city park, so continued segregation was unconstitutional state action.
Evans v. Newton, 382 U.S. 296 (1966). The state courts then determined
that because the original discriminatory condition of the will could not be
fulfilled, the land reverted to the donor’s heirs as a matter of state law. The
Supreme Court held that there was no state action in closing of the park to
fulfill the testator’s discriminatory intent. Evans v. Abney, 396 U.S. 435
(1970).
4. Ducking the question. In Rice v. Sioux City Memorial Park
Cemetery, 60 N.W.2d 110 (Iowa 1953), the court refused to impose
damages against a private cemetery that refused to bury plaintiff’s
deceased husband, who was killed in combat on active duty in Korea,
when they discovered during the funeral that he was a Winnebago Indian,
and not “Caucasian” as required by a restrictive covenant in the contract of
sale of the burial lot. The court refused to apply Shelley because, unlike the
plaintiff in Shelley, the plaintiff in Rice had herself contractually agreed to
the restriction. Id. at 115.18
The United States Supreme Court granted certiorari, and, because the
Court was evenly divided on the matter, affirmed the state court without
opinion. Rice v. Sioux City Memorial Park Cemetery, 348 U.S. 880 (1954).
Mrs. Rice successfully petitioned the Court for rehearing before the full
Court, but the Court then dismissed certiorari as improvidently granted
because Iowa had enacted a statute prohibiting such restrictions in the
future. Rice v. Sioux City Memorial Park Cemetery, 349 U.S. 70 (1955).
Scholars attribute the unusual decision to twice take the case and then

855
twice fail to rule to the Court’s reluctance to further wade into the issue of
desegregation after the uproar over Brown v. Board of Education. See
Stephen L. Wasby et al., Desegregation from Brown to Alexander 137
(1977).
5. Constitutional violations under the Restatement (Third). The
Restatement (Third) provides that among the grounds for holding a
covenant unenforceable is that “it unreasonably burdens a fundamental
constitutional right.” Restatement (Third) on Property: Servitudes §3.1(2).
The comments make clear that this does not apply constitutional standards
to restrictions whose enforcement would not otherwise constitute state
action. Rather, it means that if a servitude would be unconstitutional if
enforced by a state court, it is also invalid before enforcement as a matter
of public policy. The drafters state, “Although there may seem to be little
practical difference between an unenforceable servitude and an invalid
one, recognizing the invalidity of a servitude that is not enforceable under
any circumstances may facilitate its removal from the title or from the
governing documents of a common-interest community.” Id. cmt. (d).
6. Subsequent cases regarding covenants. Outside the context of
racial discrimination, state action has rarely been found in enforcement of
covenants. A number of cases have involved first amendment challenges
to restrictions on posting signs on one’s residence. These have generally
failed. See Committee for a Better Twin Rivers v. Twin Rivers
Homeowners Association, 929 A.2d 1060 (N.J. 2007); Linn Valley Lakes
Property Owners Association v. Brockway, 824 P.2d 948 (Kan. 1992);
Midlake on Big Boulder Lake Condominium Association v. Cappuccio,
673 A.2d 340 (Pa. Super. Ct. 1996); see also Goldberg v. 400 E. Ohio
Condominium Association, 12 F. Supp. 2d 820 (N.D. Ill. 1998)
(enforcement of condominium rule prohibiting all canvassing except for
political campaigning was not state action). A few cases have refused to
enforce covenants on constitutional grounds, but these are outliers. See,
e.g., Gerber v. Longboat Harbour Condominium, Inc., 724 F. Supp. 884
(M.D. Fla. 1989), aff’d in part and vacated in part, 757 F. Supp. 1339
(M.D. Fla. 1991) (restriction on manner in which residents flew the
American flag); Gittleman v. Woodhaven Condominium Association, Inc.,
972 F. Supp. 894 (D.N.J. 1997) (state action in enforcement of covenant
that would prevent parking for disabled resident); Board of Managers of
Old Colony Village Condominium v. Preu, 956 N.E.2d 258 (Mass. App.
2011) (finding state action implicating the First Amendment in judicial
enforcement of a sign regulation at a common interest development). In
some cases, state constitutions have also been found to create greater

856
protection for speech rights. See Mazdabrook Commons Homeowners’
Association v. Khan, 46 A.3d 507 (N.J. 2012) (holding prohibition on
posting any political signs violated New Jersey constitution despite lack of
state action); Lamprecht v. Tiara at the Abbey Homeowners Association,
No. 12 JE-CC00227 (Mo. Cir. Ct. Oct. 13, 2013) (holding prohibition on
all political signs invalid under Missouri constitution).

Problems
Is the argument for state action in the following cases stronger or
weaker than in Shelley v. Kraemer? Should the court find state action in
these cases?
1. Neighbors covenant with each other not to allow their properties
to be occupied by non-Caucasians. Defendant breaches the covenant;
plaintiff seeks damages for the breach. See Barrows v. Jackson, 346
U.S. 249 (1953) (discussing the issue).
2. African Americans seek to dine at a restaurant that has a whites-
only policy and refuse, when asked, to leave. The owner calls the
police to remove them as trespassers. See generally Christopher W.
Schmidt, The Sit-Ins and the State Action Doctrine, 18 Wm. & Mary
Bill Rts. J. 767 (2010).
3. An individual makes a substantial donation to a charity upon the
agreement that it will be used for Jewish education. The organization
decides instead to use the donation for general education. The donor
sues to enforce the agreement.
4. A condo owners association enacts a rule providing that the
common gathering room of the association cannot be used to conduct
religious services. They file to collect fines against a group of owners
who violate the rule.

§5.3 The Fair Housing Act

The Fair Housing Act, 42 U.S.C. §3601 et seq., is more fully reprinted
and discussed in Chapter 13. Because it plays an important role in
regulation of covenants and common interest developments, however, it is
discussed briefly here. Key provisions of the Fair Housing Act make it
unlawful

(a) [t]o refuse to sell or rent after the making of a bona fide offer, or to
refuse to negotiate for the sale or rental of, or otherwise make unavailable or
deny, a dwelling to any person because of race, color, religion, sex, familial
status, or national origin, [or]

857
 (b) [t]o discriminate against any person in the terms, conditions, or
privileges of sale or rental of a dwelling, or in the provision of services or
facilities in connection therewith, because of race, color, religion, sex,
familial status, or national origin.

42 U.S.C. §3604.19
1. Unpleasant but not unavailable? The act clearly prohibits
covenants like that in Shelley v. Kramer that restrict sale or rental of
dwellings based on race or religion. Some courts, however, have held that
covenants that make a residence less livable for particular groups but do
not make the property unavailable do not violate the act unless it is shown
that they were enacted to target that group. In a particularly egregious case,
the Seventh Circuit considered a condominium association that interpreted
a restriction prohibiting residents from placing “objects of any sort . . .
outside Unit entrance doors” to prohibit residents from hanging mezuzot,
rectangular boxes a few inches long containing a passage from the Torah,
which Jews are commanded to hang on their lintels. The condo repeatedly
removed the Blochs’ mezuzot, including during Mr. Bloch’s funeral (even
though they left the coat rack the Blochs had rented in the hall). A panel of
the Seventh Circuit rejected the FHA claim entirely; en banc, the court
agreed that the condo had never made the property “unavailable” to the
Blochs because they had never moved out, but remanded for determination
of whether the condo intentionally discriminated against them. Bloch v.
Frischholz, 587 F.3d 771 (7th Cir. 2009) (en banc). Is this the correct
interpretation of the statute?
2. Conflict with religious practices. Neutral rules in common interest
developments often conflict with the religious practices of residents.
Restrictions on changes to exterior elements may prohibit not only
mezuzot, but also Hindu jhandi flags, South Asian kolam drawings, Virgin
Mary statues, and Jewish sukkot. See Angela C. Carmela, Religion Free
Environments in Common Interest Communities, 38 Pepp. L. Rev. 57, 67-
71 (2010). Prohibitions on using common areas for religious worship are
also common. Id. at 71-72. While discriminating against a particular
religion in enacting or enforcing such laws would violate the Fair Housing
Act, courts uphold otherwise neutral laws, even those that discriminate
against religion generally, finding that they do not make housing
unavailable because of religion. See Savanna Club Worship Service, Inc. v.
Savanna Club Homeowners Association, Inc., 456 F. Supp. 2d 1223 (S.D.
Fla. 2005) (upholding condo rule that prohibited use of common areas for
worship); Tien Tao Association Inc. v. Kingsbridge Park Community

858
Association, Inc., 953 S.W.2d 525 (Tex. App. 1997) (FHA did not prohibit
enforcement of covenants to prohibit use of dwellings as Tao place of
worship or erection of 30-foot religious flagpoles).
3. Reasonable accommodations for individuals with disabilities. In
1988, the Fair Housing Act was amended to prohibit discrimination
against persons with disabilities. 42 U.S.C. §3604(f). Although intentional
discrimination is clearly prohibited, so are practices that make it more
difficult for individuals with disabilities to enjoy the property. Among
other things, discrimination includes refusals to make “reasonable
accommodation in rules, policies, practices, or services, when such
accommodations may be necessary to afford such person equal
opportunity to use and enjoy a dwelling.” §3604(f)(3)(B). This provision
has been interpreted to prohibit enforcement of covenants restricting
property to single-family residential housing where those covenants were
interpreted to prohibit group homes of people with disabilities living in a
family-like setting. Hill v. Community of Damien Malokai, 121 N.M. 353
(N.M. 1994) (covenant could not be interpreted to prohibit group home for
four unrelated adults with AIDS), to require amendments to rules and
covenants to provide accessible parking, Gittleman v. Woodhaven
Condominium Association, Inc., 972 F. Supp. 894 (D.N.J. 1997), and to
require that post-1988 construction be wheelchair accessible. United States
v. Quality Built Construction, Inc., 309 F. Supp. 2d 767 (E.D.N.C. 2003).

§5.4 Restraints on Alienation

The common law has long contained a strong presumption that
property owners should be able to transfer their interests. This presumption
may conflict with efforts by owners and developers to control ownership
and occupancy of neighboring communities. Promoting alienability may
allow property to shift easily to a more valued use, enhance freedom and
flexibility for current owners, encourage dispersal of property to new
owners, and prevent discriminatory exclusion. At the same time, restraints
on alienation may enhance the value of units to be marketed and allow
owners to create cohesive and congenial communities. Determining when
restraints on alienation are and are not reasonable is therefore a core task
of property law.

Northwest Real Estate Co. v. Serio

144 A. 245 (Md. 1929)

859
HAMMOND URNER, J.
A deed in fee simple for a lot of ground contained, in addition to
various building and use restrictions, a provision that the land should not
be subsequently sold or rented, prior to a designated date, without the
consent of the grantor. The decisive question in this case is whether the
restraint thus sought to be imposed upon the alienation of the property is
void as being repugnant to the granted estate.
[The covenant in the 1927 deed states:]

And for the purposes of maintaining the property hereby conveyed and the
surrounding property as a desirable high class residential section for
themselves[,] their successors, heirs, executors, administrators and assigns
that until January 1, 1932, no owner of the land hereby conveyed shall have
the right to sell or rent the same without the written consent of the grantor
herein which shall have the right to pass upon the character[,] desirability
and other qualifications of the proposed purchaser or occupant of the
property.

On March 27, 1928, the grantees contracted in writing to sell the lot to
Charles Serio and wife. The Northwest Real Estate Company declined to
give its consent to the sale and transfer for which the contract provided.
The purchaser then brought this suit against the vendors and the company
to compel the specific performance of the agreement without the consent
of the company, on the theory that the quoted covenant is void, or with the
judicially enforced consent of the company, if the covenant should be held
to be valid, the averment being made in the bill of complaint that the
company’s refusal to consent was arbitrary and unreasonable. [The circuit
court found for the plaintiff.]
The final decree of the circuit court is in accordance with the policy of
the law in this state with respect to provisions in restraint of alienation. In
Clark v. Clark, 99 Md. 356, 58 A. 24, where this court had under
construction a will which, after a devise of an absolute estate to the seven
children of the testator, provided that the property should not be sold
within ten years for partition purposes without their unanimous consent, it
was said in the opinion: “This provision of the will if effective would
practically amount to a restraint for ten years of all alienation by any child
of its share of the estate. We have no difficulty in arriving at the
conclusion that this attempted imposition of restrictions upon the method
of alienation and enjoyment of the absolute estate given to the testatrix’
children was contrary to the policy of the law and therefore inoperative
and void.”
In Clark v. Clark, the attempted restraint was for a period of ten years,

860
and consisted of a requirement for consent by six other devisees, while
here it is for a shorter period, and the consent of a single but corporate
grantor is the condition of a transfer. But in each instance the intended
interference with the normal alienability of the fee simple estate devised or
granted is equally apparent.
In practical effect the reservation in the deed before us would give the
grantor company unqualified control for a term of years over the
disposition of the property by sale or lease. The recital that the purpose of
the restriction is to maintain “a desirable high class residential section,”
and to enable the grantor “to pass upon the character desirability and other
qualifications of the proposed purchaser or occupant,” was evidently
designed to explain rather than to limit the reservation of the power to
forbid a transfer of the property by the grantees to any purchaser or lessee
who failed to conform, in the opinion of the grantor’s officers, to those
indefinite standards. The existence of such a discretionary control would
be plainly incompatible with the freedom of alienation, which is one of the
characteristic incidents of a fee-simple title.
[Affirmed.]

CARROLL BOND, C.J., dissenting.

CONTEXT

Alienation or Discrimination?
Serio arose in a period of intense racial and ethnic segregation as builders
developed the outskirts of Baltimore. Charles Serio, who owned a fruit stand
near the development, was Italian American, although his complaint noted that
his wife “was of purest Nordic stock.” George Morris, the developer of the
170-acre subdivision at issue in Serio, was later widely criticized for excluding
Jews from his development, and defended himself by saying he was not
himself anti-Semitic, but only excluded Jews for “business reasons.” Eric M.
Daniel, Northwest Real Estate Company v. Serio: The Invasion of a Northwest
Baltimore Suburb (unpublished paper, 2010). Should developers be able to
exclude individuals consistent with their senses of the prospective buyer’s
“aversions”?

The restraint upon alienation included in the deed seems clearly

enough to be one intended merely to give the developer of a suburban area
of land power to control the character of the development for a time long
enough to secure a return of his capital outlay, and to give early purchasers

861
of lots and buildings some security in their own outlay. In those objects
there is nothing against the public interest. The venture of capital for this
purpose appears to be distinctly a public benefit rather than a detriment,
one which it is to the public advantage to encourage and promote rather
than to hinder. But we know that there are real, substantial dangers to be
feared in such ventures, and that, under the modern conditions of rapid city
growth and rapid shifts of city populations, one of the most important risks
is probably that which comes from the chance of invasion into the new
neighborhood of an element of the population which the people to whom
the developer must look for the return of his outlay will regard as out of
harmony with them. However fanciful may be the aversions which give
rise to it, and however deplorable they may be, to the developer they and
their consequences must be as real as destructive physical forces. And, if it
is to the public interest that this method of development be encouraged
rather than hindered, then practically there must be a public gain in
removal or diminution of this deterring danger. And the temporary
restraint on alienation which the parties here involved have adopted to that
end must, I think, be viewed as in point of fact reasonable, and from the
standpoint of the public interest actually desirable. And, if this is true, then
I venture to think there is no substantial reason why the law should
interfere with it, denying the parties the right to agree as they have agreed,
or denying their agreement full validity.

Woodside Village Condominium Association, Inc. v. Jahren

806 So. 2d 452 (Fla. 2002)

Map: 4215 E. Bay Drive,

Clearwater, Florida

HARRY LEE ANSTEAD, J.

At issue is the validity of amendments to the Declaration of
Condominium adopted by the condominium owners which restrict the
leasing of units in Woodside Village. Woodside Village is a condominium
development located in Clearwater, Florida, consisting of 288 units. It was
established in 1979 pursuant to Florida’s “Condominium Act,” chapter
718, Florida Statutes. Petitioner, Woodside Village Condominium
Association, Inc. (“Association”), is the condominium association that was

862
formed pursuant to the Declaration of Condominium of Woodside Village
(“Declaration”), recorded in the public records of Pinellas County.
Respondents, Adolph S. Jahren and Gary M. McClernan, each own
residential condominium units in Woodside Village.
[Section 10.3 of the] original Declaration of Condominium for
Woodside Village [permitted leasing of condominium units but required
Board of Directors approval for initial leases lasting more than one year].
In addition, §10.3 was amended in 1995 to require that all leases and
renewals receive prior approval from the Board of Directors.
In 1997 some owners became concerned that units were increasingly
becoming non-owner occupied, and that such a condition would have a
negative impact on the quality of life in Woodside Village and on the
market value of units. Accordingly, [while keeping the requirement of
Board approval for leases,] §10.3 was amended in March of 1997 to limit
the leasing of units to a term of no more than nine months in any twelve-
month period. A provision was also added prohibiting owners from leasing
their units during the first twelve months of ownership. [Another provision
prohibited owners from renting more than three of their units at any one
time.] These amendments were adopted by a vote of at least two-thirds of
the unit owners as required by the Declaration. The following year the
Association notified respondents in writing that two of their respective
units were not in compliance with the nine-month lease restriction set out
in §10.3 as amended.
When the respondents failed to come into compliance with the leasing
restrictions, the Association filed complaints in circuit court seeking
injunctions to enforce compliance with the provisions of the Declaration.
Respondents [denied] that compliance could be mandated under Florida
law. In addition, respondents filed counterclaims for declaratory and
injunctive relief asserting that the lease restriction was unreasonable,
arbitrary, and capricious, and had no purpose other than to effectively ban
all leasing of units. Respondents also asserted the lease restriction was
confiscatory and deprived them of lawful uses which were permissible at
the time of purchase. Accordingly, respondents sought an injunction
prohibiting the Association from enforcing the lease restriction or,
alternatively, requiring the Association to compensate respondents for the
fair market value of their units.
Condominiums and the forms of ownership interests therein are strictly
creatures of statute. See Flat. Stat. §§718.101-718.622. In Florida, Chapter
718, Florida Statutes, known as Florida’s “Condominium Act,” gives
statutory recognition to the condominium form of ownership of real
property and establishes a detailed scheme for the creation, sale, and

863
operation of condominiums. Pursuant to §718.104(2), a condominium is
created by recording a declaration of condominium in the public records of
the county where the land is located.
The declaration, which some courts have referred to as the
condominium’s “constitution,” strictly governs the relationships among the
condominium unit owners and the condominium association. [B]ecause
condominiums are a creature of statute courts must look to the statutory
scheme as well as the condominium declaration and other documents to
determine the legal rights of owners and the association.
From the outset, courts have recognized that condominium living is
unique and involves a greater degree of restrictions upon the rights of the
individual unit owners when compared to other property owners. For
instance, in White Egret Condominium, Inc. v. Franklin, 379 So. 2d 346,
350 (Fla. 1979), we recognized that “reasonable restrictions concerning
use, occupancy and transfer of condominium units are necessary for the
operation and protection of the owners in the condominium concept.” In
White Egret, we quoted favorably from Hidden Harbour Estates, Inc. v.
Norman, 309 So. 2d 180 (Fla. Dist. Ct. App. 1975), to further explain the
restrictive nature of condominium ownership and living:

Inherent in the condominium concept is the principle that to promote the

health, happiness, and peace of mind of the majority of the unit owners since
they are living in such close proximity and using facilities in common, each
unit owner must give up a certain degree of freedom of choice which he
might otherwise enjoy in separate, privately owned property. Condominium
unit owners comprise a little democratic sub society of necessity more
restrictive as it pertains to use of condominium property than may be existent
outside the condominium organization.

Consistent with this analysis of condominium ownership, courts have

acknowledged that “increased controls and limitations upon the rights of
unit owners to transfer their property are necessary concomitants of
condominium living.” Aquarian Foundation, Inc. v. Sholom House, Inc.,
448 So. 2d 1166, 1167 (Fla. Dist. Ct. App. 1984). Indeed, section
718.104(5), Florida Statutes, expressly recognizes that a declaration of
condominium may contain restrictions concerning the use, occupancy, and
transfer of units. See §718.104(5).20
Courts have also consistently recognized that restrictions contained
within a declaration of condominium should be clothed with a very strong
presumption of validity when challenged. The logic behind this
presumption was explained in Hidden Harbour Estates, Inc. v. Basso, 393

864
So. 2d 637, 639-640 (Fla. Dist. Ct. App. 1981), wherein the court
reasoned:

There are essentially two categories of cases in which a condominium

association attempts to enforce rules of restrictive uses. The first category is
that dealing with the validity of restrictions found in the declaration of
condominium itself. The second category of cases involves the validity of
rules promulgated by the association’s board of directors or the refusal of the
board of directors to allow a particular use when the board is invested with
the power to grant or deny a particular use.
In the first category, the restrictions are clothed with a very strong
presumption of validity which arises from the fact that each individual unit
owner purchases his unit knowing of and accepting the restrictions to be
imposed. Such restrictions are very much in the nature of covenants running
with the land and they will not be invalidated absent a showing that they are
wholly arbitrary in their application, in violation of public policy, or that they
abrogate some fundamental constitutional right.

Significantly, Fla. Stat. §718.110 also provides broad authority for

amending a declaration of condominium. In particular, section 718.110(1)
(a) provides:

If the declaration fails to provide a method of amendment, the declaration

may be amended as to all matters except those listed in subsection (4) or
subsection (8) if the amendment is approved by the owners of not less than
two-thirds of the units. (emphasis added)

Based upon this broad statutory authority and the provisions for
amendment set out in the declaration of condominium, courts have
recognized the authority of condominium unit owners to amend the
declaration on a wide variety of issues, including restrictions on leasing.
Of course, §718.110(1)(a) itself contains some restrictions on the
amendment process. For example, pursuant to subsections (4) and (8), all
unit owners must consent to amendments which materially alter or modify
the size, configuration or appurtenances to the unit, change the percentage
by which the unit owner shares the common expenses and owns the
common surplus of the condominium, or permit timeshare estates to be
created in any unit of the condominium, unless otherwise provided in the
declaration as originally recorded. See Fla. Stat. §718.110(4), (8). These
provisions are not at issue here.
In Seagate Condo. Ass’n, Inc. v. Duffy, 330 So. 2d 484 (Fla. Dist. Ct.
App. 1976), the court upheld an amendment to the declaration of

865
condominium prohibiting leasing of any units, except for limited periods
in cases of hardship. The trial court held that the amendment was both an
unreasonable restriction and an unlawful restraint on alienation and
awarded damages for lost rents to the unit owners who challenged the
amendment. On appeal, the Fourth District reversed, and explained, id. at
486-487:

The restriction . . . is reasonable. Given the unique problems of condominium

living in general and the special problems endemic to a tourist oriented
community in South Florida in particular, appellant’s avowed objective — to
inhibit transciency and to impart a certain degree of continuity of residence
and a residential character to their community — is, we believe, a reasonable
one, achieved in a not unreasonable manner by means of the restrictive
provision in question. The attainment of this community goal outweighs the
social value of retaining for the individual unit owner the absolutely
unqualified right to dispose of his property in any way and for such duration
or purpose as he alone so desires.

The district court upheld the amendment even as it was applied to unit
owners who acquired their units prior to the amendments.
We note that the majority of courts in other jurisdictions have held that
a duly adopted amendment restricting either occupancy or leasing is
binding upon unit owners who purchased their units before the amendment
was effective. See Ritchey v. Villa Nueva Condo. Ass’n, 146 Cal. Rptr.
695, 700 (Cal. Ct. App. 1978); Apple II Condo. Ass’n v. Worth Bank &
Trust Co., 659 N.E.2d 93 (Ill. App. Ct. 1995); Breezy Point Holiday
Harbor Lodge-Beachside Apartment Owners’ Ass’n v. B.P. P’ship, 531
N.W.2d 917, 920 (Minn. Ct. App. 1995); McElveen-Hunter v. Fountain
Manor Ass’n, Inc., 399 S.E.2d 112 (N.C. 1991); Shorewood West Condo.
Ass’n v. Sadri, 992 P.2d 1008, 1012 (Wash. 2000); but see 560 Ocean
Club, L.P. v. Ocean Club Condo. Ass’n (In re 560 Ocean Club, L.P.), 133
B.R. 310, 320 (Bankr. D.N.J. 1991); Breene v. Plaza Tower Ass’n, 310
N.W.2d 730, 734 (N.D. 1981).
To hold otherwise, we would have to conclude that the right to amend
a declaration of condominium is substantially limited, well beyond those
limitations imposed by the Legislature in section 718.110(4) and (8). We
would also be faced with the difficult task of deciding what subjects could
be addressed by the amendment process, a task much better suited for the
Legislature, as can be seen by its imposition of restrictions in section
718.110.
Respondents in this case purchased their units subject to the
Declaration which expressly provides that it can be amended and sets forth

866
the procedure for doing so. Section 14 of the Declaration generally
provides that an amendment may be adopted by a supermajority of two-
thirds of the owners.21 Further, section 13 expressly states that each owner
shall be governed by the Declaration as amended from time to time. In
addition, the legal description for each of respondents’ units that were
allegedly being used in violation of the lease restriction provides that the
units are subject to the restrictions contained in the Declaration and
subsequent amendments thereto.
Thus, we find that respondents were on notice that the unique form of
ownership they acquired when they purchased their units in the Woodside
Village Condominium was subject to change through the amendment
process, and that they would be bound by properly adopted amendments.
We also conclude that the respondents have failed to demonstrate that
the restriction, in and of itself, violates public policy or respondents’
constitutional rights, at least as asserted herein. As discussed above, most
such restrictions simply come with the unique territory of condominium
ownership. Indeed, it is restrictions such as these that distinguish
condominium living from rental apartments or single-family residences.
Hence, persons acquiring units in condominiums are on constructive notice
of the extensive restrictions that go with this unique, and some would say,
restrictive, form of residential property ownership and living. Accordingly,
we conclude the amendment is valid and enforceable against respondents.
We recognize the concerns that owners, such as respondents, who
purchased their individual condominium units for investments have
regarding the imposition of lease restrictions through subsequent
declaration amendments without the consent of all unit owners. The
question is, of course, how far can two-thirds of the condominium owners
go in restricting leasing rights in the condominium units. The answer will
usually be found in the legislative scheme creating and governing
condominiums. Although we believe such concerns are not without merit,
we are constrained to the view that they are better addressed by the
Legislature. If condominium owners are to be restrained in their enactment
of such lease restrictions, it is appropriate that such restraint be set out in
the legislative scheme that created and regulates condominiums and
condominium living. As noted above, the Legislature has demonstrated its
awareness of the need for limitations on the authority of unit owners to
amend a declaration by its enactment of section 718.110(1)(a), (4), and (8).
However, as noted, in this instance no provision in the Condominium Act
prohibits the adoption of an amendment imposing a lease restriction, nor
does any provision require the consent of all unit owners to adopt such an
amendment. To the contrary, the Condominium Act provides broad

867
authority for amending a declaration of condominium. See Fla. Stat.
§718.110(1)(a).

PEGGY A. QUINCE, J., specially concurring.

I concur in the majority’s decision which quashes the decision by the
Second District Court of Appeal. I write simply to urge the Legislature to
seriously consider placing some restrictions on present and/or future
condominium owners’ ability to alter the rights of existing condominium
owners. At the time the units in question here were purchased, the owners
had the right to lease their property with relatively few restrictions. This
valuable right may well have been the determinative factor for their
decisions to buy these properties. As the district court suggested, there
should at least be some type of “escape” provision for those “unit owners
whose substantial property rights are altered by amendments to
declarations adopted after they acquire their property.”

Notes and Questions

1. Direct and indirect restraints on alienation. Total restraints on
alienation of fee simple interests are uniformly held void and
unenforceable. Statham v. Kelly, 584 S.E.2d 246 (Ga. 2003) (invalidating
requirement that devisees use property as their personal residences); R.H.
Macy & Co. v. May Department Stores Co., 653 A.2d 461 (Md. 1995).
Courts traditionally have held that an absolute restraint on alienation is
“repugnant” to the nature of a “fee simple” interest in real property.
Statham, 584 S.E.2d at 246. The argument seems to be that a fee simple is
a property interest that is by definition alienable so a restraint on alienation
cannot attach to it. This argument is formalistic and circular; it gives no
reason for refusing to allow the property to be inalienable. The argument
is not wholly without content, however; it appeals to the idea that owners
should presumptively have full control over the property they own, and
one of the central powers that owners want and need is the power to
transfer the property on terms chosen by them. Absolute prohibitions on
alienation thus seem to contradict the very notion of ownership. See De
Peyster v. Michael, 6 N.Y. 467, 506 (1852).
Short of an absolute prohibition on alienation, however, most courts
today hold that reasonable restraints or preconditions on alienation are
valid, even if they attach to fee interests. Restatement (Third) of Property
(Servitudes) §3.4 (2000). Reasonableness is determined by “weighing the
utility of the restraint against the injurious consequences of enforcing the
restraint.” Id.; see, e.g., Alby v. Banc One Financial, 128 P.3d 81 (Wash.

868
2006) (upholding restriction on mortgaging or encumbering land during
life of grantor, where land was sold by grantors to their daughter and son-
in-law at far below market price).
Private controls on land use may also make property less alienable by
eliminating buyers who do not want the land with the restrictions. Such
restrictions may be challenged as indirect restraints on alienation, but
these claims are very difficult to win if the restriction was voluntarily
entered into and has some justification. See, e.g., Wykeham Rise, LLC v.
Federer, 52 A.3d 702 (Conn. 2012) (reversing and remanding for factual
development summary judgment finding of invalidity of covenant
prohibiting any development on restricted land); Lamar Advertising v.
Larry & Vicki Nicholls, LLC, 213 P.3d 641 (Wyo. 2009) (finding 15-year
renewal on billboard lease was valid although the billboard prevented
development of the property and rent on the billboard had been fixed at
$400 since 1990); Restatement (Third) for example, invalidates indirect
restraints only if they “lack[] a rational justification.” Id. §3.5(2).
2. Consent to sell clauses. As Serio shows, covenants that require
owners to obtain the consent of the grantor or developer of the subdivision
or condominium are often struck down by the courts as unreasonable
direct restraints on alienation. See Camino Gardens Association, Inc. v.
McKim, 612 So. 2d 636 (Fla. Dist. Ct. App. 1993); Kenney v. Morgan, 325
A.2d 419 (Md. 1974). If the developer no longer owns any land in the
development, the covenant will violate the traditional rule prohibiting the
enforcement of a covenant when the benefit is held in gross. Even under
the Restatement (Third) rule that benefits may be held in gross to achieve a
legitimate interest, it is unclear what legitimate interest a developer who no
longer owns land would retain in consenting to future sales. The dissenting
opinion in Serio provides a policy argument in favor of enforcing
covenants that give developers the power to consent to future sales while
the developer still owns units, and perhaps for a short period afterward.
The analysis in the majority opinion is based on the formalistic
repugnancy thesis. Assume that the court would not imply a duty to act
reasonably but would interpret the covenant to give the grantor full
discretion to grant or withhold consent to any sale. Can you provide a
better, policy-based justification for invalidating such a provision than that
given by the majority opinion in Serio of Justice Urner? How would the
dissenting judge respond to these new arguments?
In contrast to grantor/developer consent requirements, covenants that
grant such powers to a homeowners or condominium association are
ordinarily upheld either if they (a) require the association to act

869
reasonably, see Laguna Royale Owners Association v. Darger, 174 Cal.
Rptr. 136 (Ct. App. 1981) or (b) are in the form of preemptive rights that
ensure that the owner can transfer the unit for its fair market value to the
association or its members or that require the holder of the preemptive
right to match any bona fide offers made by a third party. Smith v.
Mitchell, 269 S.E.2d 608 (N.C. 1980). Discretionary powers over transfer
are particularly likely to be upheld in the special case of cooperatives
because of the greater financial interdependence of the owners. Mariah
Carey, Barbra Streisand, Madonna, Rush Limbaugh, and Sheik Hamad bin
Jassim bin Jaber Al-Thani, the prime minister of Qatar and owner of
Harrod’s, are all among the rich and famous rejected by co-op boards.
3. Limitations on leasing. As Woodside Village notes, most courts
agree that leasing restrictions in condominium declarations can be
retroactively imposed on owners who purchased units before those
restrictions were adopted. Courts differ, however, on whether such
restrictions can be imposed by bylaw rather than amendments to the
declaration. Compare Apple Valley Gardens Association v. MacHutta, 763
N.W.2d 126 (Wis. 2009) (upholding bylaw) with Kiekel v. Four Colonies
Homes Association, 162 P.3d 57 (Kan. App. 2007) (invalidating bylaw).
The Florida legislature effectively overruled Woodside in 2004 by enacting
Fla. Stat. §718.110(13), which prohibits imposing retroactive lease
restrictions on nonconsenting owners. Is this fact relevant in determining
whether the Florida Supreme Court correctly interpreted the Florida
statute? If so, how?
The Restatement (Third) requires unanimous consent for declaration
amendments that “prohibit or materially restrict the use or occupancy or
units,” §6.10(2), or “that deprive owners of significant property or civil
rights,” §6.10 cmt. g. However, it makes this rule disclaimable; if the
declaration provides otherwise, it is enforceable unless a statute prohibits
retroactive enforcement. If the Florida Supreme Court had adopted this
interpretation of the common law, would it have changed the result in
Woodside? Should the court adopt this approach?

CONTEXT

Airbnb versus the Association

The rise of Airbnb and similar platforms has driven battles over short-term
rentals into high gear. See Adams v. Kimberley One Townhouse Owner’s
Association, Inc., 352 P.3d 492 (Idaho 2015) (covenant amendment prohibiting
rentals of under six months was valid and did not unduly restrain alienation);

870
 Wilkinson v. Chiwawa Communities Association, 327 P.3d 614 (Wash. 2014)
(covenants could not be amended to prohibit short-term rentals without
unanimous consent); Watts v. Oak Shores Community Association, 185 Cal.
Rptr. 3d 376 (Ct. App. 2015) (upholding rules imposing $325 fee for owners
who rent their homes and limiting parking and boat docking by renters). Should
short-term leases be treated differently from longer ones? Why or why not?

4. Charities. Restraints on alienation are generally allowed when the

holder of the property interest is a charity. See Atlanta Development
Authority v. Clark Atlanta University, Inc., 784 S.E.2d 353, 357 (Ga.
2016). Can you imagine what policies underlie this exception to the rule
against unreasonable restraints on alienation?
5. Low-income housing. In recent years, charitable organizations
called community development corporations (CDCs) have established
housing for low-income families. To ensure that the housing remains
available for such families, it is often subject to restraints on alienation that
prohibit leasing the property or sale to a family that is not a low-income
family. In City of Oceanside v. McKenna, 264 Cal. Rptr. 275 (Ct. App.
1990), Michael Shawn McKenna purchased a condominium in a
development that had been sold by the city for less than its fair market
value to a developer for the express purpose of creating housing affordable
by low- and moderate-income persons. The units were subject to
covenants that prohibited owners from renting their units out and from
“failing to occupy the dwelling as the owner’s principal place of residence
for any period.” McKenna got a new job in San Francisco and sought to
rent his unit. The city sued him to enforce the covenant. The court noted
that “[o]n determining whether a restraint on alienation is unreasonable,
the court must balance the justification for the restriction against the
quantum of the restraint. The greater the restraint, the stronger the
justification must be to support it.” Id. at 279. It held that the restriction on
leasing was a reasonable restraint on alienation because “the provision of
housing for low and moderate income persons is in keeping with the public
policy of this state. Thus, the restrictions support rather than offend the
policies of this state.” Id. at 280.

§5.5 Anticompetitive Covenants

Anticompetitive covenants are enforceable under the common law only
if they are “reasonable.” In Whitinsville Plaza v. Kotseas, 390 N.E.2d 243
(Mass. 1979), the Massachusetts Supreme Judicial Court defined

871
reasonable anticompetitive covenants as ones that are “reasonably limited
in time and space [and product line] and consonant with the public
interest” and that “serve a purpose of facilitating orderly and harmonious
development for commercial use.” This approach has been adopted by
other courts as well. See BP Products North America, Inc. v. Stanley, 669
F.3d 184, 188-189 (4th Cir. 2012) (upholding deed to three gas stations
requiring them to sell only BP gas); Davidson Brothers, Inc. v. D. Katz &
Sons, Inc., 579 A.2d 288 (N.J. 1990).
Many cases concerning anticompetitive covenants occur in the context
of shopping center leases. Further, most claims proceed not on the basis of
the common law reasonableness requirement but on the basis of federal
antitrust policy contained in the Sherman Antitrust Act, 15 U.S.C. §1 et
seq. This act prohibits all contracts “in restraint of trade.” However, as the
court explains in Optivision, Inc. v. Syracuse Shopping Center Associates,
472 F. Supp. 665, 674, 676, 679 (N.D.N.Y. 1979):

If this provision were to be read literally, all commercial contracts would

be regarded as violative of the Act since every agreement binds the
contracting parties to its terms, and, accordingly, restrains their commercial
dealings to a certain extent. Recognizing that it was not Congress’ intention
to prohibit all contracts nor even all contracts that cause an insignificant or
attenuated restraint of trade, the Supreme Court adopted the rule of reason as
the standard of analysis for scrutinizing most business relations under the
Sherman Act. Under this rule, all the circumstances presented by a particular
case must be evaluated by the trier of fact to determine whether the
complained of conduct imposes an unreasonable restraint on competition.
[T]he Court is unable to conclude that exclusivity clauses in shopping
center leases are unreasonable in all possible circumstances. The competitive
impact of such arrangements may vary considerably depending upon the
availability of suitable alternate locations in the relevant market, and upon
the strength of the remaining competition. In addition, there is a possible
economic justification for a provision of this nature. In some situations, it
may be necessary to include such a clause in a shopping center lease in order
to attract to the center a certain type of store which might be unwilling to
commit itself to a lease with high rentals if it knows that a competing store
will be present in the center.
If an exclusivity provision is necessary to attract [a particular type of]
store, such a clause has a beneficial impact on competition that will have to
be considered along with any adverse competitive effects.

In Dunafon v. Delaware McDonald’s Corp., 691 F. Supp. 1232 (W.D.

Mo. 1988), an owner promised lessee McDonald’s that it would not grant a
lease “to any persons to engage in a carry-out fast food restaurant in which

872
food and beverages are dispensed that is in direct competition with lessee
within the mall shopping center.” An owner of a Taco Bell restaurant sued
both the lessor and lessee for a declaratory judgment that the covenant
violated the Sherman Act. The court held that such covenants were not per
se unlawful but would constitute unreasonable restraints on trade only if
they violate the “rule of reason.”
The rule of reason requires the court to examine the circumstances to
determine whether the operation of the covenant actually effectuates an
unreasonable restraint on competition. The court will first define the
purpose and geographic scope of the covenant, and determine whether the
land affected is the only land suitable for the business. See Oliver v.
Quynn, 303 P.3d 1119, 1124-1125 (Wyo. 2013) (upholding covenant
prohibiting sales of alcohol by a bowling alley next to a restaurant/bar). It
will then compare the anticompetitive effect of the covenant with its pro-
competitive effect. An anticompetitive covenant may increase competition
because it provides security that induces a new competitor to enter the
market, thereby generating new business and new competition. In
Dunafon, the court determined that the covenant induced McDonald’s to
invest in creating a new restaurant and that the presence of this restaurant
helped generate business for the shopping center. Because the area
previously had little commercial property and few fast-service restaurants,
the covenant may have had the effect of inducing new competition to
emerge, rather than stifling it. Given the availability of nearby sites where
competing fast food restaurants could locate, the court found that the pro-
competitive effects of the covenant outweighed its anticompetitive effects
and that it was therefore lawful and enforceable.

Problem
An entrepreneur seeking to open a deli leases property on the first floor
of a large downtown office building. Seeking to protect her business, the
entrepreneur convinces the landlord to include the following language in
the lease: “Landlord covenants not to permit any other property in the
building to be used for operation of a deli.” The entrepreneur opens and
begins operating a profitable deli. Later, a second entrepreneur rents space
in the building and opens a sit-down restaurant. The restaurant does not
harm the deli’s business because it caters to a different clientele. However,
after a year, the restaurant begins subletting some of its space to a cart that
sells convenient, deli-style sandwiches at lunchtime. The deli’s business
suffers as people start buying from the cart. The deli owner sues the
landlord, the restaurant, and the cart owner seeking to enforce the

873
covenant. She argues that the cart is effectively a “deli” because it sells
deli-style sandwiches. She also argues that she never would have invested
so much money, time, and labor in the deli if she had known that the
landlord was going to allow another tenant to breach the covenant. The
defendants respond that there is no breach, since a cart is simply not a deli.
They argue in the alternative that even if the cart is effectively a deli,
enforcing such an anticompetitive covenant is void as against public
policy, because the labor force downtown needs convenient places to eat
and competition is desirable. Which side should win?22

§6 MODIFYING AND TERMINATING

COVENANTS
§6.1 Changed Conditions

El Di, Inc. v. Town of Bethany Beach

477 A.2d 1066 (Del. 1984)

DANIEL L. HERRMANN, Chief Justice for the majority.
This is an appeal from a permanent injunction granted by the Court of
Chancery upon the petition of the plaintiffs, The Town of Bethany Beach,
et al., prohibiting the defendant, El Di, Inc. (“El Di”) from selling
alcoholic beverages at Holiday House, a restaurant in Bethany Beach
owned and operated by El Di.
El Di purchased the Holiday House in 1969. In December 1981, El Di
filed an application with the State Alcoholic Beverage Control
Commission (the “Commission”) for a license to sell alcoholic beverages
at the Holiday House. On April 15, 1982, finding “public need and
convenience,” the Commission granted the Holiday House an on-premises
license. The sale of alcoholic beverages at Holiday House began within 10
days of the Commission’s approval. Plaintiffs subsequently filed suit to
permanently enjoin the sale of alcoholic beverages under the license.
On appeal it is undisputed that the chain of title for the Holiday House
lot included restrictive covenants prohibiting both the sale of alcoholic
beverages on the property and nonresidential construction.23 The same
restriction was placed on property in Bethany Beach as early as 1900 and
1901 when the area was first under development.
As originally conceived, Bethany Beach was to be a quiet beach
community. The site was selected at the end of the nineteenth-century by

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the Christian Missionary Society of Washington, D.C. In 1900, the
Bethany Beach Improvement Company (“BBIC”) was formed. The BBIC
purchased lands, laid out a development and began selling lots. To insure
the quiet character of the community, the BBIC placed restrictive
covenants on many plots, prohibiting the sale of alcohol and restricting
construction to residential cottages. Of the original 180 acre development,
however, approximately 1/3 was unrestricted.
The Town of Bethany Beach was officially incorporated in 1909. The
municipal limits consisted of 750 acres including the original BBIC land
(hereafter the original or “old-Town”), but expanded far beyond the 180
acre BBIC development. The expanded acreage of the newly incorporated
Town, combined with the unrestricted plots in the original Town, left only
15 percent of the new Town subject to the restrictive covenants.
Despite the restriction prohibiting commercial building (“no other than
a dwelling or cottage shall be erected . . .”), commercial development
began in the 1920’s on property subject to the covenants. This
development included numerous inns, restaurants, drug stores, a bank,
motels, a town hall, shops selling various items including food, clothing,
gifts and novelties and other commercial businesses. Of the 34 commercial
buildings presently within the Town limits, 29 are located in the old-Town
originally developed by BBIC. Today, Bethany Beach has a permanent
population of some 330 residents. In the summer months the population
increases to approximately 10,000 people within the corporate limits and
to some 48,000 people within a 4 mile radius. In 1952, the Town enacted a
zoning ordinance which established a central commercial district
designated C-1 located in the old-Town section. Holiday House is located
in this district.
Since El Di purchased Holiday House in 1969, patrons have been
permitted to carry their own alcoholic beverages with them into the
restaurant to consume with their meals. This “brown-bagging” practice
occurred at Holiday House prior to El Di’s ownership and at other
restaurants in the Town. El Di applied for a license to sell liquor at
Holiday House in response to the increased number of customers who
were engaging in “brown-bagging” and in the belief that the license would
permit restaurant management to control excessive use of alcohol and use
by minors. Prior to the time El Di sought a license, alcoholic beverages
had been and continue to be readily available for sale at nearby licensed
establishments including: one restaurant ½ mile outside the Town limits, 3
restaurants within a 4 mile radius of the Town, and a package store some
200-300 yards from the Holiday House.
In granting plaintiffs’ motion for a permanent injunction, the Court of

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Chancery rejected defendant’s argument that changed conditions in
Bethany Beach rendered the restrictive covenants unreasonable and
therefore unenforceable. The Chancery Court found that although the
evidence showed a considerable growth since 1900 in both population and
the number of buildings in Bethany Beach, “the basic nature of Bethany
Beach as a quiet, family oriented resort has not changed.” The Court also
found that there had been development of commercial activity since 1900,
but that this “activity is limited to a small area of Bethany Beach and
consists mainly of activities for the convenience and patronage of the
residents of Bethany Beach.”
The Trial Court also rejected defendant’s contention that plaintiffs’
acquiescence and abandonment rendered the covenants unenforceable. In
this connection, the Court concluded that the practice of “brown-bagging”
was not a sale of alcoholic beverages and that, therefore, any failure to
enforce the restriction as against the practice did not constitute
abandonment or waiver of the restriction.
We find that the Trial Court erred in holding that the change of
conditions was insufficient to negate the restrictive covenant.
A court will not enforce a restrictive covenant where a fundamental
change has occurred in the intended character of the neighborhood that
renders the benefits underlying imposition of the restrictions incapable of
enjoyment. Review of all the facts and circumstances convinces us that the
change, since 1901, in the character of that area of the old-Town section
now zoned C-1 is so substantial as to justify modification of the deed
restriction. We need not determine a change in character of the entire
restricted area in order to assess the continued applicability of the covenant
to a portion thereof.
It is uncontradicted that one of the purposes underlying the covenant
prohibiting the sale of intoxicating liquors was to maintain a quiet,
residential atmosphere in the restricted area. Each of the additional
covenants reinforces this objective, including the covenant restricting
construction to residential dwellings. The covenants read as a whole
evince an intention on the part of the grantor to maintain the residential,
seaside character of the community.
But time has not left Bethany Beach the same community its grantors
envisioned in 1901. The Town has changed from a church-affiliated
residential community to a summer resort visited annually by thousands of
tourists. Nowhere is the resultant change in character more evident than in
the C-1 section of the old-Town. Plaintiffs argue that this is a relative
change only and that there is sufficient evidence to support the Trial
Court’s findings that the residential character of the community has been

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maintained and that the covenants continue to benefit the other lot owners.
We cannot agree.
In 1909, the 180 acre restricted old-Town section became part of a 750
acre incorporated municipality. Even prior to the Town’s incorporation,
the BBIC deeded out lots free of the restrictive covenants. After
incorporation and partly due to the unrestricted lots deeded out by the
BBIC, 85 percent of the land area within the Town was not subject to the
restrictions. Significantly, nonresidential uses quickly appeared in the
restricted area and today the old-Town section contains almost all of the
commercial businesses within the entire Town. Moreover, these
commercial uses have gone unchallenged for 82 years.
The change in conditions is also reflected in the Town’s decision in
1952 to zone restricted property, including the lot on which the Holiday
House is located, specifically for commercial use. Although a change in
zoning is not dispositive as against a private covenant, it is additional
evidence of changed community conditions.
Time has relaxed not only the strictly residential character of the area,
but the pattern of alcohol use and consumption as well. The practice of
“brown-bagging” has continued unchallenged for at least twenty years at
commercial establishments located on restricted property in the Town. On
appeal, plaintiffs rely on the Trial Court finding that the “brown-bagging”
practice is irrelevant as evidence of waiver inasmuch as the practice does
not involve the sale of intoxicating liquors prohibited by the covenant. We
find the “brown-bagging” practice evidence of a significant change in
conditions in the community since its inception at the turn of the century.
Such consumption of alcohol in public places is now generally tolerated by
owners of similarly restricted lots. The license issued to the Holiday House
establishment permits the El Di management to better control the
availability and consumption of intoxicating liquors on its premises. In
view of both the ready availability of alcoholic beverages in the area
surrounding the Holiday House and the long-tolerated and increasing use
of “brown-bagging” enforcement of the restrictive covenant at this time
would only serve to subvert the public interest in the control of the
availability and consumption of alcoholic liquors.
In view of the change in conditions in the C-1 district of Bethany
Beach, we find it unreasonable and inequitable now to enforce the
restrictive covenant. To permit unlimited “brown-bagging” but to prohibit
licensed sales of alcoholic liquor, under the circumstances of this case, is
inconsistent with any reasonable application of the restriction and contrary
to public policy.
We emphasize that our judgment is confined to the area of the old-

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Town section zoned C-1. The restrictions in the neighboring residential
area are unaffected by the conclusion we reach herein.

ANDREW CHRISTIE, Justice, with whom MOORE, Justice, joins, dissenting.

I respectfully disagree with the majority.
I think the evidence supports the conclusion of the Chancellor, as
finder of fact, that the basic nature of the community of Bethany Beach has
not changed in such a way as to invalidate those restrictions which have
continued to protect this community through the years as it has grown.
Although some of the restrictions have been ignored and a portion of the
community is now used for limited commercial purposes, the evidence
shows that Bethany Beach remains a quiet, family-oriented resort where
no liquor is sold. I think the conditions of the community are still
consistent with the enforcement of a restrictive covenant forbidding the
sale of intoxicating beverages.
In my opinion, the toleration of the practice of “brown bagging” does
not constitute the abandonment of a longstanding restriction against the
sale of alcoholic beverages. The restriction against sales has, in fact,
remained intact for more than eighty years and any violations thereof have
been short-lived. The fact that alcoholic beverages may be purchased right
outside the town is not inconsistent with my view that the quiet-town
atmosphere in this small area has not broken down, and that it can and
should be preserved. Those who choose to buy land subject to the
restrictions should be required to continue to abide by the restrictions.
I think the only real beneficiaries of the failure of the courts to enforce
the restrictions would be those who plan to benefit commercially.
I think that restrictive covenants play a vital part in the preservation of
neighborhood schemes all over the State, and that a much more complete
breakdown of the neighborhood scheme should be required before a court
declares that a restriction has become unenforceable.

Notes and Questions

1. Changed conditions. Covenants will not be enforced if conditions
have changed so drastically inside the neighborhood restricted by the
covenants that enforcement will be of no substantial benefit to the
dominant estates, Restatement of Property §564 (1944). The change “must
be so radical as to defeat the essential purpose of the covenant or render
the covenant valueless to the parties.” Dierberg v. Wills, 700 S.W.2d 461,
467 (Mo. Ct. App. 1985). See City of Bowie v. MIE Properties, Inc., 922
A.2d 509, 526, 527 (Md. 2007) (question is whether, “after the passage of

878
a reasonable period of time,” and because of a “dramatic change in the
character of the neighborhood” or some other fact, “the continuing validity
of the covenant cannot further the purpose for which it was formed in light
of changed relevant circumstances.”). The Restatement (Third) of Property
(Servitudes) explains that very few cases result in application of the
doctrine. “The test is stringent: Relief is granted only if the purpose of the
servitude can no longer be accomplished.” Id. §7.10 cmt. a. Some state
statutes also require covenants to be of “actual and substantial benefit” in
order to be enforceable. Mass. Gen. Laws ch. 184, §30; N.Y. Real Prop.
Acts Law §1951.
The changed conditions doctrine may also apply when substantial
changes have occurred outside the restricted subdivision. Lots located on
the fringe of the restricted area, however, may not invoke the changed
conditions doctrine, even if the adjacent property is engaged in activity
contrary to the covenant, if it is still possible for the restrictions to create
benefit within the subdivision. If lots on the border of the restricted area
could easily free themselves from the covenant, it would quickly lose its
effect over time as succeeding blocks of fringe lots succumbed to external
changes. The changed conditions doctrine is likely to apply to changes
outside the restricted subdivision only when those changes have so
adversely affected so many lots in the subdivision that enforcement is
pointless. River Heights Associates L.P. v. Batten, 591 S.E.2d 683 (Va.
2004) (refusing to apply the changed conditions doctrine to allow lots on
the edge of a restricted subdivision that had been rezoned for commercial
use to develop commercially in violation of the covenant). Traditionally,
the changed conditions doctrine has not applied to easements.
As El Di shows, determining when a covenant is no longer of
substantial benefit is not a precise science. In Allemong v. Frendzel, 363
S.E.2d 487 (W. Va. 1987), the property was similarly subject to a restraint
on the sale of liquor. The current owners of the servient estate, Donald and
Lillian Frendzel, operated a grocery convenience store and began to sell
liquor. Within a three-mile radius of the property were located numerous
sales outlets for beer, including two establishments located within a
quarter of a mile of the Frendzels’ store. Because the area immediately
surrounding the restricted parcel was predominantly residential and
agricultural, however, the court held that there had not been “a radical
change or changes in the neighborhood . . . which would effectively
destroy the objectives of the covenant and thus render it unenforceable.”
The court explained, id. at 492:

We do not agree with the appellant that these commercial properties in the

879
 general vicinity of the restricted parcel significantly change the residential
character of the immediate area. Even if we were to accept the appellant’s
contention, “every effort must be exerted to protect the unchanged portions
of residential neighborhoods when businesses begin to encroach on the
fringes.” Morris v. Nease, 238 S.E.2d 844, 847 (W. Va. 1977).
Based on the evidence, we believe that the nonresidential use of the
property in the vicinity of the appellants’ convenience store [has] not
destroyed the essential objects and purposes of the restrictive covenant. We
further believe that the benefits of the original plan envisioned by the grantor
may be realized for that portion of the neighborhood which remains
primarily residential and agricultural.

The Restatement (Third) alters the changed conditions doctrine in

several crucial ways. First, it extends the doctrine to easements. Second, it
uses termination rules to substitute for controls that had traditionally been
applied through the touch and concern test. Restatement (Third) §7.10 cmt.
a. Third, it suggests modification of the covenant in lieu of termination if
modification will allow the covenant to serve its original purpose.
Traditionally, a finding of changed conditions required invalidation of the
covenant. Under the Restatement version of the test, however, termination
is only allowed if modification is not feasible. Id. §7.10. Also, if the
purpose of the servitude can be accomplished but “because of changed
conditions the servient estate is no longer suitable for any use permitted by
the servitude, a court may modify the servitude to permit other uses under
conditions designed to preserve the benefits of the original servitude.” Id.
However, the Restatement (Third) cautions that a court should rarely
intervene if a mechanism exists for terminating the covenant in a manner
that does not require the unanimous consent of the beneficiaries, such as a
supermajority vote of the members of a homeowners association. Id. §7.10
cmt. a.
2. Damages versus injunctive relief. As noted above, damages were
traditionally not awarded for breach of a covenant unless privity of estate
was present under real covenants law, while injunctive relief was available
even in the absence of privity. Because most owners want enforcement by
injunctive relief and because it makes little sense to make it harder to
obtain damages than injunctive relief (the reverse is usually the case), the
courts appear now to be ready to award either an injunction or damages for
violation of a covenant running with the land whether or not strict vertical
privity is present. Remedies are chosen on the basis of their
appropriateness under the circumstances.
When it comes to modifying or terminating a covenant, an alternative

880
to complete invalidation of a covenant under the changed conditions
doctrine is to allow the violation of the covenant to occur upon the
payment of compensatory damages to the owners of the dominant estates.
Restatement (Third) of Property (Servitudes) §8.3 (2000); Restatement of
Property §564 (1944). When might damages be an appropriate remedy in
lieu of injunctive relief? Would they have been appropriate in El Di?

§6.2 Relative Hardship

Unlike the changed conditions doctrine, which focuses on whether the
covenant remains of substantial benefit to the dominant estate, the relative
hardship doctrine focuses on the servient estate. A covenant will not be
enforced if the harm caused by enforcement, that is, the hardship to the
owner of the servient estate, will be greater by a “considerable magnitude”
than the benefit to the owner of the dominant estate, Restatement of
Property §563 (1944). If the hardship is great and the benefit small, the
courts may refuse to enforce the covenant. Appel v. Presley Cos., 806 P.2d
1054 (N.M. 1991). If, however, the benefit of the covenant is substantial,
the courts are unlikely to apply the doctrine even if the hardship to the
servient estate is substantial.
For example, in Lange v. Scofield, 567 So. 2d 1299 (Ala. 1990), the
court refused to enforce a covenant requiring that all owners of property
adjoining or across the street from a parcel consent to the construction of a
house on the parcel. One of the surrounding owners refused to give her
consent, arguing that another house in the neighborhood would increase
density and lower property values. The court found that construction
would have no effect on property values and that any benefit received by
the neighbor through enforcing the covenant would be negligible and far
outweighed by the hardship that enforcement would cause the landowner
who wished to construct the house.
The Restatement (Third) treats the relative hardship doctrine not as a
basis for terminating or modifying servitudes, but, rather, as a factor to
consider in determining the availability and selection of appropriate
remedies. Restatement (Third) §8.3. If compliance with a covenant is
unreasonable because the burden is great and the benefit small, the
Restatement (Third) concludes that nonenforcement may be appropriate,
but some amount of damages are probably appropriate to compensate the
servitude beneficiary for the loss of the benefit of the covenant, small as it
may be. Id. §8.3 cmts. a, h.
In Shalimar Association v. D.O.C. Enterprises, Inc., 688 P.2d 682
(Ariz. Ct. App. 1984), the court enforced an equitable servitude requiring

881
an owner to continue operating a golf course against a complaint by the
current owner that such a use was not profitable. It refused to apply either
the changed conditions or relative hardship doctrines. “A mere change in
economic conditions rendering it unprofitable to continue the restrictive
use is not alone sufficient to justify abrogating the restrictive covenant.”
Id. at 691. What might justify this result? What is the argument on the
other side?

§6.3 Other Equitable Defenses

In addition to the changed conditions and relative hardship doctrines,
the courts have identified a number of general equitable doctrines that may
result in nonenforcement of a servitude.
Acquiescence, abandonment, or unclean hands. The complaining
party may be barred from enforcing the covenant if he has tolerated or
failed to object to other violations of the covenant. Toleration may indicate
an intent to abandon the covenant, and the defendant may reasonably rely
on the failure to enforce the covenant in investing in her property. See
Morris v. Nease, 238 S.E.2d 844 (W. Va. 1977). This may occur if the
plaintiff:

1. has violated the covenant himself (unclean hands), or

2. has tolerated previous violations of the covenant by the owner of
the servient estate (acquiescence), or
3. has tolerated violations of the covenants by owners of other
restricted parcels in the neighborhood covered by the covenant
(abandonment).

Estoppel. An owner of a dominant estate who orally represents to the

owner of a servient estate that she will not enforce the covenant may be
estopped from asserting her interests in enforcing the covenant if the
owner of the servient estate changes his position in reliance on the oral
statement.
Laches. If the covenant has been ignored or breached for a substantial
period of time — but less than the time necessary to establish prescriptive
rights — the court may find that unexcused delay in enforcing the
covenant prompted investment in reliance on the failure to object to the
violation and that enforcement of the covenant would be unconscionable.
Marketable title acts. As with easements, many states have

882
marketable title statutes that terminate restrictive covenants if they are not
re-recorded after a specified period of time. See, e.g., Mass. Gen. Laws ch.
184, §27.
Other ways to terminate covenants. Other ways to terminate
covenants include the following:

1. Language in instrument. Many subdivisions or condominium

associations are subject to covenants that terminate within a stated
number of years unless they are periodically renewed by the
homeowners association or condominium owners association.
2. Merger. As with easements, if the burdened and benefited estates
come under the ownership of the same person, the covenants will
terminate.
3. Release. All parties affected by the covenant — both burdened and
benefited estates — may agree in writing to terminate the covenant
or release the property from it.
4. Prescription. Open and notorious violation of the covenant without
permission for the statutory period may terminate the covenant by
operation of the statute of limitations.

§6.4 Statutes
A number of states have enacted statutes that regulate the
enforceability of covenants and provide a variety of doctrines allowing
those covenants to be removed over time. These statutes generally provide
that covenants may not enforced unless they are of “actual and substantial
benefit” to those enforcing the restriction, or the purpose of the restriction
can no longer be fulfilled. See, e.g., Cal. Civ. Code §885.040; Mass. Gen.
Laws ch. 184, §30; Minn. Stat. §500.20(1); N.Y. Real Prop. Law §1951.
The case below construes Massachusetts’s particularly wide-ranging
statute.

Blakeley v. Gorin

313 N.E.2d 903 (Mass. 1974)

Map: 13-15 Arlington Street; 2

Commonwealth
Avenue; Public Alley 437,

883
 Boston, Massachusetts

EDWARD F. HENNESSEY, J.
The petitioners, owners of a parcel of land subject to certain
restrictions known as the Commonwealth Restrictions, seek a
determination and declaration that the restrictions are obsolete and
unenforceable.
The Commonwealth Restrictions date from the middle of the last
century. By 1850 the condition of the tidal flats which composed the area
now known as the Back Bay had become a nuisance, largely due to
drainage problems. The Commonwealth determined to fill in the area and
sell lots for dwellings, subject to restrictions in conformity with a
comprehensive land use plan.
With some exceptions and minor variations the same stipulations and
agreements were inserted into all the deeds to land in the Back Bay
district, from the Commonwealth as grantor to various private grantees,
beginning in 1857.
General Laws ch. 184, §30, on which the petitioners rely, provides that
no restriction shall be enforced or declared to be enforceable unless it is
determined that the restriction is, at the time of the proceeding, of actual
and substantial benefit to a person claiming rights of enforcement. Further,
even if a restriction is found to be of such benefit, it shall not be enforced
except by award of money damages if any of several enumerated
conditions are found to exist.
The facts are as follows. The petitioners are the owners of two parcels
of land separated by Public Alley No. 437; the first is known as 2, 4, 6, 8,
and 10 Commonwealth Avenue and the second as 13-15 Arlington Street
and 1, 3, and 5 Newbury Street. The former is presently a vacant lot; the
latter is the site of the Ritz-Carlton Hotel. Both are subject to various of
the Commonwealth Restrictions. The petitioners plan to build on the
former lot a 285 foot high hotel-apartment building, with a twelve-story
structure as a bridge over the alley, connecting it with the Ritz-Carlton.
Plans call for the new building to contain such restaurant and shopping
facilities as are usually incidental to the running of a large hotel, and an
underground garage for off-street parking as required by the Boston
Zoning Code.
The respondents are the owners of 12-14 Commonwealth Avenue, a
parcel which is adjacent to the petitioners’ vacant lot and backs on the
same alley. This property contains an eight-story building with eight
apartments on each floor except the first, half facing Commonwealth

884
Avenue and half the alley in back, half (the corner apartments) being of
two rooms and half efficiency apartments. The thirty-two rear apartments
derive their principal light and air from one window in each apartment on
the alley.
Among the restrictions contained in the original deeds to the
[defendant’s parcels] are the following:

(a) That a passageway, sixteen feet wide, is to be laid out in the rear of the
premises, the same to be filled in by the Commonwealth, and to be kept open
and maintained by the abutters in common.

We note that the most difficult aspect of this case concerns the
passageway. There will be no obstruction to the movements of persons or
vehicles, since the bridge between the Ritz-Carlton building and the new
building will start at a point thirteen feet above the ground. Nevertheless,
the bridge will occupy most of the space between the two buildings for a
height of twelve stories, with consequent effect on light and air. For this
reason we have determined, as discussed later in this opinion, that
damages are to be awarded for loss of light and air.
Equity does not invariably and automatically grant specific
enforcement of such restrictions on the use of land. While the usual
grounds for denying such enforcement in a case involving real property is
laches, or other inequitable conduct by the party seeking to enforce the
restriction, this need not always be the case. The Restatement of Property
§563 (1944) would deny enforcement, apparently without compensation, if
the “harm done by granting the injunction will be disproportionate to the
benefit secured thereby.” The official comments . . . suggest[] that the
standard be a “disproportion . . . of considerable magnitude.”
The . . . restriction . . . mandat[es] that the passageway behind the
petitioners’ lot, now Public Alley No. 437, shall “be kept open.” The judge
found, on evidence which clearly supports his findings, that the
respondents have an actual and substantial benefit in the enforcement of
this restriction and that the proposed building would violate it. However,
his further findings that the restriction is obsolete and that the respondents
are entitled to only nominal damages are plainly wrong. We nevertheless
hold that, even though it is not obsolete, the restriction shall not be
specifically enforced. In lieu of specific enforcement, damages are to be
awarded.
Considerable and conflicting evidence was adduced at trial as to the
potential effect that bridging the alley would have on the light and air
available to the apartments in the rear of the respondents’ building. It

885
appears that all parties are in agreement that the “bridge” would decrease
the direct sunlight available to the apartments; the dispute is as to the
magnitude of the decrease. The testimony on ambient light and on
available air was conflicting as to whether there would be an increase or a
decrease. Clearly there would be some effect on the property. There was
testimony to support a finding that the effect would not be de minimis but
would be substantial.
There are several alternatives in [Mass. Gen. Laws] ch. 184, §30,
which support the judge’s decision to deny specific enforcement. On the
evidence in this case, the petitioners have made a compelling case for such
denial based on all of the following statutory grounds: “(1) changes in the
character of the properties affected or their neighborhood [and] in
applicable public controls of land use or construction, or in any other
conditions or circumstances, [which] reduce materially the need for the
restriction or the likelihood of the restriction accomplishing its original
purposes . . . or (4) continuation of the restriction on the parcel against
which enforcement is claimed . . . would impede reasonable use of land for
purposes for which it is most suitable, and would tend to impair the growth
of the neighborhood or municipality in a manner inconsistent with the
public interest . . . or (5) enforcement, except by award of money damages,
is for any other reason inequitable or not in the public interest.”
Applying these criteria, we observe that the evidence shows, inter alia,
that the properties and the neighborhood have drastically changed. Single-
family residences have been replaced by moderately high-rise buildings
for apartments and institutional use. We have found that the passageway
restriction is of an actual and substantial benefit in its effect on light and
air, but the proposed bridge will have only a modest impact in view of the
drastic changes which have already occurred. In particular, an occupant of
the respondents’ building, in looking out a rear window of that structure,
would see to his immediate left and across the passageway the high-rise
Ritz-Carlton building. As to the petitioners’ unused land to that viewer’s
immediate left, on the same side of the passageway, it seems inevitable
that, even if the bridge were not permitted, a building higher than the
respondents’ building would at some time be constructed on it.
The record also clearly supports a conclusion that continued
enforcement of the restriction would tend to impede reasonable use of the
land for purposes for which it is most suitable. The uncontradicted
evidence was that a free standing tower is economically unfeasible
presumably because of the small size of the parcel, and that the plaintiffs’
proposal for an apartment-hotel complex connected to the adjacent Ritz-
Carlton is the most suitable use of the land.

886
 The evidence supports a conclusion that the proposed bridge is not an
arbitrary and unnecessarily large intrusion. The twelve stories of the bridge
relate to twelve of the lower floors of the new building which are to be
used as a hotel; above those floors there will be apartments. The hotel
floors are feasible only if connected to the hotel services of the Ritz
Carlton. Therefore, all considerations of equity, and the most suitable use
of the property, support the planned bridge construction in size as well as
purpose.
Weighing and comparing the interests of the parties and the public in
accordance with the several provisions of §30 brings us almost inevitably
to the conclusion that there should be no specific enforcement. In the
words of provision (5) of the statute, which unquestionably confers the
broadest discretion on the court, enforcement here would be inequitable
and not in the public interest. The magnitude of the harm to the petitioners
in specific enforcement of the restriction far exceeds that to the
respondents in its denial. Moreover we are mandated by the statute to have
due regard for the public interest in determining the manner of
enforcement of a restriction. The land in question has been vacant for over
a decade. We take judicial notice of the exceedingly high property tax
rates current in the city of Boston and the beneficial effect on the tax base
of the petitioners’ plan to construct a multimillion dollar project of public
usefulness on presently unutilized land. In the circumstances both the
balance of equities between the parties and a consideration of the public
interest require that the respondents accept money damages by way of
enforcement of this restriction.
The final decree is reversed and the case is remanded to the Superior
Court, where damages are to be assessed for the loss of benefit in light and
air. Such further evidence as the judge deems to be necessary shall be
heard on the issue of damages.

FRANCIS QUIRICO, Justice, dissenting, with whom REARDON, J., joins.

I agree with today’s holding by the court that the restriction with
respect to the passageway “was designed to preserve light and air to the
properties it benefited,” and that “[a]s this urban area has grown and
become ever more congested in the century since this restriction was first
imposed, light and air have become more, not less, valuable. The
restriction securing the respondents’ rights to them is certainly not
obsolete.”
The question then becomes what remedy or relief is available to the
parties. This court holds that notwithstanding its findings that the
passageway restriction is of actual and substantial benefit to the

887
respondents and that it has not become obsolete, the petitioners have the
right, under the terms of Mass. Gen. Laws ch. 184, §30, to compel the
respondents to receive money damages in lieu of their right to specific
enforcement of the restriction.
I do not agree with the ultimate conclusion that under §30 the
respondents’ relief should be limited to money damages rather than
specific enforcement of the restriction relating to the open passageway.
The court relies in part on its conclusion that “the properties and the
neighborhood have drastically changed (since the restrictions were
imposed). Single family residences have been replaced by moderately
high-rise buildings for apartments and institutional use.” I do not consider
this change to be drastic. It seems clear to me from the record that
Commonwealth Avenue in the block between Arlington and Berkeley
streets, with its unique architectural and physical features, is one of the few
remaining residential boulevards in the city, providing a welcome oasis
amidst the skyward push of Boston’s newer commercial buildings.
Contrary to the court’s conclusion, I believe that the erection of a twelve-
story bridging structure at the very entrance of this block does constitute
“an arbitrary and unnecessarily large intrusion” which is not justified by
any change in the character of the area.

Notes and Questions

The statute in Blakeley changed the common law by giving the court
the option of damages rather than an injunction to enforce a covenant that
was still of substantial benefit but violated the public interest. The majority
found that the facts brought the court “almost ineluctably to the conclusion
that there should be no specific performance.” Do you agree that an
injunction was inappropriate in this case? What are the arguments in favor
and against granting an injunction?

1. See Warren O. Ault, Open-Field Farming in Medieval England: A Study of

Village By-Laws (1972); Henry E. Smith, Semicommon Rights and Scattering the
Open Fields, 29 J. Leg. Stud. 131 (2000).
2. See John A. Lovett, Progressive Property in Action: The Land Reform
(Scotland) Act 2003, 89 Neb. L. Rev. 739, 753-770 (2011) (discussing common
law and statutory rights to roam in Scotland, England, and Wales).
3. See Chapter 1 §2.
4. Section 2.4 covers a number of exceptions to the Statute of Frauds respecting
easements. Other exceptions to the Statute of Frauds include fraud and part
performance. See Chapter 12, §2.1.

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 5. Easements in gross are also sometimes referred to as personal easements, as
in Green v. Lupo, infra. This terminology is somewhat confusing since some courts
have further subdivided easements in gross into two categories: (1) commercial
easements used for business purposes, such as a right of way for utility lines, which
can be sold or assigned; and (2) personal easements used for individual
convenience or pleasure, such as a right to swim in a private lake, which cannot be.
6. As one commentator notes, the themes found in the land tenure and law in
Spain and Mexico are repeated in the southwestern United States in the nineteenth
century: a tension between private land and communal land, and the importance of
Spanish custom. Malcolm Ebright, Land Grants & Lawsuits in Northern New
Mexico 21 (1994).
7. This historical material is taken from A.W.B. Simpson, A History of the Land
Law (2d ed. 1986).
8. A third problem arises in the context of residential subdivisions when early
buyers of lots try to enforce covenants entered into by later buyers. This topic is
addressed at §4.3.
9. The CC & R’s permit residents to keep “domestic fish and birds.”
10. Albert Schweitzer.
11. Archeologists in Israel found some of the earliest evidence of a domesticated
animal when they unearthed the 12,000-year-old skeleton of a woman who was
buried with her hand resting on the body of her dog.
12. Restrictions on children violate the Fair Housing Act, 42 U.S.C. §§3604,
3607(b), except in senior housing. The question here is whether it violates the
general test for covenants.
13. The units were advertised at a cost of $97,000 in 1981.
14. I owe this hypothetical to a Doonesbury cartoon by Garry Trudeau.
15. The first section of the Fourteenth Amendment provides: “All persons born
or naturalized in the United States, and subject to the jurisdiction thereof, are
citizens of the United States and of the State wherein they reside. No State shall
make or enforce any law which shall abridge the privileges or immunities of
citizens of the United States; nor shall any State deprive any person of life, liberty,
or property, without due process of law; nor deny to any person within its
jurisdiction the equal protection of the laws.”
16. Buchanan v. Warley, 245 U.S. 60, 73 (1917).
17. Note that this version of the public/private distinction is different from the
version implicated in public accommodations statutes. See §1.2. There the question
was whether private property had been sufficiently opened to the public to be
considered in the business of serving the public in general in a nonselective
manner, such that the owner would have no legitimate interest in discriminating
against persons on an illegitimate basis.
18. After the Iowa Supreme Court decision, President Truman sent angry
telegrams to the mayor of Sioux City and the director of the cemetery, and notified
Evelyn Rice that her husband could be buried in Arlington National Cemetery.
Truman Sets Arlington Internment for Indian Denied “White” Burial, N.Y. Times,

889
Aug. 30, 1951, at 1, 2. In response to Truman’s intervention, the cemetery
apologized to Mrs. Rice and offered her a free lot anywhere in the cemetery; Mrs.
Rice preferred the Arlington Cemetery offer, and Sgt. Rice was buried there with
military honors on September 6, 1951. Indian Hero Is Buried in Arlington
Cemetery After Being Refused Internment in Sioux City, N.Y. Times, Sept. 6, 1951,
at 3.
19. The prohibition on discrimination based on familial status prohibits
discrimination against families with children under 18; the prohibition does not
apply in developments dedicated to senior housing. 42 U.S.C. §3607(b).
20. Fla. Stat. §718.104(5) provides: “The declaration as originally recorded or as
amended under the procedures provided therein may include covenants and
restrictions concerning the use, occupancy, and transfer of the units permitted by
law with reference to real property. However, the rule against perpetuities shall not
defeat a right given any person or entity by the declaration for the purpose of
allowing unit owners to retain reasonable control over the use, occupancy, and
transfer of units.” — EDS.
21. Section 14.5, however, provides in part that “no amendments shall
discriminate against any apartment owner nor against any apartment or class or
group of apartment owners unless the apartment owners so affected . . . consent;
and no amendment shall change any apartment nor the share in the common
elements, and other of its appurtenances nor increase the owner’s share of the
common expenses unless the owner of the apartments concerned . . . joins in the
execution of the amendment.”
22. This problem is based on Kobayashi v. Orion Ventures, Inc., 678 N.E.2d 180
(Mass. App. Ct. 1997).
23. The restrictive covenant stated:

This covenant is made expressly subject to and upon the following

conditions: viz., That no intoxicating liquors shall ever be sold on the said lot
. . . ; a breach of which said condition [ . . . ] shall cause said lot to revert to
and become again the property of the grantor, his heirs and assigns; and upon
such breach of said conditions or restrictions, the same may be restrained or
enjoined in equity by the grantor, his heirs or assigns, or by any co-lot owner
in said plan or other party injured by such breach.

— EDS.

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PART FOUR

OWNERSHIP IN COMMON

891
CHAPTER 9

Concurrent, Family,
and Entity Property

§1 VARIETIES OF COMMON OWNERSHIP

Property may be held by more than one person in many different ways.
Property rights may be divided, with specific sticks in the bundle of rights
that make up property allocated to different persons or groups, or with the
right to all the sticks divided over time. Leaseholds provide an example of
both divisions: the tenant has the right to possess and control the property
during her lease, while the landlord has both the right to establish
conditions for use during the lease period and the future right to possess
the property after the lease ends. Property rights may be shared as well as
divided. In other words, more than one person may have the right to
control the same thing at the same time. This is called concurrent
ownership. For example, a wife and husband may together own a
condominium apartment in an urban building. In this arrangement each has
a concurrent right to possess the entire condominium unit. They have to
agree how the property will be used — whether they will live in the
condominium or rent it out to others, how they will use each room, whom
they will invite to dinner, and so on. They also share with other
condominium owners the right to use common areas of the building.
Disputes about the use and condition of common areas — such as whether
to pay for a new roof — must be worked out in conjunction with the other
condominium owners.
Family members often share property through one of the concurrent
tenancies. But familial relationships also give rise to distinctive family
property rights. Minor children, for example, have a right to support from
their noncustodial parents. Marriage also has many consequences for
property. In community property states, rights to most property
individually acquired during marriage is shared equally with one’s spouse.
In separate property states, spouses have rights to each other’s property on
divorce and death. Such rules also raise questions of the property rights of
people in family-like relationships that are not recognized by the state,
whether same-sex couples, same- or opposite-sex unmarried cohabitants,

892
or non-sexual long-time live-in companions.
Individuals also share property rights through entity property, in
which beneficial use of the property is significantly divided from rights to
govern the property. Perhaps the predominant form of entity property is
the corporation, in which vast numbers of shareholders own shares in
entities managed by others. Another important form of entity property is
the common interest development, discussed in detail in Chapter 8, in
which hundreds or thousands of individuals and families own units in
developments managed by property owners associations. The growth and
increasing influence of these forms of ownership require reconsideration
of the meaning of property and the line between private and public action.

§2 CONCURRENT TENANCIES
§2.1 Forms of Concurrent Tenancies
The three common law concurrent tenancies are the tenancy in
common, the joint tenancy, and the tenancy by the entirety.1 In all
concurrent tenancies each tenant, no matter how small her fractional
interest, has the right to possess the entire parcel — unless all the co-
tenants agree otherwise. Absent agreement, all co-tenants also have the
right to share the profits from the property, such as rents and royalties, and
the obligation to contribute to basic costs of maintaining the property, such
as mortgage and property taxes. The three tenancies, however, differ in
four key dimensions: first, how they are created; second, whether there is a
right of survivorship, meaning that surviving co-tenants automatically
inherit a deceased co-tenant’s share of the property; third, whether tenants
can unilaterally sever or terminate their tenancy; and fourth, whether
tenants can unilaterally encumber the property, such as by leasing it,
pledging it as security, or having it levied to pay a debt. A fourth form of
concurrent ownership, the partnership for business purposes, is similar in
some respects to the concurrent tenancies, but is now classified as a form
of entity property and is discussed in §4 of this chapter.

A. Tenancy in Common

Tenancies in common may be created explicitly, by conveying

property to more than one party as “tenants in common.” Tenancies in
common are also usually the default form of concurrent tenancy in face of
ambiguity; if property is conveyed or devised to multiple owners, the law
will presume that they are tenants in common. For example:

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 O devises Blackacre to A and B.
O conveys Blackacre to A, B, and C as tenants in common, with a ¼
undivided interest in A, a ¼ undivided interest in B, and a ½
undivided interest in C.

Each co-tenant has the right to transfer or encumber the interest

unilaterally and devise it or have it inherited in case of intestacy on death.
Of course, each co-tenant only has the authority to transfer her own
interest, and buyers may be unwilling to share ownership with a stranger.
Tenants may also file to terminate the co-tenancy and divide the property
or its proceeds by bringing an action for partition. In partition
proceedings, a court may order the property physically divided among the
co-owners. If this is not feasible or appropriate, the court will order the
property to be sold and the proceeds divided among the co-owners in
proportion to their ownership shares.
Tenancies in common are often used divide rights in timeshares or
fractional interests in vacation property. The property is held in concurrent
ownership, but the individual owners have contractual rights to exclusively
occupy the property during their allocated time. Tenancies in common
may also be used to create a less-regulated alternative to condominiums, in
which the co-owners have contractual rights to exclusively occupy their
units. Both kinds of tenancies in common are often financed by a single
mortgage, which created a number of problems during the recent housing
crisis. Individual financing of one’s share has become more available
today.

B. Joint Tenancy

The main difference between joint tenancy and tenancy in common is

the right of survivorship. When a joint tenant dies, her property interest is
immediately transferred to the remaining joint tenants in equal shares.
Thus, in a joint tenancy owned by A, B, and C, each with a one-third
undivided interest, A’s interest when she dies goes to B and C (that is, half
to B and half to C). The result is that B and C own the property as joint
tenants, each possessing a one-half undivided interest, in the property. If A
tries to devise her one-third interest, her will would have no effect; she has
no right to devise her interest. Although joint tenancies are no longer the
default form of concurrent ownership, they continue to be popular,
particularly for family property and joint bank accounts. The right of
survivorship consolidates property among the parties, simplifying use and
ownership. Importantly, it also avoids probate, which is expensive and can

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tie up property for long periods. For this reason, a joint tenancy with right
of survivorship is sometimes called the “poor man’s will.”
Traditionally, joint tenancies could only be created if they shared the
four unities of time, title, interest, and possession. This means that (1) the
interest of each joint tenant must be created at the same moment in time;
(2) all joint tenants must acquire title by the same instrument or title (joint
tenancy does not ordinarily arise by intestate succession); (3) all joint
tenants must possess equal fractional undivided interests in the property
and their interest must last the same amount of time; and (4) all joint
tenants must have the right to possess the entire parcel. Although the four
unities remain in force in many states, others have rejected them in favor
of a test considering the intent of the parties. See In re Estate of Johnson,
739 N.W.2d 493 (Iowa 2007) (adopting intent-based approach and
discussing trend); R.H. Helmholz, Realism and Formalism in Severance of
Joint Tenancies, 77 Neb. L. Rev. 1, 21-22 (1998) (discussing retreat from
four unities when they contravene intent). Although a number of states
have statutes that appear to abolish joint tenancies entirely, these states
will often find joint tenancies with a right of survivorship if the intent to
create them is clearly expressed. See 1 Joyce D. Palomar & Robert
Wilcox, Patton and Palomar on Land Titles §223 (3d ed. 2003); see, e.g.,
McLeroy v. McLeroy, 40 S.W.2d 1027 (Tenn. 1931) (interpreting Tenn.
Code §66-1-107). Because of the presumption against joint tenancy and
survivorship in many states, however, drafters are well advised to be
explicit:

O conveys Blackacre to A and B as joint tenants with the right of

survivorship.
O devises Blackacre to A, B, and C as joint tenants and not as tenants in
common.

In most states, the right of survivorship is highly contingent because a

joint tenant who transfers her property interest can destroy the right of
survivorship of her fellow owners with respect to her share. For example,
if A and B own property as joint tenants, each owner has the right to obtain
full ownership of the property when the other co-tenant dies (the right of
survivorship). If A sells her one-half undivided interest to C, however, the
joint tenancy is severed, and B’s right of survivorship is destroyed. The
result is that B and C will own the property as tenants in common. As with
tenancy in common, joint tenants may also file for partition of the
property. A few states prohibit severance by statute. S.C. Code §27-7-40
(prohibiting unilateral severance of joint tenancy); Nev. Const. art. IV §30

895
(prohibiting conveyance of homestead property without consent of both
husband and wife). Many states will also deem a joint tenancy to be
converted to a tenancy in common if married co-tenants divorce. Courts
have also held that a joint tenancy is converted to a tenancy in common
and the right of survivorship destroyed if one joint tenant murders the
other. See In re Estate of Thomann, 649 N.W.2d 1 (Iowa 2002)
(interpreting effect of Iowa Code §633.535 on property rights after
murder-suicide).
Can an owner sever a joint tenancy and destroy the right of
survivorship by conveying her interest from herself as joint tenant to
herself as tenant in common? Traditionally, this could not be done because
it did not break the four unities, but most states now permit such “self-
severance.” See Taylor v. Canterbury, 92 P.3d 961 (Colo. 2004); Sathoff v.
Sutterer, 869 N.E.2d 354 (Ill. Ct. App. 2007) (applying 765 Ill. Comp.
Stat. 1005/1b); In re Estate of Johnson, 739 N.W.2d 493, 499 n.9 (Iowa
2007). The procedure creates the possibility of fraud. Consider a husband
who secretly signs such a document and gives it to his daughter for
safekeeping. If he survives his wife, he can claim her interest because the
attempted severance was secret. If he predeceases her, however, his
daughter can claim to inherit his 50-percent interest on the grounds that his
wife’s right of survivorship has been destroyed by severance. To address
this possibility, some states require that conveyances be publicly recorded
to sever a joint tenancy; this would prevent a co-tenant from benefiting
from the right to survivorship after conveying the interest to himself. See
Cal. Civ. Code §683.2(c); Colo. Rev. Stat. §38-31-101 (5)(a); see John V.
Orth, The Perils of Joint Tenancies, 44 Real Prop. Tr. & Est. L.J. 427
(2009).
Severance occurs only between the selling owner and the remaining
owners; it does not change the relations of the remaining owners among
themselves. Sathoff, 869 N.E.2d at 356-357. For example, if A, B, and C
own property as joint tenants, and A conveys his interest to D, the result is
that D owns a one-third interest as a tenant in common with B and C, who
each own a one-third interest as joint tenants with each other. When D
dies, her one-third interest will go to her heirs or devisees. However, when
B dies, his interest goes to C as a surviving joint tenant, who will then own
a two-thirds interest as a tenant in common with D.
In most states, joint tenants are free to encumber their interests during
their lives, such as by renting them or pledging them as security for a debt.
But see S.C. Code §27-7-40 (prohibiting unilateral encumbrance). So long
the property is not actually sold, however, these encumbrances generally
do not survive the death of the encumbering co-tenant.

896
 Joint bank accounts. Many, perhaps most, personal joint bank
accounts are joint tenancies with rights of survivorship. The right of
survivorship is often provided by the bank’s signature form and may even
be presumed absent contrary evidence. See Estate of Ostlund, 918 A.2d
649, 656-658 (N.J. 2007) (holding that despite evidence that ailing father
added his son to his account so that he could pay his bills, the evidence did
not clearly and convincingly rebut presumption of survivorship); Uniform
Probate Code §6-212 (2010) (survivorship presumed absent clear and
convincing evidence). The four unities are rarely required. Absent other
evidence, during their lives tenants are usually entitled only to the right to
withdraw funds according to their contributions to the account, although
some states and the revised Uniform Probate Code provide that married
couples are presumed to have contributed equally. See Uniform Probate
Code §6-211; Lisa R. Mahle, A Purse of Her Own: The Case Against Joint
Bank Accounts, 16 Tex. J. Women & Law 45 (2006). Much litigation
concerns whether elderly people creating joint accounts intended to create
a right of survivorship and inter vivos use of the account, or simply
intended a “convenience account” to permit a child or other helper to write
checks on their behalf during life.
Joint tenancy versus dual life estates with alternative contingent
remainders. It is possible to create an indestructible right of survivorship
if one uses the form of life estates and remainders. For example:

O to A and B as life tenants, with a remainder in A if A survives B, and

a remainder in B if B survives A.

This conveyance creates alternative contingent remainders in A and B.

Whoever dies second will obtain the remainder and, hence, the property in
fee simple absolute. A conveyance of A’s life estate will not destroy the
contingent remainder. See Albro v. Allen, 454 N.W.2d 85 (Mich. 1990)
(interpreting a joint life estate with alternative contingent remainders).

C. Tenancy by the Entirety

Tenancies by the entirety are available only to legally married couples.

See Baker v. Speaks, 295 P.3d 847, 859-860 (Wyo. 2013) (holding that
whether the defendants had a tenancy by the entirety depended on whether
they had contracted a common law marriage in another state). The tenancy
by the entirety originated in the idea that the married couple was one legal
person; it was linked to the doctrine of coverture, which gave the husband
the sole power to manage and control his wife’s property. As a result,

897
many states abolished tenancies by the entirety when they abolished
coverture. Today, however, the tenancy by the entirety is recognized in
more than half the states and in the District of Columbia. 7 Powell on Real
Property §52.01. Some of these states presume that conveyances to
married couples are tenancies by the entirety absent contrary evidence, see
Alaska Stat. §34.15.110; Ind. Code §32-17-3-1; Beal Bank, SSB v. Almand
& Associates, 780 So. 2d 45 (Fla. 2001); In re VanConett Estate, 687
N.W.2d 167 (Mich. App. 2004), while others apply the usual presumption
in favor of tenancies in common, Haw. Rev. Stat. §509-1; 4 Thompson on
Real Property, Thomas Editions §33.06(e)).
Like a joint tenancy, the tenancy by the entirety includes a right of
survivorship. This right is much more stable than in a joint tenancy,
however, because absent agreement of both parties the tenancy by the
entirety is only severed on divorce or death.
Although the law varies from state to state, in most states, spouses
cannot encumber their interest in property held by the entirety without
each other’s consent, and creditors cannot attach property held through
tenancy by the entirety to satisfy debts of one of the spouses. See Sawada
v. Endo, §2.2.D, below; Beal Bank, SSB v. Almand & Associates, supra;
Baker v. Speaks, supra, at 859 (Wyo. 2013); Bunker v. Peyton, 312 F.3d
145 (4th Cir. 2002) (applying Virginia law). But see United States v. Craft,
535 U.S. 274 (2002) (an individual’s interest in tenancy by the entirety
property subject to federal tax lien for unpaid taxes).

Problems
1. A, owner of Greenacre, executes and delivers a deed conveying
Greenacre “jointly to myself and my wife B.” How will this conveyance be
interpreted?
2. A mother and son acquire a parcel of land as “tenants by the
entirety.” How should a court interpret this conveyance?
3. An elderly father and his daughter from his first marriage open an
account labeled a “joint bank account.” The deposits in the account are
most of the father’s lifetime savings; the daughter does not contribute.
During the father’s life, the daughter draws from the account only to write
checks for her father’s rent, medical bills, and other expenses. When the
father dies, $300,000 is left in the account. His will divides his estate
equally among the daughter and his two children from his second
marriage. The daughter claims that she is entitled to the proceeds of the
account by right of survivorship. This would leave assets worth about
$15,000 to be divided among the children under the will. What should the

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court do?
4. What should be the default in cases of intestacy? More than half of
Americans die without a will; this proportion is much larger for African
Americans, Latinos, and for middle- to lower-income people of all races.
When individuals die intestate, their property goes to their intestate heirs.
This frequently means shared ownership. For example, if the decedent
leaves multiple children and no spouse, or a spouse who is not a parent of
the children, the property will be divided among them. Following the usual
default rule, the estate descends to the intestate heirs as tenants in
common. If those heirs also die intestate, the property is divided among yet
more heirs and so on exponentially. In a few generations, the number of
co-tenants in such “heirs property” may become so large that joint
management of the property is impossible. Two much-discussed examples
of this dynamic involve African American farmers and Native Americans.
African American rural landownership dropped by more than 90
percent between 1920 and 1999 and continues to decline. There are many
causes of this phenomenon — discrimination and violence against black
landowners, African Americans’ “Great Migration” to the North, and the
general decline of small farms — but one cause may be the frequency of
heirs property, estimated to constitute one-quarter to 40 percent of Black-
owned rural property. A typical parcel of heirs property has eight or more
co-owners but may have many more, and many of the co-owners live
outside the Southeast where the property is located. Such property is
harder to manage and vulnerable to loss through forced partition sale or
foreclosure. See Thomas W. Mitchell, From Reconstruction to
Deconstruction: Undermining Black Landownership, Political
Independence, and Community Through Partition Sales of Tenancies in
Common, 95 Nw. U. L. Rev. 505 (2001); Todd Lewan & Dolores Barclay,
Developers and Lawyers Use a Legal Maneuver to Strip Black Families of
Land, Associated Press, Dec. 30, 2001.
In the late nineteenth and early twentieth centuries, much tribal land
was forcibly divided among individual Indians pursuant to the federal
allotment acts. One impact of the acts was to apply state probate laws,
including intestacy laws, to allotment holders who rarely made wills. As a
result, by 1934 “[o]n allotted reservations, numerous cases exist where the
shares of each individual heir from lease money may be 1 cent a month. Or
one heir may own minute fractional shares in 30 or 40 different allotments.
The cost of leasing, bookkeeping, and distributing the proceeds in many
cases far exceeds the total income.” 78 Cong. Rec. 11728 (1934) (Rep.
Edgar Howard). By 2004, some interests amounted to only 0.0000001

899
percent, or 1/9 millionth, of the undivided allotment. Testimony of Ross O.
Swimmer, Special Trustee for American Indians, House Resources Comm.
Hearing on S. 1721 (AIPRA) (June 23, 2004). While much of this land is
in trust and cannot be sold or foreclosed upon, this fractionation means
that the owners get almost no value from their land.
One way to prevent ownership by exponential numbers of heirs would
be to make joint tenancy with the right of survivorship the default in cases
of intestacy. What objections can you imagine to such a proposal? Would
you advocate for its adoption?

§2.2 Sharing Rights and Responsibilities Between Co-

Owners

A. Division of Benefits and Expenses

Unless they agree otherwise by contract, co-tenants are entitled to

share the benefits of the property and obligated to share its burdens. If
there is a dispute regarding these, a tenant can seek a judicial accounting,
either during co-ownership or in determining division of proceeds in a
partition action or voluntary sale, to require their co-owners to pay their
portions of required expenses or to force co-owners to hand over profits
from the property.
Possession. The right of possession is a key benefit. Each co-owner
has the right to possess the entire parcel. If one co-owner chooses to live in
the commonly owned property and the other co-owner chooses not to live
there, in most states the tenant in possession has no duty to pay rent to the
non-possessing tenant. Joint tenants and tenants in common only have a
duty to pay rent to their co-owners if they have committed ouster, an
explicit act by which one co-owner excludes others from the jointly owned
property. Note that the amount of rent owed is the fractional share of the
rental value owned by the co-owners out of possession; a co-owner with a
one-third interest in possession would have to pay only two-thirds of the
fair rental value of the property to her co-owners out of possession.
Profits. In addition to sharing the right to possess the property, co-
owners are entitled to share any rents or other profits from the property.
The share of profits belonging to each co-owner is based on that owner’s
fractional interest in the property. For example, suppose A and B own a
condominium unit as tenants in common, with a one-quarter interest in A
and a three-quarters interest in B. They rent the unit to C. A has a right to
one-quarter of the rents paid by C, and B has a right to three-quarters of the

900
rents paid by C, unless A and B agree otherwise. Tenants also share profits
on sale or partition of the property according to their respective fractional
interests.
Burdens. Co-owners generally have a duty to share basic expenses
needed to keep the property, including mortgage payments, property taxes
and other assessments, and property insurance, in accordance with their
respective shares. Co-owners generally also have a duty to share basic
maintenance and necessary repairs of the premises. See Palanza v. Lufkin,
804 A.2d 1141 (Me. 2002), abrogated on other grounds, Wicks v. Conroy,
77 A.3d 479 (Me. 2013) (approving contribution toward necessary repairs,
even though some had cosmetic effects). Some jurisdictions, however,
require a tenant to provide co-tenants with notice and opportunity to object
to the repairs in order to demand contribution. See Anderson v. Joseph, 26
A.3d 1050, 1056-1057 (Md. Ct. Spec. App. 2011) (denying contribution
for basement repairs to deal with “massive flooding” because of failure to
provide notice). Co-owners have no duty to share the costs of
improvements to the property unless they agree to do so.2 Improving
tenants may only claim the amount by which the improvement increases
the value of the property at partition or sale. Thus tenants paying for work
on a property that is determined not to be necessary may only demand
contribution on sale or partition, and then only up to the amount the work
is shown to improve the value of the property.
In most states, a co-owner who exclusively possesses the premises
must bear the entire burden of expenses (including taxes, repairs, and
mortgage payments) if the value of her occupation of the premises exceeds
those payments. If the share of expenses that would ordinarily be borne by
the tenants out of possession is less than the rental value belonging to the
tenants out of possession, no action for contribution may be brought.
Barrow v. Barrow, 527 So. 2d 1373 (Fla. 1988); William B. Stoebuck &
Dale A. Whitman, The Law of Property §5.9, at 209 (3d ed. 2000). This
principle substantially qualifies the rule that co-tenants who are occupying
the premises have no duty to pay rent to the co-owners who are not
occupying the property. Although a co-tenant out of possession cannot sue
a co-tenant in possession for rent, a tenant in possession can sue her co-
tenants out of possession only for their share of expenses that exceeds the
fair rental value to which they would be entitled if the property were
leased out to a third party. See Esteves v. Esteves, 775 A.2d 163 (N.J.
Super. Ct. App. Div. 2001) (holding that in accounting after house was
sold, parents who occupied the house for 18 years were entitled to be
reimbursed by son for one-half of expenses of mortgage and maintenance

901
but son was allowed a credit against that amount equal to the reasonable
value of his parents’ sole occupancy of the property).

Problems
1. A and B own equal shares in an apartment as tenants in common. B
lives in another state, but A lives in the apartment, whose rental value is
$1,000 per month. B refuses to contribute to paying the mortgage, property
taxes, and insurance on the apartment. A sues B for an accounting and
contribution to these carrying costs. What result if the carrying costs are
$500 per month? What result if these costs are $1,200 per month?
2. A and B live in a house in which they own equal shares as joint
tenants. B builds a third bathroom in the house at a cost of $10,000 and
seeks contribution from A. What result? The property is later sold for
$200,000. How should the proceeds be divided if the bathroom is
estimated to enhance the value of the property by $15,000? What if the
bathroom only enhanced the value of the property by $8,000?

B. Conflicts over Rent and Possession

Olivas v. Olivas

780 P.2d 640 (N.M. Ct. App. 1989)

HARRIS L. HARTZ, Judge.
Respondent Sam Olivas (husband) appeals the property division in a
divorce action. Petitioner Carolina Olivas (wife) and husband were
divorced by a partial decree entered December 18, 1984. The district court
did not enter its final order dividing property until August 31, 1987. The
issues in this appeal arise, for the most part, as a consequence of the
unusually lengthy delay between the divorce decree and the property
division.
Husband and wife separated in June 1983, about two months before
wife filed her petition for dissolution of marriage. The district court found
that husband “chose to move out of the family home, and he then
maintained another home where he also had his office for his business.”
Husband contends that the district court erred in failing to find that he had
been constructively ousted from the family home. He requested findings
and conclusions that the constructive ouster by his wife entitled him to half
of the reasonable rental value of the home from the time of the initial
separation.
Husband and wife held the family home as community property during

902
the marriage and as tenants in common after dissolution. Although wife
was the exclusive occupant of the house after the separation, ordinarily a
co-tenant incurs no obligation to fellow co-tenants by being the exclusive
occupant of the premises.

[I]t is a well-settled principle of the common law that the mere occupation by
a tenant of the entire estate does not render him liable to his co-tenant for the
use and occupation of any part of the common property. The reason is easily
found. The right of each to occupy the premises is one of the incidents of a
tenancy in common. Neither tenant can lawfully exclude the other. The
occupation of one, so long as he does not exclude the other, is but the
exercise of a legal right. If, for any reason, one does not choose to assert the
right of common enjoyment, the other is not obliged to stay out; and if the
sole occupation of one could render him liable there for to the other, his legal
right to the occupation would be dependent upon the caprice or indolence of
his co-tenant, and this the law would not tolerate. Williams v. Sinclair
Refining Co., 47 P.2d 910, 912 (N.M. 1935).

The result is otherwise, however, when the occupant has ousted the
other co-tenants. Although the term “ouster” suggests an affirmative
physical act, even a reprehensible act, the obligation of the occupying co-
tenant to pay rent may arise in the absence of “actual” ouster when the
realities of the situation, without there being any fault by either co-tenant,
prevent the co-tenants from sharing occupancy. 4 G. Thompson, Real
Property §1805, at 189 (J. Grimes Repl. 1979), states:

[B]efore a tenant in common can be liable to his co-tenants for rent for the
use and occupation of the common property, his occupancy must be such as
amounts to a denial of the right of his co-tenants to occupy the premises
jointly with him, or the character of the property must be such as to make
such joint occupancy impossible or impracticable. [Emphasis added.]

We believe that it was this latter type of situation — an “ouster” in

effect, without any physical act and perhaps without any fault — to which
the New Mexico Supreme Court was referring when it recognized the
doctrine of “constructive ouster” in the marital context in Hertz v. Hertz,
657 P.2d 1169 (N.M. 1983). The court wrote:

[I]f one of the parties in a divorce case remains in possession of the

community residence between the date of the divorce and the date of the
final judgment dividing the community assets, then there may be a form of
constructive ouster, exclusion, or an equivalent act which is created as to the
right of common enjoyment by the divorced spouse not in possession. This

903
 exclusion may render the divorced spouse in possession of the community
residence liable to the divorced spouse not in possession for the use and
occupation of the residence between the date of the divorce and the date of
the final judgment. To hold otherwise would mean that both divorced
spouses should have continued to live with each other during the eighteen
month interim or that both should have abandoned the property. 657 P.2d at
1179.

Applying the notion of constructive ouster in the marital context is

simply another way of saying that when the emotions of a divorce make it
impossible for spouses to continue to share the marital residence pending a
property division, the spouse who — often through mutual agreement —
therefore departs the residence may be entitled to rent from the remaining
spouse. Although one can say that the departing spouse has been
constructively “ousted,” the term should not suggest physical misconduct,
or any fault whatsoever, on the part of the remaining spouse.
Common law precedents support the proposition that the remaining
spouse should pay rent to the co-tenant when both cannot be expected to
live together on the property. For example, when it is impractical for all
co-tenants to occupy the premises jointly, it is unnecessary that those
claiming rent from the co-tenant in possession first demand the right to
move in and occupy the premises. See Oechsner v. Courcier, 155 S.W.2d
963 (Tex. Civ. App. 1941) (applying that principle when five heirs, with
separate families totalling twenty-two members, were co-tenants of a five-
room cottage being occupied by one of the families). The impracticality of
joint occupancy by the co-tenants may result from the relations between
the co-tenants becoming “so strained and bitter that they could not
continue to reside together in peace and concord.” Maxwell v. Eckert, 109
A. 730, 731 (N.J. Eq. 1920). If, however, hostility flows only from the co-
tenant out of possession, ordinarily there would be no constructive ouster.
See O’Connell v. O’Connell, 117 A. 634 (N.J. Eq. 1922) (wife left home
and refused to return despite solicitation by husband). In that circumstance
the departing spouse has “abandoned” his or her interest in possession,
rather than being excluded.
One jurisdiction has gone so far as to create a rebuttable presumption
of ouster of the spouse who moves out of the former marital residence
upon divorce. See Stylianopoulos v. Stylianopoulos, 455 N.E.2d 477
(Mass. App. Ct. 1983).
Husband had the burden of proving constructive ouster in this case.
Therefore, we must sustain the district court’s ruling against husband
unless the evidence at trial was such as to compel the district court to find

904
ouster. Although the evidence of hostility between the spouses may have
sustained a finding by the district court of constructive ouster, there was
substantial evidence to support the inference that husband’s purpose in
leaving the community residence was to live with a girlfriend and his
departure was the reason wife filed for divorce; he was not pushed out but
pulled. Also, the delay of several years before husband demanded any rent
from wife supports an inference of abandonment of his interest in
occupancy. In short, the evidence was conflicting and did not compel a
finding of constructive ouster.
We recognize the ambiguity in the district court’s finding that
defendant “chose to move out.” Such language could be consistent with
husband’s departure being the result of marital friction, in which case there
generally would be constructive ouster. On the other hand, the language
could also be construed as referring to husband’s abandoning the home to
live with another woman. We choose the second construction of the
finding, because “[i]n the case of uncertain, doubtful or ambiguous
findings, an appellate court is bound to indulge every presumption to
sustain the judgment.” Ledbetter v. Webb, 711 P.2d 874, 879 (N.M. 1985).
Moreover, it appeared from oral argument before this court that the issue
of constructive ouster was framed in the district court in essentially the
same manner as treated in this opinion. Therefore, we are comfortable in
assuming that the district court applied the proper rule of law and in
construing the district court’s finding compatibly with its rejection of
husband’s proposed conclusion of law that there was a constructive ouster.

Notes and Questions

1. Different approaches to occupancy after divorce. Like the New
Mexico courts, some courts adopt a version of the constructive ouster
doctrine to require separated spouses to pay rent (equal to one-half the fair
rental value) to the spouse who is no longer living at home. In re Marriage
of Watts, 217 Cal. Rptr. 301 (Ct. App. 1985) (court may order husband to
reimburse community for exclusive use of residence after separation);
Palmer v. Protrka, 476 P.2d 185, 190 (Or. 1970) (when marital difficulties
make co-occupancy impossible, requiring occupant to pay one-half of
rental value seems closest to parties’ intentions when they took title).
Other courts, however, refuse to make an exception for marital property
and hold that co-tenants in possession have no duty to pay rent unless they
have affirmatively ousted their spouse by notifying them of an intent to
exclude them from the joint property. See Hughes v. Krueger, 67 So. 2d
279 (Fla. 2011) (although divorced spouses “did not think highly of each

905
other,” husband never affirmatively excluded his ex-wife); Kahnovsky v.
Kahnovsky, 21 A.2d 569 (R.I. 1941) (finding no ouster, although
“separation was the result of marital difference”); cf. Curtis v. Dorn, 234
P.3d 682 (Haw. 2010) (absent explicit ouster, tenant who left residence
after his relationship with his partner ended could not claim rent).
Which approach is preferable? As the attorney for one of the parties in
a divorce setting, how can you avoid this problem?
2. Property impracticable for occupancy by all co-tenants. Some
courts also hold that co-owners in possession have a duty to pay rent if the
property is too small or otherwise impracticable to be physically occupied
by all the co-owners. This situation is sometimes described as
“constructive ouster” because the co-owners out of possession have been
effectively excluded from the property. See Capital Financial Co.
Delaware Valley, Inc. v. Asterbadi, 942 A.2d 21 (N.J. Super. App. Div.
2008) (bank that had become co-tenant through foreclosure with wife of
defaulting mortgagor was constructively ousted from single-family
residence).
3. Rent without ouster. Absent constructive ouster, most states
require some affirmative act by which one party excludes the other. Parker
v. Shecut, 562 S.E.2d 620 (S.C. 2002) (ouster shown when brother
changed the locks on the door and refused to give his sister a key). A few
courts, however, permit tenants out of possession to receive rent without
proving ouster. Modic v. Modic, 633 N.E.2d 1151 (Ohio App. 1993)
(construing Ohio Rev. Code §5307.21 to permit rent to co-tenant out of
possession of jointly owned business); see also Lerman v. Levine, 541
A.2d 523 (Conn. App. 1988) (construing Conn. Gen. Stat. §52-404(b))
(mother was entitled to set off for use and occupancy by her daughter and
son-in-law after she voluntarily left the property).Which is the better rule?
4. Adverse possession. Because each tenant is legally entitled to
occupy the property, one co-tenant cannot obtain adverse possession
against another unless the possessing tenant makes clear to the
nonpossessory tenant that he is asserting full ownership rights in the
property to the exclusion of the other co-tenants. The courts generally
require some affirmative act by which the nonpossessory tenant is put on
notice that her co-owner is claiming adversely to the nonpossessory
tenant’s interests. See O’Connor v. Laroque, 31 A.3d 1 (Conn. 2011) (no
adverse possession despite 27 years of sole possession in the absence of
“unequivocal” evidence of ouster).
5. Trespass. May one owner prevent another from receiving visitors in

906
jointly owned property? Since each co-tenant possesses the whole, each is
entitled to invite others onto the premises even if their co-owners object.
But in Georgia v. Randolph, 547 U.S. 103 (2006), the Supreme Court held
that the fourth amendment prohibited admission of evidence found after a
wife gave the police permission to search the house for drugs, but her
husband refused to allow them to enter. The Court held that the prohibition
on unreasonable search and seizure prohibits entry over the objections of a
physically present resident, even if his co-owner consents. Justice Souter
explained:

[I]t is fair to say that a caller standing at the door of shared premises would
have no confidence that one occupant’s invitation was a sufficiently good
reason to enter when a fellow tenant stood there saying, “stay out.” Without
some very good reason, no sensible person would go inside under those
conditions.
Since the co-tenant wishing to open the door to a third party has no
recognized authority in law or social practice to prevail over a present and
objecting co-tenant, his disputed invitation, without more, gives a police
officer no better claim to reasonableness in entering than the officer would
have in the absence of any consent at all.

Id. at 113-114. Do you agree?

Problems
A woman lives with an abusive husband who has struck her several
times.
1. The wife moves out after suffering battery at his hands. The husband
asks her to return, but she refuses. They are separated for two years, then
divorced. The wife sues the husband for one-half of the fair rental value of
the house during the two-year period. Is the husband obligated to pay one-
half the fair rental value of the house to the wife?
2. Now assume that, instead of the wife leaving, she throws the
husband out of the house after the battery and tells him not to come back.
They are separated for two years, then divorced. In the divorce
proceedings, the wife is awarded ownership of the house. The husband
argues that he is entitled to one-half of the fair rental value of the home for
the period beginning with his ouster from the home until the divorce date.
Is she obligated to pay rent to him? What are the arguments on both sides
of this question? What do you think? Is this case the same as the case in
Problem 1 above or not? See Cohen v. Cohen, 746 N.Y.S.2d 22, 23 (App.
Div. 2002) (ousted co-tenant has no right to rent for period covered by

907
court protective order excluding him from the property when tenant in
possession had obtained that order because of co-tenant’s assaultive
conduct).

C. Conflicts over Unilateral Transfers in Tenancy in Common and

Joint Tenancy

Carr v. Deking

765 P.2d 40 (Wash. Ct. App. 1988)

DALE M. GREEN, Judge.
Joel Carr and his father, George Carr, now deceased, owned a parcel of
land in Lincoln County as tenants in common. From 1974 through 1986
the Carrs leased the land to Richard Deking pursuant to a year-to-year oral
agreement receiving one-third of the annual crop as rent. The Carrs paid
for one-third of the fertilizer. In 1986, Joel Carr informed Mr. Deking he
wanted cash rent beginning with the 1987 crop year. Mr. Deking was not
receptive to this proposal.
In February 1987 Joel Carr wrote a letter to Mr. Deking to determine if
he wanted to continue leasing the property. Mr. Deking did not respond.
Instead he discussed the lease with George Carr. On February 18 Joel Carr
went to his father’s home and found Mr. Deking there discussing a
possible 5-year lease. Joel Carr again indicated he wanted cash rent. Later
that day, unbeknownst to Joel Carr, Mr. Deking and George Carr executed
a written 10-year crop-share lease at the office of Mr. Deking’s attorney.
Under this lease, Mr. Deking agreed to pay all fertilizer costs. Joel Carr
neither consented to nor ratified this lease and never authorized George
Carr to act on his behalf.
In April Joel Carr gave notice to Mr. Deking that his tenancy would
terminate at the end of the 1987 crop year. Mr. Deking responded that he
would retain possession pursuant to the written lease with George Carr. In
July Joel Carr commenced this action to declare that no valid lease existed,
Mr. Deking had no right to farm the land and he should be required to
vacate the land at the end of the 1987 crop year.
Joel Carr contends [that] the rights of Mr. Deking as lessee are
subordinate to those of a nonjoining tenant in common. He argues public
policy should prevent prospective lessees from going behind the back of
one tenant in common to obtain a more favorable lease from the other.
On the other hand, it is Mr. Deking’s position that George Carr could
lawfully enter into a lease with respect to his own undivided one-half
interest in the property, and Joel Carr was not entitled to bring an

908
ejectment action to which George Carr did not agree. He asserts the proper
remedy is partition, not ejectment.
It is well settled that each tenant in common of real property may use,
benefit and possess the entire property subject only to the equal rights of
cotenants. Thus, a cotenant may lawfully lease his own interest in the
common property to another without the consent of the other tenant and
without his joining in the lease. The nonjoining cotenant is not bound by
this lease of the common property to third persons. The lessee “steps into
the shoes” of the leasing cotenant and becomes a tenant in common with
the other owners for the duration of the lease. A nonjoining tenant may not
demand exclusive possession as against the lessee, but may only demand
to be let into co-possession.
Applying these principles, we find Joel Carr is not entitled to eject Mr.
Deking from the property. The proper remedy is partition and until that
occurs, Mr. Deking is entitled to farm the land under the lease. There is no
indication that this property is not amenable to physical partition. Joel Carr
clearly has the right to that remedy. Joel Carr cites no authority and none
has been found which would render the lease ineffective as between the
estate of George Carr and Mr. Deking.
In view of our holding that the trial court properly denied Joel Carr’s
effort to eject Mr. Deking, Joel Carr is entitled to the benefit of the
Deking-George Carr lease, at his election, until a partition of the property
occurs. However, Joel Carr cannot claim the benefits contained in the
Deking-George Carr lease without also accepting the other terms of that
lease. Consequently, we remand to the trial court to determine Joel Carr’s
election choice [between] the prior oral lease with Mr. Deking [and] the
Deking-George Carr lease.

Tenhet v. Boswell

554 P.2d 330 (Cal. 1976)

STANLEY MOSK, Justice.
A joint tenant leases his interest in the joint tenancy property to a third
person for a term of years, and dies during that term. We conclude that the
lease does not sever the joint tenancy, but expires upon the death of the
lessor joint tenant.
Raymond Johnson and plaintiff Hazel Tenhet owned a parcel of
property as joint tenants. Assertedly without plaintiff’s knowledge or
consent, Johnson leased the property to defendant Boswell for a period of
10 years at a rental of $150 per year with a provision granting the lessee an

909
“option to purchase.”3 Johnson died some three months after execution of
the lease, and plaintiff sought to establish her sole right to possession of
the property as the surviving joint tenant. After an unsuccessful demand
upon defendant to vacate the premises, plaintiff brought this action to have
the lease declared invalid.

II
An understanding of the nature of a joint interest in this state is
fundamental to a determination of the question whether the present lease
severed the joint tenancy. Civil Code section 683 provides in part: “A joint
interest is one owned by two or more persons in equal shares, by a title
created by a single will or transfer, when expressly declared in the will or
transfer to be a joint tenancy.” This statute, requiring an express
declaration for the creation of joint interests, does not abrogate the
common law rule that four unities are essential to an estate in joint
tenancy: unity of interest, unity of time, unity of title, and unity of
possession.
The requirement of four unities reflects the basic concept that there is
but one estate which is taken jointly; if an essential unity is destroyed the
joint tenancy is severed and a tenancy in common results. Accordingly,
one of two joint tenants may unilaterally terminate the joint tenancy by
conveying his interest to a third person. Severance of the joint tenancy, of
course, extinguishes the principal feature of that estate — the jus
accrescendi or right of survivorship. Thus, a joint tenant’s right of
survivorship is an expectancy that is not irrevocably fixed upon the
creation of the estate; it arises only upon success in the ultimate gamble —
survival — and then only if the unity of the estate has not theretofore been
destroyed by voluntary conveyance, by involuntary alienation under an
execution, or by any other action which operates to sever the joint tenancy.
Our initial inquiry is whether the partial alienation of Johnson’s
interest in the property effected a severance of the joint tenancy under
these principles. It could be argued that a lease destroys the unities of
interest and possession because the leasing joint tenant transfers to the
lessee his present possessory interest and retains a mere reversion.
Moreover, the possibility that the term of the lease may continue beyond
the lifetime of the lessor is inconsistent with a complete right of
survivorship.
On the other hand, if the lease entered into here by Johnson and
defendant is valid only during Johnson’s life, then the conveyance is more
a variety of life estate pur [sic] autre vie than a term of years. Such a result

910
is inconsistent with Johnson’s freedom to alienate his interest during his
lifetime.
We are mindful that the issue here presented is “an ancient
controversy, going back to Coke and Littleton.” Yet the problem is like a
comet in our law: Though its existence in theory has been frequently
recognized, its observed passages are few. Some authorities support the
view that a lease by a joint tenant to a third person effects a complete and
final severance of the joint tenancy.
Others adopt a position that there is a temporary severance during the
term of the lease. If the lessor dies while the lease is in force, under this
view the existence of the lease at the moment when the right of
survivorship would otherwise take effect operates as a severance,
extinguishing the joint tenancy. If, however, the term of the lease expires
before the lessor, it is reasoned that the joint tenancy is undisturbed
because the joint tenants resume their original relation. The single
conclusion that can be drawn from centuries of academic speculation on
the question is that its resolution is unclear.
As we shall explain, it is our opinion that a lease is not so inherently
inconsistent with joint tenancy as to create a severance, either temporary or
permanent.
Under Civil Code sections 683 and 686 a joint tenancy must be
expressly declared in the creating instrument, or a tenancy in common
results. This is a statutory departure from the common law preference in
favor of joint tenancy. Inasmuch as the estate arises only upon express
intent, and in many cases such intent will be the intent of the joint tenants
themselves, we decline to find a severance in circumstances which do not
clearly and unambiguously establish that either of the joint tenants desired
to terminate the estate.
If plaintiff and Johnson did not choose to continue the joint tenancy,
they might have converted it into a tenancy in common by written mutual
agreement. They might also have jointly conveyed the property to a third
person and divided the proceeds. Even if they could not agree to act in
concert, either plaintiff or Johnson might have severed the joint tenancy,
with or without the consent of the other, by an act which was clearly
indicative of an intent to terminate, such as a conveyance of her or his
entire interest. Either might also have brought an action to partition the
property, which, upon judgment, would have effected a severance.
Because a joint tenancy may be created only by express intent, and
because there are alternative and unambiguous means of altering the nature
of that estate, we hold that the lease here in issue did not operate to sever
the joint tenancy.

911
 III
Having concluded that the joint tenancy was not severed by the lease
and that sole ownership of the property therefore vested in plaintiff upon
her joint tenant’s death by operation of her right of survivorship, we turn
next to the issue whether she takes the property unencumbered by the
lease.
By the very nature of joint tenancy, the interest of the nonsurviving
joint tenant extinguishes upon his death. And as the lease is valid only “in
so far as the interest of the lessor in the joint property is concerned,” it
follows that the lease of the joint tenancy property also expires when the
lessor dies.
This conclusion is borne out by decisions in this state involving liens
on and mortgages of joint tenancy property. In Zeigler v. Bonnell, 126 P.2d
118 (Cal. Ct. App. 1942), the Court of Appeal ruled that a surviving joint
tenant takes an estate free from a judgment lien on the interest of a
deceased cotenant judgment debtor. The court reasoned that “The right of
survivorship is the chief characteristic that distinguishes a joint tenancy
from other interests in property. The judgment lien of (the creditor) could
attach only to the interest of his debtor. That interest terminated upon [the
debtor’s] death.” Id. at 119. After his death “the deceased joint tenant had
no interest in the property, and his judgment creditor has no greater
rights.” Id. at 120.
A similar analysis was followed in People v. Nogarr, 330 P.2d 858
(Cal. Ct. App. 1958), which held that upon the death of a joint tenant who
had executed a mortgage on the tenancy property, the surviving joint
tenant took the property free of the mortgage. The court reasoned that “as
the mortgage lien attached only to such interest as [the deceased joint
tenant] had in the real property[,] when his interest ceased to exist the lien
of the mortgage expired with it.”
As these decisions demonstrate, a joint tenant may, during his lifetime,
grant certain rights in the joint property without severing the tenancy. But
when such a joint tenant dies his interest dies with him, and any
encumbrances placed by him on the property become unenforceable
against the surviving joint tenant. For the reasons stated a lease falls within
this rule.
Any other result would defeat the justifiable expectations of the
surviving joint tenant. Thus, if A agrees to create a joint tenancy with B, A
can reasonably anticipate that when B dies A will take an unencumbered
interest in fee simple. During his lifetime, of course, B may sever the
tenancy or lease his interest to a third party. But to allow B to lease for a

912
term continuing after his death would indirectly defeat the very purposes
of the joint tenancy. For example, for personal reasons B might execute a
99-year lease on valuable property for a consideration of one dollar a year.
A would then take a fee simple on B’s death, but would find his right to
use the property — and its market value — substantially impaired. This
circumstance would effectively nullify the benefits of the right of
survivorship, the basic attribute of the joint tenancy.
On the other hand, we are not insensitive to the potential injury that
may be sustained by a person in good faith who leases from one joint
tenant. In some circumstances a lessee might be unaware that his lessor is
not a fee simple owner but merely a joint tenant, and could find himself
unexpectedly evicted when the lessor dies prior to expiration of the lease.
This result would be avoided by a prudent lessee who conducts a title
search prior to leasing, but we appreciate that such a course would often be
economically burdensome to the lessee of a residential dwelling or a
modest parcel of property. Nevertheless, it must also be recognized that
every lessee may one day face the unhappy revelation that his lessor’s
estate in the leased property is less than a fee simple. For example, a lessee
who innocently rents from the holder of a life estate is subject to risks
comparable to those imposed upon a lessee of joint tenancy property.
More significantly, we cannot allow extraneous factors to erode the
functioning of joint tenancy. The estate of joint tenancy is firmly
embedded in centuries of real property law and in the California statute
books. Its crucial element is the right of survivorship, a right that would be
more illusory than real if a joint tenant were permitted to lease for a term
continuing after his death. Accordingly, we hold that under the facts
alleged in the complaint the lease herein is no longer valid.

Notes and Questions

1. Leases by one co-owner. Should common owners have the right to
lease the premises without the consent of the co-tenants? Is the rule
promulgated in Carr v. Deking a good one?
2. Remedies for leases by one co-tenant. The court in Carr v. Deking
held that George Carr had the power to lease his one-half interest without
Joel’s consent. But in conclusion, it suggests that the son, Joel Carr, is
“entitled to the benefit of the Deking-George Carr lease, at his election”
until partition. Other courts have also held that a co-owner has a right to
choose to participate in the lease and obtain his proportional share of the
rent. American Standard Life & Accident Insurance Co. v. Speros, 494
N.W.2d 599 (N.D. 1993). Doesn’t this assume that the agreed-upon rent is

913
close to the fair rental value of the premises? Suppose Joel could show that
the agreed-upon rent in the Deking-George Carr lease was only two-thirds
of the fair rental value and had been discounted (reduced) because Deking
knew he had the consent of only one of two joint owners. Is either George
or Joel entitled to an increase in the rent to make it reflect its fair rental
value? Couldn’t Joel force Deking to agree to such an increase by
threatening to partition the property? If so, should Deking be required to
pay fair rental value rather than the agreed-upon rent if he wishes to avoid
partition? Cf. George v. George, 591 S.W.2d 655 (Ark. Ct. App. 1979)
(setting aside 99-year lease for nominal rent that court found was intended
to defraud the co-tenant).
3. Leases by one joint tenant and the right of survivorship. Courts
are divided on the question of whether leases sever joint tenancies. Justice
Mosk argues in Tenhet v. Boswell that “a lease is not so inherently
inconsistent with joint tenancy as to create a severance.” Isn’t this circular
reasoning? How does it help to ask whether a lease is consistent or
inconsistent with something that the court is being asked to define? Cf. In
re Estate of Quick, 905 A.2d 471 (Pa. 2006) (finding leases did not sever
joint tenancy where they did not reflect intent to do so). Compare the
analysis in Alexander v. Boyer, 253 A.2d 359 (Md. 1969), in which the
court held, contrary to Tenhet v. Boswell, that a lease by one joint tenant
severs the joint tenancy. Judge Barnes explained that when the joint tenant
“conveyed her possessory rights in the land” to a lessee for a term of years,
she “thereby chang[ed] the nature of her ‘interest’ in the land from a
present interest to a reversionary interest.” In so doing, she parted with “all
of her possessory rights for the term of the lease,” thereby “destroy[ing]
the unities of interest and possession in the joint tenancy” and terminating
it. Id. at 365. Accord, Estate of Gulledge, 673 A.2d 1278 (D.C. 1996). Is
this explanation any less circular than that of Justice Mosk? What policies
are relevant in answering the question whether a leasehold by one joint
tenant destroys the right of survivorship of the other?
It might be argued that joint tenants have no justified expectations in
their right of survivorship since it is so highly contingent on events that
may not happen. After all, it can be lost if one dies first or if one’s co-
owner sells her interest in the property. On one hand, allowing severance
may increase the alienability of property, especially if the court holds that
leases given by one joint tenant do not survive the death of the lessor; few
people will rent property if they know their possessory rights will end as
soon as their landlord dies. On the other hand, the right of survivorship
may increase the alienability of the property by decreasing the number of

914
owners from two to one. This makes it easier for the property to be bought
and sold since a potential lessee or buyer does not have to worry about
obtaining the consent of more than one person. Which rule better promotes
the reasonable use of property? How should the courts balance the right of
each tenant to transfer her interest (a right of freedom of action) against the
right of the co-owner to her right of survivorship (a right of security
against loss of her property interest)?
4. Mortgages and the right of survivorship. Courts are also divided
on the question of whether mortgages sever joint tenancies. Most states
describe the borrower who grants the mortgage as the owner or title holder
and the bank or lender who takes the mortgage as a “lienholder,” with a
right to possess the property only if the borrower defaults. In such states,
courts typically hold that a mortgage by one tenant does not sever the joint
tenancy. Foreclosure during the life of the tenant would sever the tenancy
and create a tenancy in common between the non-borrowing tenant and the
bank. If the borrowing tenant dies before foreclosure, however, the
surviving co-tenant receives the entire property unburdened by the
mortgage. See Biggers v. Crook, 656 S.E.2d 835 (Ga. 2008); Harms v.
Sprague, 473 N.E.2d 930 (Ill. 1984); Smith v. Bank of America, 103
A.D.3d 21 (N.Y. App. Div. 2012). But see General Credit Co. v. Cleck,
609 A.2d 553 (Pa. Super. 1992) (holding that mortgage severed joint
tenancy relying on 1806 decision from before Pennsylvania became a lien
theory state).
A minority of states retain the older “title” theory, in which the lender
takes title to the property, subject to an “equity of redemption” in the
borrower who grants the mortgage. Some courts in title theory states
consider a mortgage to be a transfer of ownership that has the effect of
severing the joint tenancy, see Schaefer v. Peoples Heritage Savings Bank,
669 A.2d 185 (Me. 1996), although others do not. Countrywide Home
Loans, Inc. v. Reed, 725 S.E.2d 667 (N.C. Ct. App. 2012). There is no
substantive difference between “lien” theory states and “title” theory
states; the difference today is merely verbal. Assuming that the question of
severance should not depend on such a flimsy argument, how should the
case have been decided, and why?

D. Conflicts over Unilateral Transfers in Tenancies by the Entirety

Sawada v. Endo

561 P.2d 1291 (Haw. 1977)

915
BENJAMIN MENOR, Justice.
This is a civil action brought by the plaintiffs-appellants, Masako
Sawada and Helen Sawada, in aid of execution of money judgments in
their favor, seeking to set aside a conveyance of real property from
judgment debtor Kokichi Endo to Samuel H. Endo and Toru Endo,
defendants-appellees herein, on the ground that the conveyance as to the
Sawadas was fraudulent.
On November 30, 1968, the Sawadas were injured when struck by a
motor vehicle operated by Kokichi Endo. On June 17, 1969, Helen Sawada
filed her complaint for damages against Kokichi Endo. Masako Sawada
filed her suit against him on August 13, 1969. The complaint and
summons in each case was served on Kokichi Endo on October 29, 1969.
On the date of the accident, Kokichi Endo was the owner, as a tenant
by the entirety with his wife, Ume Endo, of a parcel of real property situate
at Wahiawa, Oahu, Hawai`i. By deed, dated July 26, 1969, Kokichi Endo
and his wife conveyed the property to their sons, Samuel H. Endo and
Toru Endo. This document was recorded in the Bureau of Conveyances on
December 17, 1969. No consideration was paid by the grantees for the
conveyance. Both were aware at the time of the conveyance that their
father had been involved in an accident, and that he carried no liability
insurance. Kokichi Endo and Ume Endo, while reserving no life interests
therein, continued to reside on the premises.
On January 19, 1971, after a consolidated trial on the merits, judgment
was entered in favor of Helen Sawada and against Kokichi Endo in the
sum of $8,846.46. At the same time, Masako Sawada was awarded
judgment on her complaint in the amount of $16,199.28. Ume Endo, wife
of Kokichi Endo, died on January 29, 1971. She was survived by her
husband, Kokichi. Subsequently, after being frustrated in their attempts to
obtain satisfaction of judgment from the personal property of Kokichi
Endo, the Sawadas brought suit to set aside the conveyance which is the
subject matter of this controversy. The trial court refused to set aside the
conveyance, and the Sawadas appeal.
The determinative question in this case is, whether the interest of one
spouse in real property, held in tenancy by the entireties, is subject to levy
and execution by his or her individual creditors. This issue is one of first
impression in this jurisdiction.
A brief review of the present state of the tenancy by the entirety might
be helpful. Dean Phipps, writing in 1951,4 pointed out that only nineteen
states and the District of Columbia continued to recognize it as a valid and
subsisting institution in the field of property law. Phipps divided these
jurisdictions into four groups. He made no mention of Alaska and Hawai`i,

916
both of which were then territories of the United States.
In the Group I states (Massachusetts, Michigan, and North Carolina)
the estate is essentially the common law tenancy by the entireties,
unaffected by the Married Women’s Property Acts. As at common law, the
possession and profits of the estate are subject to the husband’s exclusive
dominion and control. In all three states, as at common law, the husband
may convey the entire estate subject only to the possibility that the wife
may become entitled to the whole estate upon surviving him. As at
common law, the obverse as to the wife does not hold true. Only in
Massachusetts, however, is the estate in its entirety subject to levy by the
husband’s creditors. In both Michigan and North Carolina, the use and
income from the estate is not subject to levy during the marriage for the
separate debts of either spouse.
In the Group II states (Alaska, Arkansas, New Jersey, New York, and
Oregon) the interest of the debtor spouse in the estate may be sold or
levied upon for his or her separate debts, subject to the other spouse’s
contingent right of survivorship. Alaska, which has been added to this
group, has provided by statute that the interest of a debtor spouse in any
type of estate, except a homestead as defined and held in tenancy by the
entirety, shall be subject to his or her separate debts.
In the Group III jurisdictions (Delaware, District of Columbia, Florida,
Indiana, Maryland, Missouri, Pennsylvania, Rhode Island, Vermont,
Virginia, and Wyoming) an attempted conveyance by either spouse is
wholly void, and the estate may not be subjected to the separate debts of
one spouse only.
In Group IV, the two states of Kentucky and Tennessee hold that the
contingent right of survivorship appertaining to either spouse is separately
alienable by him and attachable by his creditors during the marriage. The
use and profits, however, may neither be alienated nor attached during
coverture.
It appears, therefore, that Hawai`i is the only jurisdiction still to be
heard from on the question. Today we join that group of states and the
District of Columbia which hold that under the Married Women’s Property
Acts the interest of a husband or a wife in an estate by the entireties is not
subject to the claims of his or her individual creditors during the joint lives
of the spouses. In so doing, we are placing our stamp of approval upon
what is apparently the prevailing view of the lower courts of this
jurisdiction.
Hawai`i has long recognized and continues to recognize the tenancy in
common, the joint tenancy, and the tenancy by the entirety, as separate and
distinct estates. That the Married Women’s Property Act of 1888 was not

917
intended to abolish the tenancy by the entirety was made clear by the
language of Act 19 of the Session Laws of Hawai`i, 1903 (now Haw. Rev.
Stat. §509-1). The tenancy by the entirety is predicated upon the legal
unity of husband and wife, and the estate is held by them in single
ownership. They do not take by moieties, but both and each are seized of
the whole estate.
A joint tenant has a specific, albeit undivided, interest in the property,
and if he survives his cotenant he becomes the owner of a larger interest
than he had prior to the death of the other joint tenant. But tenants by the
entirety are each deemed to be seized of the entirety from the time of the
creation of the estate. At common law, this taking of the “whole estate”
did not have the real significance that it does today, insofar as the rights of
the wife in the property were concerned. For all practical purposes, the
wife had no right during coverture to the use and enjoyment and exercise
of ownership in the marital estate. All she possessed was her contingent
right of survivorship.
The effect of the Married Women’s Property Acts was to abrogate the
husband’s common law dominance over the marital estate and to place the
wife on a level of equality with him as regards the exercise of ownership
over the whole estate. The tenancy was and still is predicated upon the
legal unity of husband and wife, but the Acts converted it into a unity of
equals and not of unequals as at common law. No longer could the
husband convey, lease, mortgage or otherwise encumber the property
without her consent. The Acts confirmed her right to the use and
enjoyment of the whole estate, and all the privileges that ownership of
property confers, including the right to convey the property in its entirety,
jointly with her husband, during the marriage relation. They also had the
effect of insulating the wife’s interest in the estate from the separate debts
of her husband.
Neither husband nor wife has a separate divisible interest in the
property held by the entirety that can be conveyed or reached by
execution. A joint tenancy may be destroyed by voluntary alienation, or by
levy and execution, or by compulsory partition, but a tenancy by the
entirety may not. The indivisibility of the estate, except by joint action of
the spouses, is an indispensable feature of the tenancy by the entirety.
We are not persuaded by the argument that it would be unfair to the
creditors of either spouse to hold that the estate by the entirety may not,
without the consent of both spouses, be levied upon for the separate debts
of either spouse. No unfairness to the creditor is involved here. We agree
with the court in Hurd v. Hughes, 109 A. 418, 420 (Del. Ch. 1920): “But
creditors are not entitled to special consideration. If the debt arose prior to

918
the creation of the estate, the property was not a basis of credit, and if the
debt arose subsequently the creditor presumably had notice of the
characteristics of the estate which limited his right to reach the property.”
We might also add that there is obviously nothing to prevent the
creditor from insisting upon the subjection of property held in tenancy by
the entirety as a condition precedent to the extension of credit. Further, the
creation of a tenancy by the entirety may not be used as a device to
defraud existing creditors.
Were we to view the matter strictly from the standpoint of public
policy, we would still be constrained to hold as we have done here today.
It is a matter of common knowledge that the demand for single-family
residential lots has increased rapidly in recent years, and the magnitude of
the problem is emphasized by the concentration of the bulk of fee simple
land in the hands of a few. The shortage of single-family residential fee
simple property is critical and government has seen fit to attempt to
alleviate the problem through legislation. When a family can afford to own
real property, it becomes their single most important asset. Encumbered as
it usually is by a first mortgage, the fact remains that so long as it remains
whole during the joint lives of the spouses, it is always available in its
entirety for the benefit and use of the entire family. Loans for education
and other emergency expenses, for example, may be obtained on the
security of the marital estate. This would not be possible where a third
party has become a tenant in common or a joint tenant with one of the
spouses, or where the ownership of the contingent right of survivorship of
one of the spouses in a third party has cast a cloud upon the title of the
marital estate, making it virtually impossible to utilize the estate for these
purposes.
If we were to select between a public policy favoring the creditors of
one of the spouses and one favoring the interests of the family unit, we
would not hesitate to choose the latter. But we need not make this choice
for, as we pointed out earlier, by the very nature of the estate by the
entirety as we view it, and as other courts of our sister jurisdictions have
viewed it, “[a] unilaterally indestructible right of survivorship, an inability
of one spouse to alienate his interest, and, importantly for this case, a
broad immunity from claims of separate creditors remain among its vital
incidents.” In re Estate of Wall, 440 F.2d 215, 218 (D.C. Cir. 1971).
Having determined that an estate by the entirety is not subject to the
claims of the creditors of one of the spouses during their joint lives, we
now hold that the conveyance of the marital property by Kokichi Endo and
Ume Endo, husband and wife, to their sons, Samuel H. Endo and Toru
Endo, was not in fraud of Kokichi Endo’s judgment creditors.

919
H. BAIRD KIDWELL, Justice, dissenting.
The majority reaches its conclusion by holding that the effect of the
Married Women’s Act was to equalize the positions of the spouses by
taking from the husband his common law right to transfer his interest,
rather than by elevating the wife’s right of alienation of her interest to
place it on a position of equality with the husband’s. I disagree. I believe
that a better interpretation of the Married Women’s Acts is that offered by
the Supreme Court of New Jersey in King v. Greene, 153 A.2d 49, 60 (N.J.
1959):

If, as we have previously concluded, the husband could alienate his right of
survivorship at common law, the wife, by virtue of the act, can alienate her
right of survivorship. And it follows, that if the wife takes equal rights with
the husband in the estate, she must take equal disabilities. Such are the
dictates of common equality. Thus, the judgment creditors of either spouse
may levy and execute upon their separate rights of survivorship.

[R]estriction upon the freedom of the spouses to deal independently

with their respective interests is both illogical and unnecessarily at odds
with present policy trends. Accordingly, I would hold that the separate
interest of the husband in entireties property, at least to the extent of his
right of survivorship, is alienable by him and subject to attachment by his
separate creditors, so that a voluntary conveyance of the husband’s interest
should be set aside where it is fraudulent as to such creditors, under
applicable principles of the law of fraudulent conveyances.

Notes and Questions

1. Marital property and male privileges. In Kirchberg v. Feenstra,
450 U.S. 455, 456 (1981), the Supreme Court considered a Louisiana
statute giving the “husband as ‘head and master’ of property jointly owned
with his wife, the unilateral right to dispose of such property without his
spouse’s consent.” Id. at 456. The Court held that the statute violated the
equal protection clause of the fourteenth amendment because the
classification was not substantially related to achieving an important
governmental interest. Id. at 458-459.
2. Creditors’ rights to reach tenancy by the entirety property.
Massachusetts, Michigan, and North Carolina, the states that Sawada v.
Endo stated still recognized the husband’s exclusive dominion over
property by the entirety, have now abolished the husband’s prerogative.
Mass. Gen. Laws ch. 209, §1; Mich. Comp. Laws §557.71; N.C. Gen. Stat.

920
§39-13.6. Therefore the four rules Sawada described have collapsed into
three:
(1) The substantial majority of states follow the Sawada rule that
creditors cannot reach property held in the form of tenancy by the entirety
to satisfy debts of one spouse; even if the property is sold or the debtor
spouse survives the non-debtor, the creditor has no claim on the estate.
(2) A smaller group of states, including Massachusetts, New Jersey,
and New York, hold that creditors can attach the life interest of a tenant by
the entirety. Creditors may not, however, defeat the non-debtor spouse’s
survivorship interest, and may not be able to demand partition of the
property. See, e.g., Capital Finance Co. Delaware Valley, Inc. v.
Asterbadi, 942 A.2d 21 (N.J. Super. App. Div. 2008).
(3) A few states, including Tennessee and Kentucky, hold that the
creditor may only attach the debtor spouse’s right of survivorship; the
creditor only may possess the property if the debtor survives the non-
debtor spouse. See Robinson v. Trousdale County, 516 S.W.2d 626, 630-
631 (Tenn. 1974); Raybro Elec. Supplies, Inc. v. Barclay, 813 F. Supp.
1267 (W.D. Ky. 1992) (construing Kentucky law).
Which approach better protects interests in gender equality?
3. Tax liens. In United States v. Craft, 535 U.S. 274 (2002), the wife
of a delinquent taxpayer sued the United States to recover half the
proceeds of the sale of tenancy by the entirety property. The United States
had placed a lien on that portion of the proceeds to pay off her husband’s
delinquent federal taxes. The wife noted that under Michigan law, one
tenant by the entirety has no interest separable from that of the spouse;
state law did not allow her husband’s creditors to reach his interest to
satisfy his unpaid debts, and he therefore had no individual interest in the
property that could be reached by the federal government to pay his unpaid
taxes. The Supreme Court disagreed, holding that his interest did constitute
“property” or a “right to property” within the meaning of the federal tax
lien legislation. Using the legal realist metaphor of property as a “bundle
of sticks,” Justice O’Connor explained that the husband had a number of
“the most essential property rights: the right to use the property, to receive
income produced by it and to exclude others from it.” Id. at 283. He also
possessed the right to alienate the property with his wife’s consent. “There
is no reason to believe, however, that this one stick — the right of
unilateral alienation — is essential to the category of ‘property.’ ” Id. at
284. The Court noted it had previously decided that the government had
the discretion to foreclose on an individual’s interest in property, even
though he lacked the unilateral power of alienation. This would mean that

921
the United States could force a sale of the property over the wife’s
objections to satisfy the husband’s unpaid taxes. However, the Internal
Revenue Service has recognized that this creates “adverse consequences
for the non-liable spouse of the taxpayer” and thus the use of foreclosure
in such cases will be “determined on a case-by-case basis.” See Collection
Issues Related to Entireties Property, IRS Notice 2003-60, 2003-39 I.R.B.
643, 2003 WL 22100950 (Sept. 29, 2003). Once property is sold with the
consent of both owners, as it was in Craft, the United States can take the
husband’s one-half share of the proceeds of the sale. This does not mean
the delinquent taxpayer can give his property interest to his spouse and
avoid paying the taxes. Id.
Justices Scalia, Thomas, and Stevens dissented. Justice Scalia noted
that the Court “nullifies (insofar as federal taxes are concerned, at least) a
form of property ownership that was of particular benefit to the stay-at-
home spouse or mother [who is] overwhelmingly unlikely to be the source
of the individual indebtedness against which a tenancy by the entirety
protects.” Id. at 289-290. Justice Thomas opined that state law defined the
husband not to have any separate interest in the property; thus he had no
individual “property” or “rights to property” to which the federal tax lien
could attach. Id. at 292-299.
4. Presumptions. Although ambiguous conveyances are normally
interpreted as tenancies in common rather than joint tenancies,
jurisdictions that have the tenancy by the entirety may presume that a
conveyance to a married couple is held by the entirety. Beal Bank v.
Almand & Associates, 780 So. 2d 45 (Fla. 2001).
5. Homestead laws. Homestead laws may protect the surviving
spouse’s ownership and occupancy rights in the family home from
demands of the decedent’s creditors. The effect of such laws may be to
prevent the homeowner from transferring or encumbering her interests in
the family home without the consent of both spousal owners. A few states
provide unlimited protection for the value of the home, but most exempt
only a certain dollar value, and these values are infrequently adjusted for
inflation. Although the Endos’s property was a homestead under Hawaiian
law, the amount of homestead exemption at the time was very low: only
$2,750 of its value was protected from creditors. Pat Cain, Two Sisters
versus a Father and Two Sons: The Story of Sawada v. Endo, in Property
Stories 114 (Gerald Korngold & Andrew Morris eds. 2009).

Problem
Can a tenancy by the entirety be created by contract? Individuals who

922
do not wish to marry, or married couples who live in states that have
abolished the tenancy of entirety, may want to ensure that property is not
sold or encumbered without the consent of either party. Imagine, for
example, two friends who wish to live together and share expenses as they
age. They buy a house together as joint tenants. The deed is recorded with
a separate document containing a covenant between the two in which each
covenants not to bring an action for partition of the property so long as
both live in the house. It also provides that partition should not be allowed
before the parties have reached a comprehensive property settlement in the
event they move out; that settlement can either be one they voluntarily
agree to or one that is imposed by a court in the context of litigation. The
covenant also states that neither party may encumber, mortgage, sell, or
lease their undivided interests without the consent of the other and that
neither one owns a property interest that can be attached by creditors
unless both owners agree to the transaction. The friends are attempting to
create the incidents of a tenancy by the entirety through a contract, even
though they are not married.
Are the covenants enforceable, including (a) the covenant limiting the
right to partition, (b) the restraint on alienation, and (c) the attempt to limit
the ability of creditors to reach the parties’ individual interests? Or are they
void, either because they constitute an attempt to create a new estate or
because they constitute unreasonable restraints on alienation?

§2.3 Partition

Ark Land Co. v. Harper

599 S.E.2d 754 (W. Va. 2004)

Justice ROBIN JEAN DAVIS.
This is a dispute involving approximately 75 acres of land situate in
Lincoln County, West Virginia. The record indicates that “[t]he Caudill
family has owned the land for nearly 100 years.” The property “consists of
a farmhouse, constructed around 1920, several small barns, and a
garden[.]” Prior to 2001, the property was owned exclusively by the
Caudill family. However, in 2001 Ark Land acquired a 67.5% undivided
interest in the land by purchasing the property interests of several Caudill
family members. Ark Land attempted to purchase the remaining property
interests held by the Caudill heirs, but they refused to sell. Ark Land
sought to purchase all of the property for the express purpose of extracting
coal by surface mining.

923
 After the Caudill heirs refused to sell their interest in the land, Ark
Land filed a complaint in the Circuit Court of Lincoln County in October
of 2001. Ark Land filed the complaint seeking to have the land partitioned
and sold. On October 30, 2002, the circuit court entered an order directing
the partition and sale of the property.
The dispositive issue is whether the evidence supported the circuit
court’s conclusion that the property could not be conveniently partitioned
in kind, thus warranting a partition by sale. During the proceeding before
the circuit court, the Caudill heirs presented expert testimony by Gary F.
Acord, a mining engineer. Mr. Acord testified that the property could be
partitioned in kind. Specifically, Mr. Acord testified that lands surrounding
the family home did not have coal deposits and could therefore be
partitioned from the remaining lands. On the other hand, Ark Land
presented expert testimony which indicated that such a partition would
entail several million dollars in additional costs in order to mine for coal.
We note at the outset that “[p]artition means the division of the land
held in cotenancy into the cotenants’ respective fractional shares. If the
land cannot be fairly divided, then the entire estate may be sold and the
proceeds appropriately divided.” 7 Powell on Real Property, §50.07[1]
(2004). It has been observed that, “[i]n the United States, partition was
established by statute in each of the individual states. Unlike the partition
in kind which existed under early common law, the forced judicial sale
was an American innovation.” Phyliss Craig-Taylor, Through a Colored
Looking Glass: A View of Judicial Partition, Family Land Loss, and Rule
Setting, 78 Wash. U. L.Q. 737, 752 (2000).
Partition by sale, when it is not voluntary by all parties, can be a harsh
result for the cotenant(s) who opposes the sale. This is because “ ‘[a]
particular piece of real estate cannot be replaced by any sum of money,
however large; and one who wants a particular estate for a specific use, if
deprived of his rights, cannot be said to receive an exact equivalent or
complete indemnity by the payment of a sum of money.’” Consequently,
“[p]artition in kind . . . is the preferred method of partition because it
leaves cotenants holding the same estates as before and does not force a
sale on unwilling cotenants.” Powell, §50.07[4][a]. The laws in all
jurisdictions “appear to reflect this longstanding principle by providing a
presumption of severance of common ownership in real property by
partition in-kind[.]” Craig-Taylor, supra at 752.
In syllabus point 3 of Consolidated Gas Supply Corp., this Court set
out the following standard of proof that must be established to overcome
the presumption of partition in kind:

924
 By virtue of W. Va. Code §37-4-3, a party desiring to compel partition
through sale is required to demonstrate [(1)] that the property cannot be
conveniently partitioned in kind, [(2)] that the interests of one or more of the
parties will be promoted by the sale, and [(3)] that the interests of the other
parties will not be prejudiced by the sale.

In its lengthy order requiring partition and sale, the circuit court
addressed each of the three factors in Consolidated Gas Supply Corp. as
follows:

(14) [T]he subject property’s nature, character, and amount are such that it
cannot be conveniently, (that is “practically or justly”) partitioned, or divided
by allotment among its owners. Moreover, it is just and necessary to
conclude that such a proposal as has been made by the [Caudill heirs], that of
allotting the manor house and the surrounding “bottom land” unto the
[Caudill heirs], cannot be affected without undeniably prejudicing [Ark
Land’s] interests, in violation of the mandatory provisions of Code §37-4-3;
and,
(15) [W]hile its uniform topography superficially suggests a division-in-
kind, as proposed by Mr. Acord, the access road, the bottom lands and the
relatively flat home site is, in fact, integral to establishing the fair market
value of the subject property in its entirety, as its highest and best use as
mining property, as shown by the uncontroverted testimony of [Ark Land’s]
experts Mr. Morgan and Mr. Terry; and,
(16) [I]t is undisputed that the remaining heirs, that are [the Caudill heirs]
herein, do not wish to sell, or have the Court sell, their interests in the subject
property, solely due to their sincere sentiment for it as the family’s “home
place.” Other family members, however, did not feel the same way. Given
the equally undisputed testimony of [Ark Land’s] experts, it is just and
reasonable for the Court to conclude that the interests of all the subject
property’s owners will not be financially prejudiced, but will be financially
promoted, by sale of the subject property and distribution among them of the
proceeds, according to their respective interests. The subject property’s value
as coal mining property, its uncontroverted highest and best use, would be
substantially impaired by severing the family’s “home place” and allotting it
to them separately.

We are troubled by the circuit court’s conclusion that partition by sale

was necessary because the economic value of the property would be less if
partitioned in kind. We have long held that the economic value of property
may be a factor to consider in determining whether to partition in kind or
to force a sale. However, our cases do not support the conclusion that
economic value of property is the exclusive test for determining whether to

925
partition in kind or to partition by sale. In fact, we explicitly stated in Hale
v. Thacker, 12 S.E.2d 524, 526 (1940), “that many considerations, other
than monetary, attach to the ownership of land, and courts should be, and
always have been, slow to take away from owners of real estate their
common-law right to have the same set aside to them in kind.”
Other courts have also found that monetary consideration is not the
only factor to contemplate when determining whether to partition property
in kind or by sale. In the case of Eli v. Eli, 557 N.W.2d 405 (S.D. 1997),
the South Dakota Supreme Court [reversed an order of partition in kind
over the objection of one of three co-owners of farmland in the Eli family
for almost 100 years]: “[M]onetary considerations, while admittedly
significant, do not rise to the level of excluding all other appropriate
considerations. . . . The sale of property ‘without [the owner’s] consent is
an extreme exercise of power warranted only in clear cases.’ ”
Similarly, in Delfino v. Vealencis, 436 A.2d 27 (Conn. 1980), two
plaintiffs owned a 20.5 acre tract of land with the defendant. The
defendant used part of the property for her home and a garbage removal
business. The plaintiffs filed an action to force a sale of the property so
that they could use it to develop residential properties. The trial court
concluded that a partition in kind could not be had without great prejudice
to the parties, and that the highest and best use of the property was through
development as residential property. The trial court therefore ordered that
the property be sold at auction. The defendant appealed. The Connecticut
Supreme Court reversed for the following reasons:

It is the interests of all of the tenants in common that the court must
consider; and not merely the economic gain of one tenant, or a group of
tenants. The trial court failed to give due consideration to the fact . . . that the
[defendant] has made her home on the property; and that she derives her
livelihood from the operation of a business on this portion of the property, as
her family before her has for many years. A partition by sale would force the
defendant to surrender her home and, perhaps, would jeopardize her
livelihood. It is under just such circumstances, which include the
demonstrated practicability of a physical division of the property, that the
wisdom of the law’s preference for partition in kind is evident.

Delfino, 436 A.2d at 32-33 (emphasis added).

In view of the prior decisions of this Court, as well as the decisions
from other jurisdictions, we now make clear and hold that, in a partition
proceeding in which a party opposes the sale of property, the economic
value of the property is not the exclusive test for deciding whether to
partition in kind or by sale. Evidence of longstanding ownership, coupled

926
with sentimental or emotional interests in the property, may also be
considered in deciding whether the interests of the party opposing the sale
will be prejudiced by the property’s sale. This latter factor should
ordinarily control when it is shown that the property can be partitioned in
kind, though it may entail some economic inconvenience to the party
seeking a sale.
In the instant case, the Caudill heirs were not concerned with the
monetary value of the property. Their exclusive interest was grounded in
the longstanding family ownership of the property and their emotional
desire to keep their ancestral family home within the family. It is quite
clear that this emotional interest would be prejudiced through a sale of the
property.
The expert for the Caudill heirs testified that the ancestral family home
could be partitioned from the property in such a way as to not deprive Ark
Land of any coal. The circuit court summarily and erroneously dismissed
this uncontradicted fact because of the increased costs that Ark Land
would incur as a result of a partition in kind. In view of our holding, the
additional economic burden that would be imposed on Ark Land, as a
result of partitioning in kind, is not determinative under the facts of this
case.

CONTEXT

No one lived in the Caudill house at the time of the decision, but it was used on
weekends and for family events. The Mud River community in which the
house was located had been decimated after Ark Land’s mountaintop removal
mining brought blasting, stream fill, and pollution to the area. Lorene Caudill
was one of the last holdouts, leaving Mud River in 2006.

[F]or nearly 100 years the Caudill heirs and their ancestors owned the
property and used it for residential purposes. In 2001 Ark Land purchased
ownership rights in the property from some Caudill family members.
When the Caudill heirs refused to sell their ownership rights, Ark Land
immediately sought to force a judicial sale of the property. In doing this,
Ark Land established that its proposed use of the property, surface coal
mining, gave greater value to the property. This showing is self-serving. In
most instances, when a commercial entity purchases property because it
believes it can make money from a specific use of the property, that
property will increase in value based upon the expectations of the
commercial entity. This self-created enhancement in the value of property

927
cannot be the determinative factor in forcing a pre-existing co-owner to
give up his/her rights in property. To have such a rule would permit
commercial entities to always “evict” pre-existing co-owners, because a
commercial entity’s interest in property will invariably increase its value.
We are very sensitive to the fact that Ark Land will incur greater costs
in conducting its business on the property as a result of partitioning in
kind. However, Ark Land voluntarily took an economical gamble that it
would be able to get all of the Caudill family members to sell their
interests in the property. Ark Land’s gamble failed. The Caudill heirs
refused to sell their interests. The fact that Ark Land miscalculated on its
ability to acquire outright all interests in the property cannot form the basis
for depriving the Caudill heirs of their emotional interests in maintaining
their ancestral family home. The additional cost to Ark Land that will
result from a partitioning in kind simply does not impose the type of
injurious inconvenience that would justify stripping the Caudill heirs of the
emotional interest they have in preserving their ancestral family home.
In view of the foregoing, we find that the circuit court erred in
determining that the property could not be partitioned in kind. We,
therefore, reverse the circuit court’s order requiring sale of the property.
This case is remanded with directions to the circuit court to enter an order
requiring the property to be partitioned in kind, consistent with the report
and testimony of the Caudill heirs’ mining engineer expert.

Chief Justice ELLIOT MAYNARD, concurring, in part, and dissenting, in

part.
I concur with the new law created by the majority in this case. That is
to say, I agree that evidence of longstanding ownership along with
sentimental or emotional attachment to property are factors that should be
considered and, in some instances, control the decision of whether to
partition in kind or sale jointly-owned property which is the subject of a
partition proceeding.
I dissent in this case, however, because I do not believe that evidence
to support the application of those factors was presented here. In that
regard, the record shows that none of the appellants have resided at the
subject property for years. At most, the property has been used for
weekend retreats. While this may have been the family “homeplace,” a
majority of the family has already sold their interests in the property to the
appellee. Only a minority of the family members, the appellants, have
refused to do so. I believe that the sporadic use of the property by the
appellants in this case does not outweigh the economic inconvenience that
the appellee will suffer as a result of this property being partitioned in

928
kind.

CONTEXT

As the dissent suggests, coal mining is an important industry in West Virginia.

West Virginia Supreme Court justices, like those in many states, are elected.
An infamous election occurred in the year Ark Land was decided. Coal
company Massey Energy spent $3 million to get Brent Benjamin elected to the
court as part of a successful effort to win reversal of a $50 million judgment
against it. The authors of both the majority and dissent in Ark Land were
implicated in the resulting scandal. See Lawrence Leaman, The Price of
Justice: A True Story of Greed and Corruption (2013).

I am also troubled by the majority’s decision that this property should

be partitioned in kind instead of being sold because I don’t believe that
such would have been the case were this property going to be put to some
use other than coal mining. For instance, I think the majority’s decision
would have been different if this property was going to be used in the
construction of a four-lane highway. Under those circumstances, I believe
the majority would have concluded that such economic activity takes
precedence over any long-term use or sentimental attachment to the
property on the part of the appellants. In my opinion, coal mining is an
equally important economic activity. This decision destroys the value of
this land as coal mining property because the appellee would incur several
million dollars in additional costs to continue its mining operations. As a
result of the majority’s decision in this case, many innocent coal miners
will be out of work.

Notes and Questions

1. Why partition? Co-tenancy has many advantages. It permits parties
to jointly finance purchases they could not otherwise make and divide
family property among all family members. But it also may create disputes
over management, profits, and expenses. Tenants who wish to end a co-
tenancy may agree to divide or sell the land, so-called voluntary
partition. When they cannot agree, one tenant can seek involuntary or
judicial partition. One court has characterized involuntary partition as
“nothing short of the private condemnation of private land for private
purposes, a result which is abhorrent to the rights of defendant as a
freeholder.” Butte Creek Island Ranch v. Crim, 186 Cal. Rptr. 252, 256
(Dist. Ct. App. 1982). But the interests of the petitioning tenant are

929
involved as well. In the words of another court, “No person can be
compelled to remain the owner with another of real estate . . . every owner
is entitled to the fullest enjoyment of his property, and that can come only
through an ownership free from dictation by others as to the manner in
which it may be exercised.” Fernandes v. Rodriguez, 761 A.2d 128, 1288
(Conn. 2000).
2. In kind or by sale. Partition in kind divides the property itself
among the co-tenants. Where the property cannot be divided in parcels of
exactly proportional value, the co-tenant receiving disproportionate value
must pay the other co-tenant owelty (OH-el-tee) to compensate for the
difference. Partition by sale orders the property sold, on the open market
or at auction, and the proceeds divided. Some jurisdictions by statute also
permit forced sale of one tenant’s interest to another. Although statutes in
all jurisdictions express a strong preference for partition in kind, partition
by sale is typical in many states. Uniform Partition of Heirs Property Act,
§8 (2010).
Courts may order partition by sale if (1) division of the parcel is not
practicable or (2) partition by kind will create “great prejudice,”
“substantial injury” or be “inequitable” to the tenants. Although cases like
Ark Land sometimes reject partition by sale if there are significant identity
interests in the property, more often courts simply order partition by sale if
the property is worth “materially less” divided than it would be if sold as a
single parcel. See 4 Thompson on Real Property, Thomas Editions
§38.04); N.C. Gen. Stat. §46-22 (defining “substantial injury” justifying
sale as when “the fair market value of each cotenant’s share in an actual
partition of the property would be materially less than the amount each
cotenant would receive from the sale of the whole”); Schnell v. Schnell,
346 N.W.2d 713, 716 (N.D. 1984) (“Sentimental reasons, particularly in
the preservation of a home, may also be considered, although they are
subordinate to the pecuniary interests of the parties.”); Fike v. Sharer, 571
P.2d 1252, 1254 (Or. 1977) (“[T]he financial interests of the owners is the
primary factor to be considered for purposes of a determination of
prejudice in the event of partition or sale.”). Forced sales have been
identified as one cause for the sharp decline in rural land ownership by
African Americans. See Todd Lewan & Dolores Barclay, Developers and
Lawyers Use a Legal Maneuver to Strip Black Families of Land,
Associated Press, Dec. 30, 2001. The Uniform Partition of Heirs Property
Act, promulgated in 2010, seeks to limit forced sales of heirs property;
thus far it has been adopted in eight states.
Much scholarship considers the tension between market value and

930
subjective value of the property, often concluding that the law adequately
protects subjective value. See Abraham Bell & Gideon Parchomovsky, A
Theory of Property, 90 Cornell L. Rev. 531, 601 (2005); Thomas J. Miceli
& C.F. Stermans, Partition of Real Estate, or, Breaking Up Is (Not) Hard
to Do, 29 J. Legal Stud. 783, 795 (2000). The price fetched at a partition
sale, however, is likely to be far less than the market value. Partition sales
are typically conducted at auctions with minimal advertising and few
bidders; because individuals cannot usually obtain financing to bid at such
auctions, the only bidders will often be realtors and others tipped off to
such auctions or, as in Ark Land, developers who have purchased co-
tenants’ shares solely for the purpose of forcing a sale. See Thomas W.
Mitchell, Stephen Malpezzi & Richard K. Green, Forced Sale Risk: Class,
Race, and the Double Discount, 37 Fla. St. U. L. Rev. 589, 611-613 (2010)
(noting that courts often refuse to set aside partition sales prices of less
than 50 percent of market value).
3. Agreements not to partition. Co-tenants sometimes agree among
themselves not to partition jointly held property; grantors also sometimes
attempt to prevent partition by including restrictions against partition in a
deed or will. Although such agreements were traditionally held to be void
as restraints on alienation, today courts are likely to uphold them if they
are reasonably limited in time and have a reasonable purpose. William B.
Stoebuck & Dale A. Whitman, The Law of Property §5.11, at 216 (3d ed.
2000); compare Kopp v. Kopp, 488 A.2d 636 (Pa. Super. Ct. 1985)
(upholding a separation agreement restricting the husband’s right to
partition so long as the wife lived and was residing in the house) and
Libeau v. Fox, 892 A.2d 1068 (Del. 2006) (upholding agreement to give
non-selling co-tenants a right of first refusal and that those purchasing the
interest would be bound by rights of survivorship), with Vinson v. Johnson,
931 So. 2d 245 (Fla. Dist. Ct. App. 2006) (invalidating testamentary
prohibition on partition of house and farm willed to testator’s nine
children). Statutes typically prohibit partition of common areas of
condominiums.

§3 FAMILY PROPERTY
§3.1 Marital Property: Historical Background

A. Coverture, Dower, and Curtesy

Under the common law of England, a single woman (a feme sole)

931
enjoyed the same rights to hold and manage property and to enter
enforceable contracts as did a man. Once married, however, the husband
retained the sole power to possess and control the profits of all land owned
by himself and his wife. The wife was called a feme covert, and her status
was described by the institution of coverture. The husband and wife were
treated as one person in the eyes of the law; that person was the husband.
He had the power to convey his wife’s property without her consent and to
control all the profits of the land. In addition, his consent was required in
order to sell her land.
In contrast to the rigidity of the law courts, the equity courts created a
variety of mechanisms by which some married women could exercise
property rights during marriage. First, they could enforce antenuptial
agreements by which some husbands voluntarily gave control over
property to their wives. Second, a trust could be created for the benefit of
the wife, and she could enforce the trust as the beneficiary without her
husband’s consent. Fathers often took this route to keep property in their
daughters’ control rather than allowing it to pass to their prospective sons-
in-law. William B. Stoebuck & Dale A. Whitman, The Law of Property
§2.13, at 65-66 (3d ed. 2000).
The common law did give the wife certain important property interests
to take effect at the death of her husband. The common law gave the
surviving spouse a life estate in all or some of the land owned by the
deceased spouse at the time of his death. The wife’s dower interest
consisted of a life estate in one-third of the freehold lands of which the
husband was seised at any time during the marriage and that could be
inherited by the couple’s children. The wife’s dower interest could not be
alienated by her husband without her consent; nor could it be used to
satisfy the husband’s debts. The husband’s equivalent curtesy interest
consisted of a life estate in all the lands in which his wife owned a present
freehold estate during the marriage and that was inheritable by issue of the
couple. However, the husband’s curtesy interest sprang into being only if
the couple had a child capable of inheriting the property. Stoebuck &
Whitman, supra, at 67-69.
Dower and curtesy remain in only a few states, and where they exist,
the rights of husbands and wives have been equalized. The states that
retain these institutions generally allow surviving spouses to choose
between dower/curtesy and a statutorily defined share of marital assets
owned by the decedent at the time of death.

B. Married Women’s Property Acts

932
 In the second half of the nineteenth century (starting with Mississippi
in 1839), all common law states passed Married Women’s Property Acts.
These statutes abolished coverture and removed the economic disabilities
previously imposed on married women. After passage of the statutes,
married women had the same rights as single women and married men to
contract, to hold and manage property, and to sue and be sued. The wife’s
earnings were her separate property and could not be controlled or taken
by her husband without her consent; nor could her separate property be
seized by her husband’s creditors. At the same time, these acts failed to
achieve the aims of nineteenth-century women’s rights advocates who
“sought to emancipate wives’ labor in the household as well as in the
market, and to do so, advocated ‘joint property’ laws that would recognize
wives’ claims to marital assets to which husbands otherwise had title.”
Reva B. Siegel, Home as Work: The First Woman’s Rights Claims
Concerning Wives’ Household Labor, 1850-1880, 103 Yale L.J. 1073,
1077 (1994). They argued that wives were “entitled to joint rights in
marital property by reason of the labor they contributed to the family
economy.” Id. Many women worked inside the home for no wages; the
Married Women’s Property Acts failed to grant such women any rights in
marital property, while family law doctrines preserved their duties to
render services inside the home. Other women engaged in labor inside the
home for which wages were earned, such as taking in laundry or sewing,
keeping boarders, gardening and dairying, and selling the crops or milk
products for cash. Although some states gave married women property
rights in such earnings, most Married Women’s Property Acts granted the
husband control over such earnings or were interpreted by courts in this
fashion on the ground that these acts were not intended to alter family law
doctrines requiring women to provide services inside the home. Id. at
1181-1188. Since most men worked outside the home and most married
women worked inside the home, gender equality in access to property was
a long time in coming.

C. Same-Sex Marriage

The most recent revolution in laws affecting marital property has been
the extension of marriage to couples of the same sex. Until very recently,
even intimacy between persons of the same sex was condemned and even
criminalized,5 and legal marriage was impossible. In 1996, however, a trial
court in Hawai`i held that denying individuals the freedom to marry others
of the same sex constituted sex discrimination in violation of the state
constitution. Baehr v. Miike, 1996 WL 694235 (Haw. Cir. Ct. Dec. 03,

933
1996), aff’d Baehr v. Miike, 950 P.2d 1234 (Haw. 1997), abrogated by
Haw. Const. art. 1, §23. Congress immediately responded with the
Defense of Marriage Act (DOMA), declaring that for all federal programs
and laws, “the word ‘marriage’ means only a legal union between one man
and one woman as husband and wife,” and no state was required to
recognize a same-sex marriage performed under the laws of any other
state. 1 U.S.C. §7 (held unconstitutional by United States v. Windsor, 113
S. Ct. 2675 (2013)) & 28 U.S.C. §1738C. Although Hawai`i repudiated the
result in Baehr by constitutional amendment, over a dozen states
authorized same-sex marriage between 2004 and 2015.6 Even more
sweeping, however, was the wave of “mini-DOMAs,” through which at
least 35 states explicitly prohibited recognition of same-sex marriages via
statute or constitutional amendment.
The first Supreme Court case on these changes emphasized the
property implications of marriage. Edith Windsor and Thea Spyer began
their relationship in 1963, registered as domestic partners in New York in
1993, and married in Canada in 2007. Spyer died in 2009, leaving her
entire estate to Windsor. Although New York recognized the Canadian
marriage as valid, because DOMA prohibited federal recognition of same-
sex marriage, Windsor was ineligible for the marital estate-tax deduction,
and so owed $363,053 in estate taxes. In United States v. Windsor, 133 S.
Ct. 2675 (2013), the Court held DOMA unconstitutional:

The Constitution’s guarantee of equality “must at the very least mean that a
bare congressional desire to harm a politically unpopular group cannot”
justify disparate treatment of that group. The avowed purpose and practical
effect of the law here in question are to impose a disadvantage, a separate
status, and so a stigma upon all who enter into same-sex marriages made
lawful by the unquestioned authority of the States.

Id. at 2693.
Windsor inspired a number of federal courts to invalidate state bans on
same-sex marriage. The Supreme Court agreed with these courts in
Obergefell v. Hodges, 135 S. Ct. 2584 (2015), striking down refusal to
permit same-sex couples to marry. The Obergefell decision relied on the
symbolic as well as the very real legal consequences of marriage:

Marriage remains a building block of our national community. For that

reason, just as a couple vows to support each other, so does society pledge to
support the couple, offering symbolic recognition and material benefits to
protect and nourish the union. Indeed, while the States are in general free to
vary the benefits they confer on all married couples, they have throughout

934
 our history made marriage the basis for an expanding list of governmental
rights, benefits, and responsibilities. These aspects of marital status include:
taxation; inheritance and property rights; rules of intestate succession;
spousal privilege in the law of evidence; hospital access; medical
decisionmaking authority; adoption rights; the rights and benefits of
survivors; birth and death certificates; professional ethics rules; campaign
finance restrictions; workers’ compensation benefits; health insurance; and
child custody, support, and visitation rules. Valid marriage under state law is
also a significant status for over a thousand provisions of federal law. The
States have contributed to the fundamental character of the marriage right by
placing that institution at the center of so many facets of the legal and social
order.
Yet by virtue of their exclusion from that institution, same-sex couples are
denied the constellation of benefits that the States have linked to marriage.
This harm results in more than just material burdens. Same-sex couples are
consigned to an instability many opposite-sex couples would deem
intolerable in their own lives. As the State itself makes marriage all the more
precious by the significance it attaches to it, exclusion from that status has
the effect of teaching that gays and lesbians are unequal in important
respects.
The limitation of marriage to opposite-sex couples may long have seemed
natural and just, but its inconsistency with the central meaning of the
fundamental right to marry is now manifest. With that knowledge must come
the recognition that laws excluding same-sex couples from the marriage right
impose stigma and injury of the kind prohibited by our basic charter.

Obergefell, 135 S. Ct. at 2601-2602.

§3.2 Community Property and Separate Property

Different rules define the property rights of spouses during marriage,
on divorce or dissolution of the marriage, and on the death of one of the
parties. Two basic systems govern marital property rights in the United
States: the separate property system in the majority of states, and the
community property system in effect in nine states.7

A. Separate Property

During marriage. In separate property states, spouses own their

property separately, except to the extent they choose to share it or mingle it
with their spouse’s property. This means that each spouse owns whatever
property he or she possessed before the marriage — such as a house, a car,
stock, or a bank account — and is individually liable for prior debts.

935
Creditors cannot go after a spouse’s property to satisfy a debt individually
undertaken by the other spouse. Property earned after the marriage,
including wages and dividends, is also owned separately. A husband and
wife may of course choose to share property with each other either
informally, by sharing the costs of the household or giving part of
individual earnings to the spouse, or formally, by having a joint bank
account to which either spouse has access as a joint tenant.
It is important to note that spouses in separate property states are not
perfectly free to keep all their property to themselves. Spouses have a legal
duty to support each other, and this duty may require a sharing of property
earned during the marriage. A spouse who fails to comply with this
obligation may be forced to do so by a court order for maintenance,
although this kind of lawsuit rarely happens outside of divorce or
separation.
On divorce. Most legal disputes about marital property involve
divorce or the death of a spouse. All states regulate the distribution of
property rights between the parties on divorce. Separate property states
have statutes that provide for equitable distribution of property owned by
each of the parties on divorce, subject to a wide range of factors such as
economic need (support for necessities, including child support), status
(maintaining the lifestyle shared during the marriage), rehabilitation
(support sufficient to allow one spouse to attain marketable skills such that
support will no longer be needed), contributions of the parties (treating the
marriage as a partnership and dividing the assets jointly earned from the
enterprise), and, sometimes, fault. 3 Family Law and Practice §37.06.
Some states allow marital fault to be considered and some explicitly
exclude “marital misconduct” as a factor. Id. §37.06[1][h]. Specific factors
that may be taken into account include age, health, occupation, income,
vocational skills, contribution as a homemaker, dissipation of property
during the marriage, income tax consequences, debts, obligations prior to
marriage and contribution of one spouse to the education of the other. This
system gives the trial judge great discretion in determining how the
property should be shared or shifted between the parties. Often at issue are
the standards to be used in dividing property, the weight to be given
different factors, and the determination of the kinds of intangible resources
that constitute “property” subject to equitable distribution on divorce.
Separate property states also have provision for alimony, or periodic
payments from one spouse to support the other. Until recently, alimony
was routinely awarded to wives who were thought to be dependent on their
husbands for income. However, with the huge recent increase in women in

936
the workforce, as well as the advent of no-fault divorce, alimony has
become exceptional and, when awarded, is often temporary. Current policy
in most states aims at financial independence for the parties.
On death. A spouse may dispose of her property by will.
Notwithstanding her right to do so, separate property states may limit her
ability to determine who gets her property on death. Many states provide
for a statutory forced share of the decedent’s estate, effectively allowing
the widow or widower to override the will and receive a stated portion
(usually one-third to one-half) of the estate. There is no obligation to leave
separately owned property; spouses are generally free to give away their
separate property during their lifetime. But the rules in force do protect the
interests of a surviving spouse to the extent of defining an indefeasible
right to receive a portion of the testator’s estate (the property owned by
the testator at the time of death). When no will is written, a spouse’s
separate property is inherited according to the state intestacy statute. While
some states grant the surviving spouse the decedent’s entire property, other
states divide the property between the surviving spouse and the children.

B. Community Property

During marriage. In community property states, as in separate

property states, property owned prior to the marriage, as well as property
acquired after marriage by gift, devise, bequest, or inheritance, is separate
property. The American Law Institute’s Principles of the Law of Family
Dissolution, adopted in 2002, favors the community property approach
rather than the separate property approach. See id. §§4.01-4.12. All other
property acquired during the marriage, including earnings, is community
property and is owned equally by both spouses. In some community
property states, earnings on separate property remain separate property. In
several states, however, earnings from separate property, including
interest, rents, and profits, become community property. Most states allow
spouses to change, or “transmute,” their property from separate to
community property, and vice versa, by written agreement.
While community property is somewhat similar to joint tenancy since
it is a form of common ownership, a better analogy can be drawn between
community property and partnership. Since the 1960s, most states have
granted spouses equal rights to manage community property; each spouse
individually may deal with the community property without the consent of
the other spouse. At the same time, managers of community property are
fiduciaries; they have the duty to manage the property for the good of the
community and to act in good faith to benefit the community. In addition,

937
most states have statutes requiring both parties to agree to convey or
mortgage interests in real property and in assets in a business in which
both spouses participate. Community property states have widely
divergent rules on whether community property can be reached by
creditors of individual spouses. Some states protect such property from
being reached by creditors of individual spouses unless both spouses
consented to the transaction; others allow the community property to be
used to satisfy debts incurred by one spouse; still others limit the portion
of the community property reachable by such creditors.
On divorce. A few community property states allocate property on
divorce relatively mechanically by giving each spouse his or her separate
property and half of the community property. Cal. Fam. Code §2550. Most
community property states adopt the “equitable distribution” principle now
existing in separate property states. Ariz. Rev. Stat. §25-318; Tex. Fam.
Code §7.001; Wash. Rev. Code §26.09.080. The main issue arising in
community property states is how to characterize specific items of
property as separate or community property.
On death. In community property states, a spouse may dispose of her
separate property and one-half of the community property by will.
Statutory forced share statutes do not generally exist in community
property states, given the spouse’s vested ownership of one-half of the
community property.

C. Premarital Agreements

Spouses may attempt to vary their respective property rights during

marriage or at divorce by signing a premarital or antenuptial agreement.
Traditionally, such agreements were unenforceable on public policy
grounds because they were thought to undermine stable marriages. See J.
Thomas Oldham, Would Enactment of the Uniform Premarital and
Marital Agreements Act in All Fifty States Change U.S. Law Regarding
Premarital Agreements?, 46 Fam. L.Q. 367, 368 (2012). Today, however,
both premarital and marital agreements are generally enforceable if
voluntary and not otherwise against public policy, reflecting both respect
for freedom of contract and belief that such agreements may encourage
marriage and discourage bitter divorce disputes. See In re Marriage of
Traster, 291 P.3d 494, 501 (Kan. Ct. App. 2012), aff’d in part, rev’d in
part, 339 P.3d 778 (Kan. 2014). The Uniform Premarital Agreement Act
(UPAA) of 1983 made it extremely difficult to challenge premarital
agreements, and although adopted in about half the states, about half of

938
those made substantial changes to provide more protection for the parties.
In 2012, the Uniform Laws Commission adopted the Uniform Premarital
and Marital Agreements Act (UPMAA), seeking to provide a level of
protection more in line with state statutes and decisions.
Courts differ in the standards applied to determine whether agreements
are voluntary. Factors may include whether the agreement was demanded
shortly before the wedding, the relative sophistication of the parties, and
whether the challenging party had reasonable time and means to access
independent counsel. See Mamot v. Mamot, 813 N.W.2d 440, 447, 452
(Neb. 2012) (summarizing tests and finding agreement involuntary when
demanded a few days before wedding and prospective wife could not
reasonably have consulted an attorney); UMPAA §9(a)-(c) (2012)
(agreement unenforceable if party did not have time or means to access an
attorney and did not knowingly waive right to independent counsel); Cal.
Fam. Code §1612(c) (restrictions on spousal support allowed only if the
party waiving rights consulted with independent counsel).
Most jurisdictions will not enforce agreements if they are
“unconscionable” at the time of the agreement, but standards vary widely.
Oldham, supra, at 379 (factors include the relative means of the parties,
whether all distribution or economic support is waived, and degree of
financial disclosure between the parties). Some jurisdictions will go further
and consider whether agreements are equitable or fair. See Ansin v.
Craven-Ansin, 929 N.E.2d 955, 964 (Mass. 2010) (reviewing to determine
whether the terms of the agreement are “fair and reasonable”). Many states
determine unconscionability or fairness as of the date of execution of the
agreement. See Va. Code §20-151; N.J. Stat. §37:2-38(c); UPAA §6. A
significant minority of states, however, may prohibit enforcement if
unconscionable at the time enforcement is sought, particularly if there has
been a substantial change in the circumstances of the parties. Oldham,
supra, at 371, 380-381; see also UPMAA §9(f)(b) (optional provision
permitting court to refuse to enforce agreement if it “would result in
substantial hardship for a party because of a material change in
circumstances arising after the agreement was signed”); Conn. Gen. Stat.
§46b-36g(a)(2) (prohibiting enforcement if “unconscionable when it was
executed or when enforcement is sought”); Ansin, 929 N.E.2d at 964
(agreement must be “fair and reasonable at the time of execution and at the
time of divorce”); American Law Institute, Principles of the Law of Family
Dissolution §9.05 (2008) (recommending against enforcement if it “would
work a substantial injustice” and the couple has either had a child or there
has been another substantial change in circumstances).

939
 D. Homestead Laws

Almost all states have homestead laws designed to protect the interests
of a surviving spouse and children in the family home from the claims of
creditors of the deceased spouse. They generally allow the spouse to live
in the family home as long as she lives. Some states require the property to
be registered as a homestead before the protections attach, while in others
probate judges have the power to set aside homestead property as exempt
from creditor’s claims. Many states limit the value that can be exempted
from execution to pay debts; if the property is worth more than this limit,
the property (or a divisible portion of the land) may be sold to pay amounts
that exceed the limitation. See 3 Thompson on Real Property, Thomas
Editions §21.04). Some states go further and allow owners to devise
homestead property free from the reach of creditors even if there is no
surviving spouse or minor child. See McKean v. Warburton, 919 So. 2d
341, 343-345 (Fla. 2005).

§3.3 Divorce: Equitable Distribution of Property

Distribution of property differs by gender and age, as well as race.
Women, on average, earn less than men. In 2015, the median income of
men who worked full time was $51,212, while the median income of
women who worked full time was only $40,742, or 80 percent of male
earnings. Bernadette D. Proctor, Jessica L. Semega & Melissa A. Kollar,
U.S. Census Bureau, Income and Poverty in the United States: 2015 (Sept.
2016),
https://www.census.gov/content/dam/Census/library/publications/2016/demo/p60-
256.pdf. The reasons for the disparities between women and men are
complicated. It is clear, however, that a major factor is that women
continue to undertake the bulk of the responsibility for raising children.
This work not only is unpaid but also interferes with women’s ability to
work full time. See Martha Albertson Fineman, The Illusion of Equality:
The Rhetoric and Reality of Divorce Reform (1991); Victor Fuchs,
Women’s Quest for Economic Equality (1988); Joan Williams, Unbending
Gender: Why Family and Work Conflict and What to Do About It (2000);
Vicki Schultz, Life’s Work, 100 Colum. L. Rev. 1881 (2000).
Women also suffer disproportionately from divorce. Recently divorced
women, for example, had far lower incomes than divorced men or married
women, and were twice as likely as either group to live in poverty. Diana
B. Elliot & Tavia Simmons, U.S. Census Bureau, Marital Events of
Americans: 2009 at 8-9 (Aug. 2011),

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https://www.census.gov/prod/2011pubs/acs-13.pdf.
Children are more likely to be poor than adults, and some children are
very likely to be poor. Although 13.5 percent of the population fell below
the poverty line in 2015, 19.7 percent of children did so; moreover, 31.3
percent of African American children and 28.6 percent of Hispanic
children were living in poverty. Children who live in households without
an adult male are extremely likely to be poor. While only 9.8 percent of
related children in families of married couples were poor in 2015, 42.6
percent of related children living in female-headed households were poor.
While the median income of married couples was $81,118, the median
income of female-headed households was only $37,797, and the median
income of male-headed households was $55,861. Proctor, Semega &
Kollar, supra.
Upon divorce, the property obtained during the marriage is typically
divided between the parties according to principles of equitable
distribution. Equitable distribution is governed by statute, but the statutes
contain many factors and provide judges with significant discretion.
Montana’s equitable distribution statute, below, a version of the Uniform
Marriage and Divorce Act (1973) still in effect in five states, is typical.
O’Brien v. O’Brien, 489 N.E.2d 712 (N.Y. 1985), which follows below,
considers what can be considered property subject to division under New
York’s equitable distribution statute.

Montana Equitable Distribution Statute

Mont. Code §40-4-202 & 203

§40-4-202. Division of property

(1) In a proceeding for dissolution of a marriage, legal separation, or

division of property following a decree of dissolution of marriage or legal
separation by a court that lacked personal jurisdiction over the absent
spouse or lacked jurisdiction to divide the property, the court, without
regard to marital misconduct, shall, and in a proceeding for legal
separation may, finally equitably apportion between the parties the
property and assets belonging to either or both, however and whenever
acquired and whether the title to the property and assets is in the name of
the husband or wife or both. In making apportionment, the court shall
consider the duration of the marriage and prior marriage of either party;
the age, health, station, occupation, amount and sources of income,
vocational skills, employability, estate, liabilities, and needs of each of the

941
parties; custodial provisions; whether the apportionment is in lieu of or in
addition to maintenance; and the opportunity of each for future acquisition
of capital assets and income. The court shall also consider the contribution
or dissipation of value of the respective estates and the contribution of a
spouse as a homemaker or to the family unit. In dividing property acquired
prior to the marriage; property acquired by gift, bequest, devise, or
descent; property acquired in exchange for property acquired before the
marriage or in exchange for property acquired by gift, bequest, devise, or
descent; the increased value of property acquired prior to marriage; and
property acquired by a spouse after a decree of legal separation, the court
shall consider those contributions of the other spouse to the marriage,
including:
(a) the nonmonetary contribution of a homemaker;
(b) the extent to which the contributions have facilitated the
maintenance of this property; and
(c) whether or not the property division serves as an alternative to
maintenance arrangements.
(2) In a proceeding, the court may protect and promote the best
interests of the children by setting aside a portion of the jointly and
separately held estates of the parties in a separate fund or trust for the
support, maintenance, education, and general welfare of any minor,
dependent, or incompetent children of the parties.

§40-4-203. Maintenance

(1) In a proceeding for dissolution of marriage or legal separation or a

proceeding for maintenance following dissolution of the marriage by a
court that lacked personal jurisdiction over the absent spouse, the court
may grant a maintenance order for either spouse only if it finds that the
spouse seeking maintenance:
(a) lacks sufficient property to provide for the spouse’s reasonable
needs; and
(b) is unable to be self-supporting through appropriate employment
or is the custodian of a child whose condition or circumstances make it
appropriate that the custodian not be required to seek employment
outside the home.
(2) The maintenance order must be in amounts and for periods of time
that the court considers just, without regard to marital misconduct, and
after considering all relevant facts, including:
(a) the financial resources of the party seeking maintenance,
including marital property apportioned to that party, and the party’s

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 ability to meet the party’s needs independently, including the extent to
which a provision for support of a child living with the party includes a
sum for that party as custodian;
(b) the time necessary to acquire sufficient education or training to
enable the party seeking maintenance to find appropriate employment;
(c) the standard of living established during the marriage;
(d) the duration of the marriage;
(e) the age and the physical and emotional condition of the spouse
seeking maintenance; and
(f) the ability of the spouse from whom maintenance is sought to
meet the spouse’s own needs while meeting those of the spouse seeking
maintenance.

O’Brien v. O’Brien

489 N.E.2d 712 (N.Y. 1985)

RICHARD D. SIMONS, J.
In this divorce action, the parties’ only asset of any consequence is the
husband’s newly acquired license to practice medicine. The principal issue
presented is whether that license, acquired during their marriage, is marital
property subject to equitable distribution under Domestic Relations Law
§236(B)(5).

I
Plaintiff and defendant married on April 3, 1971. At the time both were
employed as teachers at the same private school. Defendant had a
bachelor’s degree and a temporary teaching certificate but required 18
months of postgraduate classes at an approximate cost of $3,000,
excluding living expenses, to obtain permanent certification in New York.
She claimed, and the trial court found, that she had relinquished the
opportunity to obtain permanent certification while plaintiff pursued his
education. At the time of the marriage, plaintiff had completed only three
and one-half years of college but shortly afterward he returned to school at
night to earn his bachelor’s degree and to complete sufficient premedical
courses to enter medical school. In September 1973 the parties moved to
Guadalajara, Mexico, where plaintiff became a full-time medical student.
While he pursued his studies defendant held several teaching and tutorial
positions and contributed her earnings to their joint expenses. The parties
returned to New York in December 1976 so that plaintiff could complete
the last two semesters of medical school and internship training here. After

943
they returned, defendant resumed her former teaching position and she
remained in it at the time this action was commenced. Plaintiff was
licensed to practice medicine in October 1980. He commenced this action
for divorce two months later. At the time of trial, he was a resident in
general surgery.
During the marriage both parties contributed to paying the living and
educational expenses and they received additional help from both of their
families. They disagreed on the amounts of their respective contributions
but it is undisputed that in addition to performing household work and
managing the family finances defendant was gainfully employed
throughout the marriage, that she contributed all of her earnings to their
living and educational expenses and that her financial contributions
exceeded those of plaintiff. The trial court found that she had contributed
76% of the parties’ income exclusive of a $10,000 student loan obtained
by defendant. Finding that plaintiff’s medical degree and license are
marital property, the court received evidence of its value and ordered a
distributive award to defendant.
Defendant presented expert testimony that the present value of
plaintiff’s medical license was $472,000. Her expert testified that he
arrived at this figure by comparing the average income of a college
graduate and that of a general surgeon between 1985, when plaintiff’s
residency would end, and 2012, when [plaintiff] would reach age 65. After
considering Federal income taxes, an inflation rate of 10% and a real
interest rate of 3% he capitalized the difference in average earnings and
reduced the amount to present value. He also gave his opinion that the
present value of defendant’s contribution to plaintiff’s medical education
was $103,390. Plaintiff offered no expert testimony on the subject.

CONTEXT

As the court notes, the couple had few assets besides the medical license.
Michael O’Brien took only a “duffel bag of clothes, his grandfather’s rocking
chair, his four guitars and a stereo” when he moved out of their New York
apartment to move in with Patti Rossini, a nurse whom he ultimately married.
Ira Mark Ellman, O’Brien v. O’Brien: A Failed Reform, Unlikely Reformers, in
Family Law Stories 272 (Carol Sanger ed. 2008).

The court, after considering the life-style that plaintiff would enjoy
from the enhanced earning potential his medical license would bring and
defendant’s contributions and efforts toward attainment of it, made a

944
distributive award to her of $188,800, representing 40% of the value of the
license, and ordered it paid in 11 annual installments of various amounts
beginning November 1, 1982 and ending November 1, 1992. The court
also directed plaintiff to maintain a life insurance policy on his life for
defendant’s benefit for the unpaid balance of the award and it ordered
plaintiff to pay defendant’s counsel fees of $7,000 and her expert witness
fee of $1,000. It did not award defendant maintenance.

II
The Equitable Distribution Law contemplates only two classes of
property: marital property and separate property (Domestic Relations Law
§236(B)(1)(c), (d)). The former, which is subject to equitable distribution,
is defined broadly as “all property acquired by either or both spouses
during the marriage and before the execution of a separation agreement or
the commencement of a matrimonial action, regardless of the form in
which title is held” (Domestic Relations Law §236(B)(1)(c) (emphasis
added)). Plaintiff does not contend that his license is excluded from
distribution because it is separate property; rather, he claims that it is not
property at all but represents a personal attainment in acquiring
knowledge. He rests his argument on decisions in similar cases from other
jurisdictions and on his view that a license does not satisfy common-law
concepts of property. Neither contention is controlling because decisions
in other States rely principally on their own statutes, and the legislative
history underlying them, and because the New York Legislature
deliberately went beyond traditional property concepts when it formulated
the Equitable Distribution Law. Instead, our statute recognizes that
spouses have an equitable claim to things of value arising out of the
marital relationship and classifies them as subject to distribution by
focusing on the marital status of the parties at the time of acquisition.
Those things acquired during marriage and subject to distribution have
been classified as “marital property” although, as one commentator has
observed, they hardly fall within the traditional property concepts because
there is no common-law property interest remotely resembling marital
property. “It is a statutory creature, is of no meaning whatsoever during the
normal course of a marriage and arises full-grown, like Athena, upon the
signing of a separation agreement or the commencement of a matrimonial
action. It is hardly surprising, and not at all relevant, that traditional
common law property concepts do not fit in parsing the meaning of
‘marital property’ ” (Florescue, “Market Value,” Professional Licenses
and Marital Property: A Dilemma in Search of a Horn, 1982 N.Y. St. Bar

945
Assn. Fam. L. Rev. 13 (Dec.)). Having classified the “property” subject to
distribution, the Legislature did not attempt to go further and define it but
left it to the courts to determine what interests come within the terms of
section 236(B)(1)(c).
We made such a determination in Majauskas v. Majauskas, 463 N.E.2d
15 (N.Y. 1984), holding there that vested but unmatured pension rights are
marital property subject to equitable distribution. Because pension benefits
are not specifically identified as marital property in the statute, we looked
to the express reference to pension rights contained in section 236(B)(5)(d)
(4), which deals with equitable distribution of marital property, to other
provisions of the equitable distribution statute and to the legislative intent
behind its enactment to determine whether pension rights are marital
property or separate property. A similar analysis is appropriate here and
leads to the conclusion that marital property encompasses a license to
practice medicine to the extent that the license is acquired during marriage.
Section 236 provides that in making an equitable distribution of marital
property, “the court shall consider: . . . (6) any equitable claim to, interest
in, or direct or indirect contribution made to the acquisition of such marital
property by the party not having title, including joint efforts or
expenditures and contributions and services as a spouse, parent, wage
earner and homemaker, and to the career or career potential of the other
party [and] (9) the impossibility or difficulty of evaluating any component
asset or any interest in a business, corporation or profession” (Domestic
Relations Law §236(B)(5)(d)(6), (9) (emphasis added)). Where equitable
distribution of marital property is appropriate but “the distribution of an
interest in a business, corporation or profession would be contrary to law”
the court shall make a distributive award in lieu of an actual distribution of
the property (Domestic Relations Law §236(B)(5)(e) (emphasis added)).
The words mean exactly what they say: that an interest in a profession or
professional career potential is marital property which may be represented
by direct or indirect contributions of the non-title-holding spouse,
including financial contributions and nonfinancial contributions made by
caring for the home and family.
The history which preceded enactment of the statute confirms this
interpretation. Reform of section 236 was advocated because experience
had proven that application of the traditional common-law title theory of
property had caused inequities upon dissolution of a marriage. The
Legislature replaced the existing system with equitable distribution of
marital property, an entirely new theory which considered all the
circumstances of the case and of the respective parties to the marriage.
Equitable distribution was based on the premise that a marriage is, among

946
other things, an economic partnership to which both parties contribute as
spouse, parent, wage earner or homemaker. Consistent with this purpose,
and implicit in the statutory scheme as a whole, is the view that upon
dissolution of the marriage there should be a winding up of the parties’
economic affairs and a severance of their economic ties by an equitable
distribution of the marital assets. Thus, the concept of alimony, which
often served as a means of lifetime support and dependence for one spouse
upon the other long after the marriage was over, was replaced with the
concept of maintenance which seeks to allow “the recipient spouse an
opportunity to achieve [economic] independence.”
The determination that a professional license is marital property is also
consistent with the conceptual base upon which the statute rests. As this
case demonstrates, few undertakings during a marriage better qualify as
the type of joint effort that the statute’s economic partnership theory is
intended to address than contributions toward one spouse’s acquisition of a
professional license. Working spouses are often required to contribute
substantial income as wage earners, sacrifice their own educational or
career goals and opportunities for child rearing, perform the bulk of
household duties and responsibilities and forego the acquisition of marital
assets that could have been accumulated if the professional spouse had
been employed rather than occupied with the study and training necessary
to acquire a professional license. In this case, nearly all of the parties’
nine-year marriage was devoted to the acquisition of plaintiff’s medical
license and defendant played a major role in that project. She worked
continuously during the marriage and contributed all of her earnings to
their joint effort, she sacrificed her own educational and career
opportunities, and she traveled with plaintiff to Mexico for three and one-
half years while he attended medical school there. The Legislature has
decided, by its explicit reference in the statute to the contributions of one
spouse to the other’s profession or career (see Domestic Relations Law
§236(B)(5)(d)(6),(9);(e)), that these contributions represent investments in
the economic partnership of the marriage and that the product of the
parties’ joint efforts, the professional license, should be considered marital
property.
Plaintiff’s principal argument is that a professional license is not
marital property because it does not fit within the traditional view of
property as something which has an exchange value on the open market
and is capable of sale, assignment or transfer. The position does not
withstand analysis for at least two reasons. First, as we have observed, it
ignores the fact that whether a professional license constitutes marital
property is to be judged by the language of the statute which created this

947
new species of property previously unknown at common law or under
prior statutes. Thus, whether the license fits within traditional property
concepts is of no consequence. Second, it is an overstatement to assert that
a professional license could not be considered property even outside the
context of section 236(B). A professional license is a valuable property
right, reflected in the money, effort and lost opportunity for employment
expended in its acquisition, and also in the enhanced earning capacity it
affords its holder, which may not be revoked without due process of law.
That a professional license has no market value is irrelevant. Obviously, a
license may not be alienated as may other property and for that reason the
working spouse’s interest in it is limited. The Legislature has recognized
that limitation, however, and has provided for an award in lieu of its actual
distribution (see Domestic Relations Law §236(B)(5)(e)).
Plaintiff also contends that alternative remedies should be employed,
such as an award of rehabilitative maintenance or reimbursement for direct
financial contributions. The statute does not expressly authorize
retrospective maintenance or rehabilitative awards and we have no
occasion to decide in this case whether the authority to do so may ever be
implied from its provisions. It is sufficient to observe that normally a
working spouse should not be restricted to that relief because to do so
frustrates the purposes underlying the Equitable Distribution Law.
Limiting a working spouse to a maintenance award, either general or
rehabilitative, not only is contrary to the economic partnership concept
underlying the statute but also retains the uncertain and inequitable
economic ties of dependence that the Legislature sought to extinguish by
equitable distribution. Maintenance is subject to termination upon the
recipient’s remarriage and a working spouse may never receive adequate
consideration for his or her contribution and may even be penalized for the
decision to remarry if that is the only method of compensating the
contribution. As one court said so well, “[t]he function of equitable
distribution is to recognize that when a marriage ends, each of the spouses,
based on the totality of the contributions made to it, has a stake in and right
to a share of the marital assets accumulated while it endured, not because
that share is needed, but because those assets represent the capital product
of what was essentially a partnership entity” (Wood v. Wood, 465
N.Y.S.2d 475 (Sup. Ct. 1983)). The Legislature stated its intention to
eliminate such inequities by providing that a supporting spouse’s “direct or
indirect contribution” be recognized, considered and rewarded (Domestic
Relations Law §236(B)(5)(d)(6)).
Turning to the question of valuation, it has been suggested that even if
a professional license is considered marital property, the working spouse is

948
entitled only to reimbursement of his or her direct financial contributions.
By parity of reasoning, a spouse’s down payment on real estate or
contribution to the purchase of securities would be limited to the money
contributed, without any remuneration for any incremental value in the
asset because of price appreciation. Such a result is completely at odds
with the statute’s requirement that the court give full consideration to both
direct and indirect contributions “made to the acquisition of such marital
property by the party not having title, including joint efforts or
expenditures and contributions and services as a spouse, parent, wage
earner and homemaker” (Domestic Relations Law §236(B)(5)(d)(6)
(emphasis added)). If the license is marital property, then the working
spouse is entitled to an equitable portion of it, not a return of funds
advanced. Its value is the enhanced earning capacity it affords the holder
and although fixing the present value of that enhanced earning capacity
may present problems, the problems are not insurmountable. Certainly
they are no more difficult than computing tort damages for wrongful death
or diminished earning capacity resulting from injury and they differ only
in degree from the problems presented when valuing a professional
practice for purposes of a distributive award, something the courts have
not hesitated to do. The trial court retains the flexibility and discretion to
structure the distributive award equitably, taking into consideration factors
such as the working spouse’s need for immediate payment, the licensed
spouse’s current ability to pay and the income tax consequences of
prolonging the period of payment and, once it has received evidence of the
present value of the license and the working spouse’s contributions toward
its acquisition and considered the remaining factors mandated by the
statute, it may then make an appropriate distribution of the marital
property including a distributive award for the professional license if such
an award is warranted. When other marital assets are of sufficient value to
provide for the supporting spouse’s equitable portion of the marital
property, including his or her contributions to the acquisition of the
professional license, however, the court retains the discretion to distribute
these other marital assets or to make a distributive award in lieu of an
actual distribution of the value of the professional spouse’s license.

BERNARD S. MEYER, Judge (concurring).

I concur in Judge Simons’ opinion but write separately to point up for
consideration by the Legislature the potential for unfairness involved in
distributive awards based upon a license of a professional still in training.
An equity court normally has power to “‘change its decrees where
there has been a change of circumstances.’” The implication of Domestic

949
Relations Law §236(B)(9)(b), which deals with modification of an order or
decree as to maintenance or child support, is, however, that a distributive
award pursuant to section 236(B)(5)(e), once made, is not subject to
change. Yet a professional in training who is not finally committed to a
career choice when the distributive award is made may be locked into a
particular kind of practice simply because the monetary obligations
imposed by the distributive award made on the basis of the trial judge’s
conclusion (prophecy may be a better word) as to what the career choice
will be leaves him or her no alternative.
The present case points up the problem. A medical license is but a step
toward the practice ultimately engaged in by its holder, which follows after
internship, residency and, for particular specialties, board certification.
Here it is undisputed that plaintiff was in a residency for general surgery at
the time of the trial, but had the previous year done a residency in internal
medicine. Defendant’s expert based his opinion on the difference between
the average income of a general surgeon and that of a college graduate of
plaintiff’s age and life expectancy, which the trial judge utilized, impliedly
finding that plaintiff would engage in a surgical practice despite plaintiff’s
testimony that he was dissatisfied with the general surgery program he was
in and was attempting to return to the internal medicine training he had
been in the previous year. The trial judge had the right, of course, to
discredit that testimony, but the point is that equitable distribution was not
intended to permit a judge to make a career decision for a licensed spouse
still in training. Yet the degree of speculation involved in the award made
is emphasized by the testimony of the expert on which it was based. Asked
whether his assumptions and calculations were in any way speculative, he
replied: “Yes. They’re speculative to the extent of, will Dr. O’Brien
practice medicine? Will Dr. O’Brien earn more or less than the average
surgeon earns? Will Dr. O’Brien live to age sixty-five? Will Dr. O’Brien
have a heart attack or will he be injured in an automobile accident? Will he
be disabled? I mean, there is a degree of speculation. That speculative
aspect is no more to be taken into account, cannot be taken into account,
and it’s a question, again, Mr. Emanuelli, not for the expert but for the
courts to decide. It’s not my function nor could it be.”
The equitable distribution provisions of the Domestic Relations Law
were intended to provide flexibility so that equity could be done. But if the
assumption as to career choice on which a distributive award payable over
a number of years is based turns out not to be the fact (as, for example,
should a general surgery trainee accidentally lose the use of his hand), it
should be possible for the court to revise the distributive award to conform
to the fact. And there will be no unfairness in so doing if either spouse can

950
seek reconsideration, for the licensed spouse is more likely to seek
reconsideration based on real, rather than imagined, cause if he or she
knows that the nonlicensed spouse can seek not only reinstatement of the
original award, but counsel fees in addition, should the purported
circumstance on which a change is made turn out to have been feigned or
to be illusory.

Notes and Questions

1. Division of the family home. When a married couple gets divorced,
the courts face the task of dividing property acquired during the marriage.
The marital home is ordinarily the most valuable asset of the parties.
Spouses often attempt to work out a settlement, which may be reviewed by
the court for fairness and legality. Many considerations influence the
outcome. On one hand, requiring the house to be sold means that neither
party can continue to live there. Having to move is especially disruptive to
children. On the other hand, because both parties contribute to the joint
enterprise of the marriage, they have a right to equitably share in the
property acquired during the marriage. If the couple has invested in a
home, it may be impossible to divide the monetary value of the home
between the parties without selling it; the person to whom the home is
given ordinarily does not have enough assets simply to pay off the other
party. Moreover, the cost of maintaining the house may be greater than the
cost of moving to more modest accommodations and may tax the limited
resources of the couple, whose expenses may have risen since living
separately. Finally, sale of the home may be the only way to obtain a
significant source of funds to pay the added expenses of splitting up the
household, allowing each of the parties to attain economic independence.
Courts have reached different conclusions in response to these
conflicting pressures. In In re Marriage of King, 700 P.2d 591 (Mont.
1985), for example, the court awarded the family home solely to the wife
over her husband’s objection after finding that it would be in the best
interests of the minor children to remain there, and the husband’s income
as a professional gambler did not permit a regular child support award. In
Ramsey v. Ramsey, 546 N.E.2d 1280 (Ind. Ct. App. 1989), by contrast, the
court ordered the house sold over the objections of both the husband and
wife, a couple who had been married for 20 years and who wished the wife
to continue living in the marital home with the five children where the
father could continue to visit the children daily. The ruling was upheld on
appeal as within the trial judge’s discretion but was accompanied by a
vigorous dissent.

951
 In Behrens v. Behrens, 532 N.Y.S.2d 893 (App. Div. 1988), the court
ordered the family house sold on the grounds that neither party had
sufficient resources to afford the maintenance costs of the home. The wife
had objected to the sale on the grounds that it would force her and the
children to leave their present community, where the family had
established strong ties. A dissenting opinion argued that the imagined
savings of moving were illusory since the lower rents in alternative
housing would increase over time, while the mortgage payments on the
current home would remain constant. Similarly, in In re Marriage of
Stallworth, 237 Cal. Rptr. 829 (Ct. App. 1987), the court held that the
adverse economic, emotional, and social impact on the minor child from
being forced to move out of the family home would be minimal, even
though the child was under psychiatric care and in a special education
program at school. The court concluded that the adverse effect on the child
was outweighed by the husband’s economic interest in the sale of the
home.
In a variation on this theme, the court in Stolow v. Stolow, 540
N.Y.S.2d 484 (App. Div. 1989), ordered the sale of the family “mini-
mansion” on the grounds that it was extravagant and that the wife and
children could use the proceeds of the sale to buy another “fine residence.”
The court ordered the sale so that the husband could obtain his share of the
value of the house, despite the fact that the husband was wealthy enough to
be able to afford the house payments and in the face of the “well settled
principle of matrimonial law that exclusive possession of a marital
residence is generally awarded to a custodial spouse with minor children.”
Id. at 486.
2. “Property” divisible on divorce. Almost all states reject New
York’s approach in O’Brien and hold that graduate degrees and
professional licenses are not “property” whose value is divisible on
divorce under statutes providing for equitable distribution of property
acquired during the marriage. Nonetheless, the O’Brien ruling has been
repeatedly reaffirmed. See Holterman v. Holterman, 814 N.E.2d 765 (N.Y.
2004); McSparron v. McSparron, 662 N.E.2d 745 (N.Y. 1995); see also
Elkus v. Elkus, 572 N.Y.S.2d 901 (App. Div. 1991) (holding that the value
of the career and celebrity status of opera singer Frederica von Stade Elkus
constituted property divisible on divorce to the extent her spouse
contributed to and increased the value of her career).
In Mahoney v. Mahoney, 453 A.2d 527 (N.J. 1982), the court rejected
the idea that graduate degrees constitute property, on the grounds that (a)
professional degrees do not resemble traditional property interests because

952
they cannot be transferred in any way; (b) they are the cumulative product
of many years of hard work and cannot be acquired by mere expenditure
of money; (c) their value cannot be readily determined because “valuing a
professional degree in the hands of any particular individual at the start of
his or her career would involve a gamut of calculations that reduces to
little more than guesswork,” including what jobs the holder will have,
what specialties she will practice, the location of practice, the length of
interruptions in the career; and (d) unlike alimony, awards of property are
final and unmodifiable, and courts therefore have no power to correct a
mistake in the valuation of the license, no matter how gross the mistake.
Justice Morris Pashman further argued that “[m]arriage is not a business
arrangement in which the parties keep track of debits and credits, their
accounts to be settled on divorce.” Id. at 533. See also Hoak v. Hoak, 370
S.E.2d 473 (W. Va. 1988) (adopting this approach). How does the New
York Court of Appeals respond to these arguments?
A number of states do hold that contributions toward receipt of the
license or degree and the opportunity cost of not pursuing greater earning
potential to permit the other spouse’s education can be reflected in either
equitable divisions of marital property or in support payments. As Justice
Shirley Abrahamson wrote for the Wisconsin Supreme Court,

[I]n a marital partnership where both parties work toward the education of
one of the partners and the marriage ends before the economic benefit is
realized and property is accumulated, it is unfair under these circumstances
to deny the supporting spouse a share in the anticipated enhanced earnings
while the student spouse keeps the degree and all the financial rewards it
promises. As this court has recognized, “in a sense,” the degree “is the most
significant asset of the marriage” and “it is only fair” that the supporting
spouse be compensated for costs and opportunities foregone while the
student spouse was in school.

Haugan v. Haugan, 343 N.W.2d 796, 800 (Wis. 1984); see also Holt v.
Holt, 976 S.W.2d 25 (Mo. Ct. App. 1998) (affirming award of 78 percent
of marital property to wife who had worked full time while husband
completed college and two master’s degrees and was primary caretaker of
children and home); Baldwin v. Baldwin, 788 So. 2d 800 (Miss. Ct. App.
2001); cf. Berger v. Berger, 747 N.W.2d 336, 350 (Mich. Ct. App. 2008)
(holding that equitable claims of contribution were available, but were not
proved in this case: “plaintiff pursued her dancing education to fulfill her
dreams but simultaneously maintained her role as primary caregiver to the
children and secondary financial supporter of the family. At best,
defendant tolerated plaintiff’s educational pursuits; he did not sacrifice his

953
own business or employment opportunities to support plaintiff’s
education.”).
3. Goodwill as marital property. Although few states hold that
professional degrees and licenses are property that can be divided, most
permit division of the value of business “goodwill,” the value of a
business’s reputation, patronage, or other intangible assets that enable it to
produce income above the value of its individual parts. 4 Thompson on
Real Property, Thomas Editions §37.11(c)(1) (2015); May v. May, 589
S.E.2d 536, 541-542 (W. Va. 2003) (surveying approaches). Many of these
seek to distinguish between “enterprise goodwill,” which can be
transferred on the market separate from the individual (such as by selling
an ongoing practice), and “personal goodwill,” which is associated with an
individual’s reputation and skill, and divide only the former. See Gaskill v.
Robbins, 282 S.W.3d 306 (Ky. 2009) (holding that value of oral surgery
practice was largely derived from reputation and skill of wife, and so could
not be divided). Others do not make this distinction, reasoning that
reputation has a sale value as well. See McReath v. McReath, 800 N.W.2d
399, 412 (Wis. 2011). A striking case of the latter comes from the divorce
of former Saturday Night Live star Joe Piscopo, in which the court divided
the value of what it called “celebrity goodwill” over objections that his
value as a star was personal to him and that his future earnings were too
uncertain. The New Jersey trial and appellate courts rejected these
arguments:

Plaintiff’s record of past earning was undisputed. It was also undisputed that
whatever plaintiff had achieved as a celebrity had taken place during the
marriage. While the trial judge recognized that it would be difficult to value
plaintiff’s celebrity goodwill, that difficulty would not affect its includability
in the marital estate.

Piscopo v. Piscopo, 557 A.2d 1040 (N.J. Super. Ct. App. Div. 1989).
4. Modifiability of the property award. Suppose the defendant in
O’Brien takes a position in a clinic in which his earnings are substantially
lower than estimated by the experts at trial. He petitions the court to
modify the amount of the award based on his new, lower salary. The
statute in question appears to allow modifications in alimony but not in
property awards. Is there any way to characterize the ex-wife’s property
interest in the degree to allow the court to modify the award?8

Problems

954
 1. In Pascale v. Pascale, 660 A.2d 485 (N.J. 1995), Debra and James
Pascale divorced after a 13-year marriage. Although they were granted
“joint legal custody” of the three children, Debra was the “primary
caretaker” with “physical custody” of the children most of the time. James
was ordered to pay 60 percent of the costs of supporting the children. He
was granted visitation rights with the children at his home from 5:30 to
8:30 P.M. for dinner on Wednesday and Thursday evenings and would
keep the children for a 24-hour period each weekend. During the summer,
the children would stay with him overnight on Wednesdays and
Thursdays, and the couple was ordered to alternate major holidays with the
children. At the time of the divorce, Debra had a gross annual income of
$52,500, and James had an income of $72,500.
The court interpreted statutory child support requirements to guarantee
“the right of children of divorce to be supported at least according to the
standard of living to which they had grown accustomed prior to the
separation of their parents.” Id. at 489. The court determined that the
parties could not maintain two large and equal houses. It was faced with a
choice between ordering the house sold immediately, allowing each spouse
to obtain a house of equal size and quality, or allowing the primary
caretaker to stay in the larger family home until the children were older,
thereby forcing the husband to live in a smaller home than he could afford
if he could immediately obtain his 50 percent of the equity built up in the
family home. The court compromised by awarding the family house to
Debra on the understanding that she had agreed to sell it in five years when
the oldest child was to begin high school.
a. What arguments would you make for James that the court should
order the house to be sold immediately?
b. What arguments would you make for Debra that she should be
given possession of the house until the youngest child reaches 18?
c. What should the court do, and why?
2. California has addressed the problem of equitable distribution of the
value of graduate degrees by statute, creating a presumption that
reimbursement is appropriate for contributions to a spouse’s education that
substantially enhance his earning potential. However, this award will be
reduced or eliminated (1) if the couple has already substantially benefited
from the education (with a presumption that this has occurred after ten
years of marriage), (2) if the supporting spouse was similarly supported in
receiving education, or (3) if the education enables the supported spouse to
obtain employment that reduces support to which the supported spouse
would otherwise be entitled. See Cal. Fam. Code §2641. At the same time,

955
the statute provides that contribution to education that increases a spouse’s
earning potential is a factor to be considered in determining whether
alimony should be awarded. In determining whether one party will be
required to provide support for the other, the courts are to consider a
variety of additional factors, including the extent to which the earning
capacity of each party is sufficient to maintain the standard of living
established during the marriage, the length of the marriage, the needs of
the parties, and the ability of each to support themselves and the other
party. Cal. Fam. Code §§4320, 4330. The statutory language suggests that
alimony is more likely to be awarded when the supporting spouse is not
able to use his or her own earning power in the marketplace to obtain the
standard of living established during the marriage. Cf. Schaefer v.
Schaefer, 642 N.W.2d 792 (Neb. 2002) (graduate degree is not property
divisible on divorce, but the fact that one spouse attained a degree with the
aid of the other is a factor to be considered in dividing other marital assets
as well as in determining whether to award alimony).
Assume a bill is introduced in the New York legislature to overrule the
result in O’Brien and adopt the California approach. Would you favor
passage of the bill? Why or why not?

§3.4 Child Support

See Chapter 2, §4.1.

§3.5 Unmarried Partners

Family property law was built around marriage. Unmarried
cohabitation was shameful and even criminalized in many states. (These
statutes remained on the books of a few states, including Florida,
Massachusetts, Mississippi, and Michigan, until the twenty-first century.)
Between 1970 and 2011, however, the number of households including an
unmarried partner increased more than tenfold, from 523,000 to 6,746,000.
Among women born since 1965, most have lived with a sexual partner.
Although most of these relationships terminate or end in marriage within
five years, many last for many years and involve children. Until recently,
moreover, same-sex couples could never marry however long they lived
together. The materials in this section concern the degree to which the law
should recognize distinctive property rights arising from long-term
unmarried cohabitation.

Watts v. Watts

956
 405 N.W.2d 303 (Wis. 1987)
SHIRLEY S. ABRAHAMSON, Justice.
The case involves a dispute between Sue Ann Evans Watts, the
plaintiff, and James Watts, the defendant, over their respective interests in
property accumulated during their nonmarital cohabitation relationship
which spanned 12 years and produced two children.
The plaintiff and the defendant met in 1967, when she was 19 years
old, was living with her parents and was working full time as a nurse’s
aide in preparation for a nursing career. Shortly after the parties met, the
defendant persuaded the plaintiff to move into an apartment paid for by
him and to quit her job. According to the amended complaint, the
defendant “indicated” to the plaintiff that he would provide for her.
Early in 1969, the parties began living together in a “marriage-like”
relationship, holding themselves out to the public as husband and wife.
The plaintiff assumed the defendant’s surname as her own. Subsequently,
she gave birth to two children who were also given the defendant’s
surname. The parties filed joint income tax returns and maintained joint
bank accounts asserting that they were husband and wife. The defendant
insured the plaintiff as his wife on his medical insurance policy. He also
took out a life insurance policy on her as his wife, naming himself as the
beneficiary. The parties purchased real and personal property as husband
and wife. The plaintiff executed documents and obligated herself on
promissory notes to lending institutions as the defendant’s wife.
During their relationship, the plaintiff contributed childcare and
homemaking services, including cleaning, cooking, laundering, shopping,
running errands, and maintaining the grounds surrounding the parties’
home. Additionally, the plaintiff contributed personal property to the
relationship which she owned at the beginning of the relationship or
acquired through gifts or purchases during the relationship. She served as
hostess for the defendant for social and business-related events.
[P]eriodically, between 1969 and 1975, the plaintiff cooked and cleaned
for the defendant and his employees while his business, a landscaping
service, was building and landscaping a golf course.
From 1973 to 1976, the plaintiff worked 20-25 hours per week at the
defendant’s office, performing duties as a receptionist, typist, and assistant
bookkeeper. From 1976 to 1981, the plaintiff worked 40-60 hours per
week at a business she started with the defendant’s sister-in-law, then
continued and managed the business herself after the dissolution of that
partnership. The plaintiff further alleges that in 1981 the defendant made
their relationship so intolerable that she was forced to move from their
home and their relationship was irretrievably broken. Subsequently, the

957
defendant barred the plaintiff from returning to her business.
The plaintiff alleges that during the parties’ relationship, and because
of her domestic and business contributions, the business and personal
wealth of the couple increased. Furthermore, the plaintiff alleges that she
never received any compensation for these contributions to the relationship
and that the defendant indicated to the plaintiff both orally and through his
conduct that he considered her to be his wife and that she would share
equally in the increased wealth.
The plaintiff asserts that since the breakdown of the relationship the
defendant has refused to share equally with her the wealth accumulated
through their joint efforts or to compensate her in any way for her
contributions to the relationship.

IV
[Plaintiff claims] that she and the defendant had a contract to share
equally the property accumulated during their relationship. The essence of
the complaint is that the parties had a contract, either an express or implied
in fact contract, which the defendant breached.
Wisconsin courts have long recognized the importance of freedom of
contract and have endeavored to protect the right to contract. A contract
will not be enforced, however, if it violates public policy. [Defendant
suggests that] any contract between the parties regarding property division
contravenes public policy because the contract is based on immoral or
illegal sexual activity.
Courts have generally refused to enforce contracts for which the sole
consideration is sexual relations, sometimes referred to as “meretricious”
relationships. Courts distinguish, however, between contracts that are
explicitly and inseparably founded on sexual services and those that are
not. This court, and numerous other courts, have concluded that “a bargain
between two people is not illegal merely because there is an illicit
relationship between the two so long as the bargain is independent of the
illicit relationship and the illicit relationship does not constitute any part of
the consideration bargained for and is not a condition of the bargain.” In
Matter of Estate of Steffes, 290 N.W.2d 697, 709 (1980).
While not condoning the illicit sexual relationship of the parties, many
courts have recognized that the result of a court’s refusal to enforce
contract and property rights between unmarried cohabitants is that one
party keeps all or most of the assets accumulated during the relationship,
while the other party, no more or less “guilty,” is deprived of property
which he or she has helped to accumulate.

958
 [C]ourts recognize that their refusal to enforce what are in other
contexts clearly lawful promises will not undo the parties’ relationship and
may not discourage others from entering into such relationships. A harsh,
per se rule that the contract and property rights of unmarried cohabiting
parties will not be recognized might actually encourage a partner with
greater income potential to avoid marriage in order to retain all
accumulated assets, leaving the other party with nothing.
The plaintiff has alleged that she quit her job and abandoned her career
training upon the defendant’s promise to take care of her. A change in one
party’s circumstances in performance of the agreement may imply an
agreement between the parties.
In addition, the plaintiff alleges that she performed housekeeping,
childbearing, childrearing, and other services related to the maintenance of
the parties’ home, in addition to various services for the defendant’s
business and her own business, for which she received no compensation.
Courts have recognized that money, property, or services (including
housekeeping or childrearing) may constitute adequate consideration
independent of the parties’ sexual relationship to support an agreement to
share or transfer property.
According to the plaintiff’s complaint, the parties cohabited for more
than twelve years, held joint bank accounts, made joint purchases, filed
joint income tax returns, and were listed as husband and wife on other
legal documents. Courts have held that such a relationship and “joint acts
of a financial nature can give rise to an inference that the parties intended
to share equally.” Beal v. Beal, 577 P.2d 507, 510 (Or. 1978). The joint
ownership of property and the filing of joint income tax returns strongly
implies that the parties intended their relationship to be in the nature of a
joint enterprise, financially as well as personally.
We conclude that public policy does not necessarily preclude an
unmarried cohabitant from asserting a contract claim against the other
party to the cohabitation so long as the claim exists independently of the
sexual relationship and is supported by separate consideration.
Accordingly, we conclude that the plaintiff in this case has pleaded the
facts necessary to state a claim for damages resulting from the defendant’s
breach of an express or an implied in fact contract to share with the
plaintiff the property accumulated through the efforts of both parties
during their relationship. [W]e do not judge the merits of the plaintiff’s
claim; we merely hold that she be given her day in court to prove her
claim.

959
 The plaintiff’s [next] theory of recovery involves unjust enrichment.
Essentially, she alleges that the defendant accepted and retained the benefit
of services she provided knowing that she expected to share equally in the
wealth accumulated during their relationship. She argues that it is unfair
for the defendant to retain all the assets they accumulated under these
circumstances and that a constructive trust should be imposed on the
property as a result of the defendant’s unjust enrichment.
Unlike claims for breach of an express or implied in fact contract, a
claim of unjust enrichment does not arise out of an agreement entered into
by the parties. Rather, an action for recovery based upon unjust enrichment
is grounded on the moral principle that one who has received a benefit has
a duty to make restitution where retaining such a benefit would be unjust.
Because no express or implied in fact agreement exists between the
parties, recovery based upon unjust enrichment is sometimes referred to as
“quasi contract,” or contract “implied in law” rather than “implied in fact.”
Quasi contracts are obligations created by law to prevent injustice.
In Wisconsin, an action for unjust enrichment, or quasi contract, is
based upon proof of three elements: (1) a benefit conferred on the
defendant by the plaintiff, (2) appreciation or knowledge by the defendant
of the benefit, and (3) acceptance or retention of the benefit by the
defendant under circumstances making it inequitable for the defendant to
retain the benefit.
As part of his general argument, the defendant claims that the court
should leave the parties to an illicit relationship such as the one in this case
essentially as they are found, providing no relief at all to either party.
As we have discussed previously, allowing no relief at all to one party
in a so-called “illicit” relationship effectively provides total relief to the
other, by leaving that party owner of all the assets acquired through the
efforts of both. Yet it cannot seriously be argued that the party retaining all
the assets is less “guilty” than the other. Such a result is contrary to the
principles of equity. Many courts have held, and we now so hold, that
unmarried cohabitants may raise claims based upon unjust enrichment
following the termination of their relationships where one of the parties
attempts to retain an unreasonable amount of the property acquired
through the efforts of both.
In this case, the plaintiff alleges that she contributed both property and
services to the parties’ relationship. She claims that because of these
contributions the parties’ assets increased, but that she was never
compensated for her contributions. She further alleges that the defendant,
knowing that the plaintiff expected to share in the property accumulated,
“accepted the services rendered to him by the plaintiff” and that it would

960
be unfair under the circumstances to allow him to retain everything while
she receives nothing. We conclude that the facts alleged are sufficient to
state a claim for recovery based upon unjust enrichment.
As part of the plaintiff’s unjust enrichment claim, she has asked that a
constructive trust be imposed on the assets that the defendant acquired
during their relationship. A constructive trust is an equitable device created
by law to prevent unjust enrichment. To state a claim on the theory of
constructive trust the complaint must state facts sufficient to show (1)
unjust enrichment and (2) abuse of a confidential relationship or some
other form of unconscionable conduct. The latter element can be inferred
from allegations in the complaint which show, for example, a family
relationship, a close personal relationship, or the parties’ mutual trust.
These facts are alleged in this complaint or may be inferred. Therefore, we
hold that if the plaintiff can prove the elements of unjust enrichment to the
satisfaction of the circuit court, she will be entitled to demonstrate further
that a constructive trust should be imposed as a remedy.

VI
The plaintiff’s last alternative legal theory on which her claim rests is
the doctrine of partition. The plaintiff has asserted in her complaint a claim
for partition of “all real and personal property accumulated by the couple
during their relationship according to the plaintiff’s interest therein and
pursuant to Chapters 820 and 842, Wis. Stats.”
In Wisconsin partition is a remedy under both the statutes and common
law. Partition applies generally to all disputes over property held by more
than one party.
In this case, the plaintiff has alleged that she and the defendant were
engaged in a joint venture or partnership, that they purchased real and
personal property as husband and wife, and that they intended to share all
the property acquired during their relationship. In our opinion, these
allegations, together with other facts alleged in the plaintiff’s complaint
(e.g., the plaintiff’s contributions to the acquisition of their property) and
reasonable inferences therefrom, are sufficient to state a claim for an
accounting of the property acquired during the parties’ relationship and
partition. We do not, of course, presume to judge the merits of the
plaintiff’s claim. Proof of her allegations must be made to the circuit court.
We merely hold that the plaintiff has alleged sufficient facts in her
complaint to state a claim for relief [for] statutory or common law
partition.

961
 Notes and Questions
1. Meretricious relationship, contract, and partnership. States have
adopted three quite different approaches to the problem of property rights
between unmarried cohabitants upon dissolution of the relationship. The
early approach was to deny any remedy on the ground that a relationship
between unmarried cohabitants violates public policy reflected in statutes
encouraging marriage and prohibiting common law marriage. Hewitt v.
Hewitt, 394 N.E.2d 1204, 1207-1208 (Ill. 1979), is illustrative:

There are major public policy questions involved in determining whether,

under what circumstances, and to what extent it is desirable to accord some
type of legal status to claims arising from such relationships. Of substantially
greater importance than the rights of the immediate parties is the impact of
such recognition upon our society and the institution of marriage. Will the
fact that legal rights closely resembling those arising from conventional
marriages can be acquired by those who deliberately choose to enter into
what have heretofore been commonly referred to as “illicit” or
“meretricious” relationships encourage formation of such relationships and
weaken marriage as the foundation of our family-based society? Does not the
recognition of legally enforceable property and custody rights emanating
from nonmarital cohabitation in practical effect equate with the legalization
of common law marriage?

Although a few states still follow this approach, today almost all states
that have considered the issue allow enforcement of some agreements
between the parties to provide support in exchange for non- sexual
services. As noted in the leading case of Marvin v. Marvin, 557 P.2d 106
(Cal. 1976), “[t]he fact that a man and woman live together without
marriage, and engage in a sexual relationship, does not in itself invalidate
agreements between them relating to their earnings, property, or expenses.
Agreements between nonmarital partners fail only to the extent that they
rest upon a consideration of meretricious sexual services.” Id. at 113. In
these cases, a central question is how explicit the agreement needs to be
and whether an agreement can be inferred from the conduct of the parties.
Some jurisdictions require that such agreements be in writing. Posik v.
Layton, 695 So. 2d 759 (Fla. App. 1997), for example, adopted this
approach in enforcing a written agreement by Dr. Nancy Layton to support
Emma Posik in the amount of $2,500 per month for the rest of her life in
exchange for her agreeing to give up her career as a nurse at the hospital
where they met, move to Brevard County with her, and maintain and take
care of their home. Four years later, Layton sought to move another
woman into the house and served a notice of eviction on Posik. Although

962
the trial court refused to enforce the agreement, the court of appeals
reversed:

Certainly, even though the agreement was couched in terms of a personal

services contract, it was intended to be much more. It was a nuptial
agreement entered into by two parties that the state prohibits from marrying.
But even though the state has prohibited same-sex marriages and same-sex
adoptions, it has not prohibited this type of agreement. By prohibiting same-
sex marriages, the state has merely denied homosexuals the rights granted to
married partners that flow naturally from the marital relationship. But the
State has not denied these individuals their right to either will their property
as they see fit nor to privately commit by contract to spend their money as
they choose.
[A]n agreement for support between unmarried adults is valid unless the
agreement is inseparably based upon illicit consideration of sexual services. .
. . Because of the potential abuse in marital-type relationships, we find that
such agreements must be in writing. The Statute of Frauds (section 725.01,
Florida Statutes) requires that contracts made upon consideration of marriage
must be in writing. This same requirement should apply to non-marital,
nuptial-like agreements.

Id. at 761-762. In 2010, the New Jersey Legislature amended its statute of
frauds to require contracts to provide support to unmarried partners to be
in writing and signed by the promisor, abrogating earlier decisions. N.J.
Stat. §25:1-5; Maeker v. Ross, 62 A.3d 310 (N.J. Super. Ct. App. Div.
2013) (holding that that statute barred enforcement of agreements made
before its enactment even if agreement was broken post-enactment).
Other courts enforce oral agreements, but require the agreement to be
express rather than implied from the conduct of the parties. The New York
Court of Appeals adopted this approach in Morone v. Morone, 413 N.E.2d
1154, 1157 (N.Y. 1980). Justice Bernard Meyer explained,

[I]t is not reasonable to infer an agreement to pay for the services rendered
when the relationship of the parties makes it natural that the services were
rendered gratuitously. As a matter of human experience personal services
will frequently be rendered by two people living together because they value
each other’s company or because they find it a convenient or rewarding thing
to do. For courts to attempt through hindsight to sort out the intentions of the
parties and affix jural significance to conduct carried out within an
essentially private and generally noncontractual relationship runs too great a
risk of error.

Id. at 1157.

963
 The third approach provides for property distribution even though the
parties were not legally married and did not enter any agreement
pertaining to support or property rights. As suggested by the Wisconsin
Supreme Court in Watts, this may be based on either finding an implied
agreement to pool resources from the conduct of the parties or by imposing
a constructive trust to avoid unjust enrichment. These cases consider
factors such as whether the parties held joint accounts or property in
common, sacrificed paid employment for work in the home, worked in the
other partner’s business, and contributed financially to the purchase of
property in the other partner’s name. See Sullivan v. Rooney, 533 N.E.2d
1372 (Mass. 1989); Pickens v. Pickens, 490 So. 2d 872 (Miss. 1986);
Wallender v. Wallender, 870 P.2d 232 (Or. 1994); Connell v. Francisco,
898 P.2d 831 (Wash. 1995); In re Marriage of Lindsey, 678 P.2d 328
(Wash. 1984). In Pickens, for example, the Mississippi Supreme Court
found that the parties had created a relationship akin to a partnership.
“Where parties such as these live together in what must at least be
acknowledged to be a partnership and where, through their joint efforts,
real property or personal property, or both, are accumulated, an equitable
division of such property will be ordered upon the permanent breakup and
separation.” 490 So. 2d at 875-876. This approach rests on the assumption
that the parties relied on each other and that both contributed to their
ongoing relationship. Recovery is allowed based on the nature of the
relationship rather than on a real or fictitious contract between the parties.
Instead of finding a contract implied in fact from the conduct of the parties
evidencing their actual intent to agree, the court imposed an agreement
implied in law, which is binding on the parties regardless of their assent.
This approach was proposed by the American Law Institute in the
Principles of the Law of Family Dissolution §§6.01-6.06, adopted in 2002.
Some scholars have defended this approach as protective of the justified
expectations of the parties to the relationship, see Nancy D. Polikoff,
Making Marriage Matter Less: The ALI Domestic Partner Principles Are
One Step in the Right Direction, 2004 U. Chi. Legal F. 353, while others
have criticized it for imposing obligations on individuals who did not
voluntarily assume them and who may have deliberately chosen to eschew
such obligations. See Marsha Garrison, Is Consent Necessary? An
Evaluation of the Emerging Law of Cohabitant Obligation, 52 UCLA L.
Rev. 815 (2005)).
Which approach best promotes gender equality?
2. Constructive trust. In Sullivan v. Rooney, 533 N.E.2d 1372 (Mass.
1989), the court imposed a constructive trust on a house in which an

964
unmarried couple with a long-term relationship had lived for several years.
The trial court found that the parties thought of the purchase as a joint
transaction, although the defendant placed title in his name alone,
explaining to the plaintiff that this was necessary to get 100 percent
Veterans’ Administration financing. The court found that the defendant
had repeatedly promised to place the house in both of their names, but
never did. The defendant paid the mortgage obligations, taxes, utilities,
and insurance on the house, while the plaintiff put all her savings and
earnings as a waitress into the house, paying for the food, household
supplies and furniture, and doing all the housework and entertaining the
defendant’s colleagues. The Supreme Judicial Court of Massachusetts
upheld the trial court’s order placing a constructive trust on the home:

The judge’s unchallenged findings of fact demonstrate that there was a

fiduciary relationship between the parties and that the defendant violated his
fiduciary duty to the plaintiff. Equitable principles impose a constructive
trust on property to avoid the unjust enrichment of a party who violates his
fiduciary duty and acquires that property at the expense of the person to
whom he owed that duty. Here the plaintiff was less educated (a high school
graduate) and less experienced (she is a waitress) than the defendant (a career
army officer attending law school at the time of the purchase of the house).
She relied on him over a long period in important matters. That reliance was
reasonable, and the defendant knew of and accepted the plaintiff’s trust in
him.
It would be unjust not to impose a constructive trust in this case. The
plaintiff gave up her career as a flight attendant and undertook to maintain a
home for the defendant while he advanced his career. She contributed her
earnings and services to the home. The defendant’s assurances to the plaintiff
that they would own the property together (although title would be taken
only in his name), his later promises to transfer title to joint ownership, and
the plaintiff’s reasonable reliance on those promises made by one in whom
she reasonably placed special confidence call for the imposition of a
constructive trust in the plaintiff’s favor on one-half the Reading property.

Id. at 1373-1375. Five years later, in Collins v. Guggenheim, 631 N.E.2d

1016 (Mass. 1994), the same court considered a case in which an
unmarried couple had jointly taken out loans, invested in, and labored on a
rundown farm titled in the woman’s name to turn it into a profitable pick-
your-own business. The court refused to impose a constructive trust on the
farm in favor of the man, finding that Massachusetts had refused to accord
unsolemnized relationships the incidents of marriage, and that in the
absence of “fraud, breach of fiduciary duty or other misconduct,” a
constructive trust would not be imposed. Id. at 1017. The court did not cite

965
its decision in Sullivan. How would you explain the different results?
3. Property rights on death. In Williams v. Mason, 556 So. 2d 1045
(Miss. 1990), Roosevelt Adams promised Frances Mason in 1962 that if
she would live in his home, take care of him, and “do his bidding,” he
would leave her all his property on his death. Mason lived with Adams for
more than 20 years. When Adams died, he left a farm but, unfortunately,
not a will or, indeed, any written memorandum of his promise to Mason.
Adams never divorced his wife, who lived in Chicago, and he never
promised to marry Mason. The court held that the promise to devise the
property was unenforceable because it was not in writing, as required by
the statute of frauds. Quoting Justice Oliver Wendell Holmes, the court
explained:

“We are aware that by our construction of Pub. Sts. C. 141, §1, the statute
of frauds may be made an instrument of fraud. But this is always true,
whenever the law prescribes a form for an obligation. The very meaning of
such a requirement is that a man relies at his peril on what purports to be
such an obligation without that form.” Bourke v. Callahan, 35 N.E. 460
(Mass. 1893).
Notwithstanding these well settled principles, experience has taught that
gross unfairness may result where one acts in good faith and lives up to an
oral agreement to provide services for another under circumstances such as
today’s. Our law has seen in such situations a potential for unjust enrichment,
if not fraud. In recognition of these practical realities, the positive law of this
state directs that a person, who provides services to another in good faith and
in consequence of an oral agreement to devise property in exchange for the
services, is not without enforceable rights. These rights arise not out of the
agreement but the conduct of the parties. The promisee activates the rights
the law affords by performing the services in good faith reliance on the
promise.
When the parties have so acted with respect one to the other, that is, when
one has provided services for the other in reasonable reliance upon a promise
to give consideration there for, our cases are legion that, upon the death of
the promisor, the promisee may recover of and from the estate on a quantum
meruit basis. In such cases the amount of recovery is limited to the monetary
equivalent of the reasonable value of the services rendered to the decedent
for which payment has not been received. Said sum becomes a charge
against the assets of the estate.
Our law recognizes an additional basis upon which — assuming proper
proof — a person such as Mason may recover. Where parties live together
without benefit of marriage and where, through their joint efforts, [they]
accumulate real property or personal property, or both, a party having no
legal title nevertheless acquires rights to an equitable share enforceable at

966
 law. Pickens v. Pickens, 490 So. 2d 872, 875-876 (Miss. 1986).

The New Jersey Supreme Court similarly held that an unmarried

companion may receive a share of the decedent’s estate in In re Estate of
Roccamonte, 808 A.2d 838 (N.J. 2002), but the legislature later abrogated
this result by amending the statute of frauds to require promises of support
between those in “non-marital personal relationships” to be in writing. N.J.
Stat. §25:1-5(h).

Problem
Although state constitutional provisions prohibiting same-sex marriage
are invalid after Obergefell v. Hodges, 135 S. Ct. 2584 (2015), other
language in those amendments may affect the property rights of all
unmarried couples. For example, the Ohio constitutional amendment
reads:

Only a union between one man and one woman may be a marriage valid in
or recognized by this state and its political subdivisions. This state and its
political subdivisions shall not create or recognize a legal status for
relationships of unmarried individuals that intends to approximate the design,
qualities, significance or effect of marriage.

Ohio Const. art. XV, §11. The amendment to the Arkansas constitution
reads:

Marriage consists only of the union of one man and one woman. Legal status
for unmarried persons which is identical or substantially similar to marital
status shall not be valid or recognized in Arkansas, except that the legislature
may recognize a common law marriage from another state between a man
and a woman.

Ark. Const. amend. LXXXIII, §§1, 2. Does the Ohio constitutional

amendment prohibit Ohio courts from dividing the property of an
unmarried male-female couple when they break up, as the Wisconsin court
did in Watts v. Watts? Does the Arkansas amendment? What is the effect
of Obergefell, which specifically focused on the importance of marriage,
on such provisions? Might Obergefell’s emphasis on the importance of
marriage even support disparate treatment of those who choose not to
marry even though marriage is available to them?

§4 ENTITY PROPERTY

967
 One traditional view of property is that ownership carries with it the
right to control the thing that is owned; if the owner manages the resource
well, she will benefit, and if she doesn’t, she will suffer accordingly. Self-
interest will therefore tend to result in the efficient management of
property. See Harold Demsetz, Toward a Theory of Property Rights, 57
Am. Econ. Rev. 347 (1967). This view has its limits even when someone
wholly owns property as an individual, see Chapter 2, §3.2, but it is
particularly challenged in the increasingly common situation where people
own property in the form of a stake in an entity whose size and nature can
deprive them of meaningful governance rights. Corporations are the most
important example of this, dividing the ownership of shares in the
corporation from operational control by managers and boards of directors.
Common interest developments similarly place control in the hands of
owners associations in which an individual owner may have little voice.
Trusts, limited partnerships, limited liability companies, and a range of
other entity types likewise divide the ownership of property from control.
These forms of entity ownership raise questions of efficient and just
management and the public role in regulating private relationships. To
understand why, consider the following reading.

Adolf A. Berle & Gardner C. Means, The Modern Corporation and

Private Property

1-3, 7-8, 121, 124-125 (1932)

Corporations have ceased to be merely legal devices through which the
private business transactions of individuals may be carried on. Though still
much used for this purpose, the corporate form has acquired a larger
significance. The corporation has, in fact, become both a method of
property tenure and a means of organizing economic life. Grown to
tremendous proportions, there may be said to have evolved a “corporate
system” — as there was once a feudal system — which has attracted to
itself a combination of attributes and powers, and has attained a degree of
prominence entitling it to be dealt with as a major social institution.
In its new aspect the corporation is a means whereby the wealth of
innumerable individuals has been concentrated into huge aggregates and
whereby control over this wealth has been surrendered to a unified
direction. The power attendant upon such concentration has brought forth
princes of industry, whose position in the community is yet to be defined.
The surrender of control over their wealth by investors has effectively
broken the old property relationships and has raised the problem of
defining these relationships anew. The direction of industry by persons

968
other than those who have ventured their wealth has raised the question of
the motive force back of such direction and the effective distribution of the
returns from business enterprise.
[This new] organization of economic activity rests upon two
developments, each of which has made possible an extension of the area
under unified control. The factory system, the basis of the industrial
revolution, brought an increasingly large number of workers directly under
a single management. Then, the modern corporation, equally revolutionary
in its effect, placed the wealth of the innumerable individuals under the
same central control. By each of these changes the power of those in
control was immensely enlarged and the status of those involved, work or
property owner, was radically changed. The independent worker who
entered the factory became a wage laborer surrendering the direction of his
labor to his industrial master. The property owner who invests in a modern
corporation so far surrenders his wealth to those in control of the
corporation that he has exchanged the position of independent owner for
one in which he may become merely recipient of the wages of the capital.
Outwardly the change is simple enough. Men are less likely to own the
physical instruments of production. They are more likely to own pieces of
paper, loosely known as stocks, bonds, and other securities, which have
become mobile through the machinery of the public markets. Beneath this,
however, lies a more fundamental shift. Physical control over the
instruments of production has been surrendered in ever growing degree to
centralized groups who manage property in bulk, supposedly, but by no
means necessarily, for the benefit of the security holders. Power over
industrial property has been cut off from the beneficial ownership of this
property — or, in less technical language, from the legal right to enjoy its
fruits. Control of physical assets has passed from the individual owner to
those who direct the quasi-public institutions, while the owner retains an
interest in their product and increase. We see, in fact, the surrender and
regrouping of the incidence of ownership, which formerly bracketed full
power of manual disposition with complete right to enjoy the use, the
fruits, and the proceeds of physical assets. There has resulted the
dissolution of the old atom of ownership into its component parts, control
and beneficial ownership.
This dissolution of the atom of property destroys the very foundation
on which the economic order of the past three centuries has rested. Private
enterprise, which has molded economic life since the close of the middle
ages, has been rooted in the institution of private property. Under the
feudal system, its predecessor, economic organization grew out of mutual
obligations and privileges derived by various individuals from their

969
relation to property which no one of them owned. Private enterprise, on the
other hand, has assumed an owner of the instruments of production with
complete property rights over those instruments. Whereas the organization
of feudal economic life rested upon an elaborate system of binding
customs, the organization under the system of private enterprise has rested
upon the self-interest of the property owner — a self-interest held in check
only by competition and the conditions of supply and demand. Such self-
interest has long been regarded as the best guarantee of economic
efficiency. It has been assumed that, if the individual is protected in the
right both to use his own property as he sees fit and to receive the full
fruits of its use, his desire for personal gain, for profits, can be relied upon
as an effective incentive to his efficient use of any industrial property he
may possess.
In the quasi-public corporation, such an assumption no longer holds.
As we have seen, it is no longer the individual himself who uses his
wealth. Those in control of that wealth, and therefore in a position to
secure industrial efficiency and produce profits, are no longer, as owners,
entitled to the bulk of such profits. Those who control the destinies of the
typical modern corporation own so insignificant a fraction of the
company’s stock that the returns from running the corporation profitably
accrue to them in only a very minor degree. The stockholders, on the other
hand, to whom the profits of the corporation go, cannot be motivated by
these profits to a more efficient use of the property, since they have
surrendered all disposition of it to those in control of the enterprise. The
explosion of the atom of property destroys the basis of the old assumption
that the quest for profits will spur the owner of the individual property to
its effective use. It consequently challenges the fundamental economic
principle of individual initiative in industrial enterprise. It raises for
reexamination the question of the motive force back of industry, and the
ends for which the modern corporation can be or will be run.
When the owner was also in control of his enterprise he could operate
it in his own interest and the philosophy surrounding the institution of
private property has assumed that he would do so. This assumption has
been carried over to present conditions and it is still expected that
enterprise will be operated in the interests of the owners. But have we any
justification for assuming that those in control of a modern corporation
will also choose to operate it in the interests of the owners? The answer to
this question will depend on the degree to which the self-interest of those
in control may run parallel to the interest of ownership and, insofar as they
differ, on the checks on the use of power which may be established by
political, economic, or social conditions.

970
 The recognition that industry has come to be dominated by these
economic autocrats must bring with it a realization of the hollowness of
the familiar statement that economic enterprise in America is a matter of
individual initiative. To the dozen or so men in control, there is room for
such initiative. For the tens and even hundreds of thousands of workers
and of owners in a single enterprise, individual initiative no longer exists.
Their activity is group activity on a scale so large that the individual,
except he be in position of control, has dropped into relative
insignificance. At the same time the problems of control have become
problems in economic government.

Henry N. Butler, The Contractual Theory of the Corporation

11 Geo. Mason U. L. Rev. 99, 101-102, 106, 110, 120-121 (1989)

A major intellectual theme in the study of the modern corporation is
the “separation of ownership and control” thesis, which was first
popularized by Adolf A. Berle and Gardiner C. Means, in 1932 in their
famous book. [T]he Berle and Means thesis has provided the basis for
many calls for more stringent legal controls on managerial behavior. This
area of corporate policy is called “corporate governance,” which refers to
the manner in which the relations between the parties to the corporate
contract are restrained by government regulation or private ordering.
[In contrast,] agency theory suggests that unity of ownership and
control is not a necessary condition of efficient performance of a firm.
This perspective stresses the voluntary, contractual nature of the
corporation. [T]he contractual theory of the corporation [depends on] the
Efficient Capital Markets Hypothesis. The hypothesis states, in most basic
terms, that securities prices are efficient in that they accurately reflect all
publicly available information about the security.
The basic mechanism of market efficiency is that information about a
firm continually alters investor expectations about future returns and hence
the prices at which they will sell and buy their securities. This information
reaches investors in a wide variety of ways, including voluntary and
mandatory disclosures by firms, stories in the media, reports by securities
analysts, and disclosure of insider trades. The efficient markets hypothesis
is important because it means that corporate contracts that harm investor
interests will be recognized and punished by price reductions in the
market. Incorporation in a state with corporation law that facilitates
managerial abuse of shareholders, for example, will result in lower share
prices than would be found if the same firm were incorporated in a state
with a different corporation law.

971
 From a legal perspective, where the concern is often with fairness
rather than efficiency, the efficient capital markets hypothesis means that
securities markets are fair in the sense that a corporate shareholder gets
what he is paying for in both the terms of the contract and the substantive
nature of the product, including the quality of management. The
contractual theory of the corporation suggests that share prices will not
only be fair, but also that corporate managers will have incentives to
maximize share value.
[T]he realities of the corporate agency relationship dictate that the
corporation’s managers select the contractual terms that are then offered to
potential investors. In order to raise capital at the lowest possible price,
managers must offer contract terms — including evidence of the existence
of intra-firm incentive structures — that convince investors that agency
costs will be minimized. The managers of firms select the mix of legal and
market governance mechanisms that is optimal given the particular
circumstances of the firm. The “nexus of contracts” specifies the extent of
reliance upon differing mechanisms. Managers substitute among the
various governance mechanisms until the marginal net productivity of
each mechanism is equal. The corporate governance mechanisms, when
combined in the manner most appropriate for the particular circumstances
of each firm, resolve most of the conflicts between shareholders and
managers. Freedom of contract allows the parties to structure their
relations in a manner that ameliorates most of the problems inherent in the
large corporation.
[T]he contractual theory of the corporation offers a new perspective on
the corporation and the role of corporation law. The corporation is in no
sense a ward of the state; it is rather, the product of contracts among the
owners and others. Once this point is fully recognized by the state
legislators and legal commentators, the corporate form may finally be free
of unnecessary and intrusive legal chains.

Notes and Questions

1. The increasing importance of entity ownership. Berle and Means
were writing during the Great Depression at a time when widespread
public ownership of companies was relatively novel. Today it represents a
significant fraction of property that people in the U.S. own. In 2011, the
total U.S. household net worth — assets minus liabilities — was about
$40.2 trillion. About 25 percent of this represented equity in people’s
homes. At the same time, however, Americans held 15 percent of their net
assets in stocks and mutual funds and another 31 percent in various forms

972
of retirement accounts. This represents a fundamental shift even over the
last generation. In 1984, over 40 percent of aggregate U.S. assets were in
home equity, while only 7 percent of American’s wealth was held in
stocks and mutual funds, and a mere 2 percent was held in retirement
accounts. Alfred Gottschalck et al., Household Wealth in the U.S.: 2000 to
2011 (Census Bureau, March 2013), available at
www.census.gov/people/wealth/files/Wealth%20Highlights%202011.pdf.
Assets in stocks and similar investments are very unevenly held, but more
than half of Americans own some stock. See Catherine Rampell, Stock
Markets Rise, but Half of Americans Don’t Benefit, N.Y. Times, May 8,
2013.
2. Splitting the atom of ownership and control. What does it mean to
“own” a portion of a corporation? Typically, shares may be sold, used as
collateral for debt, devised, and passed by intestacy. But there may be
thousands or even millions of other shareholders, particularly for large,
public companies. Berle and Means identified a central problem with the
basic structure of entity ownership that flows from this broad diffusion of
ownership, which we now call agency costs. Berle and Means argued that
the separation of ownership from control means that corporate managers
and directors (the agents) are likely to have a different agenda than
shareholders (the principals).
As Berle and Means noted, how serious this divergence between
principal and agent is “will depend on the degree to which the self-interest
of those in control may run parallel to the interest of ownership.” What
might lead managers to have different interests than shareholders?
There are a number of legal mechanisms designed to manage this
principal-agent problem. For example, corporate law generally recognizes
that officers and directors have fiduciary duties to act in the best interests
of shareholders. See Hillary A. Sale, Delaware’s Good Faith, 89 Cornell
L. Rev. 456 (2004) (discussing duties of due care, loyalty, and good faith).
While it can be difficult for shareholders to enforce these duties, given the
deference that courts give to managerial decisions, see note 4, below, the
obligation nonetheless serves as a norm for officers and directors.
Moreover, corporations — and business entities more generally — are
subject to oversight federal and state regulation, some of which polices the
relationship between management and ownership. The Securities and
Exchange Commission, for example, regulates disclosure requirements for
public companies and has used this authority to try to improve shareholder
governance. See, e.g., Securities and Exchange Commission, Final Rule,
Facilitating Shareholder Director Nominations (Nov. 15, 2010) (codified

973
in various parts of 17 C.F.R. pts. 200, 232, 240 and 249) (requiring public
companies to include nominees of significant, long-term shareholders in
the materials they provide to shareholders for voting).
However, much of corporate law is permissive, giving business entities
latitude to structure investor governance rights. This has given rise to
shareholder activism, particularly on the part of large institutional
investors such as pension funds, with a focus on leveraging what has
traditionally been passive investment into more meaningful oversight and
even direct election of corporate board members. John H. Biggs,
Shareholder Democracy: The Roots of Activism and the Selection of
Directors, 39 Loy. U. Chi. L.J. 493 (2008).
If these mechanisms fail, what other recourse do shareholders have?
3. Property versus contract in corporate governance. As Professor
Butler notes, the nexus of contracts theory of corporate governance came
to dominate corporate law theory in the 1970s. The nexus of contracts
theory conceives of the corporation as an efficient conduit through which
parties make and organize vast numbers of private agreements. The
implication of this view is that capital markets will discipline corporate
managers, leaving little justification for further legal ordering to mediate
the relationship between shareholders and managers. What might
undermine the ability of shareholders to price the structure of corporate
management accurately? When might it be better to regulate governance
rather than rely on price mechanisms, which depend on shareholders who
are dissatisfied with management being able to sell their shares?
Today, scholars are revisiting the contract-based theory of the
corporation, arguing that property-based perspectives are crucial. See John
Armour & Michael J. Whincop, The Proprietary Foundations of
Corporate Law, 27 Oxford J. Legal Stud. 429 (2007); Henry Hansmann &
Reinier Kraakman, The Essential Role of Organizational Law, 110 Yale
L.J. 387 (2000). What is at stake in the distinction? First, property rights
are generally good not simply against parties and intended beneficiaries to
an agreement, but against many unknown parties. For example, personal
creditors of the shareholders, the directors, and the managers, may not
generally reach corporate assets, and owners and creditors of the
corporation have their rights prioritized against each other despite the
absence of agreements between them. Second, while contract law begins
from a presumption of infinite contractual forms, property law tends to
limit the forms in which property may be held (the rule against creation of
new estates or numerus clausus principle). See Chapter 10, §5.1. Because
property rights are good against the public generally, property forms are

974
limited to ensure that they serve public interests and provide notice to
those who may be affected by them. A property-based theory therefore
places more focus on the organizational form of the corporate entity and
the balance of rights between owners and third parties affected by the
activities of the corporation or its agents.
4. The limits of owner control. Owners who wish to enforce the
fiduciary obligations of corporate management can file a shareholder
derivative suit on behalf of the corporation against the corporation’s
directors or officers. Such suits, however, face a number of procedural
hurdles, and liability is judged by the extremely deferential business
judgment rule. In Salsitz v. Nasser, 208 F.R.D. 589 (E.D. Mich. 2002), for
example, a shareholder in the Ford Motor Company alleged that board
members had breached their fiduciary duty of care for three major
management decisions. The court rejected these claims:

“A basic premise of corporate governance under Delaware law is that the

directors, rather than the shareholders, manage the business and affairs of the
corporation.” McCall v. Scott, 239 F.3d 808, 816 (6th Cir. 2001) (citing
Aronson v. Lewis, 473 A.2d 805, 811 (Del. 1984)). Shareholders, thus, are
permitted to challenge the propriety of decisions made by directors under
their authority, only by overcoming “the powerful presumptions of the
business judgment rule.” Id.
[The business judgment rule] provides that “whether a judge or jury
considering [a business decision] after the fact, believes a decision
substantively wrong, or degrees of wrong extending through ‘stupid’ to
‘egregious’ or ‘irrational,’ provides no ground for director liability, so long
as the court determines that the process employed was either rational or
employed in a good faith effort to advance corporate interests.” In re
Caremark Internat’l Inc. Derivative Litigation, 698 A.2d 959, 967 (Del. Ch.
1996). Thus, a court may not consider “the content of the board decision that
leads to corporate loss, apart from consideration of the good faith or
rationality of the process employed.” Id. at 591.

Id. Accepting the allegations of the complaint as true, the court then
reviewed the three alleged fiduciary breaches. The first involved
something called the “TFI module”:

The TFI module is a computerized ignition system that was installed by

Ford in a number of vehicle models directly onto the engine block. It is
alleged that the TFI has a propensity to fail and thereby shut down the engine
if overheated. Engineers began to raise warnings about TFI module
overheating and malfunctioning as early as 1982. In May 1982, Ford

975
 engineers compiled a list of components that could cause a “quits on road”
condition — a failure that causes the vehicle to shut down while being
driven. While the document questioned whether a recall was necessary, the
Company took no corrective action; it also continued to tell [the National
Highway Traffic Safety Administration (NHTSA)] there was no “common
pattern or cause” behind the complaints about stalling. A warranty analysis
conducted in January 1984 demonstrated that the TFI — which was
supposed to last for the lifetime of the vehicle — would fail at a rate of 56%
at five years or 50,000 miles.
Ford’s Policy and Strategy Committee, which included some of the
Defendants, repeatedly discussed the risks and problems inherent in the TFI
mechanism. On March 12, 1985 the committee discussed problems with the
TFI module and concluded in an internal document that “ ‘stall’ rates on
1985 model Tempos-Topazes were unchanged from the year earlier.” The
committee claimed that stalling problem was not a safety issue. The
committee would have been required to report safety issues to NHTSA.
NHTSA has recently obtained information regarding the TFI and has found
that Ford improperly withheld this information, because it was, in fact, safety
related.
[A report] delivered to Ford’s president on or about November 5, 1986,
indicated that the total cost of correcting the TFI problems would have cost
Ford approximately only $200 million more than the expected cost for one
year of warranty related repairs. Ford was also aware that about 10% of TFI
modules would have stalling problems in 1986. On November 13, 1986,
Ford’s President gave the Board a status report on the ongoing TFI problem.
The Board at this time concluded that a recall was “not feasible” because the
Company did not have sufficient replacement parts. The TFI issue was
discussed at Board meetings held in December 1987, January 1989, and
October 1991. In 1995, Ford finally stopped attaching the TFI module to the
distributor.
Ford settled four lawsuits involving serious injuries and deaths arising out
of the TFI defect. On August 30, 2000, Judge Ballachey, a California state
judge presiding over litigation arising out of the TFI defect accused Ford of
engaging in an enormous cover-up by concealing the TFI design defect from
regulators and consumers. That case was settled in 2001. Settlement was
reported as having the potential of costing Ford as much as $2.7 billion.
Judge Ballachey also blamed Ford for a corporate culture in which
executives understood that their careers would be ruined if they reported
design defects. The judge stated that the testimony of a top Ford engineer’s
reluctance to convey bad news about the ignition module reminded him of
“The Emperor’s New Clothes.” Other actions regarding the TFI module are
pending in five other states.

Id. at 593-594. The second disagreement involved allegations about

976
Bridgestone/Firestone tires:

In 1990, the Ford Explorer was introduced to replace the Bronco II, which
had attracted unfavorable publicity after the vehicle was widely linked to
rollovers. The reported problems with Bronco II should have alerted Ford to
take extra precautions with the Explorer. Ford intentionally designed the
Explorer with a high center of gravity to take advantage of the Bronco II’s
rugged SUV image. A 1990 internal Ford memorandum observed that “[t]he
relative high engine position of the Explorer, unchanged from the Bronco II,
prevents further significant improvement in stability.”
At least two tire manufacturers, Michelin and Firestone, competed to
supply tires for the new Explorer. Michelin has at all times held a world-wide
reputation for high safety standards; Firestone, on the other hand, has had a
long history of quality and manufacturing problems, including tread
separation problems that in 1978 resulted in a forced recall of 13 million
Firestone “500” tires. As a result of the 1978 tire problems, which were
linked to 41 deaths, Firestone faced more than 250 personal injury lawsuits, a
host of class action suits, and a virtual rebellion by customers. Firestone was
crippled financially by the 1978 recall and only managed to limp through the
1980’s until 1988, when it was acquired by Bridgestone, a Japanese
corporation. Firestone was founded by the great-grandfather of Defendant
William Clay Ford, Jr., and the Ford Company has maintained a close
relationship with Firestone since 1906. In 1990 Ford chose Firestone to
supply the tires for its new Explorer. Ford’s Board deferred all tire safety
oversight and monitoring to Firestone. Ford kept no safety records on the
Firestone tires installed on Explorers.
In part to compensate for the SUV’s high center of gravity, Ford
recommended that Explorer owners under-inflate their tires to ensure a
smooth ride. Ford was aware that under-inflation would result in excessive
pressure on the tire belts and also contribute to heat building up in tires, both
factors that could increase the occurrence of tread separation. As early as
1992, motorists in Saudi Arabia and Venezuela complained that they were
experiencing blowouts while driving Ford vehicles equipped with Firestone
tires. In a widely reported accident on September 5, 1996, TV reporter
Stephen Gauvain was thrown from his Explorer and killed when the tread
suddenly separated from one of his original-issue Firestone tires. In October
1998, Ford itself noted problems of tread separation on Firestone tires
mounted on the Explorer and other light truck models in Venezuela and sent
examples of the failed tires to Firestone for analysis.
It was not until August 1999, that Ford quietly began replacing Firestone
tires with tread separation problems on Explorers previously sold in Saudi
Arabia. Ford, however, did not publicly disclose its safety concerns with the
tires, and instead concealed the true purpose behind the offer to replace tires,
terming it a “customer notification enhancement action.” Ford also failed to

977
 inform NHTSA of its actions in Saudi Arabia. This failure to report was in
response to, inter alia, the specific request of Firestone, which was concerned
that reporting the Saudi recall would prompt costly regulatory scrutiny in the
United States. More than a year before initiating any public education and/or
recall procedures in the United States, Ford had come under fire for
beginning a Firestone tire recall in 16 foreign countries. On August 9, 2000,
Firestone announced a region by region recall of more than 6.5 million tires,
the majority of which had been installed by Ford on its Explorer and other
light truck models. As a result of the tire/roll-over debacle, Ford has been
named in a number of class action lawsuits.

Id. at 595-597. Finally, a third set of allegations involved the company’s

materials reserves.

On January 2002, Ford disclosed that it was required to take a $1 billion

write-off on the value of its stockpile of precious metals, primarily
palladium. Ford left the job of acquiring palladium to the same purchasing-
department employees who normally buy its steel and copper. These
purchasing department personnel failed to coordinate with Ford’s treasury
department personnel and thus did not take the sort of basic precautions a
reasonably sophisticated buyer routinely would use to hedge the inherent
financial risk involved in high dollar purchases in clearly recognized
potentially volatile markets. Likewise the purchasing department failed to
stay in reasonable contact with Ford’s engineering department, and thus was
unaware of Ford’s own engineering innovations which were continuing to
shrink the Company’s need for the metal at the same time that the Company
was increasing its purchases. Consequently, not only does Ford now find
itself holding a huge over-supply of palladium, but, because the prices of the
metal have recently fallen drastically and Ford failed to ensure its positions
in the metal were properly hedged, the Company must now take the $1
billion dollar write-off.

Id. at 599. The court rejected these claims under the business judgment
rule, finding that the board had either rationally considered each decision
in good faith or, in the case of the palladium write-off, was unaware of the
problem.
Would private shareholder interests and public interests in well-
functioning corporations be better served by a more stringent standard of
review? Or would the potential for more retrospective scrutiny prevent
corporate directors from acting creatively and effectively to enhance
corporate productivity?
5. Who owns the corporation? It is a traditional assumption of
corporate law that managers are obligated to act on behalf of shareholders

978
as the owners of the entity. But what obligations does management have to
other stakeholders in the entity, such as employees, bondholders, or even
the community in which the company does business?
Professor Kent Greenfield has argued that employees should be
represented on the board of directors, and that directors’ fiduciary duties
should extend to employees, not just shareholders. Kent Greenfield, The
Place of Workers in Corporate Law, 39 B.C. L. Rev. 283 (1998). Professor
Greenfield rejects the argument that the nature of corporate ownership
dictates the obligations of management:

The property-based justification for shareholder dominance begs the

question, of course. Asking whether directors should owe fiduciary duties to
workers or whether workers should have a say in electing directors is, in one
sense, simply asking again whether shareholders should “own” the firm. One
cannot answer this question simply by saying that the shareholders own the
firm. At heart, the property-based conception attempts to answer the question
of why shareholders are dominant in corporate law simply by reference to the
fact that they are dominant in corporate law.

Id. at 290-291. What consequences would an expanded view of corporate

ownership hold? What are the best arguments in favor and against the
traditional view of the obligations of management to shareholders as
owners?
6. Property in other common entity forms. The basic corporate form
has a number of variations based on state law and federal tax treatment,
but it is only one of an array of common types of entity ownership. Like
the menagerie of common law estates, each form carries with it certain
default characteristics and some latitude for the participants to vary those
defaults. There are significant technical regulatory, governance, and tax
implications to the selection of entity form for ownership, but property
lawyers must have at least a basic familiarity with the range of options.
a. Partnerships. The partnership is a long-standing form of
collective ownership. Partnerships may be either general partnerships
or limited partnerships. Although a general partnership is a separate
legal entity, it does not divide ownership from control. Today, all states
except Louisiana govern partnerships either through the revised
Uniform Partnership Act (1997) (RUPA) (adopted by about 40 states),
or through the original Uniform Partnership Act (1914). A partnership
is formed whenever there is “association of two or more persons to
carry on as co-owners a business for profit,” regardless of whether the
parties recognize or intend that their actions form a partnership. RUPA

979
§202(a). Although agreement is necessary, it need not be in writing.
Rather, a partnership is created whenever individuals “place their
money, assets, labor, or skill in commerce with the understanding that
profits will be shared between them.” Id. Compare Swecker v. Swecker,
360 S.W.3d 422, 426 (Tenn. App. 2011) (finding that son was entitled
to a share of dairy business on his father’s death as a partner with him
in the business) with Love v. Mail on Sunday, 489 F. Supp. 2d 1100
(C.D. Cal. 2007), aff’d Love v. Associate Newspapers, Inc., 611 F.3d
601 (9th Cir. 2010) (holding that Brian Wilson and Mike Love of the
Beach Boys did not form a legal partnership by writing songs together
without any evidence that they agreed to be co-owners of a business).
Absent other agreements, each partner has an equal right to possess
the partnership property for partnership purposes and to share in the
profits of the partnership. Because ownership is limited to the purposes
of the partnership, partners do not have an individual interest in the
partnership (as opposed to its profits or distributions of the property)
that may be sold to or inherited by others or reached by personal
creditors of the partners. Partners in a general partnership, however, are
personally liable for all obligations of the partnership. RUPA §306.
Limited partnerships are similar to the corporate form in dividing
ownership and control and affecting rights of third parties. Limited
partners contribute capital in exchange for a share of profits but do not
receive rights to manage or control partnership assets. In the
increasingly popular limited liability partnership, partners are not
personally liable for partnership debts; a creditor or tort victim may
only reach partnership assets and the asset of the partner personally
responsible for the debt. RUPA §306(c).
b. Limited liability companies. Limited liability companies, or
LLCs, mirror many of the characteristics of limited partnerships, but
allow managing members to retain limited liability while not giving up
operational control.
c. Trusts. Trusts, which can also divide ownership from control
through the separation of legal and beneficial ownership, are used not
only for estate planning but also for business purposes as well. For
example, “real estate investment trusts,” or REITs, can be publicly
traded trusts that have tax advantages for holding real estate if they
meet requirements set by the Internal Revenue Service. Similarly,
mortgage securities are often held in a trust form for investors.
Trusts are used as well to support a wide variety of nonprofit
organizations and are a common way that ownership is structured for

980
 many colleges, hospitals, churches, arts organizations, and other
nonprofits. Donors set up charitable trusts to generate income for
charities, specifying the use to which the funds can be put in the trust
documents, and can receive tax benefits in return. See Chapter 10, §4.3.
Some of the largest philanthropies in the world are charitable trusts,
including the Bill and Melinda Gates Charitable Trust, which in 2012
had assets of more than $36 billion. State attorneys general are
responsible for overseeing charitable trusts, but have significant
resource constraints, which can create challenges in terms of
accountability. See Geoffrey A. Manne, Agency Costs and the
Oversight of Charitable Organizations, 1999 Wis. L. Rev. 227, 235.
d. Condominiums, cooperatives, and other common interest
developments. This increasingly common form of homeownership
also significantly divides ownership from control. Such common
interest developments typically have property owners associations
governed by boards of directors charged with managing and enforcing
the covenants governing the development. Property owners
associations are often incorporated as not-for-profit corporations. Their
boards of directors are usually comprised of volunteer unit owners
elected by the owners, although some may be appointed by the
developer during the active marketing stage of the development.
Although unit owners may find it easier to influence decisions of the
board of a property owners association than shareholders of
corporations do, board decisions may have a much greater impact on
owners’ lives, perhaps determining, for example, what color they can
paint their houses or whether they can have pets. Some jurisdictions
apply the business judgment rule to property owner actions seeking
relief from board decisions. See Chapter 8, §4.2.
7. Public versus private role in corporate governance. Berle and
Means thought of the corporation as a quasi-public institution to be
regulated. Many corporate theorists of 1980s and today take as an
implication of the nexus-of-contracts perspective that willing parties who
invest in corporate ownership should be given substantial freedom of
contract. Does this view account for the impact of limited liability on
nonconsensual creditors? The twenty-first century has seen a resurgence of
insistence on the public nature of the corporation following the Enron
scandal of 2001 and the financial crisis of 2008. See, e.g., Simon Johnston
& James Kwak, 13 Bankers: The Wall Street Takeover and the Next
Financial Meltdown (2011) (arguing that size and influence of the
financial industry permits it to control both the global economy and

981
political efforts to regulate it). What do you think is the appropriate
balance between private and public control of corporations? Does taking a
contract-based versus a property-based view of the corporation affect your
analysis?

1. An additional common law concurrent tenancy, coparceny, is obsolete. It

arose when property was inherited by multiple relatives. Because the traditional
English heirship rule in most jurisdictions was primogeniture, meaning that a
single male heir would inherit, it only arose when the decedent had no male heirs
so that property would descend to multiple daughters or other female descendants.
2. Tenants making improvements, however, need not account to co-tenants for
profits solely as a result of those improvements. See William B. Stoebuck & Dale
A. Whitman, The Law of Property §5.9, at 208 n.5 (3d ed. 2000).
3. The lease did not disclose that the lessor possessed only a joint interest in the
property. To the contrary, the “option to purchase” granted to the lessee, which
might more accurately be described as a right of first refusal, implied that the
lessor possessed a fee simple. It provided in part: “Lessee is given a first exclusive
right, privilege and option to purchase the house and lot covered by this lease. If so
purchased, Lessor will convey title by grant deed on the usual form subject only to
easements or rights of way of record and liens or encumbrances specifically agreed
to by and between Lessor and Lessee.[] Lessor shall furnish Lessee with a policy
of title insurance at Lessor’s cost.”
4. Phipps, Tenancy by Entireties, 25 Temple L.Q. 24 (1951).
5. Until 2003, state laws criminalizing sodomy between persons of the same sex
were deemed constitutional. See Lawrence v. Texas, 539 U.S. 558, 573 (2003)
(overruling Bowers v. Hardwick, 478 U.S. 186 (1986)).
6. These states include Massachusetts, authorizing same-sex marriage in 2004;
Vermont, New Hampshire, and the District of Columbia in 2009; New York in
2011; Washington, Maine, and Maryland in 2012; and Rhode Island, Delaware,
Minnesota, New Jersey, Hawai`i, and Illinois in 2013. A number of countries,
including Argentina, Belgium, Brazil, Canada, Denmark, France, Iceland, the
Netherlands, New Zealand, Norway, Portugal, South Africa, Spain, Sweden,
England, Wales, Uruguay, parts of Mexico, and several American Indian tribal
nations also now officially recognize same-sex marriage.
7. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas,
Washington, and Wisconsin. A tenth state, Alaska, permits parties to opt in to a
community property system. Alaska Stat. §34.77.090.
8. The issue never arose in O’Brien, because the defendant convinced the
plaintiff that he could not afford to pay the award and she accepted an undisclosed
lump sum settlement instead. O’Brien did not in fact become a surgeon, deciding
that would be too difficult with his Mexican degree. Instead, he became an
emergency room doctor and continues to practice today. See Ellman, Family Law
Stories, supra.

982
CHAPTER 10

Present Estates
and Future Interests

§1 DIVISION OF OWNERSHIP OVER TIME

One way owners may share ownership is by dividing ownership rights
over time, separating the present right to possess the property from the
future interest, the right to take possession in the future under specified
circumstances.
The grantor specifies the circumstances under which the property will
shift in the future from the present interest holder to the future interest
holder. For example, the grantor may convey property to A so long as she
is alive and then provide that at A’s death, the property will transfer to B.
The grantor in this case is not attempting to control directly what A does
with the property; however, by deciding who will own the property at A’s
death, the grantor often hopes to indirectly control what is done with the
property — perhaps by keeping the property in the family and making sure
it is available for the grandchildren to inherit. Other times, the grantor
seeks to directly control use of the property; for example, the grantor may
convey property to A so long as the property is used for residential
purposes, but if it is ever used for nonresidential purposes, ownership will
revert to the grantor. In this case, the potential loss of title deters and
sanctions the present owner for violating the conditions of the grant.

Terms:
Technically, heirs are those entitled by law to inherit the property if the owner
dies intestate (without a will), while devisees are those entitled to real property
under a will. Intestate heirs are typically one’s spouse (and any children not
from that marriage); if there is no spouse, then one’s children; if no spouse or
children, then one’s parents; if no parents, then one’s siblings; if no siblings,
then certain other relatives. If no relatives qualify as heirs, the property will
escheat (es-CHEET) to the state.

Present and future interests may be created by sale, lease, will, or trust.

983
A seller may create a future interest in a deed. A landlord necessarily
creates a future interest either orally or in a written lease because the
property will revert to the landlord when the lease term expires. A testator
or testatrix (one who dies leaving a valid will) can create a future interest
by devising or bequeathing property in a will. A grantor may also create a
future interest when establishing a trust (a legal arrangement in which one
person or entity holds title to property for the benefit of another).
Future interests may be certain to come into possession or may be
contingent on events that may or may not happen. If O leases property to
A for one year, for example, the property will automatically revert after
one year (which is to say, the lease will end). If, however, O conveys
property to A so long as it is used for residential purposes, the property
will revert only if the property is used for nonresidential purposes, which
may never happen.
Future interests exist the moment they are created even though the
holder of the interest has no right to possess the property until the
triggering event occurs. Suppose O conveys property to A so long as it is
used for residential purposes; if the property is ever used for nonresidential
purposes, the property goes automatically to B. The future interest in B
comes into existence at the moment of the original conveyance to A; we
say that B owns a future interest in the property, although B has no present
right to occupy or use the property. B will have a right to possess, use, and
control the property only if and when the condition is violated; the future
interest will not become possessory unless and until the condition occurs.
By delegating to property owners the power to create future interests,
the legal system enables people to exercise some degree of control over
who owns the property in the future and what the future owner is entitled
to do with it. This is an awesome power. The law of future interests raises
a host of complicated policy questions. The two most pressing are the
problem of dead hand control and the problem of social hierarchy.
The dead hand. Owners may seek to control who owns property long
after they die, giving rise to a problem often described as “dead hand
control.” Allowing grantors or testators to do this may promote their
interests and even enhance alienability; owners may be more willing to
part with their property if they can control who owns it or how it is used in
the future. However, conditions limit what owners may do with their
property, thus interfering with freedom of future owners to control the
property. This may undermine the autonomy of future owners and the
efficient use and transfer of property. Affected persons may be able to
remove archaic restrictions by contracting with the beneficiaries of the

984
restraints to give up their rights. However, transaction costs may block
such deals, especially if the persons with the right to enforce the restraint
are not yet born or ascertained. Rigid enforcement of restrictions imposed
long ago by grantors who could not anticipate current conditions can
prevent property from being devoted to its best uses as social
circumstances and needs change. The struggle for control between prior
owners and current owners or between current owners and future owners
requires a legal structure that balances their relative interests.
Hierarchy. A second problem associated with future interests is the
possibility that imposing restraints on alienation and use will have the
effect of concentrating ownership in the hands of certain groups and
excluding others. Restricting ownership to one’s descendants, for example,
may be a useful way of securing expectations. If common, however, it
would also concentrate ownership in the families of those who already
own property. Such restrictions may also be even more pernicious; if
property ownership could be lawfully conditioned on the property’s not
being occupied by a person of a particular race, for example, future
interests could be used to perpetuate racial hierarchies.
To some extent, the marketplace is designed to decentralize power
over social resources, dispersing them among citizens rather than
concentrating them in the hands of government officials or an aristocracy.
To maintain this decentralization of power, however, rules of law are
necessary to prevent private owners from re-concentrating ownership by
creating new monopolies or centers of power. For example, in People ex
rel. Moloney v. Pullman’s Palace Car Co., 51 N.E. 664 (Ill. 1898), the
Illinois Supreme Court required the corporate owner of a company town
inhabited by 12,000 people to sell off most of the property, id. at 674:

[T]he existence of a town or city where the streets, alleys, school houses,
business houses, sewerage system, hotels, churches, theaters, water-works,
market places, dwellings and tenements are the exclusive property of a
corporation is opposed to good public policy and incompatible with the
theory and spirit of our institutions. It is clearly the theory of our law, streets,
alleys and public ways, and public school buildings, should be committed to
the control of the proper public authorities, and that real estate should be kept
as fully as possible in the channels of trade and commerce, and good public
policy demands that the number of persons who should engage in the
business of selling such articles as are necessary to the support, maintenance
and comfort of the people of any community should not be restricted by the
will of any person, natural or artificial, but should be left to be determined by
the healthy, wholesome and natural operations of the rules of trade and
business, free from all that which tends to stifle competition and foster

985
 monopolies.

Regulation of future interests may similarly help to maintain the dispersal

of access to property so that a decentralized market system can function
properly.

§2 HISTORICAL BACKGROUND: DEATH AND

TAXES
Future interest law emerged from centuries of attempts to avoid the
only two things said to be certain, death and taxes. Since the Middle Ages,
owners have sought to control ownership and use of their property after
death and, even more important, avoid estate taxes and other payments to
third parties. The law governing future interests was shaped as each
generation thwarted past efforts to control property after death and
governments thwarted efforts to avoid estate taxes and controls over
landownership. After the historical purposes of the rules ended, the rules
themselves often continued, in part because of inertia, in part because they
served other policy goals, and in part because of the interests of lawyers
and other estate professionals in maintaining the value of their expertise.
Today the law of future interests is being revised yet again, as states
change their laws to attract tax-evading dynasty trusts. The resulting rules
are both a revealing historical artifact and a potentially maddening trap for
the unwary.

CONTEXT

The Norman Conquest left deep marks on legal language. Property, contract,
tort, assault, battery, mortgage, covenant, court, justice, and indeed most legal
terms owe their origins to French, which was for centuries the language of
statutes and pleadings in England. 1 Frederick Pollock & Frederic Maitland,
History of the English Law 80-81 (1898).

The estates system originated with the 1066 Norman Conquest of

England led by William the Conqueror. To maintain military control of the
conquered country, William divided its land in fee or feudum among his
supporters. In return, they pledged him loyalty and certain duties,
generally the provision of a number of knights for a portion of the year.
One way tenants obtained knights was by allocating land to subtenants,

986
who pledged the tenant-in-chief loyalty and knight service in return. This
process of subinfeudation continued down the ladder to the tenant in
demesne, the one who actually occupied and worked the land. Although
each tenant owed loyalty and service to the superior landowner, these
tenements were considered freehold estates. Even below these tenants
were villeins, peasants who occupied and worked the land, but had unfree
tenure. The distinction between free and unfree tenure was central since
those possessed of free tenements had the right to bring lawsuits, called
real actions, in the central royal courts where the common law developed.
Until the sixteenth century, however, the villeins holding unfree tenure
were relegated to manorial courts governed by local custom and the lord’s
whim.
Land possession in this system embedded one in a set of relationships
and obligations. “Estate,” the word still used today to describe one’s
interest in land, can be traced to the Latin root meaning “status.” Tenants
owed their lords two different kinds of obligations: services (the periodic
obligations promised by the tenant-grantee to the lord-grantor) and
incidents (infrequent liabilities, including escheat and inheritance taxes).

Reflecting the idiosyncrasy of services owed for tenancies in land, Castle

Conway, in Wales, was held at a rent of six shillings and eight pence, and
“a dish of fish to the Lord of Hertford as often as he passed through
town.” Blount, Fragmentata Antiquitatis, at 322. Photograph by
Albertran, Creative Commons License.

When the feudal system began, most services were either knight
service or other military service to the crown. Land was also granted to
religious persons or institutions in return for religious services, or purely

987
economic, such as the exchange of goods or labor. But services were often
more idiosyncratic, designed to symbolize the relationship between the
lord and his vassal. For example, one estate was held upon the service of
holding the towel for the king when he washed his hands on the day of his
coronation; another estate, notoriously, was held on the service of
performing each Christmas day for the King’s amusement, “altogether and
at once, a leap, a puff, and a fart.” Thomas Blount, Fragmentata
Antiquitatis: Ancient Tenures of Land 79 (Josiah Beckwith & H.M.
Beckwith eds. 1815). Within a few centuries, however, most services were
commuted to monetary payments. Obligations to provide knight service
became obligations to provide scutage, essentially a form of taxation
controlled by the Parliament, and obligations to provide most other
services were relieved by the payment of quit-rents, moneys enabling the
tenant to “quit” other service. Although feudal services were commuted to
money payments, the payments did not keep pace with inflation and their
importance quickly declined.
Feudal incidents, in contrast, involved possession of the land and its
profits — benefits that did keep pace with inflation. Incidents initially
included the obligation to pay a portion of the profits from the land in
unspecified times of need; the right of the lord to appoint a new tenant at
the death of the first; to act as guardian of the land (and reap its profits) if
the tenant’s heir was a minor when the tenant died; and to arrange the
marriages of his minor children and perhaps even his widow. Efforts by
noble landholders to limit incidents generated the foundational documents
of English constitutional law. In 1100, the Charter of Liberties provided
that a tenant’s heir could automatically inherit his land upon the payment
of relief — essentially estate taxes — and that the tenant’s widow could
not be forced to remarry. The Magna Charta of 1215, the Great Charter of
Liberties, emerged from a rebellion by the barons largely in protest against
feudal incidents. Two-thirds of its provisions dealt with them, limiting
when tenants could be obliged to pay incidents1 fixing the amount of relief
required before land could be inherited, and regulating the behavior of
guardians appointed as wards of the estates of underage heirs. Important
continuing incidents also included escheat, the right of the lord to regain
the land if his tenant died without an heir or committed a felony, and
forfeiture, the right of the king to retake the land if the tenant committed
treason.
Royal reaction to attempts to avoid incidents ultimately led to the
creation of the fee simple, land held without homage to any lord. The
initial tenurial relationship was personal; because service from that
particular landholder was key to the relationship between a vassal and his

988
lord, it was not possible to simply buy and sell land. One could only
subinfeudate, remaining a vassal to the lords above in the feudal ladder,
and becoming a lord to one’s own tenants in turn.
Because incidents reflected the value of the land to the person owing
the incidents, however, a tenant could reduce the incidents owed to his lord
by subinfeudating for a profit of little value. If O had a tenant A, and A
subinfeudated to his son B in return for a pound of pepper a year, then A’s
incidents to O reflected the value of that pepper. To avoid such evasion,
Parliament enacted the statute Quia Emptores in 1290, prohibiting further
subinfeudation and requiring all future transfers of interests in land to take
place by substitution of one owner for another — in effect a sale of all
one’s interests and obligations. Quia Emptores created a deep paradox.
Although intended to protect feudalism, it did so by enshrining at the core
of the common law of property the key principle of promoting the
alienability of property.
Efforts to avoid incidents and determine how property would descend
on death created a further dance between landowners and government.
Until 1540, land could not be devised by will, but only inherited by one’s
legal heirs. Heirs are those who inherit by operation by law; today this
generally means division among one’s closest relatives. For much of
English history, however, this generally meant inheritance only by one’s
eldest living son, called primogeniture. Daughters would receive land
only if no sons survived the landowner, and younger sons and widows
could never inherit. Quia Emptores, however, meant that the heir could
alienate the land, ending the family’s connection to the land and the status
it conferred. In addition, the doctrine of coverture meant that a woman’s
property legally became her husband’s; unless specially conditioned, that
could mean it would descend to her husband’s heirs rather than her own or
those of her family. To evade these results and payment of relief on death,
landholders sought to transfer their land during their lifetimes and place
conditions on who would have it after their deaths. These efforts, and the
responses by heirs and Parliament, created a number of estates and rules
with some relevance today. Four of these, the Rule in Shelley’s Case, the
doctrine of worthier title, the trust, and the fee tail, are discussed here.
The Rule in Shelley’s Case. One attempt to avoid payment of relief
was to create a life estate — a property interest that lasts only for the life
of the grantee — in one individual with a future interest in the grantee’s
heirs. Because A’s heirs acquired the interest during O’s lifetime by
conveyance, rather than by inheritance on A’s death, they did not have to
pay relief. If the owner of the life estate was a woman, moreover, the

989
conveyance could help ensure that the land went to her children, rather
than what would otherwise have been a required transfer to her husband
and his children by any later wife. The courts responded with what became
known as the Rule in Shelley’s Case, which treated the interest in A’s heir
as an interest in A. In other words,

O to A for life, and then to A’s heirs

would be read as
O to A.

Although the payment of relief as such ended in England in the

seventeenth century, the Rule in Shelley’s Case continued in England until
1925, and was adopted in the United States as well. The Rule has now
been abolished in almost all states, but may still exist in Arkansas,
Colorado, Delaware, and in some form in Indiana. T.P. Gallanis, The
Future of Future Interests, 60 Wash. & Lee L. Rev. 513, 541-542 (2003);
Restatement (Third) of Property: Wills & Other Donative Transfers §16.2
(2011); see also John V. Orth, The Mystery of the Rule in Shelley’s Case, 7
Green Bag 2d 45 (2003).
The doctrine of worthier title. The doctrine of worthier title is
similar to the Rule in Shelley’s case, but applies to grants in which a life
estate is followed by an interest in the grantor’s, rather than the grantee’s,
heirs. The interest in the grantor’s heirs would be read as an interest in the
grantor, so that his heirs would have to inherit rather than take without
paying relief, like this:

O to A for life, then to O’s heirs

becomes
O to A for life, then to O.

Like the Rule in Shelley’s Case, most states have abolished the
doctrine of worthier title, but it may remain viable in Mississippi, New
Jersey, and Virginia, and perhaps a few other states. Gallanis, supra, at
546-548; Restatement (Third) of Property: Wills & Other Donative
Transfers §16.3 (2011). Even in states that recognize the rule, it has
become simply a rule of construction that can be defeated by clear intent
of the grantor.
Although largely abolished, the rules do have some current policy
justification. No one has heirs until they die. It is therefore impossible to
contract regarding future ownership of the property until the death of the

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life estate holder, because the owners of that interest won’t be identified
until then. This inability to contract may interfere with the alienability of
the property.
The trust. Landowners also sought to evade descent rules by granting
property to one individual for the “use” of another. For example, O might
grant property to A for the use of B. A would have the legal estate, but B
would have the right to use and profit from the land. O might even grant
land to A for the use of O. Although estates in land could not be left by
will, uses could, so a use might be willed to one’s younger sons, widow, or
daughters. Uses could also be used to evade feudal incidents. Felony or
treason by the user would not result in escheat or forfeiture. If the legal
estate was vested in several people and one died, moreover, the estate
would be consolidated in the survivors without inheritance, thus avoiding
both relief and the possibility of escheat because of failure of heirs.
Finally, because transferring uses did not require the same public
formalities as transferring estates, the use could be employed to hide one’s
conveyances from the public. In a development reminiscent of modern
trust law, the legal estates were often vested in attorneys, who received
suitable compensation, creating a professional class devoted to continuing
the use.
In 1536, Parliament sought to end exploitation of the use with the
Statute of Uses, which provided that the legal estate would vest entirely in
the user. Grants of uses, therefore, would have the same effect as grants of
land and be subject to the same inheritance laws. Reaction against the
statute was so negative that Parliament enacted the Statute of Wills in
1540, which for the first time allowed landowners to devise their property
by will. Thereafter, owners had an easier way to avoid both primogeniture
and escheat in the absence of heirs.
Hasty drafting of the Statute of Uses also created a number of
loopholes, which courts were often willing to exploit. In particular, a grant
of a use “in trust” for a third party, or to accomplish a particular purpose,
was not affected by the statute. By 1700, the trust had filled the place the
use had occupied. Today modern trusts involve a grantor, called the settlor
or trustor, conveying property to some person or entity (the trustee) for
the benefit of another person or purpose or entity, called the beneficiary.2
A trust may be in favor of one’s family and friends, commercial, or for
charitable purposes. For example:

O to A, in trust for B until she reaches the age of majority, then to B.

O in trust to A Foundation, to provide health care to the poor.

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 In both cases, A has legal title, but is bound by equitable rules to use
the estate for the trust beneficiary or the purposes of the trust. As in early
English practice, the trust plays an important role in tax and estate
planning, in charitable giving, and in the business of lawyers and other
professionals.
The fee tail. The fee tail should be familiar to anyone who has read the
books of Jane Austen or watched Downton Abbey. The traditional words to
create a fee tail are “O to A and the heirs of his body.” This conveyance
created ownership in A for life, then ownership in A’s lineal descendant
entitled to inherit under English law for life, and so on through a series of
life estates in A’s lineal descendants until the blood line ran out. A fee tail
might be more specific, only in favor of heirs of the bodies of a married
couple, in favor of female heirs, or in favor of male heirs. We see an
example of the fee tail in Pride and Prejudice, in which Mr. Bennett’s
estate “was entailed, in default of heirs male, on a distant relation,” the
dreadful Mr. Collins. The book revolves around the efforts of his daughter
and wife to avoid the resulting loss of income and social position after his
death.
The fee tail was initially intended to preserve the integrity of the family
estate. Because one could not contract with unborn heirs to obtain their
future interests, the land could not be sold away from the family or levied
to pay the life tenant’s debts. By the fifteenth century, however, life
tenants were able to bar, or eliminate, the entail through a procedure
known as the common recovery, a collusive lawsuit that resulted in a
default judgment awarding the land to a cooperative litigant, who would
then convey the estate back to the tenant free of the entail.3 Pride and
Prejudice may refer to the common recovery in explaining that Mr.
Bennett had expected to have a son, and “[t]his son was to join in cutting
off the entail, as soon as he should be of age, and the widow and younger
children would by that means be provided for.”
In the United States, most states abolished the fee tail soon after the
Revolution. The abolition is often described as a triumph of civic
republicanism. Thomas Jefferson, for example, credited himself with the
abolition of the fee tail in Virginia, declaring that the change undermined
an “aristocracy of wealth,” making an “opening for the aristocracy of
virtue and talent.” Recent scholarship by Claire Priest challenges this
characterization. As in England, the life tenant could bar the entail and
alienate the estate. Yet entailed property was fairly common in the
colonies, and included humble estates as well as large ones. Why, if it was
not effective in preventing alienation, was the entail so popular? Professor

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Priest argues that because only the landowners themselves could bar the
entail, it was an effective means of protecting the homestead from
creditors, who might otherwise seize the property for payment of debts.
She argues that the end of the entail owes more to opposition by creditors
and desire of large slaveholders to maintain a liquid market for land for
plantations. See Claire Priest, Creating an American Property Law:
Alienability and Its Limits in American History, 120 Harv. L. Rev. 385
(2006).

CONTEXT

Modern technology meets ancient estates.

The law has not yet resolved the status of children born after the death of a
biological parent using frozen sperm, eggs, or embryos. Whether such children
will count as benefiting from a will or inherit in intestacy (which is necessary
to receive Social Security survivors’ benefits) may depend on the intent of the
parent or grantor, but more significantly on interpretations of state laws that
often predate advanced reproductive technology. Some states have applied
these laws to find that such children can inherit, Woodward v. Commissioner of
Social Security, 760 N.E.2d 257 (Mass. 2002); Estate of Kolacy, 753 A.2d
1257 (N.J. Super. Ct. Ch. Div. 2000); In re Martin B., 841 N.Y.S.2d 207 (N.Y.
Surr. Ct. 2007), while many others have not. See Astrue v. Capato, 132 S. Ct.
2021 (2012) (construing Florida law); In re Certified Question, 825 N.W.2d
566 (Mich. 2012); Finley v. Astrue, 270 S.W.3d 849 (Ark. 2008). Benjamin C.
Carpenter, A Chip Off the Old Iceblock: How Cryopreservation Has Changed
Estate Law, 21 Cornell J.L. & Pub. Poly. 347 (2011), discusses these statutes
and the problems they raise.

Today the fee tail is recognized in only four states, Delaware, Maine,
Massachusetts, and Rhode Island, and even these permit easy barring of
the entail. See Mass. Gen. Laws ch. 183, §45 (owner of fee tail may
convert it to the fee simple by conveying it to another). States have
adopted a variety of ways to treat any fee tail interests that come up. Most
states interpret a fee tail as a fee simple absolute, Cal. Civ. Code §763;
N.Y. Est. Powers & Trusts §6-1.2; Restatement (Third) of Property: Wills
& Other Donative Transfers §24.4 (2011), while others interpret fee tails
as life estates in the present owner with a remainder in fee simple in her
issue. 765 Ill. Comp. Stat. 6; Ohio Rev. Code §2131.08.

§3 THE CONTEMPORARY ESTATES SYSTEM

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 The modern estates are largely those created during this medieval
English history. For several reasons, it remains important to learn them
today. First, ambiguous grants and conveyances will be interpreted as
fitting into one of these existing categories. For lawyers who draft wills,
trusts, leases, and conveyances, therefore, understanding the language that
creates the estates and their properties is necessary to accomplish the intent
of your clients. For lawyers representing clients in challenging or
defending existing conveyances, understanding the traditional forms is
equally important. Second, even when modern law has modified the
traditional forms, wills and conveyances will usually be interpreted under
the rules governing when they were created. Third, understanding how
these estates work is a necessary step in tackling the rule against
perpetuities, which, when it applies, may entirely defeat future interests.
Finally, studying these estates has been a rite of passage for aspiring
lawyers since before there were law schools. You are joining a very old
club — welcome.
These materials are divided according to the potential length in time of
the present estate: first, the fee simple estates, which could potentially last
forever; and second, the life estates, which last only for the life of a
particular person. There is a third present estate, the term of years, which
is any estate limited not by a natural life or event but by a specific period
of time, whether 6 months or 100 years. Terms of years were considered
non-freehold estates under medieval law, and therefore often not subject to
the same rules as other estates. They will therefore not be discussed here,
but rather in Chapter 11, Leaseholds.
There are three interpretive rules that may be helpful in interpreting
language creating future interests. First, one cannot grant more than one
has. For example, if one grants a present estate limited by a future interest
to another, the grantee generally receives the property limited by the future
interest as well. Second, unless the grant contains limiting language, the
grantor will be presumed to have given away all of the transferred interest.
So, for example, a grant of a fee simple interest from grantor to grantee
without specifying a future interest will be interpreted as granting the
property forever. Third, whatever is not granted remains with the grantor.
For example, if the grant transfers the interest only for a certain period of
time, but does not specify what happens to the property after that period,
the future interest is presumed to remain with the grantor.

§3.1 Fee Simple Interests

A fee simple is a present estate that could potentially last forever.

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“Forever” in the context of the fee simple of course does not mean that you
can own property after your death, but simply that the interest does not
necessarily end because of lapse of time or death. In effect, it is the right to
determine who owns it in the future, whether by sale, gift, inheritance, or
devise. There are four fee simple estates: the fee simple absolute; the fee
simple determinable; the fee simple subject to a condition subsequent; and
the fee simple subject to executory limitation.4

A. Fee Simple Absolute

A fee simple absolute (often just called a fee simple) is a fee simple
without an associated future interest. Because no one owns a future interest
in the property, the grantor is free to determine who owns it in the future
and how. A conveyance of a fee simple interest can be accomplished by
the following language:

O to A.
O to A and her heirs.
O to A in fee simple.

The language “A and her heirs” is technical in nature; it indicates a fee

simple interest in A. The words “and her heirs” do not give A’s heirs any
interests in the property. Of course, A may choose to leave the property to
them in a will or, if A dies without a will, they may inherit the property. If,
however, A chooses to write a will leaving the property to someone else or
to sell the property during her lifetime, A’s potential heirs cannot
complain; they have no ownership rights of their own.5

B. Defeasible Fees

Present interests that terminate at the happening of a specified event,

other than the death of the current owner, are called defeasible fees. The
categories of defeasible fees relate to two crucial distinctions: (1) whether
the future interest is in the grantor or in a third party, and (2) whether the
future interest becomes possessory automatically when the stated event
occurs or becomes possessory only if the future interest holder chooses to
assert his property rights.
1. Automatic transfer to the grantor: fee simple determinable.
When the future interest reverts automatically to the grantor on the
happening of the stated event, the present interest is called a fee simple

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determinable and the future interest is called a possibility of reverter.
A fee simple determinable is created by describing the present interest
with words of duration (e.g., so long as, during, while, until). The grant
need not explicitly state the possibility of reverter. Following the general
rule that whatever one does not give away one keeps for oneself, language
denoting that the ownership is limited to a time period during which
certain conditions are met will be interpreted to have the property revert to
the grantor after that time period.

O to A so long as used for residential purposes.

O to A while used for residential purposes.
O to A during residential use.
O to A so long as used for residential purposes; if used for a
nonresidential purpose, the property shall revert to O.

Any of these conveyances creates a fee simple determinable in A with

a possibility of reverter in O or his heirs or devisees. When the condition is
violated, ownership automatically shifts to O or her heirs or O’s devisees.
2. Transfer upon grantor’s assertion of property rights: fee simple
subject to a condition subsequent. Instead of providing for automatic
transfer of the property rights upon violation of the condition, the grantor
may choose to retain for herself or her heirs the right to decide, at the time
the condition is violated, whether to retake the property. If the future
interest owner chooses to assert her rights when the condition is violated or
the stated event occurs, the property ownership shifts to her; if she does
not assert her rights, ownership stays with the current owner. The current
interest is called a fee simple subject to a condition subsequent and the
future interest is called a right of entry (sometimes also referred to as a
right of reentry or a power of termination).
A fee simple subject to a condition subsequent is created using words
of condition (e.g., on condition that, but if, provided that). It generally
must explicitly state the right of entry, but some courts will interpret grants
made “on express condition” as implying the right of entry:

O to A on condition that the property is used for residential purposes; in

the event it is not so used, O shall have a right of entry.
O to A, but if used for nonresidential purposes, O shall have the power
to terminate the grant.
O to A, provided that the property is used for residential purposes; if
this condition is violated, O shall have a right of entry.

996
 Each of these conveyances creates a fee simple subject to condition
subsequent with a right of entry in O or her heirs. If the property is used
for nonresidential purposes, A retains ownership unless and until O asserts
her right to regain possession of the property.
Possibilities of reverter and rights of entry were traditionally not
transferable, both because they were deemed too insubstantial to transfer,
and because permitting transfer would facilitate enforcement of the
restriction. In many jurisdictions, even when possibilities of reverter were
alienable, rights of entry were not. Restatement (Third) of Property: Wills
& Other Donative Transfers §25.2 (2011). Some states retain the
traditional rule. See 765 Ill. Comp. Stat. 330 (possibilities of reverter and
rights of entry not alienable); Neb. Rev. Stat. §76-299 (possibilities of
reverter and rights of entry neither alienable nor devisable); N.D. Cent.
Code §47-09-02 (rights of entry not transferrable except to possessory
owner of property affected). Most states now hold that future interests are
alienable as well as devisable and inheritable. See, e.g., N.Y. Est. Powers
& Trusts §6-5.1. Even in states that now permit alienation of possibilities
of reverter and rights of entry, however, transfers made before the law
changed to permit alienability will be invalid. See Cathedral of the
Incarnation in the Diocese of Long Island, Inc. v. Garden City Co., 697
N.Y.S.2d 56 (App. Div. 1999) (attempted transfer in 1893 destroyed right
of entry).
Traditionally, a major difference between possibilities of reverter and
rights of entry involved the statute of limitations for adverse possession.
When a condition in a fee simple determinable is violated or occurs, the
possibility of reverter kicks in automatically, giving the holder an
immediate right of possession. The statute of limitations starts running
immediately, and if the holder of the possibility of reverter does nothing
for the statutory period, title will shift back to the current possessor.
However, a right of entry does not become possessory until the holder
asserts a right of possession; if the holder of the right of entry never asserts
the right, the title will remain with the present estate owner. This would
mean that violation of the condition in a fee simple subject to condition
subsequent does not trigger the statute of limitations unless and until the
holder of the right of entry demands a right of possession; before that
point, no trespass has occurred. See Swaby v. Northern Hills Regional
Railroad Authority, 769 N.W.2d 798 (S.D. 2009) (although railroad had
breached a condition subsequent by abandoning an easement in 1970,
because future interest holders had not exercised their power of
termination, statute of limitation had not begun to run). Under this
understanding, there is a huge difference between rights of entry and

997
possibilities of reverter.
However, the two types of future interests may now be treated
similarly under one of three theories. First, laches may prevent the holder
of a right of entry from waiting too long to assert her right of entry; laches
prevents recovery when an unreasonable delay in asserting legal rights
unfairly prejudices another. Relatedly, some courts require that a right of
entry be exercised within a reasonable time after violation of the condition.
Sligh v. Plair, 263 Ark. 936 (1978); Martin v. City of Seattle, 765 P.2d 257
(Wash. 1988). In both cases, the statute of limitations for trespass provides
one measure of unreasonable delay. Ator v. Ator, 146 P.3d 821 (Okla. App.
2006) (8-year delay in exercising right of entry not unreasonable in light of
15-year statute of limitations for trespass). Finally, some states provide a
statute of limitations for rights of entry by statute. Cal. Civ. Code §885.070
(five-year statute of limitations).
3. Transfer to a third party: fee simple subject to executory
limitation. When the future interest in a defeasible fee belongs to someone
other than the grantor, the present interest is called a fee simple subject to
executory limitation, and the future interest is called an executory
interest.6 The condition may use either words of duration (like a fee
simple determinable) or words of condition (like a fee simple subject to
condition subsequent). In either case, however, ownership automatically
shifts to the third party when the condition is violated:

O to A so long as used for residential purposes, then to B.

O to A on condition that it is used for residential purposes, then to B.

Each of the two conveyances above creates a fee simple subject to an

executory limitation. The executory interest in B automatically becomes
possessory if the property is used for nonresidential purposes.

§3.2 Life Estates

A. Reversions and Remainders

Present ownership rights can be held during the life of a designated

individual. A conveyance from O to A for life creates a life estate in A.
This means that A owns the property during his lifetime. The future
interest following a life estate can be either in the grantor or in a third
party. If the property reverts to the grantor when A dies, the future interest
is called a reversion; if the grantor designates a third party to obtain

998
ownership when A dies, the future interest in the third party is called a
remainder.
The difference between a life estate and a fee simple is that the owner
of a fee simple can choose who will own the property after her death by
either writing a will or availing herself of the state intestacy statute. In
contrast, a life estate owner has no right to determine who owns the
property on her death since ownership automatically shifts to the
reversioner or remainder holder. If a life estate owner, A, sells her property
to a buyer, B, the buyer gets exactly what the seller had: an estate for the
life of A. Thus, when A dies, the property will shift to the reversioner or
remainder holder. B’s interest is called a life estate for the life of another
or a life estate per autre vie.

O to A for life.
This conveyance gives a life estate to A and automatically creates a
reversion in O. When A dies, the property reverts to O or, if O is deceased,
to her heirs or devisees. It is not necessary for the conveyance to mention
the reversion; O retains whatever property rights are not given away.
When A dies, her ownership rights terminate and ownership automatically
shifts back to O.

O to A for life, then to B.

This conveyance creates a life estate in A, with a remainder in B. Note
that an executory interest divests, or cuts short, a present estate while a
reversion or remainder takes effect at the “natural” termination of the
preceding estate, such as the death of a life tenant holder or the end of a
term of years in a lease. A life estate may be subject to a divesting
condition that would cause the interest to shift before the owner dies; if so,
the future interest would be an executory interest.

B. Contingent and Vested Remainders

One final set of distinctions is important. We have seen that future

interests following defeasible fees vest either in the grantor (possibility of
reverter or right of entry) or in a third party (executory interest). Future
interests following life estates also may vest either in the grantor
(reversion) or in a third party (remainder). Remainders are further divided
into two kinds: contingent remainders and vested remainders.
Contingent remainders. Remainders are contingent if one or both of
two conditions are met: (1) if the remainder will take effect only upon the
happening of an event that is not certain to happen, or (2) if the remainder

999
will go to a person who cannot be ascertained at the time of the initial
conveyance.
For example, a conveyance from “O to A for life, then to B if B has
graduated from law school,” creates a contingent remainder because at the
time of the original conveyance from O to A it is not certain that B will
graduate from law school. (If B does not graduate from law school, the
property will revert to O on A’s death; if B later graduates from law
school, the property will then spring to B.)
Contingent remainders often arise in the context of class gifts, grants
to a group that is merely described but not named. For example, a class gift
from “O to A for life, then to the children of B,” creates a contingent
remainder in the children of B if B has no children upon the conveyance
from O to A, because the children cannot be individually identified at the
time of the conveyance. Another example of a class gift creating a
contingent remainder is “O to A for life, then to the heirs of B.” If B is
alive at the time of the conveyance from O to A, it is impossible to tell who
B’s heirs will be until B dies; only persons alive at the time of B’s death
can inherit as “heirs” under the intestacy statute.
Vested remainders. Vested remainders, conversely, are remainders to
persons who are identifiable at the time of the initial conveyance and for
whom no conditions must occur before the future interest becomes
possessory other than the death of the life estate tenant. Vested remainders
are of three kinds.
1. Absolutely vested remainders. This is a remainder that is not
subject to change. “O to A for life, and then to B” for example, creates an
absolutely vested remainder.
2. Vested remainders subject to open. Typically arising in class gifts,
this is a remainder that is vested in some individuals but may be divided
with others who join the class in the future. For example, a class gift from
“O to A for life, then to the children of B,” is a vested remainder if B has
any living children at the time of the conveyance from O to A; it is subject
to open, however, because any children of B born after the conveyance
from O to A may share the property rights with the children who were
alive at the time of the conveyance. Under the rule of convenience, most
courts will, absent contrary evidence of grantor intent, close the class when
A dies so that B’s children can take possession at A’s death and will not
have to share the property with any after-born children.
3. Vested remainders subject to divestment. This is a vested
remainder that may be lost due to an event that occurs after the original

1000
conveyance. For example, a conveyance from “O to A for life, then to B,
but if B marries a lawyer, the property shall then revert to O,” creates a
vested remainder in B because B is ascertained at the time of the
conveyance to A and there are no conditions precedent to B’s taking the
property; however, it is subject to divestment because if the condition is
met at any time — if B marries a lawyer — B will lose his right to obtain
the property on the death of A.

C. Destructibility of Contingent Remainders

The law formerly provided that contingent remainders were

“destroyed” in two circumstances. First, contingent remainders were
destroyed if they did not vest before the preceding life estate ended. For
example, in the conveyance “O to A for life, then to B if she has been
elected president of the United States,” the contingent remainder in B
would be destroyed if B had not been elected president before the death of
A. The justification for the rule was purely formal: the property would
revert to O if the condition had not occurred by the end of the life estate,
and it was believed inconsistent with the nature of the estate to have a
remainder “spring” from the life estate over an interest in O once the
condition occurred.
Second, contingent remainders were destroyed by “merger” of the
present and future estates. For example, suppose O conveyed her property
to A for life, and then to A’s children. If A does not have children at the
time of the conveyance, then the children have a contingent remainder, and
the property will revert to O if A dies without children. If O then conveyed
her reversion to A, the traditional doctrine would say that the contingent
remainder was destroyed, leaving A with a fee simple and any future
children with nothing. See Abo Petroleum Corp. v. Amstutz, 600 P.2d 278
(N.M. 1979) (rejecting the doctrine of merger).
Almost all states have abolished the destructibility of contingent
remainders by common law or statute, and the last case to apply the rule
was decided in 1963. Restatement (Third) of Property: Wills & Other
Donative Transfers §25.5 (2011). While it is theoretically possible that one
of the few states that have not officially abolished the rule might apply it,
it is extremely unlikely. It is fair to conclude with the Restatement (Third)
that “[t]he Rule of Destructibility of Contingent Remainders is not
recognized as part of American law.” Id.
The traditional rule effectively destroyed many future interests that
could have vested after the death of the current life estate holder. Applying
the rule therefore resulted in freeing land from archaic restrictions. Today

1001
contingent remainders likely to vest too far into the future are regulated by
the rule against perpetuities or by statutory limits on their continuation,
discussed at §5.3.C, infra.

Problems
1. O to A and her heirs. What estate does A have? What result if A
dies, leaving the property in her will to her friend B, and her heir C claims
the property for himself? What if A sells the property to D, then dies
leaving the property to B in her will?
2. O to A for life, then to A’s children. A is alive and has one child, C.
What estates do A and C have? If A sells the property to B, then dies, who
owns the property?
3. O to A so long as the property is used as a school. What estates are
created? What happens if the property stops being used as a school after O
dies?
4. O grants a strip of land to A “for use as a railroad, but if the
property ever ceases to be used for railroad purposes, O may terminate
the grant.” What does A have? What does O have? What result if the
property was converted to a hiking trail in 1980 and O’s successors file a
quiet title suit in 2010?
5. O to A for life, then to B if she graduates from law school. What
does A have? What does B have? If A dies before B graduates from law

1002
school, who gets the property? What happens if B later does graduate?

§4 INTERPRETATION OF AMBIGUOUS
CONVEYANCES
§4.1 Presumption Against Forfeitures and the Grantor’s
Intent

A. Fee Simple versus Defeasible Fee

Wood v. Board of County

Commissioners of Fremont County

759 P.2d 1250 (Wyo. 1988)

C. STUART BROWN, Chief Justice.
Appellants Cecil and Edna Wood, husband and wife, appeal summary
judgment favoring appellee, the Board of County Commissioners for
Fremont County, Wyoming. By a 1948 warranty deed appellants conveyed
land in Riverton, Wyoming, to Fremont County for the construction of a
county hospital. They now contend that language in the deed created either
a fee simple determinable or a fee simple subject to a condition subsequent
with a right of reversion in them if the land ceased to be used for the
hospital. [This case presents the question whether] cessation of appellee’s
hospital operation by sale of public hospital facilities to a private company
constituted the occurrence of an event which divested appellee of its estate
in property conditionally conveyed by appellants. The trial court found
that appellants retained no interest in the land surrounding and under the
old county hospital as a matter of law. We affirm.
On September 1, 1948, by warranty deed, appellants conveyed

[a] tract of land situated in the SE 1/4 SW 1/4, Sec. 26, Township 1, North
Range 4 East, W.R.M., Fremont County, Wyoming, described . . . as follows:
Beginning at the Southwest corner of said SE 1/4 SW 1/4, Sec. 26, aforesaid,
thence east along the South line of said Section 310 feet, thence North at
right angles to said South line 297 feet, thence West on a line parallel to said
South line 310 feet, thence South 297 feet to the point of beginning,
containing 2.1 acres. . . . Said tract is conveyed to Fremont County for the
purpose of constructing and maintaining thereon a County Hospital in
memorial to the gallant men of the Armed Forces of the United States of
America from Fremont County, Wyoming. . . . (Emphasis added.)

1003
 This deed was recorded in the Fremont County Clerk’s Office on
December 14, 1948. Appellee constructed a hospital on the land and
operated it there until November 18, 1983. At that time appellee sold the
land and the original hospital facility to a private company. The buyer
operated a hospital on the premises until September, 1984, at which time it
moved the operation to a newly constructed facility. The private company
then put the premises up for sale.
Appellants’ argument boils down to whether or not the language “. . .
for the purpose of constructing and maintaining thereon a County Hospital
in memorial to the gallant men of the Armed Forces of the United States of
America from Fremont County, Wyoming . . .” in the 1948 warranty deed
is sufficient limiting language to create either 1) a fee simple determinable,
or 2) a fee simple subject to a condition subsequent giving appellants title
to the land. We review disputed language in a deed to determine the intent
of the parties to it from the plain language in the deed considered as a
whole. Also, Wyo. Stat. §34-2-101 (1977) provides, in pertinent part:
“[E]very conveyance of real estate shall pass all the estate of the grantor . .
. unless the intent to pass a less estate shall expressly appear or be
necessarily implied in the terms of the grant.”
A fee simple estate in land that automatically expires upon the
happening of a stated event, not certain to occur, is a fee simple
determinable. Restatement of Property §44, at 121 (1936). In Williams v.
Watt, 668 P.2d 620, 627 (Wyo. 1983), we said:

The existence of an estate in fee simple determinable requires the presence of

special limitations. An estate in fee simple determinable may be created so as
to be defeasible upon the occurrence of an event which is not certain ever to
occur. Words such as “so long as,” “until,” or “during” are commonly used
in a conveyance to denote the presence of this type of special limitation. The
critical requirement is that the language of special limitation must clearly
state the particular circumstances under which the fee simple estate conveyed
might expire. Language of conveyance that grants a fee simple estate in land
for a special purpose, without stating the special circumstances that could
trigger expiration of the estate, is not sufficient to create a fee simple
determinable.

The plain language in the 1948 deed, stating that appellants conveyed
the land to Fremont County for the purpose of constructing a county
hospital, does not clearly state that the estate conveyed will expire
automatically if the land is not used for the stated purpose. As such, it does
not evidence an intent of the grantors to convey a fee simple determinable,
and we hold that no fee simple determinable was created when the land

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was conveyed.
Use of the language conveying the land in “memorial” similarly fails
to create a fee simple determinable. “Memorial” is defined in Webster’s
Third New International Dictionary 1409 (1971) as “[s]omething that
serves to preserve memory or knowledge of an individual or event.” The
time for which the hospital should serve to “preserve” the memory or
knowledge is not stated in the deed, just as the time for maintaining the
hospital is not there stated. The language of conveyance fails to designate
the time at which the hospital must be constructed as well as the time
during which it must be maintained or during which the indicated memory
must be preserved. The omission of such limiting language evidences an
intent not to convey a fee simple determinable.
Similar reasoning applies to appellants’ assertion that the language of
conveyance created a fee simple subject to a condition subsequent. A fee
simple subject to a condition subsequent is a fee simple estate in land that
gives the grantor a discretionary power to terminate the grantee’s estate
after the happening of a stated event, not certain to occur. This type of
interest is similar to the fee simple determinable in that the language of
conveyance must clearly state the grantor’s intent to create a discretionary
power to terminate the estate he conveys. Words commonly used in a
conveyance to denote the presence of a fee simple estate subject to a
condition subsequent include “upon express condition that,” “upon
condition that,” “provided that,” or “if.” In J.M. Carey & Brother v. City of
Casper, 213 P.2d 263, 268 (Wyo. 1950), we quoted 19 Am. Jur. Estates
§65 at 527 (1939), which said:

It is a well-settled rule that conditions tending to destroy estates, such as

conditions subsequent, are not favored in law. They are strictly construed.
Accordingly, no provision will be interpreted to create such a condition if the
language will bear any other reasonable interpretation, or unless the
language, used unequivocally, indicates an intention upon the part of the
grantor or devisor to that effect and plainly admits of such construction.

Quick Review:
How should the Woods have written the grant if they wanted to retake the
property once it was no longer used as a hospital?

That rule has not lost its potency. Applying it to this case, we hold that
the plain language of the 1948 warranty deed, while articulating that the
land conveyed was to be used for a county hospital, does not clearly state

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an intent of the grantors to retain a discretionary power to reenter the land
if the land ceased to be used for the stated purpose. Appellants did not
convey a fee simple subject to a condition subsequent, and we will not
create one by construction some forty years after the conveyance took
place.

B. Fee Simple versus Life Estate

Edwards v. Bradley

315 S.E.2d 196 (Va. 1984)

GEORGE M. COCHRAN, Justice.
In this appeal, the question presented to us is whether by certain
provisions in her will a testatrix devised a fee simple estate or a life estate
in real property therein described.
Viva Parker Lilliston died testate in 1969. Her will dated January 12,
1957, duly probated with a 1958 codicil irrelevant to this case, provided in
part as follows:

Item Twelve: I give and devise my farm situated on the Seaside from
Locustville, in the County of Accomack, State of Virginia . . . to my
daughter, Margaret Lilliston Edwards, upon the conditions, set out in Item
Fourteen. . . .
Item Fourteen: all gifts made to my daughter, Margaret L. Edwards,
individually and personally, under Items Eleven and Twelve of this Will,
whether personal estate or real estate, are conditioned upon the said Margaret
L. Edwards keeping the gift or devise herein free from encumbrances of
every description, and in the event the said Margaret L. Edwards shall
attempt to encumber same or sell her interest, or in the event any creditor or
creditors of said Margaret L. Edwards shall attempt to subject her interest in
the gift or devise herein made to the payment of the debts of the said
Margaret L. Edwards, then and in that event the interest of said Margaret L.
Edwards therein shall immediately cease and determine, and the gift or
devise shall at once become vested in her children, viz: Betty Belle Branch,
Beverly Bradley, John R. Edwards, Bruce C. Edwards, Jill A. Edwards and
Jackie L. Edwards, in equal shares in fee simple. . . .

Margaret L. Jones, formerly Margaret L. Edwards, qualified as

executrix under her mother’s will. In 1979, Jones sought to have her
children and their spouses execute an agreement to consent to her selling
the farm devised to her. Only a daughter, Beverly Bradley, and the latter’s
husband declined to execute the agreement. In 1980, Jones died testate; in

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her will, executed in 1979, she left Bradley $1.00, and directed that the
farm be sold and the proceeds distributed equally among her other
children. The executors named in the will duly qualified. Bradley filed a
bill of complaint in the trial court against these personal representatives
and her five brothers and sisters, alleging that under the Lilliston will a life
estate was devised to Jones with remainder to Jones’s children. Bradley
sought to enjoin the sale or encumbrance of the farm without her consent
and asked that her interest therein be determined.
After hearing evidence presented by Bradley, the trial court determined
that Jones had not violated any of the conditions specified in the Lilliston
will. Edwards presented no evidence. The trial judge issued a letter
opinion in which he stated his conclusion that under the Lilliston will a life
estate in the farm was devised to Jones with remainder to her six named
children in fee simple. A final decree, incorporating the opinion by
reference, was entered March 25, 1981. On appeal, Edwards argued before
us that Jones had fee simple title subject to valid conditional limitations
and, having not violated the conditions, could freely dispose of the farm by
will as she chose. Edwards argued in the alternative on brief that if the
conditions were invalid Jones was vested with fee simple title without
restrictions or conditions even though such unconditional vesting would
have been contrary to her mother’s intent to protect the farm from Jones’s
creditors.
There is no conflict in the evidence. Jones was in financial difficulties
when the Lilliston will was executed. The will was prepared by an
experienced attorney. One provision, referring specifically to the enabling
statute, established a spendthrift trust for the benefit of another child of the
testatrix.
The trial judge, in his opinion, noted that the “able and experienced”
draftsman had used the words “fee simple” at least seven times in the will
and codicil. Apparently, the judge reasoned that if a fee simple estate had
been intended for Jones, the draftsman would have used that terminology
in Item Twelve. Moreover, the judge stated that under Edwards’s theory
that Jones died vested with fee simple title, a creditor could then bring a
creditor’s suit to subject the land to the satisfaction of the debt contrary to
the testamentary conditions and the intent of Lilliston. The judge further
stated that the conditions set forth in Item Fourteen were repugnant to a fee
simple estate but not to an estate for life. For these reasons, he ruled that a
life estate was created under the Lilliston will.
As a general rule, a condition totally prohibiting the alienation of a
vested fee simple estate or requiring a forfeiture upon alienation is void.
As an exception to the rule, conditions prohibiting alienation of land

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granted to corporate entities for their special purposes are valid. A
conditional limitation imposed upon a life estate, however, is valid. See
also Restatement of Property §409 (1944), where such limitations, therein
classified as forfeiture restraints, are said to be valid as to life estates.
It is apparent, therefore, that if Lilliston’s will vested fee simple title to
the farm in Jones, the unqualified restraint on alienation would be invalid
and the property from the time of vesting would be subject to sale,
encumbrance, or devise by her and subject to the claims of her creditors,
results contrary to the express intent of the testatrix. On the other hand, if
Lilliston’s will vested a life estate in Jones, the unqualified restraint on
alienation imposed by the testatrix would be valid. Jones could not
acquire, as Edwards suggested, a life estate which, upon compliance with
the testamentary conditions, became a fee simple estate at the time of her
death. Jones acquired under the Lilliston will either a fee simple estate free
of conditions and thus inconsistent with the testatrix’s intent or a life estate
subject to conditions and thus consistent with such intent.
The draftsman of the Lilliston will carefully avoided using in either
Item Twelve or Item Fourteen the words “fee simple” which he had used
elsewhere in the instrument. It is true, as Edwards observed, that he also
did not use the words “life estate” in those clauses of the will. Under Va.
Code §55-11 it is not necessary to use the words “in fee simple” to create a
fee simple estate where real estate is devised without words of limitation
unless a contrary intention shall appear by the will. In the present case,
however, the real estate was devised with words of limitation and a
contrary intention appears in the will. Moreover, unless there is a power of
disposal in the first taker, Va. Code §55-7, a life estate may be created by
implication as well as by explicit language, provided the will shows the
requisite intent.
Since the testatrix established a spendthrift trust in another provision of
her will, she was aware of the availability of that device but did not choose
to use it for the benefit of Jones. Moreover, under Va. Code §55-7, the
testatrix could have devised the land to Jones for life with a power of
appointment under which Jones could have disposed of the property by
will. She did not do so.
The intention of the testatrix is to be upheld if the will can be
reasonably construed to effectuate such intent and if it is not inconsistent
with an established rule of law. In addition, the language of the will is “to
be understood in the sense in which the circumstances of the case show”
that the testatrix intended. Gray v. Francis, 124 S.E. 446, 450 (Va. 1924).
Here, the testatrix intended that Jones have the use and benefit of the real
estate free of the claims of her creditors. The ultimate beneficiaries were

1008
Jones’s children. Although the will did not expressly designate the
children as remaindermen, the conditional limitation to them indicated that
they were intended to take the farm when their mother’s interest
terminated, whether by violation of the conditions or otherwise.
Accordingly, we conclude that the trial court properly ruled that Jones
acquired a life estate in the property with remainder at her death in fee
simple to her six children.

Notes and Questions

1. Estates. We could allow owners complete freedom to create future
interests as they please. This approach would protect freedom of contract
or free disposition of property. This is not the way the property law system
developed. A variety of rules limits the ability of owners to create future
interests, both to protect the interests of current owners in using their
property and having the power to transfer it and to protect social interests
in efficient land use. These rules compromise between the interests of
grantors and grantees. One regulatory rule is the rule against creation of
new estates, discussed below at §5.1. This rule prohibits owners from
creating ownership packages that do not fit within one of the established
estates; it helps ensure that sufficient rights are consolidated in owners so
that they can act like owners. This means that the courts must interpret
conveyances or wills to determine which estate the grantor intended to
create. The court cannot simply ask what future interest the grantor
intended to create; instead, the court must fit the future interest into an
established category.
2. Interpretation and the presumption against forfeitures.
Sometimes grantors do not use traditional language to create one of the
estates. Other times, grantors use conflicting language, seeming to create
one estate in one phrase and another estate in another phrase. In either
case, courts must interpret the conveyance to determine what types of
current and future interests were created and who owns the property. Two
conflicting rules of interpretation dominate court discussions of this issue.
On one hand, courts often proclaim their fealty to the goal of effectuating
the grantor’s intent to the extent it can be discerned from language in the
deed or will or, possibly, from the surrounding circumstances. On the other
hand, when the language is ambiguous, most courts also voice a preference
for a construction of the language that will avoid recognition of a future
interest. This is especially so if recognition of the future interest would
mean that the present possessor lost her title to the future interest holder. It
is a common maxim that “the law abhors a forfeiture.” Harrison v.

1009
Morrow, 977 So. 2d 457 (Ala. 2007). There is therefore a presumption
against forfeitures. If it is possible to interpret the language to avoid loss
of the property by the current owner, the courts will generally adopt this
interpretation.
If the choice is between a future interest and mere precatory language
(a statement of purpose not intended to be legally binding), the
presumption is to recognize a fee simple absolute with no future interest.
Roberts v. Rhodes, 643 P.2d 116, 118 (Kan. 1982) (“The general rule is
well settled that the mere expression that property is to be used for a
particular purpose will not in and of itself suffice to turn a fee simple into a
determinable fee.”). If the choice is either a covenant or a future interest,
the presumption is against the future interest and in favor of the
enforceable covenant because this will keep title with the current owner. If
the choice is either a fee simple determinable or a fee simple subject to
condition subsequent, the fee simple subject to condition subsequent is
preferred because the current interest is not automatically forfeited when
the condition is violated, thereby keeping ownership (at least for the time
being) with the current owner. If the choice is between a life estate and a
fee simple (defeasible or absolute), a fee simple interest is preferred.
Accord, Howson v. Crombie Street Congregational Church, 590 N.E.2d
687 (Mass. 1992). But see Edwards v. Bradley, supra (finding a life estate
rather than a fee simple when this will promote the grantor’s intent to
effectuate an enforceable restraint on alienation); Cain v. Finnie, 785
N.E.2d 1039 (Ill. App. Ct. 2003) (similarly interpreting a will leaving land
to “Blanche Spurlock so long as she remains my widow” as a conditional
life estate rather than as a fee simple determinable).
3. Policies behind the presumption against forfeitures. The choice
of preferring either the interests of the current owner or the interests of the
future interest holder involves a policy decision about the proper
distribution of power over property between grantors and grantees.
Enforcing the condition in the original conveyance by requiring a
forfeiture promotes the interests of the grantor in controlling the future use
and disposition of property; it also creates security for neighboring
property owners who may benefit by the condition. In contrast, the
presumption against forfeitures promotes the interests of current owners in
controlling property in their possession, giving them greater freedom to
change land uses as economic conditions and social values change; it also
promotes social interests in deregulating economic activity to allow
property owners the freedom to shift property to more valuable or desired
uses. At the same time, the presumption against forfeitures may further the

1010
grantor’s intent, on the theory that the grantor presumably intends to give
away any interests she has and would be likely to make it very clear if she
intended to retain a future interest.
4. Purpose language. When conveyances include language explaining
the purpose of the transfer, such as in Wood, the vast majority of courts
agree with Wood and will hold the language to be precatory — not
intended to have any legal significance — and will interpret the
conveyance to have transferred all the interests the grantor owned. If the
grantors owned a fee simple, the courts presume that is what they intended
to convey. This result follows from the presumption against forfeitures and
protects the interests of the grantee, placing the burden on the grantors to
be clear if they intend to retain a future interest in the property. Accord, St.
Mary’s Medical Center v. McCarthy, 829 N.E.2d 1068 (Ind. App. 2005).
The courts are not unanimous on this score and sometimes find a future
interest in the absence of language clearly creating one. For example, in
Cathedral of the Incarnation in the Diocese of Long Island, Inc. v. Garden
City Co., 697 N.Y.S.2d 56 (App. Div. 1999), the court found that a
conveyance to the Cathedral of the Incarnation for purposes of the local
Episcopal diocese “without any power, right, or authority to grant, convey,
or mortgage the same or any part thereof in any way or manner
whatsoever,” created a right of entry despite the lack of any language
specifying this future interest. The court found, however, that the grantors’
attempt in 1893 to transfer their right of entry had destroyed it, because
rights of entry were not transferable at common law at the time. Therefore
the Cathedral, which was in financial distress and had filed for bankruptcy,
had a fee simple free from any restrictions on sale of the land.
Although most courts are reluctant to find a future interest in the
absence of clear language creating one, some courts are eager to find a
future interest when the property is donated for charitable purposes. In the
absence of a future interest, the owner is entitled to shift the property to a
noncharitable use, thereby possibly violating the intent of the grantor and
harming the public interest by ending the charitable use. Property is often
more valuable if sold on the open market than when reserved for charitable
purposes. There are pressures therefore to sell such property. In order to
help preserve charitable uses, courts sometimes do not apply the
presumption against forfeitures or future interests to charitable property.
Recognition of a future interest will not always promote charitable
uses. After all, if the grantors had prevailed in Wood and reclaimed the
property, they could have used the property for any purpose, including a
noncharitable one. Finding no restriction, moreover, may permit the use of

1011
property in the way most beneficial to the charity. In St. Mary’s Medical
Center v. McCarthy, supra, for example, the court determined that a grant
to a hospital for the purposes of building a chapel did not create a trust,
permitting the chapel to be destroyed so that the hospital could expand its
facilities.
When a deed states a charitable purpose for property or restricts its use
to charitable purpose, courts have attempted to achieve the charitable
purpose by adopting a number of different interpretations. Most hold the
language to be precatory, applying the presumption against forfeitures.
However, from time to time, courts have rejected this approach, granting
substantial legal effect to language of purpose. William B. Stoebuck &
Dale A. Whitman, The Law of Property §2.5, at 41 (3d ed. 2000). Some
have found a future interest, as did the court in Cathedral of the
Incarnation (either a possibility of reverter or a right of entry). Other
courts have interpreted the purpose language or use restriction as an
enforceable covenant, allowing the covenant to be enforced in gross at
least in the context of charitable property. Davis v. St. Joe School District,
284 S.W.2d 635 (Ark. 1955). Still other courts have imposed a
constructive trust on the property, obligating the current owner to use it for
charitable purposes or transfer it to someone who will so use it. United
States v. Certain Land in Cape Girardeau, 79 F. Supp. 558 (D. Mo. 1947).
5. Restraints on alienation. The Virginia Supreme Court in Edwards
v. Bradley resolved what it saw as an ambiguity in the conveyance partly
by reference to the fact that the property was subject to a restraint on
alienation — a restraint that would be valid if attached to a life estate but
void if attached to a fee simple. The presumption against forfeitures would
suggest that the fee simple be chosen over the life estate, the restraint held
void, and the property left with a fee simple absolute. The court refused to
adopt this approach, instead focusing on the fact that the grantor intended
to create a valid restraint on alienation and the only way to achieve that
result was to interpret the conveyance as creating a life estate. Which of
these interpretations is preferable and why?
6. Changed conditions. The changed conditions doctrine denying
enforcement of covenants when circumstances are so drastically changed
that they are no longer of benefit to the dominant estate has traditionally
not applied to future interests. Prieskorn v. Maloof, 991 P.2d 511 (N.M.
Ct. App. 1999). Some states, moreover, have statutes that remove future
interests from charitable properties where the restrictions substantially
impede the charitable organization in achieving its purposes or become
“unlawful, impracticable, impossible to achieve, or wasteful.” See, e.g.,

1012
Wash. Rev. Code §11.96A.127; N.Y. Real Prop. Acts Law §1955; Mich.
Comp. Laws §451.926. Should a court grant relief from such restrictions in
the absence of a statute?

§4.2 Waste
Life tenants and owners of remainders or reversions have conflicting
interests. It is in the interest of life tenants to maximize the profits and
minimize the costs from the property while they have it. It is in the interest
of the future interest holders to preserve the property and its value until
they come into possession. The doctrine of waste seeks to mediate these
conflicts by preventing present possessory owners from unreasonably
damaging the estate. Prohibitions against waste also apply to relationships
between tenants and landlords and between mortgagors and mortgagees,
although the default rules vary with the different ownership interests.
Applying the doctrine involves questions of efficient use of resources, the
intent of the drafters, the justified expectations and rights of the future and
present interest holders, and the role of property in society. For discussions
of the various theories behind the doctrine of waste, see John Lovett,
Doctrines of Waste in Landscape of Waste, 72 Mo. L. Rev. 1209 (2007),
and Jedediah Purdy, The American Transformation of Waste Doctrine: A
Pluralist Interpretation, 91 Cornell L. Rev. 653 (2006).

McIntyre v. Scarbrough

471 S.E.2d 199 (Ga. 1996)

HUGH P. THOMPSON, Justice.
In October 1988, plaintiffs Russell and Sally Scarbrough purchased
from defendant Dillie McIntyre a 16.59 acre tract of land by warranty
deed, with reservation of a life estate in Ms. McIntyre in 1.2 acres which
included a mobile home, porch, and shed. The reservation provided:
“[L]ife estate is for [McIntyre’s] natural life and during her occupancy of
this tract as a personal residence. As to this tract, [McIntyre] shall be
responsible for maintenance and upkeep of the property and all
improvements thereon and for payment of ad valorem taxes.”
In 1994, the plaintiffs brought a petition to establish title and to
terminate the life estate, and subsequently moved for summary judgment,
asserting that: (1) the defendant ceased occupying the tract as a personal
residence in violation of the warranty deed, and (2) committed waste by
failing to maintain the property and improvements thereon. Because the
evidence conclusively established that the life tenant failed to exercise

1013
ordinary care for the preservation of the property, we agree with the trial
court that she forfeited her interest to the remaindermen and that they are
entitled to immediate possession.
The evidence on summary judgment showed the following: The
Scarbroughs both averred by affidavit that they had not seen Ms. McIntyre
on the property since 1990; that there was no water or gas service to the
mobile home, nor a mailbox on the property; and that the structure is in a
state of dilapidation. Ms. Scarbrough further averred that ad valorem
property taxes had accrued on the McIntyre property since 1990, and that
she (Ms. Scarbrough) was forced to pay the arrearage to avoid injury to her
remainder interest. The Scarbroughs also offered the affidavit of a fire
marshall who opined that the mobile home appeared to have been vacant
for some time; that it was in a general state of decay and disrepair; and that
it posed fire and health hazards and was unfit for habitation.
In response, Ms. McIntyre offered her own affidavit in which she
stated that she is now 90 years of age, that she had been recently unable to
occupy her residence due to health problems, and that she was in the
process of renovating her home to make it fit for habitation. A July 29,
1994 sheriff’s entry of service form shows that Ms. McIntyre could not be
located and served because she was residing in a convalescent home
outside the court’s jurisdiction.
Ms. McIntyre also offered the affidavit of her grandson who averred
that she had been confined away from home for medical reasons, that she
had always expressed her intention of returning to the home and occupying
it for the remainder of her life, that she had never removed any of her
personal belongings during the time she was away, and that he completed
certain repairs to the mobile home making it fit for habitation.
1. The trial court found that the warranty deed required Ms. McIntyre
to occupy the tract as a personal residence as a condition of her life estate,
concluding that “occupy” meant to “to dwell in” according to Webster’s
New Universal Unabridged Dictionary. Relying on the affidavits of record,
the court found as a matter of law that Ms. McIntyre failed to occupy the
property. However, the court’s definition of occupancy was too narrow.
“Occupy” is more expansively defined in Black’s Law Dictionary as
“to hold possession of; to hold or keep for use; to possess.” Because one
may occupy a residence by holding it or keeping it for use, the court erred
in imposing a requirement that permanent physical presence was necessary
to fulfill the occupancy requirement of the warranty deed. Evidence that
Ms. McIntyre had never removed any of her personal belongings during
the time she had been away for medical reasons, as well as her stated
ongoing intent to occupy the residence until her death, raises a question of

1014
fact as to whether she continued to occupy the residence while residing
elsewhere for medical recuperation.
2. The trial court, however, correctly determined that the plaintiffs
were entitled to judgment as a matter of law under plaintiffs’ alternative
theory of recovery, that the life estate was extinguished under the doctrine
of waste.
A life tenant is entitled to the full use and enjoyment of the property if
in such use he or she exercises the ordinary care of a prudent person for its
preservation and protection and commits no acts which would permanently
injure the remainder interest. Ga. Code §44-6-83; Graham v. Bryant, 89
S.E.2d 640 (Ga. 1955). The unrebutted evidence shows that Ms. McIntyre
had failed to pay ad valorem property taxes on the 1.2 acre tract for the
years 1991 through 1993, or on the improvements for the years 1992
through 1994. In Austell v. Swann, 74 Ga. 278, 281 (1885), this Court
stated that “a neglect to pay the burdens imposed by law upon the property
during the term would be a want of such ordinary care as a prudent person
should exercise for its protection and preservation, and would tend to
divest the title to the fee by exposing it, or a portion of it, to sale, to raise
the taxes levied on it.” In the present case, not only was the defendant
obligated by law to maintain taxes on her portion of the property, but she
also specifically agreed to pay ad valorem taxes as a condition of the
warranty deed. Although the question of waste is generally one for a jury,
the undisputed facts show that the defendant failed to exercise ordinary
care for the preservation of the property, and to comply with a condition of
the warranty deed, resulting in forfeiture of the life estate as a matter of
law.

ROBERT BENHAM, Chief Justice, joined by HUNSTEIN and CARLEY,

dissenting.
I agree fully with the first division of the majority opinion, and I
believe the evidence submitted on motion for summary judgment would,
in a trial, support a verdict for the Scarbroughs. I do not believe, however,
that they are entitled to judgment as a matter of law, so I must dissent from
the majority opinion’s affirmance of the trial court grant of summary
judgment on the issue of waste.
As the majority opinion correctly notes, the question of waste is
generally one for a jury. That is especially so in a case such as the present
one where there is evidence presented in defense of the life estate to the
effect that any damage to the estate has been unintentional and due to the
circumstances of the holder of the life estate rather than from disregard of
the estate. [In] Roby v. Newton, 49 S.E. 694 (Ga. 1905), this court noted

1015
that, as forfeitures are not favored, the statute must be strictly construed, as
a criminal statute must be. The court went on to construe the statute as
requiring a concurrence of permissive (lack of due care) and voluntary
(active) waste, and held that the waste which would authorize forfeiture
must be committed “in such a manner as to indicate an utter disregard of
the rights of those who are thereafter to take.”
In the present case, there is evidence that Ms. McIntyre has made some
efforts, through the agency of her son, to reverse the deterioration of the
property and that she has been ill and unable to care for the property
adequately, although she has always intended to return to it. That evidence,
if believed, does not show the wilful behavior required to warrant a
forfeiture. The evidence offered in favor of forfeiture does not demand, as
a matter of law, a finding of wilfulness. As this court noted in Grimm v.
Grimm, 113 S.E. 91 (Ga. 1922), “if the life tenant from poverty or inability
to keep the premises from falling into decay, allowed them to get in such
condition, such conduct would be merely permissive, and would not be
voluntary. . . .”
“The question of intent . . . fits the pattern of those issues of material
fact which are not appropriate issues for summary judgment but are
decided by the trier of fact.” State Farm Fire & Cas. Co. v. Morgan, 368
S.E.2d 509 (Ga. 1988). The question of whether Ms. McIntyre’s conduct
with regard to the life estate she holds has been so egregiously wasteful as
to warrant forfeiture of her interest in the property should be submitted to a
jury. I must, therefore, dissent to the affirmance of the trial court’s grant of
summary judgment on that issue.

Notes and Questions

1. Voluntary and permissive waste. The dissent in McIntyre v.
Scarbrough distinguishes between voluntary and permissive waste.
Voluntary or affirmative waste is the result of deliberate acts by the
possessory tenant, such as destruction or removal of structures or resources
on the property. An important category of voluntary waste is the removal
of natural resources, such as timber, minerals, or oil and gas. Removal of
minerals or oil and gas is generally prohibited voluntary waste unless,
under the “open mines” doctrine, the resource was already being mined
when the life tenant came into possession. See Galkin v. Town of Chester,
716 A.2d 25 (Vt. 1998). Similarly, removing timber is permitted if the land
was already used for timber harvesting or the removal is consistent with
good husbandry of the land, but voluntary waste otherwise. Permissive
waste, in contrast, is a matter of omission rather than commission. As in

1016
McIntyre, permissive waste includes failure to make ordinary repairs
preventing deterioration as well as failure to pay real property taxes and
other carrying charges necessary to prevent loss of the property. The
distinction between voluntary and permissive waste may be important in
setting remedies, as discussed below.

Natural disaster and waste.

Although life tenants must make ordinary repairs to prevent deterioration, they
generally have no obligation to repair damage caused by natural disasters like
hurricanes. But the remainder holder has no obligation to pay for such repairs
either. This leaves the life tenant whose home is catastrophically damaged with
two bad choices: either pay for repairs herself, although the value will
ultimately go to the remainder holder, or vacate the damaged property.

2. Remedies. A future interest holder may sue the life tenant to enjoin
waste or seek damages for losses to the property or moneys spent to
protect it. Suit for damages may also be brought against the life tenant’s
estate after death, although the suit may be barred by laches or statutes of
limitations. See Moore v. Phillips, 627 P.2d 831 (Kan. Ct. App. 1981) (no
laches where life tenant if alive could not have disputed waste); McCarver
v. Blythe, 555 S.E.2d 680 (N.C. App. 2001) (statute of limitations barred
action, which began running as soon as remainder holder noticed some
deterioration). Many states by statute permit the more radical remedy of
termination of the life estate. Some of these require that the waste be either
voluntary or willful to result in termination, while others allow termination
without a showing of intent. See Matteson v. Walsh, 947 N.E.2d 44 (Mass.
App. 2011) (finding forfeiture for failing to pay taxes and make repairs
necessary to prevent leaks and structural rot). States may also permit
double or treble damages against tenants committing waste, at least where
the damage is intentional. See N.J. Stat. §2A:65-3 (tenants committing
waste will pay treble damages and lose the place wasted); Thomas v.
Thomas, 661 N.W.2d 1, 9 (S.D. 2003) (treble damages only permitted
where the waste is willful, wanton, or malicious).
3. Ameliorating waste. What happens if the life tenant’s actions
change the character of the property but increase, rather than decrease, the
value or utility of the property? This is called variously ameliorating,
ameliorative, or meliorative waste. Although the original rule was that
any fundamental alteration of the property was waste, today ameliorating
waste is sometimes condoned. An important case in this shift is Melms v.

1017
Pabst Brewing Co., 79 N.W. 738 (Wis. 1899), which involved a claim for
damages for destruction of a large house by the Pabst Brewing Co. after it
was determined that Pabst had only a life estate per autre vie on the land.
Changes to the surrounding area in the city of Milwaukee had left the
house isolated and surrounded by factories and railroad tracks and
undesirable as a residence, but valuable if cleared for industrial
development. The court held that ordinarily a life tenant was prohibited
from making any changes, even if beneficial, to the “identity of the
property,” but could make fundamental changes where “a complete and
permanent change of surrounding conditions . . . has deprived the property
of its value and usefulness as previously used.” Id. at 741.
While some jurisdictions maintain the rule prohibiting ameliorating
waste, most will approve substantial alteration that increases value if it is
justified in light of changed circumstances, consistency with what a fee
simple owner would do, and the intent of the parties. See Thomas Merrill,
Melms v. Pabst Brewing Co. and the Doctrine of Waste in American
Property Law, 94 Marq. L. Rev. 1055, 1083 (2011). The 1936 Restatement
on Property also encouraged this shift, providing that the duty of the life
tenant is not to decrease “the market value of the interests,” id. at §138,
and that alteration is only prohibited if the remainder or reversion holders
would have a “reasonable ground for objection thereto.” Id. at §141.7
What reasonable grounds for objection might there be to fundamental
changes that increase the value of a property? Would preserving a family
home be a reasonable ground for objection? What about preserving a
wooded area in a relatively undeveloped state? For a critique of the
majority rule (and a fascinating history of Melms), see Merrill, supra.
4. Sale by the life tenant. If property is no longer economically viable
or personally useful in its prior form, can the life tenant sell it rather than
develop it? There is no legal obstacle to selling the life estate, but who
wants to buy a life estate? Property held under a life estate is likely to be
marketable only if the present and future holders can agree to a sale of a
fee simple interest. Proceeds from the sale would be divided between the
parties according to the value of their respective interests. Can a life tenant
force the remainder holders to agree? Baker v. Weedon, 262 So. 2d 641
(Miss. 1972), considered a petition by an elderly life tenant who was
impoverished and unable to support herself upon the meager income of
$1,300 from her agricultural land. A planned highway bypass had
increased the value of the land to $168,500 if it could be sold for
development, but the value would double to $336,000 when the bypass
was completed in the next few years. The court held that equity included

1018
the power to order a sale of the land when it was “in the best interest of all
parties,” but found that the facts did not meet this test, ordering sale of
only a small portion of part of the property. Id. at 645.8
Suppose on remand the trial court had found that the remainder holders
are wealthy and do not need income from either sale or lease of the land;
they prefer to keep the land for a summer retreat, while the life estate
owner is barely getting by because the farming income from the land is
almost nil. Should the court order the sale on grounds of relative hardship?
Whose rights should prevail?
5. Contracting to avoid conflicts. Grantors may avoid the default
rules limiting alteration, sale, or exploitation of the property by contracting
around them. For example, a will creating a life estate in oil-producing
property might permit the life tenant to create leases extending beyond her
life or to receive royalties from newly drilled wells. See Steger v. Muenster
Drilling Co., 134 S.W.3d 359 (Tex. App. 2003) (life tenant had authority
to create leases extending after her death); Singleton v. Donalson, 117
S.W.3d 516 (Tex. App. 2003) (life tenant had authority to receive royalties
from new oil wells). Similarly, a life tenant might be expressly authorized
to sell the fee or fundamentally alter structures on the property.
6. Trust versus life estate. More flexibility may also be created by
using a trust for life rather than a legal life estate. For example, a property
could be placed in trust for the benefit of the grantor’s widow or widower
for life, and then to the grantor’s children. The trustee could be empowered
to sell the property (the “trust corpus”) so long as sale met the trustee’s
fiduciary obligations to act in the best interests of the beneficiaries. See
Jesse Dukeminier, James E. Krier, Gregory Alexander, Michael Schill &
Lior Jacob Strahilevitz, Property 241 (8th ed. 2014) (arguing that “[a]
legal life estate is unsuited to a modern economy that regards land as just
another form of income-producing wealth, which can swiftly appreciate in
value under pressure for development and which must be managed
effectively”). Trusts do not, however, resolve all disputes between present
and future interest holders. See Bailey v. Delta Trust & Bank, 198 S.W.3d
506 (Ark. 2004) (ruling on challenge to trustee’s payment of expenses of
life beneficiary).
7. Duties to the community not to commit waste? There is generally
no duty for the living not to waste fee simple property. Absent nuisance,
historic preservation, or other prohibitions, fee simple holders may alter
and destroy their property, even if it reduces its value. But a number of
courts have prohibited execution of wills that ordered destruction of

1019
valuable homes after the death of the testator, particularly when it would
impact the value of surrounding properties. See Estate of Eyerman v.
Mercantile Trust Co., 524 S.W.2d 210 (Mo. Ct. App. 1975); In re Estate of
Jones, 389 A.2d 436, 437 (N.H. 1978); In re Will of Pace, 400 N.Y.S.2d
488, 491 (Surr. Ct. 1977). As the court explained in Pace,

There is a greater need for the protection of the community interests after the
death of the testator. Although a person may wish to deal capriciously with
his property, while he is alive, his self-interest will usually prevent him from
doing so. After his death there is no such restraint and it is against public
policy to permit the decedent to confer this power upon someone else where
his purpose is merely capricious.

400 N.Y.S.2d at 491. Do such decisions inappropriately violate grantor

intent, or are they appropriate restraints on the reach of the dead hand?
Should the living be restrained from destroying or wasting property?
Compare Lior Jacob Strahilevitz, The Right to Destroy, 114 Yale L.J. 781
(2005) (arguing in favor of a right to destroy), with Joseph L. Sax, Playing
Darts with a Rembrandt: Public and Private Rights in Cultural Treasures
(1999) (arguing for restrictions on destruction to conserve historic and
artistic treasures), and Edward J. McCaffery, Must We Have the Right to
Waste?, in New Essays in the Legal and Political Theory of Property 76
(Stephen R. Munzer ed. 2001) (arguing against a right to destroy for both
the living and the dead).

§4.3 Charitable Trusts and the Cy Pres Doctrine

Terms:
Reflecting the medieval English origins of property law, cy pres comes from
the old Norman French phrase, “cy pres comme possible,” as close as possible,
and may be pronounced consistently with the French as “see pray,” but is more
often pronounced half in English and half in French as “sigh pray.”

When a settlor establishes a charitable trust and the charitable purpose

identified by the settlor becomes impracticable or impossible to achieve,
courts may apply the doctrine of cy pres, or equitable reformation, to
modify the purpose of the trust. For example, imagine that in 1940 a donor
created a trust for the treatment of polio in Maryland. Once polio was
eradicated in the United States, should the trust fail and be returned to the
settlor’s heirs or devisees? Or should it be used for another charitable
purpose, and if so, which one? To fighting polio overseas, for example, or

1020
to another similarly devastating childhood illness in Maryland? Although
many nineteenth-century American courts rejected cy pres as
impermissible governmental control of donor property, after 1900 it
quickly spread with the explosion of charitable trusts in the wake of the
Gilded Age. Application of cy pres involves difficult questions of the
determination of donor intent in light of changed circumstances and the
role of societal interests in modifying charitable trusts.

Evans v. Abney

396 U.S. 435 (1970)

Mr. Justice HUGO BLACK delivered the opinion of the Court.
Once again this Court must consider the constitutional implications of
the 1911 will of United States Senator A.O. Bacon of Georgia which
conveyed property in trust to Senator Bacon’s home city of Macon for the
creation of a public park for the exclusive use of the white people of that
city. As a result of our earlier decision in this case which held that the
park, Baconsfield, could not continue to be operated on a racially
discriminatory basis, Evans v. Newton, 382 U.S. 296 (1966), the Supreme
Court of Georgia ruled that Senator Bacon’s intention to provide a park for
whites only had become impossible to fulfill and that accordingly the trust
had failed and the parkland and other trust property had reverted by
operation of Georgia law to the heirs of the Senator. Petitioners, the same
Negro citizens of Macon who have sought in the courts to integrate the
park, contend that this termination of the trust violates their rights to equal
protection and due process under the Fourteenth Amendment. We granted
certiorari because of the importance of the questions involved. For the
reasons to be stated, we are of the opinion that the judgment of the
Supreme Court of Georgia should be, and it is, affirmed.
In 1911 United States Senator Augustus O. Bacon executed a will that
devised to the Mayor and Council of the City of Macon, Georgia, a tract of
land which, after the death of the Senator’s wife and daughters, was to be
used as “a park and pleasure ground” for white people only, the Senator
stating in the will that while he had only the kindest feeling for the
Negroes he was of the opinion that “in their social relations the two races
(white and negro) should be forever separate.” The will provided that the
park should be under the control of a Board of Managers of seven persons,
all of whom were to be white. The city kept the park segregated for some
years but in time let Negroes use it, taking the position that the park was a
public facility which it could not constitutionally manage and maintain on
a segregated basis.

1021
 Thereupon, individual members of the Board of Managers of the park
brought this suit in a state court against the City of Macon and the trustees
of certain residuary beneficiaries of Senator Bacon’s estate, asking that the
city be removed as trustee and that the court appoint new trustees, to
whom title to the park would be transferred. The city answered, alleging it
could not legally enforce racial segregation in the park. The other
defendants admitted the allegation and requested that the city be removed
as trustee.
Several Negro citizens of Macon intervened, alleging that the racial
limitation was contrary to the laws and public policy of the United States,
and asking that the court refuse to appoint private trustees. Thereafter the
city resigned as trustee and amended its answer accordingly. Moreover,
other heirs of Senator Bacon intervened and they and the defendants other
than the city asked for reversion of the trust property to the Bacon estate in
the event that the prayer of the petition were denied.
The Georgia court accepted the resignation of the city as trustee and
appointed three individuals as new trustees, finding it unnecessary to pass
on the other claims of the heirs. On appeal by the Negro intervenors, the
Supreme Court of Georgia affirmed, holding that Senator Bacon had the
right to give and bequeath his property to a limited class, that charitable
trusts are subject to supervision of a court of equity, and that the power to
appoint new trustees so that the purpose of the trust would not fail was
clear.
The Court in Evans v. Newton, supra, went on to reverse the judgment
of the Georgia Supreme Court and to hold that the public character of
Baconsfield “requires that it be treated as a public institution subject to the
command of the Fourteenth Amendment, regardless of who now has title
under state law.” 382 U.S., at 302. [On remand, petitioners and the
Georgia Attorney General] argued that the trust should be saved by
applying the cy pres doctrine to amend the terms of the will by striking the
racial restrictions and opening Baconsfield to all the citizens of Macon
without regard to race or color. The trial court, however, refused to apply
cy pres. It held that the doctrine was inapplicable because the park’s
segregated, whites-only character was an essential and inseparable part of
the testator’s plan. Since the “sole purpose” of the trust was thus in
irreconcilable conflict with the constitutional mandate expressed in our
opinion in Evans v. Newton, the trial court ruled that the Baconsfield trust
had failed and that the trust property had by operation of law reverted to
the heirs of Senator Bacon. On appeal, the Supreme Court of Georgia
affirmed.
We are of the opinion that in ruling as they did the Georgia courts did

1022
no more than apply well-settled general principles of Georgia law to
determine the meaning and effect of a Georgia will. At the time Senator
Bacon made his will Georgia cities and towns were, and they still are,
authorized to accept devises of property for the establishment and
preservation of “parks and pleasure grounds” and to hold the property thus
received in charitable trust for the exclusive benefit of the class of persons
named by the testator. Ga. Code, ch. 69-5 (1967); Ga. Code §§108-203,
108-207 (1959). These provisions of the Georgia Code explicitly
authorized the testator to include, if he should choose, racial restrictions
such as those found in Senator Bacon’s will. The city accepted the trust
with these restrictions in it. When this Court in Evans v. Newton, supra,
held that the continued operation of Baconsfield as a segregated park was
unconstitutional, the particular purpose of the Baconsfield trust as stated in
the will failed under Georgia law. The question then properly before the
Georgia Supreme Court was whether as a matter of state law the doctrine
of cy pres should be applied to prevent the trust itself from failing.
Petitioners urged that the cy pres doctrine allowed the Georgia courts to
strike the racially restrictive clauses in Bacon’s will so that the terms of the
trust could be fulfilled without violating the Constitution.
The Georgia cy pres statutes upon which petitioners relied provide:

When a valid charitable bequest is incapable for some reason of execution

in the exact manner provided by the testator, donor, or founder, a court of
equity will carry it into effect in such a way as will as nearly as possible
effectuate his intention. Ga. Code §108-202 (1959).
A devise or bequest to a charitable use will be sustained and carried out in
this State; and in all cases where there is a general intention manifested by
the testator to effect a certain purpose, and the particular mode in which he
directs it to be done shall fail from any cause, a court of chancery may, by
approximation, effectuate the purpose in a manner most similar to that
indicated by the testator. Ga. Code §113-815 (1959).

The Georgia courts have held that the fundamental purpose of these cy
pres provisions is to allow the court to carry out the general charitable
intent of the testator where this intent might otherwise be thwarted by the
impossibility of the particular plan or scheme provided by the testator. But
this underlying logic of the cy pres doctrine implies that there is a certain
class of cases in which the doctrine cannot be applied. Professor Scott in
his treatise on trusts states this limitation on the doctrine of cy pres which
is common to many States as follows:

It is not true that a charitable trust never fails where it is impossible to carry

1023
 out the particular purpose of the testator. In some cases . . . it appears that the
accomplishment of the particular purpose and only that purpose was desired
by the testator and that he had no more general charitable intent and that he
would presumably have preferred to have the whole trust fail if the particular
purpose is impossible of accomplishment. In such a case the cy pres doctrine
is not applicable. 4 A. Scott, The Law of Trusts §399, at 3085 (3d ed. 1967).

In this case, Senator Bacon provided an unusual amount of information

in his will from which the Georgia courts could determine the limits of his
charitable purpose. Immediately after specifying that the park should be
for “the sole, perpetual and unending, use, benefit and enjoyment of the
white women, white girls, white boys and white children of the City of
Macon,” the Senator stated that “the said property under no circumstances
. . . [is] to be . . . at any time for any reason devoted to any other purpose
or use excepting so far as herein specifically authorized.” And the Senator
continued:

I take occasion to say that in limiting the use and enjoyment of this
property perpetually to white people, I am not influenced by any unkindness
of feeling or want of consideration for the Negroes, or colored people. On the
contrary I have for them the kindest feeling, and for many of them esteem
and regard, while for some of them I have sincere personal affection.
I am, however, without hesitation in the opinion that in their social
relations the two races . . . should be forever separate and that they should
not have pleasure or recreation grounds to be used or enjoyed, together and
in common.

The Georgia courts, construing Senator Bacon’s will as a whole,

concluded from this and other language in the will that the Senator’s
charitable intent was not “general” but extended only to the establishment
of a segregated park for the benefit of white people. The Georgia trial
court found that “Senator Bacon could not have used language more
clearly indicating his intent that the benefits of Baconsfield should be
extended to white persons only, or more clearly indicating that this
limitation was an essential and indispensable part of his plan for
Baconsfield.” Since racial separation was found to be an inseparable part
of the testator’s intent, the Georgia courts held that the State’s cy pres
doctrine could not be used to alter the will to permit racial integration. The
Baconsfield trust was therefore held to have failed, and, under Georgia
law, “[w]here a trust is expressly created, but uses . . . fail from any cause,
a resulting trust is implied for the benefit of the grantor, or testator, or his
heirs.” Ga. Code §108-106(4) (1959). The Georgia courts concluded, in

1024
effect, that Senator Bacon would have rather had the whole trust fail than
have Baconsfield integrated.
When a city park is destroyed because the Constitution requires it to be
integrated, there is reason for everyone to be disheartened. We agree with
petitioners that in such a case it is not enough to find that the state court’s
result was reached through the application of established principles of state
law. No state law or act can prevail in the face of contrary federal law, and
the federal courts must search out the fact and truth of any proceeding or
transaction to determine if the Constitution has been violated. Here,
however, the action of the Georgia Supreme Court declaring the
Baconsfield trust terminated presents no violation of constitutionally
protected rights, and any harshness that may have resulted from the state
court’s decision can be attributed solely to its intention to effectuate as
nearly as possible the explicit terms of Senator Bacon’s will.
The construction of wills is essentially a state-law question, and in this
case the Georgia Supreme Court, as we read its opinion, interpreted
Senator Bacon’s will as embodying a preference for termination of the
park rather than its integration. Given this, the Georgia court had no
alternative under its relevant trust laws, which are long standing and
neutral with regard to race, but to end the Baconsfield trust and return the
property to the Senator’s heirs.
A second argument for petitioners stresses the similarities between this
case and the case in which a city holds an absolute fee simple title to a
public park and then closes that park of its own accord solely to avoid the
effect of a prior court order directing that the park be integrated as the
Fourteenth Amendment commands. Yet, assuming arguendo that the
closing of the park would in those circumstances violate the Equal
Protection Clause, that case would be clearly distinguishable from the case
at bar because there it is the State and not a private party which is injecting
the racially discriminatory motivation. In the case at bar there is not the
slightest indication that any of the Georgia judges involved were motivated
by racial animus or discriminatory intent of any sort in construing and
enforcing Senator Bacon’s will. Nor is there any indication that Senator
Bacon in drawing up his will was persuaded or induced to include racial
restrictions by the fact that such restrictions were permitted by the Georgia
trust statutes. On the contrary, the language of the Senator’s will shows
that the racial restrictions were solely the product of the testator’s own
full-blown social philosophy. Similarly, the situation presented in this case
is also easily distinguishable from that presented in Shelley v. Kraemer,
334 U.S. 1 (1948), where we held unconstitutional state judicial action
which had affirmatively enforced a private scheme of discrimination

1025
against Negroes. Here the effect of the Georgia decision eliminated all
discrimination against Negroes in the park by eliminating the park itself,
and the termination of the park was a loss shared equally by the white and
Negro citizens of Macon since both races would have enjoyed a
constitutional right of equal access to the park’s facilities had it continued.

Mr. Justice WILLIAM J. BRENNAN, JR., dissenting.

For almost half a century Baconsfield has been a public park. Senator
Bacon’s will provided that upon the death of the last survivor among his
widow and two daughters title to Baconsfield would vest in the Mayor and
Council of the City of Macon and their successors forever. The city
acquired title to Baconsfield in 1920 by purchasing the interests of Senator
Bacon’s surviving daughter and another person who resided on the land.
Some $46,000 of public money was spent over a number of years to pay
the purchase price. From the outset and throughout the years the Mayor
and City Council acted as trustees, Baconsfield was administered as a
public park. T. Cleveland James, superintendent of city parks during this
period, testified that when he first worked at Baconsfield it was a
“wilderness . . . nothing there but just undergrowth everywhere, one road
through there and that’s all, one paved road.” He said there were no park
facilities at that time. In the 1930’s Baconsfield was transformed into a
modern recreational facility by employees of the Works Progress
Administration, an agency of the Federal Government. Other capital
improvements were made in later years with both federal and city money.
I have no doubt that a public park may constitutionally be closed down
because it is too expensive to run or has become superfluous, or for some
other reason, strong or weak, or for no reason at all. But under the Equal
Protection Clause a State may not close down a public facility solely to
avoid its duty to desegregate that facility.
The Court, however, affirms the judgment of the Georgia Supreme
Court on the ground that the closing of Baconsfield did not involve state
action. This discriminatory closing is permeated with state action: at the
time Senator Bacon wrote his will Georgia statutes expressly authorized
and supported the precise kind of discrimination provided for by him; in
accepting title to the park, public officials of the City of Macon entered
into an arrangement vesting in private persons the power to enforce a
reversion if the city should ever incur a constitutional obligation to
desegregate the park; it is a public park that is being closed for a
discriminatory reason after having been operated for nearly half a century
as a segregated public facility; and it is a state court that is enforcing the
racial restriction that keeps apparently willing parties of different races

1026
from coming together in the park. That is state action in overwhelming
abundance. I need emphasize only three elements of the state action
present here.
First, there is state action whenever a State enters into an arrangement
that creates a private right to compel or enforce the reversion of a public
facility. Whether the right is a possibility of reverter, a right of entry, an
executory interest, or a contractual right, it can be created only with the
consent of a public body or official, for example the official action
involved in Macon’s acceptance of the gift of Baconsfield. The State’s
involvement in the creation of such a right is also involvement in its
enforcement; the State’s assent to the creation of the right necessarily
contemplates that the State will enforce the right if called upon to do so.
Where, as in this case, the State’s enforcement role conflicts with its
obligation to comply with the constitutional command against racial
segregation the attempted enforcement must be declared repugnant to the
Fourteenth Amendment.
A finding of discriminatory state action is required here on a second
ground. Shelley v. Kraemer, 334 U.S. 1 (1948), stands at least for the
proposition that where parties of different races are willing to deal with
one another a state court cannot keep them from doing so by enforcing a
privately devised racial restriction. Nothing in the record suggests that
after our decision in Evans v. Newton, supra, the City of Macon retracted
its previous willingness to manage Baconsfield on a nonsegregated basis,
or that the white beneficiaries of Senator Bacon’s generosity were
unwilling to share it with Negroes, rather than have the park revert to his
heirs. [In addition,] the Attorney General of Georgia was made a party
after remand from this Court, and, acting “as parens patriae in all legal
matters pertaining to the administration and disposition of charitable trusts
in the State of Georgia in which the rights of beneficiaries are involved,”
he opposed a reversion to the heirs and argued that Baconsfield should be
maintained “as a park for all the citizens of the State of Georgia.” [S]o far
as the record shows, this is a case of a state court’s enforcement of a racial
restriction to prevent willing parties from dealing with one another. The
decision of the Georgia courts thus, under Shelley v. Kraemer, constitutes
state action denying equal protection.
Finally, a finding of discriminatory state action is required on a third
ground. In Reitman v. Mulkey, 387 U.S. 369 (1967), this Court announced
the basic principle that a State acts in violation of the Equal Protection
Clause when it singles out racial discrimination for particular
encouragement, and thereby gives it a special preferred status in the law,
even though the State does not itself impose or compel segregation. [In

1027
1905] prior to the enactment of §§69-504 and 69-505 of the Georgia Code
“it would have been extremely doubtful” whether Georgia law authorized
“a trust for park purposes when a portion of the public was to be excluded
from the park.” Sections 69-504 and 69-505 removed this doubt by
expressly permitting dedication of land to the public for use as a park open
to one race only.
In 1911, only six years after the enactment of §§69-504 and 69-505,
Senator Bacon, a lawyer, wrote his will. When he wrote the provision
creating Baconsfield as a public park open only to the white race, he was
not merely expressing his own testamentary intent, but was taking
advantage of the special power Georgia had conferred by §§69-504 and
69-505 on testators seeking to establish racially segregated public parks.
This state-encouraged testamentary provision is the sole basis for the
Georgia courts’ holding that Baconsfield must revert to Senator Bacon’s
heirs. The Court’s finding that it is not the State of Georgia but “a private
party which is injecting the racially discriminatory motivation”
inexcusably disregards the State’s role in enacting the statute without
which Senator Bacon could not have written the discriminatory provision.

Notes and Questions

1. Donor intent. In applying cy pres to charitable trusts, the
hypothetical inquiry is whether the donor, knowing of the changed
circumstances, would prefer to have the charitable donation fail altogether
or modified to serve a related purpose. In Evans v. Abney, how should we
construct this hypothesized testator? Are we asking what Senator Bacon
would have wanted in 1911 had the city refused to segregate the park
(unimaginable in 1911), or what he would have wanted had he lived
through the changes leading to the decisions that public segregation was
unconstitutional and private segregation violated federal civil rights
statutes (also unimaginable in 1911)? Which inquiry better respects the
donor’s wishes? Which better respects the donor himself?
The cy pres doctrine traditionally places the burden on the party
seeking reformation to prove that the donor had a “general charitable
intent” beyond the specific purposes named in the bequest. Kolb v. City of
Storm Lake, 736 N.W.2d 546, 559 (Iowa 2007). This has been the most
litigated element of the cy pres determination. Often the trust document
itself states only specific purposes and there is no other evidence of intent.
Nevertheless, courts often find a general intent in such circumstances. See
id. at 559 (finding that despite several mentions of specific location of a
memorial garden, the donors had a general charitable intent permitting the

1028
city to move the garden when its location became impracticable).
The modern trend is to do away with this requirement and presume
general charitable intent. The Restatement (Third) of Trusts (2003)
provides that if the purposes of a charitable trust become impossible,
impracticable, or wasteful to achieve, the trust shall be redirected to a
purpose that “reasonably approximates” the stated purpose “[u]nless the
terms of the trust provide otherwise.” Id. §67; see In re Elizabeth J.K.L.
Lucas Charitable Gift, 261 P.3d 800, 808-809 (Haw. App. 2011) (noting
trend). The Uniform Trust Code, a model law promulgated by the National
Conference of Commissioners on Uniform State Laws, provides that a
charitable trust whose purposes become impossible or impracticable to
accomplish “shall not fail” and “shall not revert to the settlor” and the
court may modify it in a manner consistent with the settlor’s charitable
purposes. Uniform Trust Code §413 (2000). Even specific provisions for
reversion to the grantor on failure of the trust shall not be enforced unless
the settlor is still living or the trust has been in existence for less than 21
years. Id. About half the states have already adopted the provision. While
other states may continue to espouse a need to find a general charitable
purpose, many will likely apply it by assuming that the testator had such a
purpose absent clear evidence otherwise.
Does the new test sacrifice donor intent in order to achieve public
interests in charitable trusts? Or does is it appropriately attribute to the
donor the motives of a reasonable generous person, who would prefer to
see her bequest used effectively than fail or be devoted to an impracticable
purpose? Compare Vanessa Laird, Phantom Selves: The Search for
General Intent in the Application of the Cy Pres Doctrine, 40 Stan. L. Rev.
973 (1988) (arguing that presuming that donors would want their gifts
used charitably and usefully honors donor intent), and Restatement (Third)
of Trusts §67 cmt. b (“ ‘[T]he dilemma of whether to enforce the testator’s
intent or to modify the terms of the will in accordance with changed
conditions since his death is often a false one.’ ”) (quoting Richard A.
Posner, Economic Analysis of Law 556-557 (5th ed. 1998)), with Alberto
V. Lopez, An Evaluation of Cy Pres Redux, 78 U. Cin. L. Rev. 1307
(2010) (arguing that the new rules improperly elevate societal interests
over donor intent). Note that (as seen in the dissent in Evans v. Abney) the
state attorney general is often a party or even the petitioner in a cy pres
action, with the sometimes conflicting roles of safeguarding the donor’s
intent and society’s interests as parens patriae for charities.
2. Impossible or just contrary to the public interest? The traditional
inquiry, maintained in many states, is whether fulfilling the purpose of the

1029
trust is actually or practicably impossible to achieve. See Estate of Estes v.
Central United Methodist Church, 523 N.W.2d 863 (Mich. App. 1994)
(trust corpus could only be used for building a new church, although
existing church was in landmarked well-constructed building,
congregation was shrinking, and no plans had been made to build new
church in the 21 years since the gift). The modern trend, however, is to
permit reformation if the purpose is broadly impracticable, “wasteful,” or
unreasonable. See Restatement (Third) of Trusts §67 (adding “wasteful”
element); Uniform Trust Code §413 (2000) (same); N.H. Rev. Stat.
§498:4-a (cy pres permitted if, among other things, the trust is “prejudicial
to the public interest”).
3. Cy pres and the reform of discriminatory trusts. Many courts
have applied cy pres to reform trusts that illegally restricted their benefits
on the basis of race or sex. Home for Incurables of Baltimore City v.
University of Maryland Medical System Corp., 769 A.2d 746 (Md. 2002)
(reforming trust for construction of rehabilitation center for white
patients); In re Crichfield Trust, 426 A.2d 88 (N.J. Super. Ct. Ch. Div.
1980) (reforming trust that established a college scholarship for male
graduates of a public high school); Coffee v. William Marsh Rice
University, 408 S.W.2d 269, 271 (Tex. Ct. App. 1966) (using cy pres to
excise racial restriction in endowment fund). Cf. United States v. Hughes
Memorial Home, 396 F. Supp. 544 (D. W. Va. 1975) (cy pres doctrine
applied to excise racial restriction on trust benefiting orphanage because
racial exclusion from the orphanage would violate the federal Fair
Housing Act). In In re Certain Scholarship Funds, 575 A.2d 1325 (N.H.
1990), for example, a testator established a charitable scholarship trust to
provide a college education “for some Poor and worthy Keene boy who is
a scholar in the Keene High School.” A second settlor established a similar
trust providing that the income be used “to provide tuition for one year for
some worthy protestant boy” at Keene High School. The New Hampshire
Supreme Court agreed to remove the race and gender restrictions,
affirming the trial court’s finding that “there was no indication that Mr.
Wright or Mr. Alger would not have responded to the changes in attitudes
experienced by society since the creation of these trusts.” Id. at 1328. The
court denied the Attorney General’s request that it should cure the
unconstitutional restrictions by substituting private trustees for the Board
of Education:

[T]he court must ask whether its first priority is to end the discrimination or
to preserve it. [W]e believe that the appropriate source of values for our
judgment is the constitution, which forbids the agencies of the State to act in

1030
 a manner that would preserve the constitutionally impermissible desires of
the testator.

Id. at 1329-1330. In a similar case, however, the New York Court of

Appeals substituted private trustees for Board of Education officials in two
trusts, one for scholarships for “five (5) young men who shall have
graduated from the Canastota High School, three (3) of whom shall have
attained the highest grades in the study of science and two (2) of whom
shall have attained the highest grades in the study of chemistry” and the
other for scholarships for “bright and deserving young men who have
graduated from the High School of [the Croton-Harmon Union Free]
School District.” Matter of Estate of Wilson, 452 N.E.2d 1228, 1228 (N.Y.
1983). The trial court found that the donors had a specific intent to benefit
men, and that gender-specific scholarships did not violate public policy.
Id. What justifies the different approaches?
4. State action. In Shelley v. Kraemer, 334 U.S. 1 (1948), the Supreme
Court held that judicial enforcement of a racially restrictive covenant to
prevent a sale to an African American family constituted state action and
so was prohibited by the fourteenth amendment. See Chapter 8, §5.2.
Evans v. Abney, however, holds that the reversion required by state statute
after a trust fails because of violation of the fourteenth amendment is not
state action. What justifies the difference? In 1955, the North Carolina
Supreme Court reached the same result, affirming the constitutionality of a
possibility of reverter of land conveyed to the city of Charlotte as a public
park “for use by the white race only.” Charlotte Park & Recreation
Commission v. Barringer, 88 S.E.2d 114 (N.C. 1955). The court found no
state action:

If Negroes use the Bonnie Brae Golf Course, the determinable fee conveyed
to plaintiff by Barringer, and his wife, automatically will cease and terminate
by its own limitation expressed in the deed. . . . The operation of this
reversion provision is not by any judicial enforcement by the State Courts of
North Carolina, and Shelley v. Kraemer, 334 U.S. 1, has no application.

Id. at 123. In contrast, in Capitol Federal Savings & Loan Association v.

Smith, 316 P.2d 252 (Colo. 1957), a group of property owners entered into
a covenant not to sell or lease their land to “any colored person or
persons,” and providing that if any parcel were conveyed or leased in
violation of the covenant, the interest of the African American owner
“shall be forfeited to and rest in such of the then owners of all of said lots
and parcels of land not included in such conveyance or lease who may

1031
assert title thereto by filing for record notice of their claim.” The court held
that regardless of whether the restriction was a covenant or an executory
interest, the policies underlying Shelley v. Kraemer applied:

No matter by what ariose terms the covenant under consideration may be

classified by state counsel, it is still a racial restriction in violation of the
Fourteenth Amendment to the Federal Constitution. While the hands may
seem to be the hands of Esau to a blind Isaac, the voice is definitely Jacob’s.
We cannot give our judicial approval or blessing to a contract such as is here
involved.

Id. at 254-255. Which approach is correct?

Problems
1. In the 1940s and 1950s, Georgia O’Keefe donated the important art
collection of her husband, Alfred Stieglitz, and several of her own
paintings to Fisk University, a historically black college in Nashville,
Tennessee, which at that time provided a uniquely integrated cultural and
artistic center in the South. The gifts were made with numerous specific
restrictions including that the works could not be sold, that the
photographs could not be loaned for display elsewhere, and that the works
had to be displayed as an entire collection, in a room painted in a white or
off-white color selected by O’Keefe. In 2005, in dire financial straits and
unable to afford to show the collection, Fisk sought permission to sell
some of the paintings. What should the court do? See In re Fisk University,
392 S.W.3d 582 (Tenn. App. 2011).
2. In Hermitage Methodist Homes of Virginia, Inc. v. Dominion Trust
Co., 387 S.E.2d 740 (Va. 1990), a testator named Jack Adams died,
leaving a charitable trust providing income to the Prince Edward School,
“so long as Prince Edward School Foundation admits to any school,
operated or supported by it, only members of the White Race.” His will
further provided that if the school should ever “matriculate . . . any person
who is not a member of the White Race, no further payment of income
shall be made” to the school, but all income should go to the Miller
School. Further gifts were provided to the Seven Hills School and then to
Hampden-Sydney College if the prior recipient violated the “whites-only”
provision of the trust. The final beneficiary of the successive gifts over
was Hermitage Methodist Homes of Virginia; this final gift had no racial
restriction built in. At the time Adams wrote his will, Virginia Code §55-
26 made it lawful to create a charitable trust for the education of white or
“colored” persons but not of both. The statute was later repealed.

1032
 In 1987, the trustee sued the first beneficiary, Prince Edward School,
because it had admitted African American students. The trial court held
that all “racially discriminatory conditions of the Trust are unconstitutional
and void” and determined that Prince Edward School should continue
receiving the income from the trust. The Virginia Supreme Court reversed,
holding that even if it were unconstitutional to enforce a restrictive
condition, depriving Prince Edward of the income from the trust effected
no such enforcement. The condition in the trust did not take the form of a
condition subsequent but was, rather, a “special limitation” that ended
Prince Edward’s beneficial ownership interest automatically as soon as the
condition was violated. Thus, no court action was needed to alter
ownership of the income from Prince Edward. Because all of the
educational institutions had admitted black students, the interests in the
trust proceeds went to Heritage Methodist Homes, which alone had no
restrictions in its gift.
Professor Jonathan Entin reports the history of the Prince Edward
School:

The Prince Edward School Foundation was founded in June 1955 to establish
private schools for white pupils in the event that the federal courts ordered
the public schools of Prince Edward County to desegregate. Such an order
seemed certain because the county school board was one of the defendants in
Brown v. Board of Education. The order finally came in 1959. Local officials
responded by shutting down the public schools. At the same time, the
Foundation opened a private school known as Prince Edward Academy that
enrolled almost every white student in the county. The Academy continued
to enroll a large majority of the county’s white pupils for some years after the
Supreme Court ordered the public schools reopened on a desegregated basis
in 1964.

Jonathan Entin, Defeasible Fees, State Action, and the Legacy of Massive
Resistance, 34 Wm. & Mary L. Rev. 769 (1993). Does this knowledge
change your analysis of the case?
3. Section 1982 of the Civil Rights Act of 1866, 42 U.S.C. §1982,
provides that

[a]ll citizens of the United States shall have the same right, in every State and
Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease,
sell, hold, and convey real and personal property.

The statute clearly prohibits any state law that would prevent persons
of a particular race from inheriting property. Does it also prevent the state

1033
from enforcing a racial restriction placed by a donor in a donative transfer?
If it does, does §1982 require the restriction to be stricken, leaving title
with the city and thereby keeping the park open? Even if the equal
protection clause of the Constitution does not prevent closure of the park
to honor the donor’s discriminatory intent, does §1982 prohibit
enforcement of the racial restriction? See Florence Wagman Roisman, The
Impact of the Civil Rights Act of 1866 on Racially Discriminatory
Donative Transfers, 53 Ala. L. Rev. 463 (2002) (arguing that it does).

§5 RESTRICTIONS ON ESTATES AND FUTURE

INTERESTS
Future interests are regulated by both common law rules and statutes.
The main structural rules include (1) the rule prohibiting the creation of
new estates; (2) the rule against unreasonable restraints on alienation; (3)
the rule against perpetuities; and (4) the rule against unreasonable
restraints on marriage.

§5.1 Rule Against Creation of New Estates (The Numerus

Clausus Doctrine)
The rules underlying the creation of future interests are intended to
discourage the social hierarchy characteristic of feudalism and to promote
a market system involving wide dispersal of property rights to prevent
local monopolies. The commitment to these goals requires courts to decide
which forms of property shall be recognized. We could just allow owners
to create whatever future interests they want, but this is not how the law
developed. Instead, courts follow a general rule against the creation of
new estates. A conveyance that does not fit within any of the established
categories (including fee simple absolute subject to covenants, defeasible
fees, life estates, leaseholds, and in some states, fees tail) must be
interpreted to fit an established estate.
This rule has both formal and substantive dimensions. Formally, it
means that grantors must put their conveyances in a recognizable form if
they want courts to recognize the package of rights they intended to create.
Substantively, it means that certain packages of rights will not be
recognized. This both limits transaction costs by making it easier to
determine what one is buying and owns, and serves other policy goals by
ensuring that packages of rights are those approved by law. See Nestor M.
Davidson, Standardization and Pluralism in Property Law, 61 Vand. L.
Rev. 1597 (2008); Thomas W. Merrill & Henry E. Smith, Optimal

1034
Standardization in the Law of Property: The Numerus Clausus Principle,
110 Yale L.J. 1 (2000). Consider how Justice Oliver Wendell Holmes, Jr.,
reacted to the following estate.

Johnson v. Whiton

34 N.E. 542 (Mass. 1893)

OLIVER WENDELL HOLMES, JR., J.
This is an action to recover a deposit paid under an agreement to
purchase land. The land in question passed under the seventh clause of the
will of Royal Whiton to his five grandchildren, and a deed executed by
them was tendered to the plaintiff, but was refused, on the ground that one
of the grandchildren, Sarah A. Whiton, could not convey a fee-simple
absolute, and this action is brought to try the question. The clause of the
will referred to is as follows: “After the decease of all my children, I give,
devise, and bequeath to my granddaughter Sarah A. Whiton and her heirs
on her father’s side one-third part of all my estate, both real and personal,
and to my other grandchildren and their heirs, respectively, the remainder,
to be divided in equal parts between them.”
We see no room for doubt that the legal title passed by the foregoing
clause. We think it equally plain that the words “and her heirs on her
father’s side” are words of limitation, and not words of purchase. The only
serious question is whether the effect of them was to give Sarah A. Whiton
only a qualified fee, and whether, by reason of the qualification, she is
unable to convey a fee simple. By the old law, to take land by descent a
man must be of the blood of the first purchaser, and descent is traced from
the purchaser. For instance, if the land had been acquired in fee simple by
Sarah A. Whiton’s father, it could only have descended from her to her
heirs on her father’s side. It was no great stretch to allow a limitation in the
first instance to Sarah of a fee with the same descendible quality that it
would have had in the case supposed. Especially is this true if, as Mr.
Challis argues, the grantee under such a limitation could convey a fee
simple, just as he or she could have done if the estate actually had
descended from the father. But our statute of descent looks no further than
the person himself who died seised of or entitled to the estate. The analogy
which lies at the foundation of the argument for the possibility of such
limitations is wanting. A man cannot create a new kind of inheritance.
These and other authorities show, too, that, except in the case of a grant by
the king, if the words “on her father’s side” do not effect the purpose
intended, they are to be rejected, leaving the estate a fee simple. Certainly,
it would seem that in this commonwealth an estate descending only to

1035
heirs on the father’s side was a new kind of inheritance.
What we have to consider, however, is not the question of descent, but
that of alienability; and that question brings a further consideration into
view. It would be most unfortunate and unexpected if it should be
discovered at this late day that it was possible to impose such a
qualification upon a fee, and to put it out of the power of the owners to
give a clear title for generations. In the more familiar case of an estate tail,
the legislature has acted, and the statute has been carried to the furthest
verge by construction. It is not too much to say that it would be plainly
contrary to the policy of the law of Massachusetts to deny the power of
Sarah A. Whiton to convey an unqualified fee.

Notes and Questions

1. Sarah Whiton’s estate. Rather than a conveyance to “Sarah A.
Whiton and her heirs,” which would convey a fee simple absolute, to
“Sarah A. Whiton for life, and then her heirs on her fathers’ side,” which
would convey a life estate, or “Sarah A. Whiton and the heirs of her
father’s body,” which would convey a fee tail, her grandfather’s will
appears to convey a fee that can only go in the future to any heirs on her
father’s side. Because it does not fit precisely into any category, Justice
Holmes rules that she has a fee simple absolute, even though finding the
estate to be a fee tail or life estate appears more consistent with her
grandfather’s likely intent. What explains his ruling?
2. Unlike civil law courts, United States courts rarely expressly state
the numerus clausus principle. But see Zanes v. Lehigh Transit Co., 41
F.2d 552 (E.D. Pa. 1930) (“[I]n furtherance of [the] policy to unfetter
estates and to promote freedom of alienation . . . [s]uch estates and such
only as the law permits may be created in land. The power of an owner to
carve out new estates or give to them novel incidents is very much
restricted.”). Nevertheless, courts regularly squeeze unfamiliar grants into
one of the established forms. When faced, for example, with leases “for
life” and other leases ending at the occurrence of some event rather than a
fixed period of time, courts have historically found that the lease was a
“tenancy at will,” which either lessee or lessor could end at any time. See,
e.g., Nitschke v. Doggett, 489 S.W.2d 335 (Tex. Ct. App. 1972).
The accepted forms are remarkably similar to those developed
centuries ago, but are not immune from change. Most jurisdictions, for
example, have abolished the fee tail as a permissible form. Similarly, faced
with the unfairness of permitting a landlord to terminate a lease that
appeared to be for life, some jurisdictions have recognized a “tenancy for

1036
life.” Garner v. Gerrish, 473 N.E.2d 223 (N.Y. 1984); Thompson v.
Baxter, 119 N.W. 797 (Minn. 1909); Restatement (Second) of Property,
Landlord and Tenant §1.6. For a discussion of what other new forms, such
as the common interest development, illuminate about the numerus clausus
principle, see Anna di Robilant, Property and Democratic Deliberation:
The Numerus Clausus Principle and Democratic Experimentalism in
Property Law, 62 Am. J. Comp. L. 367 (2014).

§5.2 Rule Against Unreasonable Restraints on Alienation

See Chapter 8, §5.3.

§5.3 Rule Against Perpetuities

A. The Traditional Rule

The rule against perpetuities invalidates future interests that may vest
too far into the future. It does so in order to protect against dead hand
control, limiting the time within which the identity of who will own the
property in the future may become certain. By doing so, the rule arguably
promotes alienability and productive use of land by requiring that the
identity of those who own the property be fixed within a certain period of
time.
Under the rule, future interests are invalid unless they are certain to
“vest” or fail to vest within the lifetime of someone who is alive (“in
being”) at the creation of the interest or no later than 21 years after her
death. In John Chipman Gray’s famous formulation:

No interest is good unless it must vest, if at all, no later than 21 years after
the death of some life in being at the creation of the interest.

The Rule in the Movies:

The Descendants, an Academy Award–winning 2011 film, features a
conveyance written to avoid the rule against perpetuities. George Clooney is a
beneficiary of a trust of land providing that the trust will end and the land may
be sold 20 years after the death of the last of the descendants living at the time
of the settlor’s death. For an older starring role of the rule, see Body Heat
(1981), in which Kathleen Turner gains a fortune and lands William Hurt in
prison through her knowledge of the rule.

1037
John Chipman Gray, The Rule Against Perpetuities §201 (4th ed. 1942).
The rule is technical, complicated, and, in the minds of some, archaic.
It has also been substantially modified by statute in more than half the
states. At the same time, the policies underlying the rule still have
substantial support among many judges, legislators, and scholars. The rule
is “designed to prevent remoteness of vesting and thereby leave control of
the wealth of the world more in the hands of the living than in the hands of
the dead.” 3 Thompson on Real Property, Thomas Editions §28.02.
Although modified by statute, it has been abolished entirely only in a few
states.
The rule against perpetuities has been the bane of law students for
generations. As Gray wrote in his foundational text,

There is something in the subject which seems to facilitate error. Perhaps it is

because the mode of reasoning is unlike that with which lawyers are most
familiar. . . . [T]here are few lawyers of any practice in drawing wills and
settlements who have not at some time either fallen into the net which the
Rule spreads for the unwary, or at least shuddered to think how narrowly
they have escaped it.

Gray, supra, at ix-x. In an infamous decision, the California Supreme

Court even held that a lawyer could not held guilty of malpractice for
drafting a will that violated the rule because it was unreasonable to expect
a lawyer of “ordinary skill and capacity” to apply it correctly. Lucas v.
Hamm, 364 P.2d 685 (1961).

How to apply the rule. The rule is difficult to apply to complicated

conveyances. However, the rule is not difficult in the vast majority of
cases. These materials explain the rule in detail and show how to apply it
to a series of representative problems.
The rule requires four steps. First, identify the future interests created
by the grant. If the interest is in the grantor, it is not subject to the rule
(except for certain commercial interests discussed below). Second, identify
what has to happen for the interest to fully vest, meaning that any
conditions will have occurred, and no more people can be added to the
class of recipients. Third, identify all the “lives in being,” the people alive
at the creation of the interest who can have something to do with it vesting.
Fourth, see if you can imagine any way — however unlikely or in defiance
of normal rules of reproductive biology — in which the future interest will
vest more than 21 years after the death of all of the people identified in
step three. If you can, the future interest is invalid. Let us consider these
steps in more depth.

1038
 1. Identify the future interests created by the grant. All future
interests in the grantor are exempt from the rule against perpetuities; these
include reversions (following life estates and leaseholds) and possibilities
of reverter and rights of entry (following defeasible fees). Interests in the
grantor were conceptualized as “vested” the moment they were created.
This is because an owner of a fee simple absolute who conveys a fee
simple determinable is carving out a present estate from a fee simple
absolute that is already vested; the possibility of reverter is part of that
vested interest that was not given away. These future interests are “good”
and will be enforced by the courts unless they are regulated by special
statutory limitations other than the rule against perpetuities. The only
interests in third parties that are similarly exempt from the rule against
perpetuities are vested remainders that are either absolutely vested or
vested subject to divestment.
Future interests that are subject to the rule against perpetuities are
executory interests, contingent remainders, and vested remainders subject
to open. These interests must be tested to see whether they comply with
the rule. Vested remainders subject to open are subject to the rule because
some of the interests to the class members are vested and some are
contingent (those belonging to persons who are not born at the creation of
the interest). All future interests in third parties following defeasible fees
(executory interests) are subject to the rule against perpetuities. Future
interests in third parties following life estates (remainders) are subject to
the rule only if they are contingent, that is, if there is a condition precedent
to their vesting or if they are allocated to persons unascertained at the time
of the original conveyance creating them. Vested remainders subject to
open are partially contingent and therefore have traditionally been held
subject to the rule.
A common example of a future interest traded in the marketplace is an
option to purchase, which is the right to buy property for a stated price at
some point in the future. Because options are rights to terminate an estate,
they are akin to executory interests and therefore are ordinarily subject to
the rule against perpetuities. This is true whether the option is held by the
original grantor of the property or by a third party. Preemptive rights,
also called rights of first refusal, allow the holder to purchase property
whenever the current owner decides to sell. Some courts hold that
preemptive rights are not subject to the rule against perpetuities because
they allow the current owner either to obtain the fair market value or to
have an offer by a third party matched by the owner of the preemptive
right. Either way, the property is alienable. Other courts hold that
preemptive rights, like options to purchase, are subject to the rule against

1039
perpetuities. See §5.3.D, infra.
Note that the type of interest is fixed when it is created. Thus when an
owner of a right of entry transfers the interest to another person, it remains
a right of entry and does not change into an executory interest, even
though it is held by someone other than the grantor or her heirs.
2. Identify what has to happen for the interest to fully vest. This
step requires you to understand the concept of vesting. Fully vest means
that all future interest holders are ascertained and any contingencies for
their ownership are removed. In other words, we know exactly who is
going to get the interest, that they are going to get it, and what fraction of
the interest they are going to get.
Importantly, the question is not when the future interest becomes
possessory, but rather when we know exactly who will own the property in
the future. For example, imagine a will providing,

O to A for life, and then to A’s children.

What has to happen for this interest to vest in anybody? A needs to
have some children! The children do not need to survive A for the interest
to vest. Once they come into being, they have a right to at least some
portion of the remainder. If any children of A die before A, the property
may go to their heirs or devisees. But what needs to happen for the
remainder to fully vest for purposes of the rule? A needs to die. Because A
might have another child before he dies, until that happens the remainder
is vested subject to open, and although we know that the existing children
are entitled to something, we do not know whether any other children will
share the remainder.
3. Identify all the lives in being at the creation of the interest. This
step requires you to understand two concepts, “creation of the interest” and
“lives in being.”
a. “Creation of the interest.” A future interest is created by
conveyance (sale) at the moment of the conveyance. It is created in a
will at the moment the testator dies. It is created in a trust the moment
the trust document is signed and the trust created if the trust is
irrevocable. If the trust is revocable, it is created at the moment it
becomes irrevocable — trusts created during the life of the settlor
(inter vivos trusts), for example, often are revocable until the settlor’s
death.
b. “Life in being.” A life in being is a person alive (or in utero) at
the creation of the interest who may have something to do with it
vesting. It includes both people mentioned in the conveyance and

1040
 people not mentioned who are alive and may affect vesting. A life in
being includes only human beings, not corporations, animals, or other
non-human entities.
To apply step 3 to the above example, imagine that O to A for life, and
then to A’s children, is part of a will. The interest is created when O dies.
The lives in being include both A and any of A’s children alive when O
dies.
4. See if you can imagine any way, however unlikely, in which the
future interest will fully vest more than 21 years after the death of all
of the lives in being identified in step 3. This is the tricky step, because it
requires you to imagine not what is likely to happen, but what could
possibly happen if all normal practices are suspended. The inquiry also
requires you to look at the state of things when the interest is created, not
as it exists at the moment you are looking at the situation. The question is
whether the interest might only fully vest (or become certain not to vest)
outside the “perpetuities period,” the lifetime of all lives in being plus 21
years. (Actually, the period is the life in being plus 21 years and around 9
months, because periods of gestation are not counted within the 21 years.9)
In our O to A for life, then to A’s children example, the perpetuities
period looks like this:

Is there any chance the remainder in A’s children will not fully vest within
this period? No. A will have any children she is going to have by the time
she dies — this interest has 21 years to spare.
But now imagine that the bequest is from O to A for life, then to A’s
children who have graduated from college. A could have a child just
before her death. (One must ignore actual or probable fertility in applying
the traditional rule against perpetuities; everyone is assumed to be able to
have children until they die.) Because that child was not born when O died
and the interest was created, he does not count as a life in being. He might
not graduate from college until he is 40, more than 21 years after A’s
death. Because of the possibility that the future interest will not fully vest
until after the perpetuities period, this interest is invalid.
Remedy for violating the rule against perpetuities. The remedy for

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violating the rule is simply to strike, or cross out, the offending language.
Thus, for example:

O to A for residential purposes, then to B.

If the conveyance to B violates the rule against perpetuities (it does —
can you see why?), strike out the words “then to B.” We are left with “O to
A for residential purposes.” This describes a fee simple determinable; since
the possibility of reverter in O is not subject to the rule, the interest is
valid.

O to A, but if the property is not used for residential purposes, then to

B.
If the conveyance to B violates the rule (and, again, it does), strike out
the entire phrase “but if the property is not used for residential purposes,
then to B,” leaving “O to A,” creating a fee simple absolute in A. This is
because merely striking out the words “then to B” leaves a conveyance that
is not recognizable as a standard estate.
The different results in these two conveyances have been subject to
criticism, especially because the possibility of reverter in O is just as
pernicious a clog on title as an executory interest in B would be. Some
courts therefore treat these conveyances alike and convert A’s interest to a
fee simple in both cases.
Some class gifts are partially valid and partially invalid. For example, a
conveyance from “O to A for life, then to the grandchildren of A” creates a
vested remainder subject to open in the grandchildren if one grandchild is
alive at the time of the conveyance to A. The interest in the living
grandchild is vested while the interest in unborn grandchildren is
contingent. If the jurisdiction applies the rule of convenience and the class
closes at the death of A, the grandchildren’s interest will be valid because
their interests will vest at the death of a life in being. However, if the class
does not close at the death of A, then the interest in unborn grandchildren
may violate the rule because A could have another child after the
conveyance from O to A and that child could have a child more than 21
years after the death of O, A, and any children or grandchildren of A alive
at the creation of the interest. Some states invalidate the entire class gift to
the grandchildren of A because some of the interests may violate the rule.
Other states split the difference by validating the vested interests in the
grandchildren who are alive at the creation of the interest while striking
down the contingent remainders. See In re Estate of Weaver, 572 A.2d
1249, 1253 (Pa. Super. Ct. 1990) (explaining the evolution of
Pennsylvania law on treatment of class gifts).

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 Illustrations
To illustrate how the rule is applied, we will examine a series of
problems, first identifying future interests and then applying the rule
against perpetuities.
Caveat: It is important to note that the following examples will provide
a false sense of precision and determinacy. The rules may be applied
differently in different jurisdictions. Moreover, the law changes over time,
and changes in perceptions of the relative interests of grantors, present
owners, and owners of future interests may lead to changes in the way the
rule is interpreted and applied.
Interests in the grantor. Future interests in the grantor or her heirs are
exempt from the rule against perpetuities. For example:

1. O to A as long as used for residential purposes. The possibility of

reverter in O is exempt from the rule against perpetuities and the
interest is good. (Remember a statute may cut off possibilities of
reverter if they do not vest within a certain number of years of the
creation of the interest.)
2. O to A for life. The reversion in O is exempt from the rule against
perpetuities and the interest is good.

Absolutely vested remainders. Remainders that are absolutely vested

are immune from the rule.

3. O to A for life, then to B. The vested remainder in B is not subject

to the rule. If B dies before A, then B’s heirs will get the property
when A dies. If A dies before B, then B will get it when A dies.

Vested remainders subject to divestment. Remainders that are vested

subject to divestment are immune from the rule.

4. O to A for life, then to B, but if B marries C, then the property shall

revert to O. B’s remainder is vested remainder subject to
divestment (or defeasance) and is valid.

Executory interests. Executory interests are subject to the rule against

perpetuities. The main exception is that the rule does not apply if both the
present estate owner and the future interest owner are charities. Because
executory interests are subject to the rule, they are void unless they are
certain to vest or fail to vest within 21 years of the death of some person

1043
alive at the creation of the interest. For example:

5. O to A as long as used for residential purposes, then to B. The

property could be used for residential purposes for a thousand
years, long after O, A, B, and everyone else alive at the creation of
the interest has died and 21 years have passed. Because there is a
possibility the executory interest in B may vest too far into the
future, it is void. The traditional remedy is to strike out the words
“then to B,” leaving the words “O to A as long as used for
residential purposes.” This is a recognizable estate (a fee simple
determinable) and the possibility of reverter in O is immune from
the rule and thus is good. Some courts, however, may strike out the
whole condition, leaving A with a fee simple absolute.
6. O to A, but if the property is ever used for nonresidential purposes,
then to B. B’s executory interest is invalid for the same reasons it
was invalid in example 5 above. However, the remedy traditionally
has been different. One cannot strike out only the words “then to
B” because what is left is not a recognizable estate; it contains a
“but if” clause but then does not say what happens if the condition
is fulfilled. Therefore, the courts traditionally struck out all the
language after “O to A” and A would be left with a fee simple
absolute rather than a fee simple determinable as in example 5. The
difference is a formal one and does not have any real policy
justification because the two conveyances are otherwise
functionally identical. For this reason, and to further the policy of
reducing dead hand control, some courts may strike the interest in
B and leave A with a fee simple absolute in example 5 as well.
7. O to A, but if the property is used for nonresidential purposes
within 21 years of this conveyance, then to B. The executory
interest in B is subject to the rule against perpetuities but does not
violate it because it will vest, if ever, within 21 years of the
conveyance and thus within 21 years of all lives in being at the
creation of the interest.

Contingent remainders and vested remainders subject to open.

Contingent remainders are dependent on something occurring that will not
necessarily occur, such as an individual having children or performing a
certain act. When a remainder goes to all the people who meet a particular
condition (i.e., is a class gift), it may vest in some members of the class,
but because others may join the class it is vested subject to open, and still
be contingent for those who may join the class in the future. Contingent

1044
remainders and vested remainders subject to open will generally be good if
the contingency depends solely on the actions of someone named in the
document creating the interest — that person is a life in being, and the
contingency must occur during the person’s lifetime, if at all. When
unnamed persons can have something to do with vesting, however, things
get trickier. For example:

8. O to A for life, then to B if B marries C. The contingent remainder

in B is good because B must marry C, if at all, during the lifetimes
of both B and C, both of whom were lives in being at the creation
of the interest.
9. O to A for life, then to the children of B. If B has no children at the
time of the conveyance, they have a contingent remainder because
they are not ascertainable at that time. The remainder will vest
when B has a child, and B must have a child, if at all, within B’s
lifetime (or around nine months after B’s death if B is a man). If B
dies without children, the remainder will fail, and the property will
revert to O.
If B is alive at the time of the conveyance from O to A and has
children at that time, those children have a vested remainder
subject to open because B could have more children. Their interest
is subject to the rule against perpetuities but does not violate it. If
the jurisdiction has adopted the rule of convenience, the class will
close and their interest will vest when A dies. Even if the
jurisdiction has not adopted the rule of convenience, the class will
close when B dies, and so will fully vest during a life in being.
10. O to A for life, then to the first child of B to be elected President
of the United States. Whether or not B has children at the time of
the conveyance, B could have a daughter who would be born after
the conveyance, so she is not a life in being at the creation of the
interest; she could become president more than 21 years after the
death of O, A, B, and any children of B alive at the creation of the
interest, so the contingent remainder in B’s child violates the rule
against perpetuities. Because the remainder is void, it is struck out,
leaving “O to A for life”; O has a reversion that is not subject to the
rule.

Contingent remainders give rise to some well-known and rather

humorous traps that have been studied by generations of law students.
Unborn widow. The first is the “unborn widow.” A conveyance from
“O to A for life, remainder to A’s widow for life, remainder to A’s

1045
surviving children” creates a contingent remainder in A’s surviving
children that violates the traditional rule against perpetuities. What has to
happen for the interest to vest in A’s children? They have to survive A’s
widow. Even if A is married at the time of the conveyance, that person will
not necessarily be his widow — his wife could die, and A could marry
someone who was born after the conveyance, and so would not be a life in
being. A’s children as well could be born after the conveyance, so they are
not necessarily lives in being either. A’s widow could outlive A for more
than 21 years. So we will not necessarily know if A’s children survive her
within the perpetuities period. Note that if the conveyance did not require
them to survive A’s widow, their interests would vest when A died (even
though they would not become possessory until the death of A’s widow). It
is the requirement that they survive A’s widow that makes their interest
invalid.
Fertile octogenarian. If O grants property to “A for life, remainder to
A’s grandchildren,” the assumption has always been that A could have
more children until she dies, even if she is 80 years old. This assumption
used to be humorous but new reproductive technologies make it perfectly
plausible today; imagine a frozen embryo of hers implanted in another
woman who bears her child. The contingent remainder in the
grandchildren (or vested remainder subject to open if there are
grandchildren at the conveyance from O to A) violates the rule because A
could have a child after the creation of the interest and that child could
have a child more than 21 years after the death of A (and everyone else
alive at the creation of the interest). A’s children alive at the time of the
creation of the interest could all predecease A, with the property going
back to O as a reversion. If the after-born child has a child more than 21
years later, the interest will have vested too remotely. Thus the remainder
violates the rule and is invalid.
The endless will contest. O to A for life, then to B’s children after A’s
will is probated. The will contest could last forever; there is no guarantee
the lawsuit will ever end, making the contingent remainder in B’s children
void. In addition, if B has no children at the time of the conveyance from
O to A, then their interest is contingent because they are unascertained and
the will could be probated more than 21 years after the deaths of O, A, and
B and all other lives in being at the creation of the interest, giving a second
reason to invalidate their contingent remainder.
For other explanations of the rule, see Paula A. Franzese, A Short and
Happy Guide to Property (2011); Jesse Dukeminier, A Modern Guide to
Perpetuities, 74 Cal. L. Rev. 1867, 1884 (1986); and Carolyn Burgess
Featheringill, Understanding the Rule Against Perpetuities: A Step-by-Step

1046
Approach, 13 Cumb. L. Rev. 161 (1982).

Problems
In answering these problems, determine (a) what is the present
possessory interest; (b) what are the future interests; (c) does the future
interest violate the rule against perpetuities; (d) if so, how should the
interest be reformed? Unless otherwise stated, O, A, and B are human
beings who are alive at the time the future interest is created.
1. O to A, but if the land is ever developed, then to B.
2. O to A, but if A ever seeks to develop the land, then to B.
3. O to A for life, then to B when she reaches 25. (B is alive but is not
yet 25.)
4. O to A for life, then to A’s children who reach 25.
5. O to A for life, then to A’s grandchildren.
6. O to A for life, then to O’s grandchildren. (devise)
7. O to A for life, then to A’s first child to pass the Bar exam.
8. The first devise below is invalid, the second two are valid. Why?
a. O to A for life, then to A’s widow for life, then to A’s children
then living.
b. O to A for life, then to A’s widow for life, then to A’s children.
c. O to A for life, then to B (who is A’s wife) for life, then to A’s
children then living.
9. O to A for 1,000 years, then to B.

Drafting Around the Rule: Savings Clauses

Because even experienced lawyers may fall into the traps laid by the
rule against perpetuities, drafters often insert “savings clauses” intended to
provide for validity in case an interest violates the rule. Such clauses may
take different forms. Some may provide the court or a trustee corporation
with the power of reforming the document if necessary to avoid invalidity.
See, e.g., W. Barton Leach & James K. Logan, Perpetuities: A Standard
Savings Clause to Avoid Violations of the Rule, 74 Harv. L. Rev. 1141
(1961). Others may provide that should the interest violate the rule, it
should be construed to vest only in those persons who may legally take it
under the rule. Smith v. Smith ex rel. Clarke, 747 A.2d 85 (Del. Ch. 1999)
(finding such a clause saved an option to purchase from invalidity).
Yet other clauses provide that in case of invalidity, the future interest
shall vest within 21 years after the death of a particular class of people

1047
alive at the creation of the interest. The members of this class need not be
beneficiaries of the interest — today, for example, it is common to have
the class include the living descendants of Joseph P. Kennedy, father of
John F., Robert, and Teddy. Drafters using such clauses must take care,
however, to select a class whose members are reasonably ascertainable. If
the class chosen is so large that determining its members would effectively
be a perpetual task, then the class violates the rule. Restatement (Second)
of Property (Donative Transfers) §1.3; see N.Y. Est. Powers & Trusts Law
§9-1.1(b) (measuring lives must not be “unreasonably difficult to
determine”); Wyo. Stat. §34-1-139 (same). Compare State v. McGee, 204
N.W. 408 (Iowa 1925) (holding impermissible a grant to “each and every
member of American Legion of Iowa, each and every member of the
Independent Order of Odd Fellows of Iowa, each and every member of the
Knights of Pythias of Iowa, and each and every attorney at law in Iowa”),
with In re Villar, 1 Ch. 243 (1929) (U.K.) (upholding interest that vested
“20 years from the day of the death of the last survivor of all the lineal
descendants of Her Late Majesty Queen Victoria, who shall be living at
the time of [the testator’s] death,” although there were more than 120
descendants living in different parts of the globe), and Bender v. Bender,
74 A. 246 (Pa. 1909) (upholding grant in which 11 grandnephews and
grandnieces were used as validating lives).

B. Modern Approaches and the Rise of the Perpetuity

The rule against perpetuities facilitated productive use of land and

distribution of wealth by limiting the power of the dead hand to keep
property within families and control its use. But the difficulty of applying
it and the invalidation of interests that would not in practice vest outside
the perpetuities period led some jurisdictions to adopt modifications to
avoid its harsh results. The most popular are wait and see and cy pres. The
Uniform Statutory Rule Against Perpetuities (USRAP), adopted in about
half the states since 1986, uses and expands both modifications.10 Even
more significant has been the trend for states to effectively abolish the rule
in an effort to compete for the profitable business of dynasty trusts. These
trusts represent the antithesis of the rule: means to ensure that successive
generations benefit from the trust fund, and are shielded from federal
estate taxes and creditors, potentially forever.11
Despite these changes, the rule remains important to understand. First,
even in the many states that have adopted wait and see reforms, the
validity of a future interest that violates the traditional rule cannot be
ascertained for many years after its creation, but interests that are good

1048
under the traditional rule can be validated immediately. Second, because
the law applicable to a particular grant may change depending on the
domicile of the deceased, the location of the property granted, or other
factors, it makes sense to ensure validity under the laws of most states. See
CS-Lakeview at Gwinnett, Inc. v. Simon Property Group, Inc., 659 S.E.2d
359 (Ga. 2008) (although option to purchase would be valid under Georgia
law, it was invalid under Delaware law, which was chosen by the parties in
their contract). Finally, the law in this area is rapidly changing, with
proposals coming from all directions. Lawyers should be able to
understand its current variations, and to weigh in on the changes.
1. Traditional wait and see. Some states modify the rule by using a
wait and see or second look test. Under the traditional rule, a future
interest is void if a possibility exists that it will vest outside the perpetuities
period; this can be determined on the date of the conveyance. Under the
wait and see test, the courts will not hold that a future interest violates the
rule until the perpetuities period has passed and they are certain that the
future interest has not vested within that period. For example, in the
conveyance “O to A so long as the property is used for residential
purposes, then to B,” the executory interest in B is void under the
traditional rule because it is possible that the property will be used for
residential purposes long after the deaths of O, A, and B plus 21 years.
In contrast, under the traditional wait and see test, the courts will wait
until the condition occurs or the perpetuities period ends, whichever comes
first. In this case, the perpetuities period ends 21 years after the death of
the last of O, A, and B. (Do you see why?) If the property is used for
nonresidential purposes before that period has lapsed, the executory
interest is good and will be recognized; the property shifts to B. If,
however, O, A, and B die and 21 years pass, and the property is still used
for residential purposes, at that moment the future interest in B (actually
B’s heirs or devisees since B is dead) is destroyed.
The advantage of the wait and see test is clear — rather than
invalidating interests because of a mere possibility of remote vesting, it
validates them so long as they do in fact vest within the perpetuities
period. The disadvantages are more subtle. Under the old rule, the validity
of the future interest could be determined immediately. Under wait and
see, it remains in limbo during the perpetuities period. Traditional wait and
see also requires determining exactly who were the relevant lives in being
and when they died. Although a number of states adopted some form of
wait and see before 1986, most of these have now adopted the USRAP,
which modifies the wait and see doctrine as discussed below.

1049
 2. Cy pres. Some jurisdictions permit the use of cy pres to modify a
grant to validate it if it appears consistent with the intent of the grantor.
The most common application of cy pres is to reduce age contingencies
that invalidate the future interest. For example, “O to A for life, then to the
first child of B to attain 25 years of age,” creates a contingent remainder in
the first child of B to reach 25 (assuming B has no children at the time of
the initial conveyance), which violates the rule since a child could be born
after the conveyance and reach 25 more than 21 years after the deaths of
O, A, and B. A court may invoke the cy pres doctrine to reduce the age
contingency of 25 to 21. See In re Estate of Chun Quan Yee Hop, 469 P.2d
183 (Haw. 1970) (reducing 30-year contingency). Some jurisdictions also
apply cy pres to provide that a reference to an individual’s “widow” is
intended to refer to his current wife, thus eliminating the unborn widow
problem, or cure other interpretive stumbling blocks under the common
law rule.
3. Uniform Statutory Rule Against Perpetuities. The USRAP
validates future interests in donative transfers (those created in gifts or
trusts or wills) that otherwise violate the traditional rule against
perpetuities if the interest vests at any time within 90 years of the date of
its creation. This test applies the wait and see doctrine for interests that
violate the traditional rule but limits the perpetuities period to 90 years
rather than to “lives in being at the creation of the interest plus 21 years.”
The 90-year wait and see provision applies only to interests that would
have been invalid under the traditional rule. If an interest violates the 90-
year wait and see period, the statute authorizes the courts to reform the
deed, will, or trust in the manner that most closely approximates the
transferor’s manifested plan of distribution and is within the allowable 90-
year period. Although the law only applies to interests created after the
passage of the statute, it also provides for cy pres to reform interests
created earlier.
4. Abolition of the rule for family trusts. Many states have now
abolished or substantially altered the rule against perpetuities, at least with
respect to trusts. See, e.g., Jesse Dukeminier & James T. Krier, The Rise of
the Perpetual Trust, 50 UCLA L. Rev. 1303, 1313-1314 (2003) (listing 20
states that had abolished the rule for trusts, and anticipating that the list
would grow). Some states have done so by providing that the rule only
applies to suspension of the power of alienation; so long as the trustee has
the ability to sell the trust assets as a fee simple absolute, the rule does not
apply. See, e.g., S.D. Codified Laws §43-5-1; Wis. Stat. §700.16; N.J. Stat.
§46:2F-10. Other states have abolished the rule for all trusts, but left non-

1050
trust transfers untouched. See Del. Code tit. 25, §503 (providing that trusts
are not subject to the rule, but that their assets must be distributed within
110 years after settlement). Yet other states have effectively abolished the
rule by adopting very long perpetuities periods. See Utah Code §752-1203
(1,000 years); Wyo. Stat. §34-1-139 (1,000 years); Fla. Stat. §689.225(2)
(f) (360 years).
These changes are driven by a race by banks and trust companies to act
as trustees for family trusts. Tax avoidance is a big part of the story.
Before 1976, no federal estate tax was levied at the end of a life estate, so
testators could avoid taxation of their estates by leaving a series of life
estates to their descendants. The only limitation was the rule against
perpetuities, which generally meant that the trust would be distributed to
the grandchildren of the testator in fee simple, and taxed then. In 1976,
Congress amended the tax code to provide that a generation skipping
transfer (GST) tax is due at the end of a life estate when it passes to the
remainder holder. In 1986, Congress simplified the GST and added an
important exclusion: $1 million of the initial settlement was exempt from
the GST. This exemption is now over $5 million. What is more, the entire
exempt trust corpus remains immune from estate taxation, even if
compounding interest and investments multiply its value.
The competition for trustee fees from family dynasties seeking to avoid
these and other taxes has created a race to the bottom in state laws. One of
the more blatant stories of legislative change comes from the Alaska Trust
Company, which boasts on its website of its founding by two brothers, one
an estate planning attorney from New York, who were on a fishing trip in
Alaska and decided that it would be a great place to live and set up a trust
company if only they could change some of the laws. They then
successfully lobbied to change state laws to “make Alaska the premier
location for trust services,” resulting in the abolition of the rule against
perpetuities for alienable personal property and several other “unique
pieces of legislation.” Other states that were traditional homes to the trust
business, like Delaware and Florida, amended their laws to keep up. See
Ray Madoff, Immortality and the Law: The Rising Power of the American
Dead 80-81 (2010). A 2005 empirical study found that these legislative
changes pay off. States that both abolished the rule against perpetuities and
eliminated state income taxes on trusts saw the value of trust funds in their
states increase by 20 percent, an average of $6 billion. Robert Sitkoff &
Max Schwartzenbach, Jurisdictional Competition for Trust Funds: An
Empirical Study of Perpetuities and Taxes, 115 Yale L.J. 356 (2005).
5. The return of the rule? Many commentators have criticized the rise

1051
of perpetual trusts and the decline of the rule against perpetuities. One
potentially influential critique comes from the American Law Institute’s
Restatement (Third) of Property: Wills & Other Donative Transfers
(2011). In the Restatement, the drafters point out that as each generation
passes, the settlor of a family trust has less connection to the beneficiaries
and the number of potential beneficiaries grows. This makes the trust both
more expensive and less practicable to administer and takes it further from
the legitimate scope of the settlor’s interests. Id. at ch. 27 (Introductory
Note). They propose reforming the rule against perpetuities to restore its
bite and better serve its goals. They would have all interests — both vested
and contingent, in the grantor and in third parties — terminate and return
to fee simple absolute after the death of the beneficiaries two generations
after the grantor. The generations would not need to be born at the time of
the creation of the interest to count as measuring lives under the rule. Id.
§27.1; see Scott Andrew Shepard, Which the Deader Hand: A Counter to
the American Law Institute’s Proposed Revival of a Dying Perpetuities
Rule, 86 Tul. L. Rev. 559 (2012). The proposal would simplify and
rationalize the application of the rule, but it is not clear that there is an
incentive to adopt it with states seeking to attract dynasty trusts and
lawyers glad not to have to worry about the rule at all. No states appear to
have adopted the proposal thus far.

C. Other Statutory Limits on Future Interests

Many states have passed statutes that codify the rule against
perpetuities. Some states have passed other statutes that also affect future
interests.
1. Statutory cut-offs. The rule against perpetuities does not apply to
rights of entry or possibilities of reverter. The common law courts in
England treated these interests as vested from the very beginning since
they defined interests in the grantor that were reserved when the present
estate was created. Yet, as a matter of public policy, it makes no sense to
worry about executory interests because of the problem of dead hand
control while deferring to future interests in the heirs of the grantor that
could similarly vest 300 years in the future.
This is especially true in light of the ability to evade the rule against
perpetuities by careful drafting. For example, a grantor who wanted to
convey property to A so long as used for residential purposes, then to B,
could easily do so in a two-step transaction. The grantor could convey a
fee simple determinable to A, retaining a possibility of reverter. The
grantor would then convey her possibility of reverter to B. The transfer of

1052
the future interest to B does not convert it to an executory interest. Since it
was a possibility of reverter, the rule against perpetuities does not apply
and the policy of restricting dead hand control has been evaded. A second
way to do this is for O to transfer a fee simple absolute to B, and then for B
to convey a fee simple determinable to A; since B’s interest is a possibility
of reverter rather than an executory interest, it is immune from the rule
against perpetuities.
For these reasons, some states have passed statutes that cut off interests
in the grantor following defeasible fees if the condition does not occur
within a stated time period, often 30 years after the initial conveyance. See,
e.g., Cal. Civ. Code §885.030; Ky. Rev. Stat. §381.221; Mass. Gen. Laws
ch. 184A, §7; Mich. Comp. Laws §554.62; Black Mountain Energy Corp.
v. Bell County Board of Education, 467 F. Supp. 2d 715 (E.D. Ky. 2006)
(holding statute voiding possibilities of reverter after 30 years did not
violate the takings clause). The odd result is that while an executory
interest or contingent fee may continue for 90 years under the Uniform
Statutory Rule Against Perpetuities, a right of entry or possibility of
reverter, although traditionally not subject to the rule, will terminate in
only 30 years.
2. Marketable title acts. Many states have marketable title statutes
requiring that future interests be re-recorded periodically in the local
registry of deeds (typically every 30 or 40 years) to remain valid and
enforceable. See, e.g., Cal. Civ. Code §§880.020-887.090; Iowa Code
§614.24. Statutes that effectively nullify future interests have often been
challenged on the grounds that they violate due process or
unconstitutionally take property or impair contracts. Compare Severns v.
Union Pacific Railroad Co., 125 Cal. Rptr. 2d 100 (Ct. App. 2002)
(finding California statute valid) with Board of Education v. Miles, 207
N.E.2d 181 (N.Y. 1965) (holding New York statute invalid). These laws
are generally upheld today if they apply prospectively and give owners
enough notice of the obligation to re-record their interests.

D. Commercial Future Interests: Options to Purchase and

Preemptive Rights

The rule against perpetuities was originally created in the context of

so-called donative transfers, such as wills and other gifts to family and
friends. It was justified both with the desire to prevent restriction of wealth
to family dynasties and with the need to promote productive use of land.
How do these interests apply to so-called commercial options created in
the context of market transactions? The two most important kinds of

1053
commercial options are options to purchase, a right to acquire the
property at some time in the future for a fixed price, and preemptive
rights, or rights of first refusal, rights to acquire the property at the
market price should it be sold in the future. Today cases involving such
commercial interests are common in perpetuities litigation.

Symphony Space, Inc. v. Pergola Properties, Inc.

669 N.E.2d 799 (N.Y. 1996)

Map: 2537 Broadway at 95th Street,

New York, New York

JUDITH KAYE, Chief Judge.

This case presents the novel question whether options to purchase
commercial property are exempt from the prohibition against remote
vesting embodied in New York’s Rule against Perpetuities (N.Y. Est.
Powers & Trusts §9-1.1[b]). Because an exception for commercial options
finds no support in our law, we decline to exempt all commercial option
agreements from the statutory Rule against Perpetuities.
Here, we agree with the trial court and Appellate Division that the
option defendants seek to enforce violates the statutory prohibition against
remote vesting and is therefore unenforceable.

I. Facts
The subject of this proceeding is a two-story building situated on the
Broadway block between 94th and 95th Streets on Manhattan’s Upper
West Side. In 1978, Broadwest Realty Corporation owned this building,
which housed a theater and commercial space. Broadwest had been unable
to secure a permanent tenant for the theater — approximately 58% of the
total square footage of the building’s floor space. Broadwest also owned
two adjacent properties, Pomander Walk (a residential complex) and the
Healy Building (a commercial building). Broadwest had been operating its
properties at a net loss.
Plaintiff Symphony Space, Inc., a not-for-profit entity devoted to the
arts, had previously rented the theater for several one-night engagements.
In 1978, Symphony and Broadwest engaged in a transaction whereby
Broadwest sold the entire building to Symphony for the below-market

1054
price of $10,010 and leased back the income-producing commercial
property, excluding the theater, for $1 per year. Broadwest maintained
liability for the existing $243,000 mortgage on the property as well as
certain maintenance obligations. As a condition of the sale, Symphony, for
consideration of $10, also granted Broadwest an option to repurchase the
entire building. Notably, the transaction did not involve Pomander Walk or
the Healy Building.
The purpose of this arrangement was to enable Symphony, as a not-
for-profit corporation, to seek a property tax exemption for the entire
building — which constituted a single tax parcel — predicated on its use
of the theater. The sale-and-leaseback would thereby reduce Broadwest’s
real estate taxes by $30,000 per year, while permitting Broadwest to retain
the rental income from the leased commercial space in the building, which
the trial court found produced $140,000 annually. The arrangement also
furthered Broadwest’s goal of selling all the properties, by allowing
Broadwest to postpone any sale until property values in the area increased
and until the commercial leases expired. Symphony, in turn, would have
use of the theater at minimal cost, once it received a tax exemption.
Thus, on December 1, 1978, Symphony and Broadwest — both sides
represented by counsel — executed a contract for sale of the property from
Broadwest to Symphony for the purchase price of $10,010. The contract
specified that $10 was to be paid at the closing and $10,000 was to be paid
by means of a purchase-money mortgage.
The parties also signed several separate documents, each dated
December 31, 1978: (1) a deed for the property from Broadwest to
Symphony; (2) a lease from Symphony to Broadwest of the entire building
except the theater for rent of $1 per year and for the term January 1, 1979
to May 31, 2003, unless terminated earlier; (3) a 25-year, $10,000
mortgage and mortgage note from Symphony as mortgagor to Broadwest
as mortgagee, with full payment due on December 31, 2003; and (4) an
option agreement by which Broadwest obtained from Symphony the
exclusive right to repurchase all of the property, including the theater.
It is the option agreement that is at the heart of the present dispute.
Section 3 of that agreement provides that Broadwest may exercise its
option to purchase the property during any of the following “Exercise
Periods”:

“(a) at any time after July 1, 1979, so long as the Notice of Election
specifies that the Closing is to occur during any of the calendar years 1987,
1993, 1998 and 2003;
“(b) at any time following the maturity of the indebtedness evidenced by

1055
 the Note and secured by the Mortgage, whether by acceleration or otherwise;
“(c) during the ninety days immediately following any termination of the
Lease by the lessor thereof other than for nonpayment of rent or any
termination of the Lease by the lessee thereof;
“(d) during the ninety days immediately following the thirtieth day after
Broadwest shall have sent Symphony a notice specifying a default by
Symphony of any of its covenants or obligations under the Mortgage.”

Section 1 states that “Broadwest may exercise its option at any time
during any Exercise Period.”
The following purchase prices of the property, contingent upon the
closing date, are set forth in section 4: $15,000 if the closing date is on or
before December 31, 1987; $20,000 if on or before December 31, 1993;
$24,000 if on or before December 31, 1998; and $28,000 if on or before
December 31, 2003.
Importantly, the option agreement specifies in section 5 that
“Broadwest’s right to exercise the option granted hereby is . . .
unconditional and shall not be in any way affected or impaired by
Broadwest’s performance or nonperformance, actual or asserted, of any
obligation to be performed under the Lease or any other agreement or
instrument by or between Broadwest and Symphony,” other than that
Broadwest was required to pay Symphony any unpaid rent on the closing
date.
Symphony ultimately obtained a tax exemption for the theater. In the
summer of 1981, Broadwest sold and assigned its interest under the lease,
option agreement, mortgage and mortgage note, as well as its ownership
interest in the contiguous Pomander Walk and Healy Building, to
defendants’ nominee for $4.8 million. The nominee contemporaneously
transferred its rights under these agreements to defendants Pergola
Properties, Inc., Bradford N. Swett, Casandium Limited and Darenth
Consultants as tenants in common.
Subsequently, defendants initiated a cooperative conversion of
Pomander Walk, which was designated a landmark in 1982, and the value
of the properties increased substantially. An August 1988 appraisal of the
entire blockfront, including the Healy Building and the unused air and
other development rights available from Pomander Walk, valued the
property at $27 million assuming the enforceability of the option. By
contrast, the value of the leasehold interest plus the Healy Building
without the option were appraised at $5.5 million.
[In 1985, Swett and Pergola sought to terminate the lease and exercise
the option to purchase. After much litigation, both the trial court and the

1056
Appellate Division held that the option was void under the rule against
perpetuities.]

II. Statutory Background

The Rule against Perpetuities evolved from judicial efforts during the
17th century to limit control of title to real property by the dead hand of
landowners reaching into future generations. Underlying both early and
modern rules restricting future dispositions of property is the principle that
it is socially undesirable for property to be inalienable for an unreasonable
period of time. These rules thus seek “to ensure the productive use and
development of property by its current beneficial owners by simplifying
ownership, facilitating exchange and freeing property from unknown or
embarrassing impediments to alienability” (Metropolitan Transp. Auth. v.
Bruken Realty Corp., 492 N.E.2d 379, 381 (N.Y. 1986)).
In New York, the rules regarding suspension of the power of alienation
and remoteness in vesting — the Rule against Perpetuities — have been
statutory since 1830. Prior to 1958, the perpetuities period was two lives in
being plus actual periods of minority. Widely criticized as unduly complex
and restrictive, the statutory period was revised in 1958 and 1960,
restoring the common-law period of lives in being plus 21 years.
Formerly, the rule against remote vesting in New York was narrower
than the common-law rule, encompassing only particular interests. A
further 1965 amendment enacted a broad prohibition against remote
vesting. This amendment was intended to make clear that the American
common-law rule of perpetuities was now fully in force in New York.
New York’s current statutory Rule against Perpetuities is found in
N.Y. Est. Powers & Trusts §9-1.1. Subdivision (a) sets forth the
suspension of alienation rule and deems void any estate in which the
conveying instrument suspends the absolute power of alienation for longer
than lives in being at the creation of the estate plus 21 years. The
prohibition against remote vesting is contained in subdivision (b), which
states that “[n]o estate in property shall be valid unless it must vest, if at
all, not later than twenty-one years after one or more lives in being at the
creation of the estate and any period of gestation involved.” This Court has
described subdivision (b) as “a rigid formula that invalidates any interest
that may not vest within the prescribed time period” and has “capricious
consequences” (Wildenstein & Co. v. Wallis, 595 N.E.2d 828, 831-32
(N.Y. 1992)). Indeed, these rules are predicated upon the public policy of
the State and constitute non-waivable, legal prohibitions.
In addition to these statutory formulas, New York also retains the more

1057
flexible common-law rule against unreasonable restraints on alienation.
Unlike the statutory Rule against Perpetuities, which is measured
exclusively by the passage of time, the common-law rule evaluates the
reasonableness of the restraint based on its duration, purpose and
designated method for fixing the purchase price.

III. Validity of the Option Agreement

Defendants proffer three grounds for upholding the option: that the
statutory prohibition against remote vesting does not apply to commercial
options; that the option here cannot be exercised beyond the statutory
period; and that this Court should adopt the “wait and see” approach to the
Rule against Perpetuities. We consider each in turn.

A. Applicability of the Rule to Commercial Options

Under the common law, options to purchase land are subject to the rule
against remote vesting. Such options are specifically enforceable and give
the option holder a contingent, equitable interest in the land. This creates a
disincentive for the landowner to develop the property and hinders its
alienability, thereby defeating the policy objectives underlying the Rule
against Perpetuities.
Typically, however, options to purchase are part of a commercial
transaction. For this reason, subjecting them to the Rule against
Perpetuities has been deemed “a step of doubtful wisdom” (Leach,
Perpetuities in Perspective: Ending the Rule’s Reign of Terror, 65 Harv.
L. Rev. 737). As one vocal critic, Professor W. Barton Leach, has
explained,

“[t]he Rule grew up as a limitation on family dispositions; and the period of

lives in being plus twenty-one years is adapted to these gift transactions. The
pressures which created the Rule do not exist with reference to arms-length
contractual transactions, and neither lives in being nor twenty-one years are
periods which are relevant to business men and their affairs” (Leach,
Perpetuities: New Absurdity, Judicial and Statutory Correctives, 73 Harv. L.
Rev. 1318, 1321-1322).

Professor Leach, however, went on to acknowledge that, under

common law, “due to an overemphasis on concepts derived from the
nineteenth century, we are stuck with the application of the Rule to options
to purchase,” urging that “this should not be extended to other commercial
transactions” (id., at 1322).
It is now settled in New York that, generally, N.Y. Est. Powers &

1058
Trusts §9-1.1(b) applies to options. While defendants offer compelling
policy reasons — echoing those voiced by Professor Leach — for refusing
to apply the traditional rule against remote vesting to these commercial
option contracts, such statutory reformation would require legislative
action similar to that undertaken by numerous other State lawmakers.
Our decision in Metropolitan Transp. Auth. v. Bruken Realty Corp.,
492 N.E.2d 379, supra, is not to the contrary. In Bruken, we held that §9-
1.1(b) did not apply to a preemptive right in a “commercial and
governmental transaction” that lasted beyond the statutory perpetuities
period. In doing so, we explained that, unlike options, preemptive rights
(or rights of first refusal) only marginally affect transferability.
Enforcement of the preemptive right in the context of the governmental
and commercial transaction, moreover, actually encouraged the use and
development of the land, outweighing any minor impediment to
alienability. Id.
Here, the option agreement creates precisely the sort of control over
future disposition of the property that we have previously associated with
purchase options and that the common-law rule against remote vesting —
and thus §9-1.1(b) — seeks to prevent. As the Appellate Division
explained, the option grants its holder absolute power to purchase the
property at the holder’s whim and at a token price set far below market
value. This Sword of Damocles necessarily discourages the property
owner from investing in improvements to the property. Furthermore, the
option’s existence significantly impedes the owner’s ability to sell the
property to a third party, as a practical matter rendering it inalienable.
That defendants, the holder of this option, are also the lessees of a
portion of the premises does not lead to a different conclusion here.
Generally, an option to purchase land that originates in one of the lease
provisions, is not exercisable after lease expiration, and is incapable of
separation from the lease is valid even though the holder’s interest may
vest beyond the perpetuities period. Such options — known as options
“appendant” or “appurtenant” to leases — encourage the possessory holder
to invest in maintaining and developing the property by guaranteeing the
option holder the ultimate benefit of any such investment. Options
appurtenant thus further the policy objectives underlying the rule against
remote vesting and are not contemplated by §9-1.1(b).
To be sure, the option here arose within a larger transaction that
included a lease. Nevertheless, not all of the property subject to the
purchase option here is even occupied by defendants. The option
encompasses the entire building — both the commercial space and the
theater — yet defendants are leasing only the commercial space. With

1059
regard to the theater space, a disincentive exists for Symphony to improve
the property, since it will eventually be claimed by the option holder at the
predetermined purchase price.
Where, as here, the parties to a transaction are corporations and no
measuring lives are stated in the instruments, the perpetuities period is
simply 21 years. Section 1 of the parties’ agreement allows the option
holder to exercise the option “at any time during any Exercise Period” set
forth in section three. Section 3(a), moreover, expressly provides that the
option may be exercised “at any time after July 1, 1979,” so long as the
closing date is scheduled during 1987, 1993, 1998 or 2003.
Even factoring in the requisite notice, then, the option could potentially
be exercised as late as July 2003 — more than 24 years after its creation in
December 1978. Defendants’ contention that section 3(a) does not permit
exercise of the option beyond the 21-year period is thus contradicted by
the plain language of the instrument. [Each of the other time periods
provided for exercising the option could also be exercised until 2003.]

C. “Wait and See” Approach

Defendants next urge that we adopt the “wait and see” approach to the
Rule against Perpetuities: an interest is valid if it actually vests during the
perpetuities period, irrespective of what might have happened. The option
here would survive under the “wait and see” approach since it was
exercised by 1987, well within the 21-year limitation.
This Court, however, has long refused to “wait and see” whether a
perpetuities violation in fact occurs. As explained in Matter of Fischer,
307 N.Y. 149, 157, 120 N.E.2d 688, “[i]t is settled beyond dispute that in
determining whether a will has illegally suspended the power of alienation,
the courts will look to what might have happened under the terms of the
will rather than to what has actually happened since the death of the
testator.”

IV. Remedy
As a final matter, defendants argue that, if the option fails, the contract
of sale conveying the property from Broadwest to Symphony should be
rescinded due to the mutual mistake of the parties. We conclude that
rescission is inappropriate and therefore do not pass upon whether
Broadwest’s claim for rescission was properly assigned to defendant
Pergola.
A contract entered into under mutual mistake of fact is generally
subject to rescission. CPLR 3005 provides that when relief against mistake

1060
is sought, it shall not be denied merely because the mistake is one of law
rather than fact. Relying on this provision, defendants maintain that neither
Symphony nor Broadwest realized that the option violated the Rule against
Perpetuities at the time they entered into the agreement and that both
parties intended the option to be enforceable.
The remedy of rescission, moreover, lies in equity and is a matter of
discretion. Defendants’ plea that the unenforceability of the option is
contrary to the intent of the original parties ignores that the effect of the
Rule against Perpetuities — which is a statutory prohibition, not a rule of
construction — is always to defeat the intent of parties who create a
remotely vesting interest.
The Rule against Perpetuities reflects the public policy of the State.
Granting the relief requested by defendants would thus be contrary to
public policy, since it would lead to the same result as enforcing the option
and tend to compel performance of contracts violative of the Rule.
Accordingly, the order of the Appellate Division should be affirmed,
with costs, and the certified question answered in the affirmative.

Notes and Questions

1. Options to purchase. Options to purchase have traditionally been
considered to be executory interests and subject to the rule against
perpetuities. Arundel Corp. v. Marie, 860 A.2d 886 (Md. 2004); Bortolotti
v. Hayden, 866 N.E.2d 882 (Mass. 2007). As in Symphony Space, this is
true even if the right is in the original grantor of the property, because the
need to purchase the property to reacquire indicates that the option is not
simply the reversion of an already vested right in the property, but a new
interest cutting off an existing estate. It is easy to see how an option to
purchase for a fixed price at a period far in the future might hinder
productive use of land. See, e.g., Central Delaware County Authority v.
Greyhound Corp., 588 A.2d 485 (Pa. 1991) (plaintiff sued to invalidate
option to purchase created in 1941, which would permit the land to be
purchased for the original sales price, $5,500, if it ever ceased to be used
for public purposes). Is it true that allowing the option in Symphony Space
would have hindered the productive use of the property?

CONTEXT

As a result of the decision, Symphony Space acquired a property worth

millions for $10,010. Today, Symphony Space remains a unique multimedia
performing arts center, hosting over 600 events a year, including dance, music,

1061
 theater performances, films, dramatic readings (including for the NPR show
Selected Shorts), and other cultural events.

2. Options to purchase and renew in leases. Despite the general rule,

most courts hold that options to purchase in commercial leases are exempt
from the rule against perpetuities. William B. Stoebuck & Dale A.
Whitman, The Law of Property §3.18, at 123 (3d ed. 2000). As Chief
Justice Ellen Peters explained in Texaco Refining & Marketing, Inc. v.
Samowitz, 570 A.2d 170 (Conn. 1990), “[a]n option coupled with a long-
term commercial lease . . . stimulates improvement of the property and
thus renders it more rather than less marketable.” Id. at 174. Similarly,
many courts hold that options to renew leases during the lease term are not
subject to the rule against perpetuities. See Bleecker Street Tenants Corp.
v. Bleeker Jones, LLC, 945 N.E.2d 484 (N.Y. 2011). What if an option in a
lease is exercised by a tenant who has become a month-to-month tenant
after her initial term of years expires? In Bleecker Street Tenants Corp.,
the New York Court of Appeals considered this to be still within the lease
term and therefore not violative of the rule. Was this the right resolution?
3. Uniform Statutory Rule Against Perpetuities and commercial
options. The drafters of the USRAP intended it to supersede the common
law rule against perpetuities entirely and so provided in §9 of the act.
Because the USRAP applies only to donative transfers, the USRAP’s
drafters suggested that states pass separate laws limiting executory
interests such as options to purchase to a 30-year period, and some states
have done so. Mass. Gen. Laws ch. 184A, §5; N.C. Gen. Stat. §41-29. Cf.
765 Ill. Comp. Stat. 305/4(a)(7) (40-year limit). Some states adopted the
USRAP without imposing any limit on commercial options. See, e.g.,
Larson Operating Co. v. Petroleum, Inc., 84 P.3d 626 (Kan. Ct. App.
2004) (interpreting Kan. Stat. §59-340). Some states that adopted the
USRAP refused to enact §9 but did not pass any supplementary legislation
concerning nondonative interests. In those states, such interests are
probably still governed by the traditional rule against perpetuities. See
Buck v. Banks, 668 N.E.2d 1259 (Ind. Ct. App. 1996). Some states adopted
statutes that explicitly apply the rule against perpetuities as modified by
the wait and see test to nondonative transfers. See Va. Code §55-13.3.
Even in states that have adopted both the USRAP and a limit on
commercial options, moreover, the common law rule against perpetuities
may bar options created before their enactment. Compare Bauermeister v.
Waste Management Co. of Nebraska, 783 N.W.2d 594 (Neb. 2010)
(statutory abolition reflected policy regarding nondonative transfers

1062
created before enactment), with New Bar Partnership v. Martin, 729
S.E.2d 625 (N.C. Ct. App. 2012) (right of first refusal barred by common
law rule against perpetuities).
In states that have abolished the rule against perpetuities with respect
to nondonative transfers, options to purchase are still regulated by the
common law rule against unreasonable restraints on alienation. See
Chapter 8, §5.4. Courts may refuse to enforce an option, especially if it is
for a fixed price, if the option has no time limit and the option was not
exercised within a reasonable period after its creation (unless the option is
included in a lease). Mr. Sign Sign Studios, Inc. v. Miguel, 877 So. 2d 47
(Fla. Dist. Ct. App. 2004).
4. Preemptive rights or rights of first refusal. Some jurisdictions
retain the traditional rule that preemptive rights, also called rights of first
refusal, are subject to the rule against perpetuities. See Selig v. State
Highway Administration, 861 A.2d 710 (Md. 2004) (noting that rule still
generally applied to preemptive rights, although transportation statute
exempted preemptive rights against state); Hensley-O’Neal v.
Metropolitan National Bank, 297 S.W.3d 610 (Mo. Ct. App. 2009); New
Bar Partnership v. Martin, 729 S.E.2d 625 (N.C. Ct. App. 2012).
Preemptive rights give the holder the right to purchase the property if the
owner chooses to sell, either by offering the market price for the property,
or by matching the offer made by any bona fide purchaser. Some courts
reason that preemptive rights may restrict alienability by deterring other
bidders for the land, or leading sellers to accept below-market prices rather
than litigate over fair market value. Selig, 861 A.2d at 718-719.
As Symphony Space discusses, an increasing number of courts hold
that preemptive rights are wholly exempt from the rule against
perpetuities. See Bortolotti v. Hayden, 866 N.E.2d 882 (Mass. 2007); Old
Port Cove Holdings v. Old Port Cove Condominium Association, 986 So.
2d 1279 (Fla. 2008); Hartnett v. Jones, 629 P.2d 1357 (Wyo. 1981). As the
Massachusetts Supreme Court argued in Bortolli, “[b]ecause the holder of
a right of first refusal may only choose to purchase property on the same
terms as a bona fide offer, if and when the owner decides to sell, there is
no power either to compel an owner to sell the property at an unfavorable
price, or to encumber an owner’s ability to sell the property for a lengthy
period of time. There is no casting of a cloud of uncertainty on the title to
the property, and no potential to forestall a sale.” 866 N.E.2d at 889. When
preemptive rights are held by owners associations to purchase units in
common interest developments, moreover, they may increase the market
value of the properties held by association members. Cambridge Co. v.

1063
East Slope Investment Corp., 700 P.2d 537 (Colo. 1985). Courts adopting
this approach may hold that preemptive rights must be exercised within a
reasonable time in order to avoid invalidation as unreasonable restraints on
alienation, see Shiver v. Benton, 304 S.E.2d 903 (Ga. 1983), or interpret
them to be exercisable only during a particular person’s lifetime, thereby
validating them under the rule. See Firebaugh v. Whitehead, 559 S.E.2d
611 (Va. 2002).
5. The Restatement (Third). The Restatement (Third) of Property
(Servitudes) §3.3 (2000) provides that the rule against perpetuities “does
not apply to servitudes or powers to create servitudes,” which it defines to
include options and rights of first refusal. The reason for the exemption is
explained in Comment b:

[The] vice [of the rule against perpetuities is] that it operate[s] arbitrarily,
applying a time limit totally unsuited to commercial transactions. Lives in
being plus 21 years is too long for some servitude arrangements and
irrational in others. For example, an option in gross should rarely, if ever be
permitted to last as long as the rule would permit. As another example, the
power of a property owners association to grant easements in common areas
should be limited by the duration of the association, rather than by the lives
of the developer’s family and friends plus 21 years, or by a fixed period of 21
or 90 years.

Instead, the “purpose of the restriction must be balanced against the

harm caused by the nature of the restraint, a process that is best carried out
under the rules against restraints on alienation, which permit a
contextualized inquiry into the utility of the arrangement.” The proposed
exemption of options and preemptive rights from the rule against
perpetuities applies not only to commercial transactions but to family gifts
as well. The Reporter’s note to §3.3 candidly admits that the Restatement
has chosen a minority position in an attempt to influence the future course
of the law. Do you agree with the Restatement position?

Problem
Grantor, O, conveys property to A so long as it is used for residential
purposes. A opens a law office on the premises, and O sues for a
declaratory judgment that title has reverted to O. Possibilities of reverter
are, of course, viewed as “vested” and thus exempt from the rule against
perpetuities. Alby v. Banc One Financial, 82 P.3d 675 (Wash. Ct. App.
2003) (a possibility of reverter is “immediately vested in the grantor”). A
responds that the policies underlying the common law rule against

1064
perpetuities apply to possibilities of reverter as well as to executory
interests, and that it is nonsensical to continue to exempt possibilities of
reverter from the rule on the grounds that they are “vested.” A further
argues that this proposed change in the law (applying the rule against
perpetuities to possibilities of reverter) should be applied retroactively, on
the ground that when the rule was first developed in the Duke of Norfolk’s
Case, 22 Eng. Rep. 931 (1681), it was applied retroactively to the
conveyance in that case. What arguments could you make for the plaintiff?
For the defendant? What should the court do?
Consider that in Washington State Grange v. Brandt, 148 P.3d 1069
(Wash. Ct. App. 2006), a conveyance provided that “the land herein
deeded reverts back to original plot in event it is no longer used for Grange
purposes.” The court interpreted “to original plot” to mean to the “current
owner of the retained land at the time the condition is violated”; since this
was an executory interest in a third party, the court held that it was void
under the rule against perpetuities. However, this left language creating a
possibility of reverter (“the land . . . reverts back . . . in the event it is no
longer used for Grange purposes”). Since possibilities of reverter are not
subject to the rule, the court deemed that interest valid. Does this make
sense?

§5.4 Rule Against Unreasonable Restraints on Marriage

Restraints on marriage often raise public policy concerns, both as
restraints on an important area of human freedom and because of public
support for marriage generally. But testators not infrequently condition
their gifts based on their survivors’ marital choices. What should be the
role of the courts in enforcing testators’ efforts to control marriage choices
after death?

Estate of Guidotti

109 Cal. Rptr. 2d 674 (Cal. App. 2001)

ARTHUR GILBERT, Presiding Judge
A clause in a husband’s testamentary trust gives his wife the net
income for life, but only if she does not remarry or live with a man as
though married. Here we conclude that the clause is void as a restraint on
marriage. (Cal. Civ. Code §710.)
Petitioner Darlene Guidotti appeals an order by the probate court
denying a petition to reform the will of her deceased husband, Earl
Guidotti, to comply with the requirements of the Internal Revenue Code

1065
concerning the marital deduction and the charitable deduction. We reverse.
On March 13, 1999, Earl Guidotti died. His last will and testament
dated November 19, 1993, created a testamentary trust for the benefit of
his wife, Darlene. The trust generally provided for Darlene during her
lifetime and upon her death, provided for distribution to “charitable 501(c)
(3) organizations” within the meaning of the Internal Revenue Code. The
trust granted Darlene the power to appoint the charitable beneficiaries.
The trust gave Darlene the right to live in the family residence during
her lifetime, rent-free. In the event she moved from the residence or was
absent for more than 60 continuous days, without an intent to return,
Darlene forfeited the right to live in the residence.12
The trust also provided that Darlene would receive the net income for
her lifetime. However, “[i]n the event [she] should remarry, or, live with a
man as though they were husband and wife, even though not married, all
income payments to her shall immediately stop. . . .” The trust also
permitted an invasion of the trust principal as necessary for Darlene’s
proper health, maintenance, and support. The power to invade principal,
however, ceased in the event of Darlene’s remarriage or cohabitation “with
a man as though they were husband and wife, even though not married.”
During the probate proceedings, Darlene expressly disclaimed any interest
in the trust principal by filing a written disclaimer pursuant to Probate
Code section 275.
On March 13, 2000, Darlene filed a petition to reform the will in order
to meet the technical requirements of the Internal Revenue Code regarding
the marital and charitable deductions. Darlene asserted that the clause that
terminated her income interest upon remarriage or cohabitation precluded
the federal estate tax marital deduction and also prevented the charitable
tax deduction because the remainder interest passing to charity would be
uncertain. (26 U.S.C. §§2055, 2056.) She argued that the clause regarding
her remarriage or cohabitation with a man was void as a restraint on
marriage. (Cal. Civ. Code §710.)
In support of the reformation petition, Darlene offered a declaration by
the attorney who drafted Earl’s will and testamentary trust. The attorney
declared that Earl was “extremely jealous” of Darlene and “did not want
Darlene to remarry nor live with another man as if married” after Earl’s
death. Earl instructed him to draft the will “in such a manner that Darlene
would be severely penalized in the event she remarried or lived with
another man as if married.” The attorney stated: “[Earl] intended and
specifically directed me to draft provisions which would prevent, in so far
as he could control, the remarriage of Darlene or her living with another
man as if married.”

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 According to the attorney’s declaration, Earl also hoped to obtain a
marital deduction and a charitable deduction for federal estate tax
purposes. The attorney stated: “[Earl] wished to [accomplish the estate
plan] without payment of state or federal death taxes. He wanted there to
be no federal or state estate taxes at his death.” Indeed, the trust
empowered the personal representative “to elect qualified terminable
interest treatment [regarding the marital deduction] for all or for any
portion” of the trust.
The probate court considered the petition for reformation and
determined that the clause regarding remarriage or cohabitation was not a
restraint on marriage because it fell under the exception of Civil Code
section 710, “where the intent was not to forbid marriage, but only to give
the use until marriage.” The trial court reasoned that the clause was “harsh,
unwise and somewhat punitive” but “also” reflected an intent that any new
partner provide for Darlene’s support. The court therefore refused to
declare the clause void and reform the will to comply with federal estate
tax requirements for favorable tax treatment.
Darlene appeals and contends that the clause restraining marriage is
against public policy and void. Her appeal is unopposed by the Attorney
General, who represents the yet unnamed charitable beneficiaries.
The interpretation of a written instrument, including a will, is a judicial
function. A reviewing court may exercise its independent judgment in
interpreting an instrument provided that extrinsic evidence regarding
interpretation is not conflicting. (Estate of Edwards, 250 Cal. Rptr. 779,
781-82 (Cal. App. 1988).) Probate Code section 21102, subdivision (a),
provides: “The intention of the transferor as expressed in the instrument
controls the legal effect of the dispositions made in the instrument.” Thus,
the paramount rule in the construction of a will is the determination of the
testator’s intent.
Civil Code section 710 provides: “Conditions imposing restraints upon
marriage . . . are void; but this does not affect limitations where the intent
was not to forbid marriage, but only to give the use until marriage.” Our
Supreme Court has invalidated clauses in wills that either restrain marriage
generally or marriage to a particular person. (Estate of Duffill, 183 P. 337
(Cal. 1919) (testatrix’s will reduced gift to son if he married “Mrs. Alice
McNamara”); Estate of Scott, 148 P. 221 (Cal. 1915) (testator’s will
limited wife’s bequest if she “[s]hould . . . wish to marrie agane”).)
Here Earl’s will terminates payment of all trust income to Darlene
“[i]n the event [she] should remarry, or, live with a man as though they
were husband and wife.” The declaration of the attorney who drafted the
will states that Earl was jealous of Darlene and wanted to preclude her

1067
remarrying or living with another man. Indeed, the attorney states that he
counseled Earl that a clause restraining her remarriage “might be
unenforceable as against public policy.” Our review of the wording of the
will and more importantly, the evidence surrounding its execution shows
that Earl intended to restrain Darlene’s relationships or remarriage in
violation of Civil Code section 710. His intent was not to provide for her
until such time as she formed another relationship. (Estate of Fitzgerald,
119 P. 96 (Cal. 1919) (testator left estate to wife, but “in the event” she
remarried, her gift was divided with testator’s son unless he died without
issue).) Unlike the circumstances in Estate of Fitzgerald, supra, we cannot
say there is “not the slightest indication that there was any design or [the
testator’s] part to deter his wife from contracting another marriage, or that
he had any objection whatever to her so doing.” We draw the reasonable
inference from the declaration of the drafting attorney that Earl intended to
restrict Darlene from remarrying or living with a man.
The order is reversed and the matter remanded for further proceedings
concerning reformation of the will and the charitable bequests.

Notes and Questions

1. Restraints on remarriage of testator’s spouse. The traditional and
still majority rule is that bequests to a surviving spouse conditioned on the
beneficiary remaining unmarried are valid and will be enforced. In the
words of the Missouri Supreme Court, “[i]t seems settled law that men
have a sort of mournful property right, so to speak, in the viduity
[widowhood] of their wives.” Knost v. Knost, 129 S.W. 665, 667 (Mo.
1910). What justifies the rule? An early court stated dramatically, “[i]t
would be extremely difficult to say, why a husband should not be at liberty
to leave a homestead to his wife, without being compelled to let her share
it with a successor to his bed, and to use it as a nest to hatch a brood of
strangers to his blood.” Commonwealth v. Stauffer, 10 Pa. 350, 355 (1849).
But a testator may have other reasons for divestment on remarriage, such
as preserving the estate for the testator’s children by another marriage. As
seen in Guidotti, however, these restrictions may have a drastic monetary
impact. Although the federal marital deduction immunizes inheritance
from a spouse from estate taxation, bequests terminable before the end of a
life estate are not eligible. See Roels v. United States, 928 F. Supp. 812 (D.
Wis. 1996) (construing I.R.C. §2056(b)(1)).
In Guidotti, the court followed a state statute in determining whether
the restriction was mere possessiveness or was to support the widow.
Other states have similar statutes. Ga. Code §44-6-68; Ind. Code §29-1-6-

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3; In re Estate of Robertson, 859 N.E.2d 772 (Ind. App. 2007)
(invalidating life estate for widower “until he remarries or allows any
female companion to live with him who is not a blood relative”). Should
other states, by common law or statute, require review of remarriage
restrictions and strike them down if they are simply demands for
faithfulness from beyond the grave? The Restatement (Second) of Property
(Donative Transfers) §6.3 (1983), while it otherwise requires review for
reasonableness for restrictions on remarriage, would simply uphold
without review restraints on remarriage by the testator’s spouse.
2. Restraints on marriage generally. In contrast with restrictions on
remarriage of a surviving spouse, restrictions on a first marriage are
invalid if they unreasonably limit the opportunity to marry. Restatement
(Second) of Property (Donative Transfers) §6.2. Thus restraints on
marriage until the individual turns 21, or prohibiting marrying one
particular individual, will be upheld. See Taylor v. Rapp, 124 S.E.2d 271
(Ga. 1962) (upholding will prohibiting daughter from sharing in the estate
should she “marry JODY TAYLOR, a boy I do not like and care for in any
respects”). Bequests conditioned on the beneficiary remaining unmarried
will only be upheld if the intent is to provide support to the individual
when unmarried. See Restatement (Second) §6.1; Lewis v. Searles, 452
S.W.2d 153 (Mo. 1970).
3. Religious restrictions. Courts generally uphold conditions that the
beneficiary must marry an individual of a particular ethnicity or religion.
See, e.g., Gordon v. Gordon, 124 N.E.2d 228, 230 (Mass. 1955)
(upholding a condition that beneficiaries must marry persons “born in the
Hebrew faith”; court revoked gift to son when he married a Jew by choice
(convert)); Shapira v. Union National Bank, 315 N.E.2d 825 (Ohio Ct.
Comm. Pleas 1974) (upholding a condition that testators’ son “should
receive his share of the bequest only if he is married at the time of my
death to a Jewish girl whose both parents were Jewish” or so married
within seven years of his death); In re Estate of Keffalas, 233 A.2d 248
(Pa. 1967) (upholding gift to sons conditional on their marrying women of
“true Greek blood and descent and of Orthodox religion”).
The Restatement (Third) of Trusts §29(c) cmt. j, illus. 3 (2003), in
contrast, provides that conditions limiting gifts if the recipient does not
marry a person of a particular religion are void as against public policy
because they interfere with the fundamental right to marry. The Illinois
Supreme Court considered both the Restatement (Third) and constitutional
arguments in In re Estate of Feinberg, 919 N.E.2d 888 (Ill. 2009), but
upheld a provision that an estate be divided only among those

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grandchildren who, if married, were married to Jews or whose non-Jewish
spouses had converted within one year of marriage. The court rejected the
challenger’s constitutional arguments, finding no state action in
enforcement of the condition. Emphasizing the states’ strong policy of
respecting testator intent, the court found that public policy did not
prohibit benefitting only the “grandchildren whose lives most closely
embraced the values [the testators] cherished.” Id. at 903.
A restriction will be held invalid when it effectively prohibits the
beneficiary from marrying at all. Thus in Madox v. Madox, 52 Va. 804
(1854), the court invalidated a condition that the testator’s daughter remain
a member in good standing of the Society of Friends, because members
were prohibited from marrying nonmembers and there were not “more
than five or six marriageable male members of the society” in the county,
so “the restriction imposed by the condition would have operated a virtual
prohibition of her marrying.” While there might have been other members
outside the county, she “could not be expected, if she had the means,
which it seems she had not, to go abroad in search of a helpmate; and to
subject her to the doubtful chance of being sought in marriage by a
stranger.” Should the advent of Internet dating change the result in a
similar case today?
4. Gender roles. Professor Mary Joe Frug argues that cases involving
women as parties often implicate tacit assumptions about gender roles.
Mary Joe Frug, Re-Reading Contracts: A Feminist Analysis of a Contracts
Casebook, 34 Am. U. L. Rev. 1065 (1985). A donor may make a transfer
of property conditional on the transferee remaining single for various
reasons. The donor could hope to induce the donee not to marry, or the
donor could imagine that the donee will no longer need the property once
she marries. Such donors may or may not distinguish among donees based
on their sex. One goal of property law is to confer freedom on donors to
determine how and on which conditions to part with their property, but
another is to construct rules governing property ownership in a manner
that does not treat women as less worthy of owning or controlling property
than men. See Married Women’s Property Acts, Chapter 9, §3.1.B, above
(giving married women right to own property); Kirchberg v. Feenstra, 450
U.S. 455 (1981) (finding that giving husbands the sole power to manage
and control jointly owned property violated the equal protection clause).
How should courts think about restraints on marriage if one goal is to
promote gender equality?
5. Encouragement of divorce. Provisions in gifts of property
encouraging separation or divorce are widely viewed with disfavor and

1070
generally held to violate public policy. They may be upheld if the
“dominant motive of the transferor is to provide support in the event of
separation or divorce, in which case the restraint is valid.” Restatement
(Second) of Property (Donative Transfers) §7.1. Thus, in a case devising
$2,000 to the testator’s daughter, who was married at the time of
execution, if she remarried a man of “true Greek blood and descent and of
Orthodox religion” was invalid as encouraging divorce, although similar
conditions on his unmarried sons’ receipt of their devises were valid. In re
Estate of Keffalas, 233 A.2d 248 (Pa. 1967); see also In re Estate of Owen,
855 N.E.2d 603 (Ind. 2006) (voiding prohibition on daughter renting
residence while married to her husband).

Problem
A testator creates a trust to be shared among his grandchildren, but his
2007 will provides that the children of his son Robert may not benefit from
the trust if Robert shall “not be married to the child’s mother within six
months of the child’s birth.” Robert, who his father knew was gay, is
married to a man with whom he has a child via a surrogate. New York,
where the will is construed, enacted the Marriage Equality Act in 2011,
providing in part that “marriage is a fundamental right. Same sex couples
should have the same access as others to the protections, responsibilities,
rights, obligations, and benefits of civil marriage.” Robert challenges the
restriction in the will as restricting his right to marry and encouraging a
sham marriage. What arguments could you make as the attorneys
challenging or defending the condition? How should the court rule? See
Kathianne Boniello, Manhattan Businessman’s Will Ordered Gay Son to
Marry Woman Who Gave Birth to Their Child, N.Y. Post, Aug. 19, 2012
(reporting dispute, but not resolution).

1. After the Magna Charta, payments could only be required when ransoming
the lord from captors or upon the knighting of the lord’s eldest son or the marriage
of his eldest daughter.
2. Note that the settlor, trustee, and beneficiary need not be different people. A
common estate planning scheme today is to settle property on oneself for one’s
own benefit, with the remainder to go to designated individuals or entities after
one’s death.
3. Common recoveries were clearly sham lawsuits. So why did courts allow
them? While decisions and statutes at various periods restricted the common
recovery, particularly when challenged by the issue in tail, in general, courts
respected the recovery as a means to restrain burdensome restrictions on property

1071
by the dead.
4. The Restatement (Third) of Property: Wills & Other Donative Transfers
§§24.3 & 25.1 (2011) would absorb all the defeasible fees under the term “fee
simple defeasible,” and their associated future interests under the terms remainder
and reversion. Because no jurisdiction has yet adopted this terminology, and older
grants will continue to be interpreted under the traditional rules, it remains
important to learn the different names.
5. The language identifying the named owner A is referred to as words of
purchase because it identifies who owns the property; the language “and her heirs”
is referred to as words of limitation because it describes the kind of estate owned
by A (a fee simple) rather than identifying who owns the property.
6. An executory interest is any interest not in the grantor that cuts short an estate
before its natural termination, i.e., before it necessarily ends at death, as in a life
estate, or due to an expiration of a term of years. Traditionally, an executory
interest that cuts short an estate in someone other than the grantor has been called a
shifting executory interest, while an executory interest that follows an estate in the
grantor has been called a springing executory interest. These terms are relevant for
the rule of destructibility of contingent remainders, which prohibits springing but
not shifting executory interests, but the rule is no longer in effect in the United
States. See §3.2.C, infra.
7. The rules are different for lessees and mortgagors, with lessees generally
prohibited from making any fundamental alteration to the property unless
contemplated by the lease, and mortgagors generally prohibited only from making
changes that reduce the value of the property, unless otherwise restricted by the
mortgage.
8. At common law, a life estate was valued at one-third of the value of the fee.
Today life estates are valued by calculating the value of receiving the going rate of
interest on the fee each year for the expected life of the life tenant. See 26 C.F.R.
§20.2031-7. In Baker v. Weedon, the proposal was to invest the proceeds of the
sale, with the life tenant to receive the interest on the investment for the rest of her
life.
9. Of course, new reproductive technologies render this traditional assumption
— that people can only have children during their lifetimes or shortly thereafter —
more than problematic! See Sharona Hoffman & Andrew P. Morriss, Birth After
Death: Perpetuities and the New Reproductive Technologies, 38 Ga. L. Rev. 575
(2004).
10. Jurisdictions that have adopted the USRAP include Alabama, Arizona,
Arkansas, California, Colorado, Connecticut, the District of Columbia, Florida,
Georgia, Hawai`i, Indiana, Kansas, Massachusetts, Michigan, Minnesota,
Montana, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, North
Dakota, Oregon, South Carolina, Tennessee, the Virgin Islands, Virginia, and West
Virginia. Alaska initially adopted the USRAP but later repealed it, replacing it with
a prohibition on restricting the power of alienation for more than a life in being
plus 30 years, and a 1,000-year limit on the power of appointment. Alaska Stat.

1072
§§34.27.051 & 34.27.90
11. For an incisive critique of each of the three phases of perpetuities
modification, from early wait and see and cy pres, to the Uniform Statutory Rule
Against Perpetuities, to the abolition and rise of the dynasty trust, see a trilogy of
articles by the late Jesse Dukeminier, Perpetuities: Measuring Lives, 85 Colum. L.
Rev. 1648 (1985), The Uniform Statutory Rule Against Perpetuities: Ninety Years
in Limbo, 34 UCLA L. Rev. 1023 (1987), and (with James Krier) The Rise of the
Perpetual Trust, 50 UCLA L. Rev. 1303 (2003).
12. This provision prevented Darlene from selling the family residence and
acquiring a condominium or a smaller home. The trial court declared this provision
unenforceable for several reasons. The clause is not in issue here.

1073
CHAPTER 11

Leaseholds

§1 LEASEHOLD ESTATES
Property interests known as leaseholds are familiar to most law
students. In a lease, the landlord agrees to transfer possession of the
property for a specified period to the tenant in return for the tenant’s
promise to make a periodic rental payment. When the tenancy is over,
possession ordinarily reverts to the landlord unless she has sold the
property, conveying her interest to someone else. Landlord-tenant law
therefore involves a division of property interests between the landlord and
the tenant as well as a long-term relationship between them.
A lease is both a conveyance of an important property interest, akin in
many ways to other estates such as the life estate, as well as a contract
between the landlord and the tenant. Many of the topics in this chapter
highlight this dual character. In some instances, doctrines traditionally
based in property law have given way to contractual norms, and this has
been an important part of the modernization of landlord-tenant law.1

§1.1 Categories of Tenancies

There are four major types of tenancies or leaseholds: term of years,
periodic tenancy, tenancy at will, and tenancy at sufferance.

CONTEXT

The first version of URLTA was approved by the National Conference of

Commissioners on Uniform State Laws in 1972 and has been adopted in some
form by nearly half the states. In 2015, the Uniform Law Commission
promulgated a Revised Uniform Residential Landlord and Tenant Act with a
range of updates and new sections on disposing tenant property, security
deposits, and terminating leases in the context of domestic violence or sexual
assault.

1074
 1. Term of years. A term of years lasts for a specified period of time
determined by the parties. The period can be of any length. For example, a
one-year lease is a term of years; so is a 10-year lease or a 60-day lease.
For that matter, so is a 99-year lease. A term of years ends automatically at
the agreed-upon time, but it may be terminated before the end of the fixed
period on the happening of some event or condition stated in the lease
agreement.2 The future interest that follows the term of years, if retained
by the landlord, is a reversion. If, at the time the lease is signed, the owner
provides that the property will shift to a third party at the end of the
leasehold, the third party holds a remainder.3 The death of either party
does not terminate the tenancy. The landlord is not entitled to evict the
tenant before the end of the term; the only exception occurs when the
tenant is breaching a material term of the lease, such as the covenant to
pay rent.
2. Periodic tenancy. Periodic tenancies renew automatically at
specified periods unless either the landlord or the tenant chooses to end the
relationship. For example, a tenant may have a lease that renews annually
for a year period. By statute or common law, notice is required before
either party can terminate the relationship and end the periodic tenancy.
Usually, the required notice for termination is the length of one period (up
to some maximum, such as six months).
Many tenants have no written leases or specified end to their tenancy
but pay monthly rent to the landlord. These arrangements create month-
to-month tenancies, a form of periodic tenancy; they renew automatically
each month if neither party notifies the other that he intends to end the
relationship. Many states require a month’s notice to end a month-to-
month tenancy, while the Uniform Residential Landlord and Tenant Act
(URLTA) §4.301(b) requires 60-day notice for such termination. See also
Revised Uniform Residential Landlord and Tenant Act (RURLTA)
§801(b)(2) (requiring 30-day notice). The death of either the landlord or
the tenant does not terminate the tenancy. Of course, the heirs or devisees
of the deceased landlord or tenant may choose to end the tenancy, unless
some statute or common law rule prevents this. Under this arrangement,
the landlord can evict the tenant only by providing the requisite notice that
the tenancy will not be renewed.
3. Tenancy at will. The tenancy at will is similar to a periodic tenancy
except that it can be ended with no notice by either party. Many states
have effectively abolished tenancies at will by requiring notice before a
tenancy can be terminated; if the required notice is the same as that for a
month-to-month tenancy, the two become virtually identical. But some

1075
differences remain. For example, traditionally, the death of either the
landlord or the tenant terminates the tenancy at will. This result differs
from periodic tenancies or the term of years and may have important
consequences. Although the landlord still needs to give the statutorily
required notice to evict, the landlord may have an absolute right to do so
since the tenancy is at an end. In contrast, the landlord under a periodic
tenancy may not be able to terminate the tenancy if the tenant has a
defense to eviction, such as violation of the implied warranty of
habitability.
4. Tenancy at sufferance (holdover tenant). A tenant rightfully in
possession who wrongfully stays after the leasehold has terminated is
called a tenant at sufferance, or a holdover tenant. The term is intended
to distinguish between a tenant who wrongfully retains possession after the
end of the lease term from a trespasser, who never had a right to possess
the property. The legal procedures for ejecting trespassers often differ in
significant ways from those for evicting holdover tenants. It may be lawful
for an owner to physically eject a trespasser herself or to call on the police
to do so. In contrast, an eviction proceeding and a court judgment are
generally required to evict a tenant, including a tenant at sufferance. A
landlord who accepts rent checks from a holdover tenant may be held to
have agreed to a new tenancy calculated by the rental payment schedule
(monthly checks creating a month-to-month tenancy).

§1.2 Commercial and Residential Tenancies

Courts often distinguish between residential and commercial
tenancies. Residential tenancies involve renting property for the purpose of
establishing a home; commercial tenancies involve any nonresidential use,
including operation of a business for profit or operation of a nonprofit
institution such as a church, hospital, or university. Residential leases tend
to be relatively shorter than commercial leases; one-year residential leases
are common, while commercial leases can last a decade or more,
depending on the nature of the use.
Most rules are the same for both types of tenancy, but there are some
differences. Even when the rules are the same, courts often analyze the two
situations separately, on the assumption that the underlying policy
considerations and the justified expectations of the parties may differ. In
general, courts are more inclined to adopt common law rules regulating the
terms of residential leases, on the assumption that commercial tenants are
more likely to have sufficient bargaining power and expertise to shape the
contractual arrangement in their best interests, while residential tenants are

1076
less likely to bargain for appropriate terms in the contract that reflect their
justified expectations. See Wesson v. Leone Enterprises, 774 N.E.2d 611,
620 (Mass. 2002). By its own terms, ULRTA applies only to residential
tenancies. The doctrines canvassed in this chapter apply to residential and
commercial tenancies, although their application may differ in each
context; when they do, we will make the distinctions explicit.

§1.3 Regulation of Landlord-Tenant Relationships

In most states, landlord-tenant relationships are heavily regulated by
both common law and local, state, and federal statutes. Procedural
regulations, for example, impose formal requirements for creating the
landlord-tenant relationship. Under the Statute of Frauds, most states
require that leases of more than one year be in writing, while leases of one
year or less are enforceable whether they are written or oral. Oral periodic
tenancies are generally enforceable under the Statute of Frauds so long as
the period is one year or less; month-to-month tenancies satisfy this
condition because, although they could last more than one year in total, the
relevant period — one month — is less than a year. Oral tenancies at will
are valid as well. Regulations also define the procedures required to
terminate the relationship; these procedures ordinarily require notice and
an eviction proceeding and court judgment to evict the tenant from the
property. They may also provide for expedited court proceedings, often
called summary process, to allow relatively quick evictions.
Substantive regulations define the parties’ obligations to each other.
For example, administrative agencies established by legislation may pass
housing codes specifying the minimum requirements for conditions in an
apartment, including heat, toilet and kitchen facilities, and pest control.
Common law rules also govern the mutual obligations of the parties and
impose implied terms in the contract. For example, all leaseholds include
an implied covenant of quiet enjoyment by which the landlord promises
not to disturb the tenant’s use and enjoyment of the property.
Common law doctrines, and some statutes, define the circumstances
under which a breach of the agreement by each of the parties entitles the
other party to end her performance of her contractual obligations. For
example, the landlord’s failure to comply with the housing code may
relieve the tenant partially or totally of the obligation to pay rent.
Some terms implied into leases are waivable by the parties, who may
contract around them by agreeing to different arrangements. Other implied
terms are compulsory or nonwaivable; any contractual term purporting to
waive or alter the implied term is void and unenforceable.

1077
 In addition to legislation specifically regulating landlord-tenant
relations, many states have passed general consumer protection statutes.
In recent years, a number of courts have held that tenants may bring claims
against landlords as consumers of housing services.
Why do tenants bring claims under consumer protection acts when
they have remedies under a statute or the common law for issues covered,
for example, by the implied covenant of quiet enjoyment? They do so
because some unfair trade practices or consumer protection statutes
provide for multiple damages or reimbursement for attorneys’ fees or both.
Multiple damages are awarded both to punish the wrongdoer and to deter
wrongful conduct. Legislatures fear that compensatory damages may not
be enough to deter fraudulent conduct since defendants may simply factor
possible liability into their cost-benefit calculations, thus treating it as a
cost of doing business. If the benefits of such conduct outweigh the costs,
businesses may simply continue the unlawful conduct, thereby defeating
the purpose of the legislation, which aims to protect consumers from such
activity in the first place.
Various issues arise in these cases. First, courts must determine
whether tenants are protected by general consumer protection statutes that
prohibit “unfair” or “deceptive” trade practices in the sale of “goods” and
“services” to consumers. Courts commonly hold that rental housing
constitutes a “service” that is bought by tenants as consumers, thus
enabling tenants to sue under these statutes, or otherwise find landlords to
be covered by such statutes. See, e.g., Sawyer v. Robson, 915 A.2d 1298,
1304 (Vt. 2006); People ex rel. City of Santa Monica v. Gabriel, 112 Cal.
Rptr. 3d 574, 579 (Ct. App. 2010). Some courts, however, have held that
the presence of specific landlord-tenant legislation, such as the URLTA,
demonstrates a legislative intent to exclude tenants from coverage under
other statutes and that tenants therefore cannot obtain additional remedies
under general consumer protection legislation. State v. Schwab, 693 P.2d
108 (Wash. 1985).
Second, courts must define what kinds of conduct constitute “unfair”
or “deceptive” practices. For example, the Massachusetts Supreme Judicial
Court has held that including illegal and unenforceable clauses in
residential leases constitutes an unfair and deceptive practice that “injures”
tenants, even if the landlord never attempts to enforce the clause and the
tenant admits never having read the clause. In the absence of reliance,
however, damages are nominal. Leardi v. Brown, 474 N.E.2d 1094 (Mass.
1985). Other kinds of conduct held to constitute unfair or deceptive trade
practices include retaliatory evictions, Hernandez v. Stabach, 193 Cal.
Rptr. 350 (Ct. App. 1983), and the failure to maintain rental housing in a

1078
habitable condition, Dean v. Hill, 615 S.E.2d 699, 701-702 (N.C. Ct. App.
2005); State v. Weller, 327 N.W.2d 172 (Wis. 1982). Another central issue
is addressed in the following problem.

Problem
Consumer protection laws generally regulate those involved in “trade”
or “business” or “commerce.” If a landlord owns a two-unit building and
rents out one unit, is she engaged in a trade or business? What arguments
can be made on both sides? How should the court rule? Compare Billings
v. Wilson, 493 N.E.2d 187 (Mass. 1986) (no), with Stanley v. Moore, 454
S.E.2d 225 (N.C. 1995) (yes).

§1.4 Distinguishing Tenancies from Other Property

Relationships
The following case deals with the question whether migrant
farmworkers who reside in facilities provided by their employer are
entitled to a court hearing before being evicted. Tenants are generally
entitled to such legal process; others generally are not so entitled. In
addition, tenants may have a right under certain circumstances to
continued occupancy over the landlord’s objections. The farmworkers’
relationship with their employer has many of the elements of a landlord-
tenant relationship: the employer transfers possession of a portion of the
employer’s property by allowing the farmworkers to live there in exchange
for the farmworkers’ promises to convey value back to the employer. Their
relationship also appears different, in ways that may be significant, from
that of most tenants. Many migrant farmworkers pay no rent; instead, they
work for the employer in the fields. They are compensated for these
services in the form of wages. This compensation may be reduced to
account for the rental value of the employer’s property they occupy. The
exchange of land for services may make the relationship seem more like a
feudal one than a modern contractual one.
Whether the employees are classified as tenants or otherwise, the
common law may require employers to follow certain procedures to
exclude an ex-employee from the employer’s property. The important
question therefore centers on the real procedures required to evict fired
employees who, during their employment, were legally entitled to live on
the employer’s property. Can the employer-landlord eject them physically?
Can he call the police and have them arrested? Or must the employer
provide notice and obtain a court judgment?

1079
 Vásquez v. Glassboro Service Association, Inc.

415 A.2d 1156 (N.J. 1980)

STEWART G. POLLOCK, Justice.
Glassboro [Service Association] is a non-profit corporation comprised
of farmers who contracted with Glassboro for migrant farm labor. The
farmers called Glassboro as they needed workers to pick crops, and
Glassboro transported workers from its labor camp to the farms. The
length of time that a worker stayed at a farm varied, depending primarily
on the time needed to pick a crop. Glassboro paid the worker his wages,
and the farmer paid Glassboro for those wages plus a commission for
Glassboro’s services.
Only men were hired; the workers’ families remained in Puerto Rico.
Glassboro paid a farmworker $2.40 per hour and charged him $23 per
week for meals. The worker agreed to work eight hours a day for six days
a week, plus overtime as mutually agreed.
[In 1976, Glassboro negotiated a contract with the Puerto Rican
Department of Labor.] The contract stated that a worker was to pay for his
transportation from Puerto Rico. If he completed his contract, he would be
reimbursed for the cost of transportation from and provided return
transportation to Puerto Rico. If the worker did not fulfill his contract,
Glassboro was not obliged to reimburse him for the cost of transportation.
Although the contract provided that Glassboro would furnish a non-
negotiable airplane ticket to Puerto Rico for a worker who became
physically unfit, there was no comparable provision for a worker who was
fired. The contract period was for 28 weeks, or until December 1,
whichever came first.
The contract provided that, if an employee was to be discharged, a
hearing was to occur no later than five days after the employee was given
notice of termination. The contract did not require a minimum amount of
time to elapse between notice and termination of employment. The
contract provided further for administrative review within the Puerto Rican
Department of Labor whenever a worker had a complaint “regarding the
breach, application, interpretation or compliance” with the contract. If the
Secretary of Labor determined that Glassboro had “not adequately
remedied the complaint,” the Secretary could represent the worker and sue
Glassboro.
Pursuant to the contract, Glassboro supplied living quarters for workers
at its labor camp in New Jersey. Those quarters consisted of barracks
housing up to 30 men. Each worker received a mattress, bedding, and a

1080
locker. The barracks were equipped with common toilets, showers, and
lavatories. Although some farmers charged the workers for housing while
the workers were at the farms, Glassboro did not impose any extra charge
for housing at its labor camp. The contract did not require a migrant
farmworker to live at Glassboro’s labor camp. Nonetheless, the parties
contemplated that the farmworker would reside at the labor camp.
In 1976, [Natividad] Vásquez was recruited in Puerto Rico and came to
New Jersey to work for Glassboro. According to Glassboro’s foreman,
Vásquez’s work was not satisfactory. On July 19, 1976, the foreman told
Vásquez that he was to be discharged. A few hours later Vásquez had his
“hearing” with the foreman and a field representative of the Puerto Rican
Department of Labor. Thereafter the foreman decided to complete the
discharge, a decision Vásquez does not challenge in this action. Although
there were vacant spaces at the Glassboro barracks, Vásquez was not
permitted to remain overnight. The foreman told him to gather his
belongings and leave.
Unable to speak English and without funds to return to Puerto Rico,
Vásquez sought the assistance of the Farmworkers Corporation, a federally
funded non-profit corporation dedicated to the needs of farmworkers. A
Rutgers law student returned with Vásquez to the camp and requested that
Vásquez be allowed to remain overnight. The request was refused.
Vásquez stayed with a friend who was participating in a job training
program conducted by the Farmworkers Corporation.
The Farmworkers Rights Project filed a complaint on July 22, 1976,
seeking an order permitting Vásquez to reenter his living quarters and
enjoining defendants from depriving him of the use of the quarters except
through judicial process. Although Vásquez has since found housing, other
workers have been evicted, one at 3:00 A.M.

II
At common law, one who occupied premises as an employee of the
owner and received the use of the premises as part compensation for his
services or under a contract of employment was not considered a tenant.
[The New Jersey Anti-Eviction Act, N.J. Stat. §§2A:18-61.1 to 2A:18-
61.12, prohibits eviction of tenants unless the landlord can show good
cause, as defined in the statute. Section 2A:18-61.1(m) allows eviction if
the “landlord or owner conditioned the tenancy upon and in consideration
for the tenant’s employment by the landlord or owner as superintendent,
janitor or in some other capacity and such employment is being
terminated.”]

1081
 The initial question is whether the Legislature intended to include
migrant farmworkers in the phrase “in some other capacity” in N.J. Stat.
§2A:18-61.1(m). Where general words follow a specific enumeration, the
principle of ejusdem generis requires that the general words are applicable
only to the same class of things already mentioned. In N.J. Stat. §2A:18-
61.1(m), the general words “in some other capacity” follow the specific
enumeration of “superintendent” and “janitor.” We determine that, within
the meaning of the statute, a farmworker does not belong to the same class
of employees as a janitor or superintendent. A farmworker who possesses
a mattress and locker in an unpartitioned barracks while waiting to be sent
to work on a farm is different from a superintendent or janitor residing
with his or her family in an apartment house. The farmworkers are all men
who come from Puerto Rico without their families. They live in large
barracks with no privacy, sleeping in bunks in an unpartitioned room and
sharing toilets and showers. Their occupancy of the barracks is
intermittent, since it is a base camp for use while they are awaiting
assignment to farms.
Our analysis of the words of the statute, the absence of any
illuminating legislative history, and the application of principles of
statutory construction lead to the conclusion that a migrant farmworker is
not a tenant within the meaning of N.J. Stat. §2A:18-61.1(m). The special
characteristics of migrant workers’ housing, the absence of a contractual
provision for the payment of rent, the lack of privacy, the intermittent
occupancy, and the interdependence of employment and housing support
this conclusion.

III
In ascertaining whether a farmworker is entitled to notice before
dispossession, we turn next to the Glassboro contract. [T]he contract
resulted from negotiations between the Puerto Rican Department of Labor
and Glassboro. No migrant farmworker participated directly or through a
labor union in the negotiations. The record does not demonstrate whether
or not the Puerto Rican Department of Labor has the same interests as the
migrant farmworkers. The Puerto Rican Department of Labor may have
been concerned also about reducing unemployment in Puerto Rico by
finding jobs for its residents on farms in New Jersey. Whatever the
interests of the parties to the negotiations, a migrant farmworker was
required to accept the contract as presented by Glassboro.
The contract in evidence is written in English. Although Vásquez
spoke Spanish only, the record does not show that he received a Spanish

1082
translation of the contract. Nonetheless, he signed a copy of the contract.
Once a migrant farmworker came to Glassboro’s labor camp in New
Jersey, he depended on Glassboro for employment, transportation, food,
and housing. He was separated by over 1300 miles from his home and
family. Although an American citizen, he was isolated from most citizens
in New Jersey by his inability to speak English. An invisible barrier
separated a migrant farmworker from the rest of the State as he was
shuttled from the labor camp to the farms. The lack of alternative housing
emphasized the inequality between Glassboro and the migrant
farmworkers. Once his employment ended, a farmworker lost not only his
job but his shelter. The fear of discharge, and with it the loss of income,
housing, and return passage to Puerto Rico permeated the contractual
relationship. This is the setting in which we measure the contract against
the public policy of the State.
Public policy eludes precise definition and may have diverse meanings
in different contexts. The sources of public policy include federal and state
legislation and judicial decisions.
In the past, courts in New Jersey have refused to enforce contracts that
violate the public policy of the State. No contract can be sustained if it is
inconsistent with the public interest or detrimental to the common good.
Contracts have been declared invalid because they violate statutes,
promote crime, interfere with the administration of justice, encourage
divorce, violate public morality, or restrain trade. With respect to
employment contracts that have an otherwise lawful purpose, courts have
afforded judicial sanction to post-employment restrictive covenants only to
the extent that the covenants are reasonable and comport with public
policy.
The courts and Legislature of New Jersey have demonstrated a
progressive attitude in providing legal protection for migrant farmworkers.
[The state legislature has passed legislation regulating housing conditions
and sanitation for migrant farmworkers. In 1979, the federal government,
pursuant to the Occupational Safety and Health Act of 1970, 29 U.S.C.
§651 et seq., assumed responsibility for inspection of many migrant labor
camps.] The constant attention accorded by Congress and the State
Legislature demonstrates a legislative concern for the well-being of
migrant farmworkers.
In State v. Shack, 277 A.2d 369 (N.J. 1971), this Court reversed
convictions for trespass of a fieldworker and an attorney for organizations
providing services for migrant farmworkers. Declining to characterize the
migrant farmworker as either tenant or employee, Chief Justice Weintraub
wrote:

1083
 We see no profit in trying to decide upon a conventional category and then
forcing the present subject into it. That approach would be artificial and
distorting. The quest is for a fair adjustment of the competing needs of the
parties, in the light of the realities of the relationship between the migrant
worker and the operator of the housing facility. 277 A.2d at 374.

The Court weighed the property rights of the farmer against the rights
of the farmworkers to information and services and found that the balance
tipped in favor of the farmworker. Underlying that conclusion was
recognition of the fundamental right of the farmworker to live with
dignity. As in Shack, the appropriate result in this case arises from the
status and the relationship of the parties.
The enlightened approach of the courts and the Legislature provides
the context in which we assess the Glassboro contract and consider how a
migrant farmworker should be dispossessed from his living quarters at a
labor camp.
A basic tenet of the law of contracts is that courts should enforce
contracts as made by the parties. However, application of that principle
assumes that the parties are in positions of relative equality and that their
consent is freely given. In recent years, courts have become increasingly
sensitive to overreaching in contracts where there is an inequality in the
status of the parties.
In a variety of situations, courts have revised contracts where there was
an inequality in the bargaining power of the parties. The principle has been
applied also to leases. In Kuzmiak v. Brookchester, 111 A.2d 425 (N.J.
Super. Ct. App. Div. 1955), the court invalidated a clause in an apartment
lease exculpating a landlord from liability for negligence. More recently
the inequality of bargaining power between landlord and tenant led this
Court to comment that “lease agreements are frequently form contracts of
adhesion.” Trentacost v. Brussel, 412 A.2d 436, 442 (N.J. 1980).
A migrant farmworker has even less bargaining power than a
residential tenant. Although the contract did not require a migrant
farmworker to live at the labor camp, the realities of his employment
forced him to stay at the camp. Residence at the labor camp benefited not
only the farmworker, but also Glassboro and its member farmers. It was
more convenient for them if the workers resided at the camp: the pool of
labor was at hand, and the workers could be transported conveniently to
the farms. The contract assured Glassboro that there would be a labor
source available on its property.
Under the contract, once a worker’s employment was ended, he had no
right to stay at the camp. Glassboro’s possible need for the bed of a

1084
discharged farmworker, particularly during the growing season, is
relevant, but not persuasive. In this case, Glassboro had ample space for
Vásquez, yet he was turned out of the barracks on the same day he was
fired. The interest of neither the migrant farmworker nor the public is
served by casting the worker adrift to fend for himself without reasonable
time to find shelter.
The status of a worker seeking employment with Glassboro is
analogous to that of a consumer who must accept a standardized form
contract to purchase needed goods and services. Neither farmworkers nor
consumers negotiate the terms of their contracts; both must accept the
contracts as presented to them. In both instances, the contracts affect many
people as well as the public interest.
With respect to a standardized form contract, the intention of the
consumer has been described as “but a subjection more or less voluntary to
terms dictated by the stronger party, terms whose consequences are often
understood only in a vague way, if at all.” Kessler, Contracts of Adhesion
— Some Thoughts About Freedom of Contract, 43 Colum. L. Rev. 629,
632 (1943). A contract where one party, as here, must accept or reject the
contract does not result from the consent of that party. It is a contract of
adhesion:

There being no private consent to support a contract of adhesion, its

legitimacy rests entirely on its compliance with standards in the public
interest. The individual who is subject to the obligations imposed by a
standard form thus gains the assurance that the rules to which he is subject
have received his consent either directly or through their conforming to
higher public laws and standards made and enforced by the public
institutions that legitimately govern him. Slawson, Standard Form Contracts
and Democratic Control of Lawmaking Power, 84 Harv. L. Rev. 529, 566
(1971).

The absence of a provision in the contract for reasonable time to find

housing after termination of his employment bespeaks Glassboro’s
superior bargaining position. Further, by failing to provide for a reasonable
time to find alternative housing, the contract is inconsistent with the
enlightened attitude of the Legislature and the courts towards migrant
farmworkers.
The crux of this case thus becomes the unconscionability of the
contract as it is sought to be enforced against the migrant workers. The
unconscionability of the contract inheres not only in its failure to provide a
worker with a reasonable opportunity to find alternative housing, but in its
disregard for his welfare after termination of his employment. The inherent

1085
inequity of the contract arouses a sense of injustice and invokes the
equitable powers of the courts. In the absence of any concern demonstrated
for the worker in the contract, public policy requires the implication of a
provision for a reasonable time to find alternative housing.

IV
At common law, on termination of employment, an employer could
dispossess an employee who occupied premises incidental to his
employment. Similarly, a landlord could dispossess peaceably a holdover
tenant. To that extent, both an employer and landlord could use self-help to
regain possession peaceably. The advantage to them was that they were
assured of prompt restoration of the use of their property. However, an
inherent vice in self-help is that it can lead to confrontations and breaches
of the peace. In the absence of self-help, a landlord or employer at
common law was remitted to an action in ejectment. The problem with
ejectment is that it was slow and expensive.
With regard to real property occupied solely as a residence, the
Legislature has resolved the dilemma by prohibiting entry without consent
and by providing a summary dispossess proceeding. N.J. Stat. §2A:39-1
and N.J. Stat. §2A:18-53 et seq. Similarly, the Legislature has provided a
summary dispossess proceeding for the removal of residential tenants. N.J.
Stat. §2A:18-61.2. As explained above, migrant farmworkers are not
tenants, and there is no comparable statute providing for their summary
dispossession on termination of their employment. In fashioning a suitable
remedy, we acknowledge that the realities of the relationship between the
migrant worker and a farm labor service are unique and summon a judicial
response unrestricted by conventional categories, such as employer-
employee and landlord-tenant.
In the absence of a contractual provision or legislation addressing the
plight of a migrant farmworker on termination of his employment, the
courts, exercising equitable jurisdiction, should devise a remedy to fit the
circumstances of each case. Depending on the circumstances, an equitable
adjustment of the rights of the parties may vary from one case to another.
An appropriate remedy might include time in addition to that implied in
the contract, assistance in obtaining alternative housing, return passage to
Puerto Rico, or some other form of relief. By abolishing self-help and
requiring dispossession through a judicial proceeding, we provide a forum
for an equitable resolution of a controversy between a farm labor service
and a migrant farmworker on termination of the latter’s employment.
We are mindful of the special considerations pertaining to migrant

1086
farmworkers and of the need for a prompt resolution of disputes between
farmworkers and a farm labor service. In general, a summary action under
[N.J. Rule 4:67] should be a more appropriate proceeding than a plenary
action. In fact, the present case was instituted on complaint and order to
show cause returnable three days later, at which time the court heard
testimony, reserved decision, and rendered a written opinion seven days
later. We conclude that a dispute concerning the dispossession of a migrant
farmworker on termination of his employment, whether instituted by a
farm labor service or, as here, by a farmworker, should proceed in a
summary manner under [Rule] 4:67.

Notes and Questions

1. Summary process versus self-help. Owners are entitled to use self-
help to remove licensees and those illegally occupying their property. See,
e.g., Harkins v. Win Corp., 771 A.2d 1025 (D.C. 2001) (provider of
transient accommodations may use self-help to evict non-paying lodger);
Paulino v. Wright, 620 N.Y.S.2d 363 (App. Div. 1994) (city entitled to use
self-help to evict illegal occupants of city-owned property). If they refuse
to leave, the owner may even use reasonable force. Owners used to be
entitled to use self-help to remove tenants as well, and the law in some
states still allows this, particularly for commercial tenants. See Brown v.
State Central Bank, 459 F. Supp. 2d 837 (S.D. Iowa 2006) (commercial
landlord permitted to retake possession by changing locks). However,
today almost all states outlaw self-help in removing tenants, instead
obligating landlords to use court proceedings (eviction) to recover
possession.
2. Leases versus licenses and easements. The question frequently
arises whether an arrangement constitutes a lease or whether it is instead a
license or an easement. This matters for purposes of determining whether a
landlord may use self-help, but can be an issue in a much broader range of
tenant statutory and common law rights. The characterization issue comes
up in the context of department store and shopping mall concessions,
students living in college dormitories, apartment complex managers and
migrant farmworkers, and other contexts. Students living in dormitories
and apartment managers living on the premises are explicitly exempted
from the protections of the URLTA. See URLTA §1.202 (tenancy
protections do not apply to residents at educational institutions or to
“occupancy by an employee of a landlord whose right to occupancy is
conditional upon employment in and about the premises”); see also
RURLTA §103(c). Such residents will thus not be treated as tenants in

1087
those states that have adopted URLTA without modification on this point,
compare, e.g., Conn. Gen. Stat. §47a-2 (excluding the general exemption
for employees in Connecticut’s version of URLTA), although, as Vásquez
shows, they may have other legal protections. If no statute answers the
question, these cases are generally decided by asking whether the owner
has transferred exclusive “possession” of a defined space; if so, a lease
will be found. If control of a particular space is not granted, or such
possession is not exclusive, a license is likely to be found. Millennium
Park Joint Venture, LLC v. Houlihan, 948 N.E.2d 1, 18-21 (Ill. 2010).
However, the cases are split, with some courts finding leases and other
courts finding mere licenses.
Courts have reached differing results in the case of students in
dormitories, in part depending on the nature of the claim at issue. Compare
Burch v. University of Kansas, 756 P.2d 431 (Kan. 1988), and Rhaney v.
University of Maryland, Eastern Shores, 880 A.2d 357, 367 (Md. 2005)
(both holding that students in dormitories are tenants for purposes of
analyzing universities’ tort liability as landlords), with Houle v. Adams
State College, 547 P.2d 926 (Colo. 1976), and Cook v. University Plaza,
427 N.E.2d 405 (Ill. App. Ct. 1981) (both holding that universities are not
landlords in the context of security deposit requirements). In the case of
employees, such as migrant farmworkers and apartment building
managers, the cases focus on determining whether access to the apartment
seems to be part of the employment relationship and intended to last only
as long as the employee remains on the job. It also matters whether the
employer/landlord has a particular space reserved for employees and if
occupancy by a nonemployee would interfere with the owner’s ability to
provide the services that the employee renders. Compare GENC Realty
LLC v. Nezaj, 860 N.Y.S.2d 106 (App. Div. 2008), with Bigelow v.
Bullard, 901 P.2d 630 (Nev. 1995) (superintendent is a tenant). Compare
De Bruyn Produce Co. v. Romero, 508 N.W.2d 150 (Mich. Ct. App. 1993)
(migrant farmworkers are licensees, not tenants), with State v. DeCoster,
653 A.2d 891 (Me. 1995) (migrant farmworkers are tenants).
How should the courts distinguish between licenses and leases? In
Keller v. Southwood North Medical Pavilion, Inc., 959 P.2d 102 (Utah
1998), a chiropractor leased space in a shopping center pursuant to a
written agreement that included the right to place a sign on a large
monument located near the street. Most of the signs on the monument
were small brass plaques advertising various tenants’ services, but the
landlord allowed the chiropractor to put up a larger sign in exchange for
additional consideration. When the landlord sold the shopping center, the
new owner objected to the appearance of the chiropractor’s sign and

1088
removed it. The chiropractor claimed that the new owner violated the state
forcible entry statute, which required landlords to use court eviction
proceedings rather than self-help to recover possession of property from
tenants. The court, however, found that the chiropractor only had a license,
not a lease subject to the statute, because the agreement did not transfer
exclusive possession of any part of the monument and did not identify any
particular space on the monument that the chiropractor had a right to
occupy. Does the court’s focus on possession make sense? Or should it
instead focus on the policies underlying the prohibition on landlord self-
help? We discuss those policies in §3.1, below.
The Vásquez court avoided the abstract question whether the farm
owner had granted “possession” to the farmworkers or whether they had
the status of “tenants.” In effect, the court ruled that the farmworkers were
entitled to protection even if they were not tenants and even if the statutory
procedures did not apply to them. Was this a good idea? Was it justified?
Could the legislature have intended to allow owners to engage in self-help
in cases not covered by the summary process law? See, e.g., City of New
York v. Utsey, 714 N.Y.S.2d 410 (App. Div. 2000) (governmental owner
may be obligated to use eviction proceedings against long-term squatters
whose initial occupancy was nonpermissive if the owner acquiesced in
their occupancy in a manner that demonstrates an intent to treat them as
tenants at will).
3. Contract language. Could the issue of the character of the property
interest be avoided if the parties had a written agreement? The answer
depends in part on whether the policy outlawing self-help is disclaimable.
If it is, then there should be no problem with the parties agreeing to call
their arrangement a license, under which the licensee can be removed at
will without court eviction proceedings. If it is not, then the language
cannot be determinative. The cases are not uniform. Courts have
interpreted “lease” arrangements as licenses and “license” arrangements as
leases. Compare Halley v. Harden Oil Co., 357 S.E.2d 138 (Ga. Ct. App.
1987) (although contract stated that it was a “lease,” owner retained
possession, use, and responsibility for maintenance of property and thus
was merely a license), and Loren v. Marry, 600 N.Y.S.2d 369 (App. Div.
1993) (same), with Dargis v. Paradise Park, Inc., 819 N.E.2d 1220 (Ill.
App. Ct. 2004), and M & I First National Bank v. Episcopal Homes
Management, Inc., 536 N.W.2d 175 (Wis. Ct. App. 1995) (both holding
that “license” arrangements were leases).
4. Freedom of contract, unequal bargaining power, and minimum
standards. Landlord/tenant relationships arise from voluntary agreements

1089
between landowners and those who seek access to their land. When the
agreement is ambiguous, courts must interpret the agreement to determine
its terms. However, contracts involve a second, distinct issue; some
contracts are illegal and some contract terms are mandatory. Statutes,
regulations, and common law may, for example, require eviction
procedures to remove an occupant of land, whether or not the agreement
between the parties provides for this. When should contracts contain
mandatory terms?
One view is that contracts should be regulated when the parties have
unequal bargaining power. Robert Hale argued that individuals may be
forced to agree to onerous contract terms if they have no reasonable
alternative. They may have little market power because of their poverty,
lack of marketable skills, or substantial competition from others seeking
similar entitlements. “[B]y judicious legal limitation on the bargaining
power of the economically and legally stronger, it is conceivable that the
economically weak would acquire greater freedom of contract than they
now have — freedom to resist more effectively the bargaining power of
the strong, and to obtain better terms.” Robert Hale, Bargaining, Duress,
and Economic Liberty, 43 Colum. L. Rev. 603, 628 (1943). If the law
prohibits certain onerous contract terms, then potential tenants will be
protected from them. For example, tenants will know that, if they obtain
rental housing, they cannot be evicted without court proceedings to
determine whether the landlord has a right to recover possession and to
ensure that the tenants have time to move. Tenants and landlords may have
unequal bargaining power because housing is a necessity and because of
structural disparities between landlords and tenants associated with the fact
that landlords own real property and tenants do not; in addition, landlords
often collude by using form leases drafted by real estate associations that
include terms favorable to landlords.
However, this view has been criticized because it fails to recognize that
landlords can respond to regulations either by raising the rent, changing
other terms of the contract, or withdrawing from the market altogether —
all of which arguably hurt the very people we hoped to help by the
regulation in the first place. Thus, a second view is that contracts should
hardly ever be regulated by the state; the ideal of freedom of contract is
based on the notion that the parties should be free to make whatever
arrangements suit their purposes. Limitation on freedom of contract
arguably both interferes with individual autonomy and is inefficient
because it makes both parties worse off in their own terms. Professor Alan
Schwartz argues that “just outcomes arise when people are permitted to do
the best they can, given their circumstances. This is because, the theory

1090
goes, people are the best judges of what maximizes their own utility;
hence, allowing them to make unrestrained choices is most likely to
maximize utility for the individual and for society as a whole.” Alan
Schwartz, Justice and the Law of Contracts: A Case for the Traditional
Approach, 9 Harv. J.L. & Pub. Poly. 107, 107 (1986). This means that
people should be free to contract on any terms they like. Nor should we
worry about unfair contract terms because “competition in markets
prevents even very large firms from exploiting even very small
consumers.” Id. at 109. Moreover, regulating contract terms arguably hurts
the very people we are trying to protect. Schwartz explains that “not
enforcing contract clauses . . . tends to make people poorer rather than
richer.” Id. at 115. He continues:

To make a person poorer is meant here to shrink the number of options a

person has available to improve his or her lot in life. Suppose a judge bans a
contract clause. He has imposed a restriction on the choices available to
persons who agreed to it or would have agreed to it in preference to other
contract clauses that firms could offer. Poor people tend to have fewer
choices than rich people because they have less money. Poor people do have
free will, however. If a judge bans a contract clause on the ostensible ground
of protecting the poor, the judge actually is reducing the choices of poor
people and is therefore preventing poor people from doing as well as they
can, given their circumstances, in the realm of contractual choice.

A third view is that contracts should be regulated to ensure that they

comply with minimum standards compatible with the legal framework of
a free and democratic society. Joseph William Singer, Things That We
Would Like to Take for Granted: Minimum Standards for the Legal
Framework of a Free and Democratic Society, 2 Harv. L. & Poly. Rev.
139 (2008). All contracts are regulated by state or federal law in some
respect. Some of these regulations ensure that contracts do not violate
public policy and that they are consistent with basic standards of decency
in social relationships in a just society. Other regulations take the form of
consumer protection laws that ensure that products (including housing)
are safe and meet the legitimate expectations of purchasers. On this view,
freedom of contract is an important norm, but it takes place within
boundaries established by minimum standards regulations. If such
regulations make housing too expensive for the very poorest persons, then
the appropriate remedy is not to deregulate but to adopt other means either
to increase their bargaining power or to provide affordable and safe
housing.

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 Problems
1. Two university students living in a college dormitory come to you
with the following problem. Along with signing many other forms and
documents, the students signed form dormitory contracts that stated
“LICENSE” at the top of the first page. The contract granted the students a
“license” to occupy a dormitory room in exchange for an amount to be
paid one semester at a time. The form stated that the university “reserved
the right to cancel the license at any time for any reason.” It also stated:
“This agreement is not a lease.” One student placed a banner reading
“SUPPORT THE LIVING WAGE CAMPAIGN” outside her window in
an effort to persuade the university to raise the wages it pays to its lowest-
paid employees to enable them to earn enough to live in the community
without taking a second job. The other student placed a banner reading
“ABORTION KILLS” outside her window. The university had a policy
prohibiting students from placing any banners outside their windows. The
students knew about the policy but decided to violate it on the ground that
it interfered with their right to free speech. Because of their violations of
the rules, they were given 24 hours to vacate their dormitory rooms. They
were not suspended or otherwise punished for their conduct. A state statute
provides that “tenants” cannot be evicted without one month’s notice and a
court eviction proceeding.
a. What is the students’ argument that they are “tenants” protected
from eviction without judicial process?
b. What is the school’s argument that they are licensees, rather than
tenants, and can be removed with self-help and no notice?
c. How should the court rule?
2. A tenant invites her boyfriend to move in with her on the condition
that he pay half the rent. Is he a tenant or a licensee? In Kiehm v. Adams,
126 P.3d 339 (Haw. 2006), the court held that the question should be
decided by the intent of the parties but that roommate arrangements should
be presumed to be licenses if the roommate does not have the “right to
occupy a distinct and separate part of the premises,” the right is not
intended to be assignable, and the right is not for a particular term.
However, a dissenting judge would have found a sublease since a state
statute, Haw. Stat. §521-8, defined a “rental agreement” to mean all
agreements that concern the “use and occupancy of a dwelling unit and
premises.” Id. at 350 (Acoba, J., dissenting). Who is right, and how should
this question be decided? From the landlord’s perspective, what are the
consequences of treating a roommate who is not a signatory to the lease as
a licensee?

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 §1.5 The Sharing Economy in the Rental Housing Sector
Across a number of areas, the phenomenon often referred to as the
“sharing economy” has become increasingly common in recent years, with
notable examples that include ridesharing companies such as Uber and
Lyft and companies such as Airbnb and HomeAway that allow people to
find short-term stays in people’s homes. The general model across sectors
involves an on-line “platform” that pairs people with some surplus to offer
(space in a car, a room in an apartment, time for short-term work) with
people in need of that resource. The sharing economy has many
proponents who tout its potential to reduce the ecological footprint of
consumer spending as well as the social promise of “collaborative
consumption,” see Janelle Orsi, Practicing Law in the Sharing Economy
(ABA 2012), but has also sparked controversy for undermining consumer
welfare regulation and weakening labor and employment rights. See
generally Orly Lobel, The Law of the Platform, 101 Minn. L. Rev. 87
(2016); Kellen Zale, Sharing Property, 87 Colo. L. Rev. 501 (2016).
In housing, the sharing economy has been criticized for potentially
reducing the stock of available housing in tight rental markets as well as
for safety concerns, and several cities and states have passed new
regulations to limit the model. In New York, it has been illegal since 2010
in certain types of buildings for residents to have paying guests for fewer
than 30 consecutive days, N.Y. Multiple Dwelling Law §4(8)(a), and New
York has taken steps to enforce this requirement, see Katie Benner, Airbnb
in Disputes with New York and San Francisco, N.Y. Times, June 28, 2016.
And, in 2016, seeking to limit the number of units removed from the rental
market, San Francisco’s Board of Supervisors voted to limit postings on
sites like Airbnb to providers who register with the city, see Joshua
Sabitini, SF Legislators Approve Tougher Rules for Airbnb, S.F.
Examiner, June 7, 2016. Airbnb sued to block the new requirement, citing
§230 of the Communications Decency Act, 47 U.S.C. §230, a provision
that protects Internet service providers from certain kinds of liability
related to information posted through those services. See Tracey Lien &
Emily Alpert Reyes, Airbnb Sues San Francisco — Its Hometown — to
Block New Rental Law, L.A Times, June 28, 2016.
How should local governments balance the benefits of allowing people
to rent out surplus space in their homes against the potential harms to the
housing market? What other interests might be at stake?

§2 CONFLICTS ABOUT OCCUPANCY

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 It is important to understand the context in which landlord-tenant
litigation tends to occur. Many disputes arise because either the landlord
has interfered with the tenant’s possession or what is known as “quiet
enjoyment” of the property or the tenant has breached his obligation to pay
rent — or both. This chapter addresses these issues in this and the next two
sections.
When a landlord asserts a claim against a tenant based on the tenant’s
failure to pay rent or on some claimed breach of the lease agreement, the
landlord may seek either (or both) (a) payment of back rent the tenant
owes, or (b) possession of the premises (otherwise known as eviction).
The landlord may also make a claim for damages resulting from the
tenant’s breach — for example, the cost of repairing facilities damaged by
the tenant. The tenant may answer each of these claims by denying that he
has breached the lease (he has in fact paid the rent or he did not cause the
damage). Or he may raise defenses to these claims, admitting that he
stopped paying rent but asserting that he was entitled to do so because the
landlord breached the agreement first.
In response to a lawsuit by the landlord, the tenant may also be able to
make counterclaims against the landlord. These may include claims for
damages resulting from the landlord’s breach of the lease, and courts may
order a rent abatement (a reduction in rent) owed for the period during the
breach. Some courts will also allow the tenant to recover damages if the
landlord acted negligently and physical harm resulted to the tenant or an
invitee on the premises; such damages also may exceed the rental value of
the premises. The tenant may petition for injunctive relief, such as an
order to the landlord to fix the apartment to comply with the local housing
code.
Tenants may also sue the landlord initially with the tenant’s claims.
Such lawsuits ordinarily ask for either (a) damages resulting from the
landlord’s breach, such as a failure to maintain the premises, or
compensation, for example, for injuries resulting from the landlord’s
failure to comply with the housing code, or (b) an injunction ordering the
landlord to fix the apartment to comply with the terms of the lease or the
housing code.
Keep this litigation context in mind as you work through the doctrines
on occupancy, rent, habitable premises, and other materials covered in this
chapter.

§2.1 Initial Occupancy: Landlord’s Duty to Deliver

Possession

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 Under the current majority rule, the landlord has the duty to deliver
possession of the rented premises to the tenant at the beginning of the
leasehold. Restatement (Second) of Property (Landlord and Tenant) §6.2
(1977); URLTA §§2.103, 4.102; see also RURLTA §§301, 405. If a prior
tenant wrongfully holds over after his lease term expires, the landlord has
an obligation in most jurisdictions to remove the prior tenant within a
reasonable period of time by either instituting eviction proceedings or
convincing the holdover tenant to leave. Failure to deliver actual
possession of the premises to the new tenant constitutes a breach of the
lease by the landlord. The tenant who has been shut out may either
terminate the lease and recover damages as compensation for having to
find another place to live or affirm the lease, withhold rent for the period
during which she could not occupy the premises, and recover damages for
the cost of temporarily renting alternative housing while the landlord
undertakes eviction proceedings to remove the prior tenant.
A minority of jurisdictions follow the traditional rule, under which the
landlord has only the duty to deliver the right to possession but no duty to
deliver actual possession. In those states, it is the new tenant’s
responsibility to evict the holdover tenant by bringing ejectment or other
appropriate proceedings. Since the landlord is not in default under the
minority rule, the new tenant is legally obligated to pay the rent even
though she is not in possession. The new tenant’s remedy is to go after the
holdover tenant for damages.

§2.2 During the Leasehold

Leaseholds often entail an ongoing landlord-tenant relationship, with
inevitable adjustments and accommodations over the term of the lease, and
the nature of this relationship can vary significantly depending on the type
of parties involved. A large-scale commercial tenant is likely to have a
different kind of interaction with its landlord than someone renting a room
upstairs in a landlord’s two-family building.

A. Landlord’s Right to Inspect and Repair

Uniform Residential Landlord and Tenant Act

§3.103

§3.103. Access
(a) A tenant shall not unreasonably withhold consent to the landlord to

1095
enter into the dwelling unit in order to inspect the premises, make
necessary or agreed repairs, decorations, alterations, or improvements,
supply necessary or agreed services, or exhibit the dwelling unit to
prospective or actual purchasers, mortgagees, tenants, workmen, or
contractors.
(b) A landlord may enter the dwelling unit without consent of the
tenant in case of emergency.
(c) A landlord shall not abuse the right of access or use it to harass the
tenant. Except in case of emergency or unless it is impracticable to do so,
the landlord shall give the tenant at least [2] days’ notice of his intent to
enter and may enter only at reasonable times.
(d) A landlord has no other right of access except
(1) pursuant to court order;
(2) as permitted by Sections 4.202 and 4.203(b) [giving the landlord
the right to enter the dwelling to fix damage to the apartment caused by
the tenant or to enter the apartment in case of extended tenant absence];
or
(3) unless the tenant has abandoned or surrendered the premises.

Problem
A tenant has a one-year lease that grants the landlord the “right to
inspect the premises at the landlord’s discretion.” After living in the
apartment for three months, the landlord notifies the tenant that he intends
to inspect the property three days later at 10:00 A.M. and that she need not
be present if she does not want to be there during the inspection. The
tenant decides not to be present. After the inspection, she finds some
papers on her desk moved around. She asks the landlord about this, and he
says he was checking to see if she had too many electronic devices
plugged into the socket. A similar event happens a month later. She
decides to stay in the apartment during the inspection this time. When the
landlord comes, he does a cursory overview of the apartment and then tries
to engage the tenant in conversation. She is friendly but not interested in
becoming friends with the landlord and wishes he would leave. The
inspections begin to occur once a month, and when the tenant asks the
landlord why he needs to inspect so often, he says “just to make sure
things are safe for you.” These frequent visits are not customary, and the
tenant is uncomfortable with them. What advice would you give the
tenant? If she complains to the landlord and the landlord calls you for legal
advice, what would you tell the landlord?

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 B. Tenant’s Right to Receive Visitors and to Marry

Problem
Tenants have a nondisclaimable right to receive visitors. State v.
DeCoster, 653 A.2d 891, 894 (Me. 1995). Similarly, a tenant who gets
married should be entitled to live with his or her new spouse. But does the
tenant have a right to live with someone other than a spouse? What rights
go along with the leasehold? Does the landlord have the right to control
occupancy to those listed on the written lease, or does the tenant have the
right to have a family member or a boyfriend or girlfriend move in with
her? Cf. Barrett Japaning, Inc. v. Bialobroda, 892 N.Y.S.2d 35 (App. Div.
2009) (landlord entitled to injunction to limit tenant to no more than one
roommate). Should it matter if the landlord has religious objections to
cohabitation outside marriage?

C. Tenant’s Duties Not to Commit Waste or Cause a Nuisance,

and the Problem of Domestic Violence

Tenants generally have a duty not to commit waste, giving landlords

the right to have the premises intact and not damaged, subject to normal
wear and tear. Written leases almost invariably contain a clause entitling
the landlord to evict the tenant for breach of this obligation. Written leases
also generally contain a clause stating that the tenant “covenants not to
disturb the neighbors, interfere with their quiet enjoyment of their
property, or cause a nuisance” — or other words to that effect.

Problem
A woman breaks off her relationship with a man and moves out with
their two children. He repeatedly harasses her at work, calling more than
ten times a day, and threatens her life. She moves to a new apartment and
goes to court to obtain a restraining order on him ordering him to stop
harassing her and to stay away from her. He then shows up at the new
apartment, throws a brick through the window, and kicks down the front
door. She calls the police, who arrest him. Then the landlord sues to evict
her for violating the lease terms against “committing waste” and “causing
a nuisance.” Is the landlord entitled to evict her? Does she have any
possible defenses? See Jill Barton, The Harsh Reality of Choosing Between
Safety and Housing: Solutions for Victims of Domestic Violence, 93
Women Law. J. 21 (2008).

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 D. Tenant Use Restrictions and Obligations

1. Use restrictions. Many residential leases, in addition to addressing

waste and nuisance, limit the use of the premises to “residential purposes”
or similar terms, and questions can arise about whether home businesses
violate these restrictions. As with similar covenants in the context of
common interest communities, courts often read residential use restrictions
in leases narrowly, although some courts have found a breach for
substantial businesses. See Park West Village v. Lewis, 465 N.E.2d 844
(N.Y. 1984) (tenant in breach where she conducted a professional
counseling practice out of an apartment rented for residential purposes).
In commercial and retail leases, particularly those involving multiple
tenants in office buildings and shopping centers, restrictions on the use to
which tenants can put the property are quite common and can regulate the
nature of a tenant’s use in detail. Can you see why?
2. Covenants to operate. Tenants may also be affirmatively
obligated in some circumstances to continue a use contemplated in a lease.
In The College Block v. Atlantic Richfield Co., 254 Cal. Rptr. 179 (Ct.
App. 1988), a company signed a 20-year lease for land on which it agreed
to build and operate a gas station. Rent was set as a percentage of gasoline
delivered, with a $1,000 monthly base amount. After operating for 17
years, the company closed the service station, but continued to pay the
monthly minimum of $1,000 per month due under the lease. The landlord
sued for damages, seeking the amount it asserted it would have received
had the station remained in business. Despite the absence of an express
provision in the lease on point, the court found that a covenant of
continued operation could be implied because the bulk of the contemplated
rent was to have come from operations, and remanded for a finding as to
whether the base rent was substantial and provided a fair return on the
landlord’s investment.
Most courts refuse to interpret percentage leases to find an implied
covenant to operate a business continuously if the base rent is substantial.
If the base rent is nominal or is much less than the fair rental value of the
premises, most courts will take the approach suggested in The College
Block and find such an implied covenant. Is an implied duty to operate
likely to be more consistent or less consistent with the actual intent of the
parties at the time they contracted? Should commercial tenants be exempt
from implied obligations on the grounds that commercial landlords are
sufficiently sophisticated and can adequately protect themselves by
including an explicit covenant to operate in their leases? Should the result

1098
depend on whether the tenant had a right to sublet or assign the lease?
Why? Does a negatively phrased obligation not to use the premises for
anything other than a specific purpose, such as a restaurant, imply an
affirmative duty to operate? What result best promotes the efficient use of
property? Most likely reflects the intent of the parties?
Courts generally will enforce express covenants to operate. However,
they will not force an unprofitable business to operate and are very likely
to deny injunctive relief ordering the tenant to continue operating,
relegating the landlord to damages on the ground that damages are an
adequate remedy for the tenant’s breach and because judges are not
competent to manage the tenant’s business operations to ensure
compliance with the operating covenant. Summit Town Center, Inc. v. Shoe
Show of Rocky Mount, Inc., 828 A.2d 995 (Pa. 2003) (enforcing an express
covenant to operate by a damages remedy and denying injunctive relief).
3. Anchor stores. Many shopping centers include large “anchor
stores” that are intended to attract large numbers of patrons and to serve as
a draw to the shopping center that would enable smaller stores there to
attract customers. Does an anchor store have an implied obligation to
continue operating?
In Columbia East Associates v. Bi-Lo, Inc., 386 S.E.2d 259 (S.C. Ct.
App. 1989), the court held that it did have such an obligation despite the
absence of any affirmative obligation to that effect in the lease. Defendant
Bi-Lo, a popular supermarket chain, leased space in the center of
plaintiff’s shopping center for a term of 20 years. The lease provided that
the leased premises “shall be used only for the operation of a supermarket
(for the sale of groceries, meats and/or other items generally sold by
supermarkets).” When another supermarket in an adjacent shopping center
closed, Bi-Lo took the opportunity to take over the space because it could
thereby “eliminat[e] the competitor and [prevent another] competitor from
taking over the [space].” Id. at 261. Although it had a right to sublet the
original site, Bi-Lo failed to obtain a subtenant and made only minimal
efforts to do so. Instead, it continued to pay the agreed-upon fixed rent,
which did not include a percentage rent. Bi-Lo argued that, under the terms
of the lease, it could vacate the premises and leave the store empty so long
as it continued to pay rent. The landlord, Columbia East, argued that Bi-Lo
was required either to operate a supermarket or to sublet to another for
operation of a retail store. The court noted that Bi-Lo was an anchor tenant
whose presence in the shopping center was intended by the landlord to
bring customers to the smaller shops. Allowing Bi-Lo to leave without an
adequate replacement would defeat the landlord’s purpose in agreeing to

1099
the lease. The court held that the lease contained an implied obligation of
good faith and that this encompassed a requirement of continuous
operation on an anchor store even in the absence of a percentage rent
agreement. Bi-Lo breached its lease by ceasing operations and by failing to
make reasonable efforts to find a subtenant. Chief Judge Sanders
concurred on the ground that Bi-Lo had breached the lease by using the
premises not for operation of a supermarket but “for a purpose not allowed
by the lease; namely, as part of a scheme to stifle competition.” Id. at 263.
However, some other courts have disagreed with this result. For
example, in Oakwood Village LLC v. Albertsons, Inc., 104 P.3d 1226
(Utah 2004), the Utah Supreme Court refused to find an implied covenant
of continuous operation in circumstances somewhat similar to those in Bi-
Lo. Despite the fact that the landlord had leased the ground to the anchor
tenant (which built its own store) for up to 65 years at a very low rent,
which did not rise over time, the lease did not impose any obligations on
the tenant who closed the store after 21 years of operation and moved to
another location nearby, leaving the other 25 stores in the center without
the benefit of the anchor’s business. The court refused to imply a covenant
of operation either from the nominal rent or the potential 65-year duration.
It focused on the fact that the lease did not have a percentage rent term and
that the tenant had built its own store. It was not clear why the landlord
gave a ground lease for such a low rent, but the court concluded that, if
this was a bad deal, the landlord had to live with it. Moreover, the tenant
had the right to sublet or assign the premises without the landlord’s
consent. Nor did the implied covenant of good faith and fair dealing
suggest imposing obligations that could not be inferred from the language
of the lease. The court concluded:

This lease is a complete and unambiguous agreement between competent

commercial parties. Long-term commercial leases, by their nature, are risky.
Neither side can foretell future market conditions with any certainty. We
presume that both [landlord] and [tenant] bargained for the best terms and
conditions each could get. Each party took the risk that unpredictable market
forces would at some later day render the contractual terms unfavorable to
themselves. Despite this risk, both parties willingly agreed to the terms in the
lease. It is not our role to intervene now, construing the contract’s
unambiguous terms to mean something different from what the parties
intended them to mean at the outset.

Id. at 1241. Accord, Daniel G. Kamin Kilgore Enterprises v. Brookshire

Grocery Co., 81 F. App’x 827 (5th Cir. 2003) (lease clause providing that
the tenant “shall use and occupy” the property “for the purpose of

1100
conduct[ing a] grocery” business does not imply a continuous operation
obligation); Giessow Restaurants, Inc. v. Richmond Restaurants, Inc., 232
S.W.3d 576 (Mo. Ct. App. 2007) (similar result).

Problem
In Casa D’Angelo v. A & R Realty Co., 553 N.E.2d 515 (Ind. Ct. App.
1990), a restaurant, Casa D’Angelo, that leased its premises from plaintiff
landlord, A & R Realty, decided to open a second restaurant within a mile
of the first establishment. The tenant, whose lease stated that it “shall use
the premises for the operation of a restaurant facility and for no other
purpose without first obtaining the written consent of Lessor,”
subsequently changed its operation from offering a full-service dinner
menu to a limited offering of soup, salad, and sandwiches to walk-in
customers only. Gross sales fell dramatically. The base rent was $825 per
month, and the court assumed that this amount was substantial. However,
the percentage rent (5 percent of gross sales) was also substantial, rising
from $2,500 in 1978 to $18,752 in 1981 and a total of $36,230 for 1986.
Eventually, the tenant closed the restaurant entirely but continued to pay
the base rent of $825 per month for the remainder of the lease term. The
landlord sued the tenant for the amounts of percentage rent it would have
earned had the tenant maintained its operation without interruption.
What arguments would you make on behalf of the plaintiff landlord?
What arguments would you make on behalf of the defendant tenant? If you
were the judge, how would you rule, and why?

§2.3 Transfers of the Landlord’s Leasehold Interest

The landlord has the right to transfer her property interest. What
happens if the landlord sells the property or it is inherited by the landlord’s
heirs? The new owner receives what the landlord was able to sell or give,
that is, the landlord’s reversion subject to the tenant’s leasehold.4 The new
owner also receives the attendant contractual rights to collect rent and to
enforce the other terms of the lease. The new owner, however, does not
obtain an immediate right to possess the property; the tenant’s leasehold
interest survives. The new owner, of course, may end a month-to-month
tenancy, just as the prior landlord could have done, but if the tenant has six
months left on a one-year lease, the new owner is obligated to honor the
tenant’s remaining six-month possessory right. The landlord’s interest may
also end through equitable division of property on divorce. Because
property is reallocated between the parties on divorce, a building owned
partly or wholly by a husband may be granted to the wife upon divorce.

1101
Such cases are treated like sales of the property and the leases survive.
What happens if the property was mortgaged and the landlord fails to
make the mortgage payments and loses the property through foreclosure?
The answer depends on whether the lease or mortgage was established
first. If the landlord leased the property to the tenant and then borrowed
money subject to a mortgage on the building, the lease generally takes
priority since it was first in time. However, if the property is subject to a
mortgage and the lease follows, the mortgage takes priority. The mortgage
gives the lender the power to force a sale of the property to recoup the
unpaid loan; tenants who rent such properties take their apartments subject
to the prior mortgage. Thus, in the absence of statute to the contrary, when
the landlord’s title ends through foreclosure, so does the tenant’s lease. A
similar situation obtains with a life estate. If the landlord owns the
property for life and leases it to the tenant, then the landlord’s interest ends
when the landlord dies; since you can only convey what you own, and the
landlord did not own the right to lease the property after her death, the
tenant’s lease ends automatically when the landlord dies.
The subprime mortgage foreclosure crisis that began around 2008 led
to many tenants facing eviction after foreclosure, even though the tenants
were faithfully paying the rent, because their leases were entered into after
the mortgage that gave rise to the foreclosure. Many banks following
foreclosure immediately evict the tenants because they believe it is easier
to sell property that is vacant than property that is inhabited. These tenants
complain that although the landlord may have defaulted on the mortgage
payments to the bank, the tenants had been paying their lease payments
faithfully and should not suffer because of the landlord’s default. See
generally Creola Johnson, Renters Evicted en Masse: Collateral Damage
Arising from the Subprime Foreclosure Crisis, 62 Fla. L. Rev. 975 (2010).
A 2009 federal statute, the Protecting Tenants at Foreclosure Act, Pub.
L. No. 111-22, 123 Stat. 1660, codified as 12 U.S.C. §5220, note, gave
tenants some protection, although the statute expired at the end of 2014. A
number of state and local governments have responded to the impact of the
foreclosure crisis on tenants with their own legislation. These statutes vary
significantly, but some examples of their scope include requirements that
tenants receive notice of foreclosure, see, e.g., N.J. Ct. R. 4:65-1-4:65-2, as
amended by N.J. Orders 2009-37; mandates that tenants receive notice of
the identity of the new owner, which responds to the problem of tenants
following foreclosure not knowing where to send their rent and then facing
nonpayment evictions, see, e.g., Cal. Civ. Code §1962, amended by AB
1953; and provisions that tenants in units acquired through foreclosure can
only be evicted for good cause, with foreclosure itself not constituting

1102
good cause, see Los Angeles Municipal Code ch. IV, art. 14.1, §49.92.

Problem
A lease for a drug store in a shopping center provided that the landlord
would not lease to a competing store in the same center. Three years into
the five-year term of the lease, the landlord sells the shopping center to a
new owner. A few days before the transfer, the original landlord signed a
lease with a grocery store that includes a small pharmacy. When the
grocery store opens, the drug store tenant complains to the new owner of
the shopping center, who responds that the grocery store does not violate
the non-competition provision and, even if it does, the violation occurred
before the sale, so it was the original owner’s responsibility. If the tenant
seeks to enforce the non-competition clause against the new owner, how
should a court respond? Would the situation be different if the lease
obligated the landlord to provide financial statements at the end of every
year detailing each tenant’s charges for common areas in the shopping
center, and the year before the transfer, the original owner failed to meet
this obligation?

§2.4 Assigning and Subleasing

The tenant’s right to transfer. A tenant can generally transfer all or a
portion of her possessory interest in the premises unless the lease
specifically limits this right. The tenant can do so through an assignment
or through a sublease, or sublet. An assignment generally conveys all the
tenant’s remaining property interests without retaining any future rights to
enter the property; under a sublease, the tenant retains some future interest
or the right to control the property in the future. A sublease exists, for
example, if a tenant has six months remaining on the lease and transfers
possession of the apartment to someone else for four months. Since the
tenant retains the right to regain possession for the last two months of the
term of years, the transfer is a sublease rather than an assignment. A
sublease may also exist if the tenant retains a right of entry that can be
exercised if the subtenant violates one or more of the terms of the sublease
agreement.

Terms:
A sublease generally refers to a transfer by a tenant of a portion of its
possessory rights under the lease; by contrast, an assignment generally refers
to the transfer of the tenant’s entire possessory rights.

1103
 Although restraints on alienation of fee interests are generally void, a
“no subletting” or “no assignment” clause in a lease agreement is generally
enforceable, and violation of the prohibition on assignment will entitle the
landlord to evict the tenant for breaching a material term of the lease
contract. Cal. Civ. Code §1995.230 (“A restriction on transfer of a tenant’s
interest in a lease may absolutely prohibit transfer.”); Carma Development
(California), Inc. v. Marathon Development California, Inc., 826 P.2d 710,
717-718 (Cal. 1992). Such a clause protects the landlord from being forced
to accept a substitute tenant who may be less creditworthy. For the tenant,
a clause prohibiting subletting may limit her ability to get out of the lease
and move elsewhere.
In limiting sublets or assignments, leases sometimes use the general
term “sublet” when what is really meant is “sublet or assign.” Traditional
doctrine held that, in order to promote the alienability of leaseholds, a
lease that limits subletting but not assigning will be strictly construed to
limit only subletting. However, the modern trend is to focus on the intent
of the parties; since modern usage sometimes employs the term
“subletting” to mean any transfers of the leasehold interest, a clause that
provides for “no subletting” may very well be interpreted to prohibit
subletting or assigning.
Why it matters whether the transfer is an assignment or a
sublease. Why is it important to know whether the arrangement is a
sublease or an assignment? Traditionally, under an assignment, the new
tenant — called the assignee — is responsible directly to the landlord for
all the undertakings under the original lease. In other words, the tenant’s
covenants — including the covenant to pay rent and other covenants in the
lease agreement — run with the land. The landlord and the assignee are
not in privity of contract since they did not reach an agreement with each
other. Since the original tenant has given up all interest in the property,
however, the landlord and the assignee are thought to share interests in the
property; they are therefore in privity of estate, which makes the assignee
directly liable to the landlord for the covenants made by the original tenant
to the landlord. It also makes the landlord liable to the assignee for breach
of the landlord’s covenants, such as the covenant of quiet enjoyment,
which we will discuss below.
In contrast, under a sublease, the lease covenants do not run with the
land as real covenants. The landlord has no right to sue the subtenant to
enforce any of the covenants in the original lease, including the covenant
to pay rent, if the requested relief is damages. The only exception is when

1104
the subtenant expressly promises the tenant to pay the rent to the landlord.
In that case, the landlord may be able to sue the subtenant as a third-party
beneficiary of the contract made between the tenant and subtenant; in
other words, the landlord is the intended beneficiary of the subtenant’s
promise to the tenant. However, lease covenants probably can be enforced
by injunction as equitable servitudes, so long as the subtenant has notice of
them. Is the subtenant bound if she has not seen the original lease and that
lease is not recorded? The courts are likely to find the subtenant on inquiry
notice of the covenants in the original lease; the reasonable subtenant
would inquire whether the tenant had made promises to the landlord
restricting use of the premises.
The difficult question is whether the landlord can sue the subtenant for
an injunction ordering the subtenant to comply with the covenant to pay
rent. Some courts will not grant an injunction since the payment of rent is
a money payment and resembles the payment of damages. Others grant an
injunction because it constitutes enforcement of an affirmative covenant,
even though that covenant requires the payment of money.
If an assignee fails to pay the rent, the landlord may sue the original
tenant for the unpaid rent because the original tenant remains in a
contractual relationship with the landlord, which the assignment does not
relieve. But the landlord may instead choose to sue the assignee directly
for the unpaid rent. Since the covenant to pay rent runs with the land, the
assignee is directly liable to the landlord for the unpaid rent. In a sublet,
however, the landlord can only sue the original tenant (who remains
contractually bound to pay the rent). Note, however, that, in a sublet, if
neither the tenant nor the subtenant pays the rent, the landlord can evict the
tenant (sue for possession from the tenant) and end the leasehold, thereby
terminating the subtenant’s right of possession. In either case, if the
landlord chooses to sue the original tenant for the rent, the original tenant
has a right to be reimbursed by the new tenant for the amount owed to the
landlord.
The tenant may choose to sublet for a rental amount different from the
amount owed to the landlord. Whether the new rent is less or more than
the original rent, the tenant remains liable only for the original amount to
the landlord. Thus, if the subtenant is paying less than the rent owed to the
landlord, the tenant must make up the difference. If the subtenant is paying
more than the rent owed to the landlord, the tenant subtenant is allowed to
keep the difference.5
Landlord consent. Many leases provide for subletting or assignment
only with the landlord’s consent. These clauses may be phrased either in

1105
the negative or the affirmative, that is, “no subletting without the
landlord’s consent” or “subletting allowed subject to the landlord’s
consent.” An issue that has occasioned much litigation recently is the
question whether a criterion of “reasonableness” should be implied in
these clauses.

Kendall v. Ernest Pestana, Inc.

709 P.2d 837 (Cal. 1985)

Map: Norman Y. Mineta San Jose

International Airport, San Jose,
California

ALLEN E. BROUSSARD, Justice.

This case concerns the effect of a provision in a commercial lease6 that
the lessee may not assign the lease or sublet the premises without the
lessor’s prior written consent. The question we address is whether, in the
absence of a provision that such consent will not be unreasonably
withheld, a lessor may unreasonably and arbitrarily withhold his or her
consent to an assignment. This is a question of first impression in this
court.

I
The lease at issue is for 14,400 square feet of hangar space at the San
Jose Municipal Airport. The City of San Jose, as owner of the property,
leased it to Irving and Janice Perlitch, who in turn assigned their interest to
respondent Ernest Pestana, Inc. Prior to assigning their interest to
respondent, the Perlitches entered into a 25-year sublease with one Robert
Bixler commencing on January 1, 1970. The sublease covered an original
five-year term plus four 5-year options to renew. The rental rate was to be
increased every 10 years in the same proportion as rents increased on the
master lease from the City of San Jose. The premises were to be used by
Bixler for the purpose of conducting an airplane maintenance business.
Bixler conducted such a business under the name “Flight Services”
until, in 1981, he agreed to sell the business to appellants Jack Kendall,
Grady O’Hara and Vicki O’Hara. The proposed sale included the business
and the equipment, inventory and improvements on the property, together

1106
with the existing lease. The proposed assignees had a stronger financial
statement and greater net worth than the current lessee, Bixler, and they
were willing to be bound by the terms of the lease.
The lease provided that written consent of the lessor was required
before the lessee could assign his interest, and that failure to obtain such
consent rendered the lease voidable at the option of the lessor.
Accordingly, Bixler requested consent from the Perlitches’ successor-in-
interest, respondent Ernest Pestana, Inc. Respondent refused to consent to
the assignment and maintained that it had an absolute right arbitrarily to
refuse any such request. The complaint recites that respondent demanded
“increased rent and other more onerous terms” as a condition of
consenting to Bixler’s transfer of interest.
The proposed assignees brought suit for declaratory and injunctive
relief and damages seeking, inter alia, a declaration “that the refusal of
Ernest Pestana, Inc. to consent to the assignment of the lease is
unreasonable and is an unlawful restraint on the freedom of alienation.”

II
The law generally favors free alienability of property, and California
follows the common law rule that a leasehold interest is freely alienable.
Contractual restrictions on the alienability of leasehold interests are,
however, permitted. “Such restrictions are justified as reasonable
protection of the interests of the lessor as to who shall possess and manage
property in which he has a reversionary interest and from which he is
deriving income.” Schoshinski, American Law of Landlord and Tenant
§815, at 578-79 (1980).
The common law’s hostility toward restraints on alienation has caused
such restraints on leasehold interests to be strictly construed against the
lessor.7 This is particularly true where the restraint in question is a
“forfeiture restraint,” under which the lessor has the option to terminate the
lease if an assignment is made without his or her consent.
Nevertheless, a majority of jurisdictions have long adhered to the rule
that where a lease contains an approval clause (a clause stating that the
lease cannot be assigned without the prior consent of the lessor), the lessor
may arbitrarily refuse to approve a proposed assignee no matter how
suitable the assignee appears to be and no matter how unreasonable the
lessor’s objection. The harsh consequences of this rule have often been
avoided through application of the doctrines of waiver and estoppel, under
which the lessor may be found to have waived (or be estopped from
asserting) the right to refuse consent to assignment.

1107
 The traditional majority rule has come under steady attack in recent
years. A growing minority of jurisdictions now hold that where a lease
provides for assignment only with the prior consent of the lessor, such
consent may be withheld only where the lessor has a commercially
reasonable objection to the assignment, even in the absence of a provision
in the lease stating that consent to assignment will not be unreasonably
withheld.
For the reasons discussed below, we conclude that the minority rule is
the preferable position.

III
The impetus for change in the majority rule has come from two
directions, reflecting the dual nature of a lease as a conveyance of a
leasehold interest and a contract. The policy against restraints on alienation
pertains to leases in their nature as conveyances. Numerous courts and
commentators have recognized that “[i]n recent times the necessity of
permitting reasonable alienation of commercial space has become
paramount in our increasingly urban society.” Schweiso v. Williams, 198
Cal. Rptr. 238, 240 (Ct. App. 1984).
Civil Code section 711 provides: “Conditions restraining alienation,
when repugnant to the interest created, are void.” It is well settled that this
rule is not absolute in its application, but forbids only unreasonable
restraints on alienation. Reasonableness is determined by comparing the
justification for a particular restraint on alienation with the quantum of
restraint actually imposed by it. “[T]he greater the quantum of restraint
that results from enforcement of a given clause, the greater must be the
justification for that enforcement.” Wellenkamp v. Bank of Am., 148 Cal.
Rptr. 379, 382 (Ct. App. 1978).
The Restatement Second of Property adopts the minority rule on the
validity of approval clauses in leases: “A restraint on alienation without
the consent of the landlord of a tenant’s interest in leased property is valid,
but the landlord’s consent to an alienation by the tenant cannot be
withheld unreasonably, unless a freely negotiated provision in the lease
gives the landlord an absolute right to withhold consent.” (Rest. 2d
Property, §15.2(2) (1977)) (italics added). A comment to the section
explains: “The landlord may have an understandable concern about certain
personal qualities of a tenant, particularly his reputation for meeting his
financial obligations. The preservation of the values that go into the
personal selection of the tenant justifies upholding a provision in the lease
that curtails the right of the tenant to put anyone else in his place by

1108
transferring his interest, but this justification does not go to the point of
allowing the landlord arbitrarily and without reason to refuse to allow the
tenant to transfer an interest in leased property.” (Id., comment a.) Under
the Restatement rule, the lessor’s interest in the character of his or her
tenant is protected by the lessor’s right to object to a proposed assignee on
reasonable commercial grounds. The lessor’s interests are also protected
by the fact that the original lessee remains liable to the lessor as a surety
even if the lessor consents to the assignment and the assignee expressly
assumes the obligations of the lease.
The second impetus for change in the majority rule comes from the
nature of a lease as a contract. As the Court of Appeal observed in Cohen
v. Ratinoff, 195 Cal. Rptr. 84, 88 (Ct. App. 1983), “[since the majority rule
was adopted], there has been an increased recognition of and emphasis on
the duty of good faith and fair dealing inherent in every contract.” Thus,
“[i]n every contract there is an implied covenant that neither party shall do
anything which will have the effect of destroying or injuring the right of
the other party to receive the fruits of the contract.” Universal Sales Corp.
v. Cal. etc. Mfg. Co., 128 P.2d 665, 677 (Cal. 1942). “[W]here a contract
confers on one party a discretionary power affecting the rights of the other,
a duty is imposed to exercise that discretion in good faith and in
accordance with fair dealing.” Cal. Lettuce Growers v. Union Sugar Co.,
289 P.2d 785, 791 (Cal. 1955). Here the lessor retains the discretionary
power to approve or disapprove an assignee proposed by the other party to
the contract; this discretionary power should therefore be exercised in
accordance with commercially reasonable standards.
Under the minority rule, the determination whether a lessor’s refusal to
consent was reasonable is a question of fact. Some of the factors that the
trier of fact may properly consider in applying the standards of good faith
and commercial reasonableness are: financial responsibility of the
proposed assignee; suitability of the use for the particular property; legality
of the proposed use; need for alteration of the premises; and nature of the
occupancy, i.e., office, factory, clinic, etc.
Denying consent solely on the basis of personal taste, convenience or
sensibility is not commercially reasonable. Nor is it reasonable to deny
consent “in order that the landlord may charge a higher rent than originally
contracted for.” This is because the lessor’s desire for a better bargain than
contracted for has nothing to do with the permissible purposes of the
restraint on alienation — to protect the lessor’s interest in the preservation
of the property and the performance of the lease covenants.
In contrast to the policy reasons advanced in favor of the minority rule,
the majority rule has traditionally been justified on three grounds.

1109
Respondent raises a fourth argument in its favor as well. None of these do
we find compelling.
First, it is said that a lease is a conveyance of an interest in real
property, and that the lessor, having exercised a personal choice in the
selection of a tenant and provided that no substitute shall be acceptable
without prior consent, is under no obligation to look to anyone but the
lessee for the rent. This argument is based on traditional rules of
conveyancing and on concepts of freedom of ownership and control over
one’s property.
A lessor’s freedom at common law to look to no one but the lessee for
the rent has, however, been undermined by the adoption in California of a
rule that lessors — like all other contracting parties — have a duty to
mitigate damages upon the lessee’s abandonment of the property by
seeking a substitute lessee. Furthermore, the values that go into the
personal selection of a lessee are preserved under the minority rule in the
lessor’s right to refuse consent to assignment on any commercially
reasonable grounds. Such grounds include not only the obvious objections
to an assignee’s financial stability or proposed use of the premises, but a
variety of other commercially reasonable objections as well. The lessor’s
interests are further protected by the fact that the original lessee remains a
guarantor of the performance of the assignee.
The second justification advanced in support of the majority rule is that
an approval clause is an unambiguous reservation of absolute discretion in
the lessor over assignments of the lease. The lessee could have bargained
for the addition of a reasonableness clause to the lease (i.e., “consent to
assignment will not be unreasonably withheld”). The lessee having failed
to do so, the law should not rewrite the parties’ contract for them.
Numerous authorities have taken a different view of the meaning and
effect of an approval clause in a lease, indicating that the clause is not
“clear and unambiguous,” as respondent suggests. As early as 1940, the
court in Granite Trust Bldg. Corp. v. Great Atlantic & Pacific Tea Co., 36
F. Supp. 77 (D. Mass. 1940), examined a standard approval clause and
stated: “It would seem to be the better law that when a lease restricts a
lessee’s rights by requiring consent before these rights can be exercised, it
must have been in the contemplation of the parties that the lessor be
required to give some reason for withholding consent.” (Id. at 78, italics
added.)
[T]he assertion that an approval clause “clearly and unambiguously”
grants the lessor absolute discretion over assignments is untenable. It is not
a rewriting of a contract, as respondent suggests, to recognize the
obligations imposed by the duty of good faith and fair dealing, which duty

1110
is implied by law in every contract.
The third justification advanced in support of the majority rule is
essentially based on the doctrine of stare decisis. It is argued that the
courts should not depart from the common law majority rule because
“many leases now in effect covering a substantial amount of real property
and creating valuable property rights were carefully prepared by
competent counsel in reliance upon the majority viewpoint.” As pointed
out above, however, the majority viewpoint has been far from universally
held and has never been adopted by this court. Moreover, the trend in
favor of the minority rule should come as no surprise to observers of the
changing state of real property law in the 20th century. The minority rule
is part of an increasing recognition of the contractual nature of leases and
the implications in terms of contractual duties that flow therefrom. We
would be remiss in our duty if we declined to question a view held by the
majority of jurisdictions simply because it is held by a majority. As we
stated in Rodriguez v. Bethlehem Steel Corp., 525 P.2d 669, 676 (Cal.
1974), the “vitality [of the common law] can flourish only so long as the
courts remain alert to their obligation and opportunity to change the
common law when reason and equity demand it.”
A final argument in favor of the majority rule is advanced by
respondent and stated as follows: “Both tradition and sound public policy
dictate that the lessor has a right, under circumstances such as these, to
realize the increased value of his property.” Respondent essentially argues
that any increase in the market value of real property during the term of a
lease properly belongs to the lessor, not the lessee. We reject this assertion.
One California commentator has written:

[W]hen the lessee executed the lease he acquired the contractual right for the
exclusive use of the premises, and all of the benefits and detriment attendant
to possession, for the term of the contract. He took the downside risk that he
would be paying too much rent if there should be a depression in the rental
market. Why should he be deprived of the contractual benefits of the lease
because of the fortuitous inflation in the marketplace[?] By reaping the
benefits he does not deprive the landlord of anything to which the landlord
was otherwise entitled. The landlord agreed to dispose of possession for the
limited term and he could not reasonably anticipate any more than what was
given to him by the terms of the lease. His reversionary estate will benefit
from the increased value from the inflation in any event, at least upon the
expiration of the lease. Miller & Starr, Current Law of Cal. Real Estate
§27:92 at 321 (1977 & 1984 Supp.).

Respondent here is trying to get more than it bargained for in the lease.

1111
A lessor is free to build periodic rent increases into a lease, as the lessor
did here. Any increased value of the property beyond this “belongs” to the
lessor only in the sense, as explained above, that the lessor’s reversionary
estate will benefit from it upon the expiration of the lease. We must
therefore reject respondent’s argument in this regard.

MALCOLM M. LUCAS, Justice, dissenting.

I respectfully dissent. In my view we should follow the weight of
authority which, as acknowledged by the majority herein, allows the
commercial lessor to withhold his consent to an assignment or sublease
arbitrarily or without reasonable cause. The majority’s contrary ruling,
requiring a “commercially reasonable objection” to the assignment, can
only result in a proliferation of unnecessary litigation.
The correct analysis is contained in the opinion of Justice Carl
Anderson for the Court of Appeal in this case. I adopt the following
portion of his opinion as my dissent:

The plain language of the lease provides that the lessee shall not assign the
lease “without written consent of Lessor first had and obtained. Any such
assignment or subletting without this consent shall be void, and shall, at the
option of Lessor, terminate this lease.” The lease does not require that
“consent may not unreasonably be withheld”; the lease does not provide that
“the lessor may refuse consent only where he has a good faith reasonable
objection to the assignment.” Neither have the parties so contracted, nor has
the Legislature so required. Absent such legislative direction, the parties
should be free to contract as they see fit. . . .

Slavin v. Rent Control Board of Brookline

548 N.E.2d 1226 (Mass. 1990)

FRANCIS P. O’CONNOR, Justice.
Article XXXVIII of the Brookline rent control by-law provides in
relevant part as follows:

Section 9. Evictions. (a) No person shall bring any action to recover

possession of a controlled rental unit unless:
(2) the tenant has violated an obligation or covenant of his tenancy
other than the obligation to surrender possession upon proper notice and
has failed to cure such violation after having received written notice
thereof from the landlord;
(b) A landlord seeking to recover possession of a controlled rental unit
shall apply to the board for a certificate of eviction. If the board finds that the

1112
 facts attested to in the landlord’s petition are valid and in compliance with
paragraph (a), the certificate of eviction shall be issued.
(c) A landlord who seeks to recover possession of a controlled rental unit
without obtaining such certificate of eviction shall be deemed to have
violated this By-law, and the Board may initiate a criminal prosecution for
such violation.

The plaintiff landlord applied to the defendant rent control board of

Brookline (board) for a certificate of eviction seeking to evict the
defendant tenant Barry Myers on the ground that Myers had violated an
obligation of his tenancy. The lease states:

Occupancy of Premises — Tenant shall not assign nor underlet any part or
the whole of the premises, nor shall permit the premises to be occupied for a
period longer than a temporary visit by anyone except the individuals
specifically named in the first paragraph of this tenancy, their spouses, and
any children born to them hereafter, without first obtaining on each occasion
the assent in writing of Landlord.

After a hearing, the board found that the tenant had allowed an
unauthorized person to occupy his apartment without first obtaining the
landlord’s written consent. Nonetheless, the board refused to issue the
eviction certificate. The board based its refusal on its determination of law
that, implicit in the lease provision requiring the landlord’s consent prior to
an assignment or a sublease or the permitting of other occupants, there is
an “agreement on the part of the landlord to at least consider prospective
tenants [and other permitted occupants] and not withhold consent
unreasonably or unequivocally.” The board found that the landlord had
acted unreasonably because she had categorically refused to allow the
tenant to bring in someone new after the original cotenant had moved out.
Because of the landlord’s unreasonable behavior, the board concluded that
the tenant could not be said to have violated the lease.
The issue whether a tenant’s obligation, as specified in a residential
lease, to obtain the written consent of a landlord before assigning the lease
or subletting or permitting other occupants implies as a matter of law an
obligation on the landlord’s part to act reasonably in withholding consent
has not been decided by this court.
A majority of jurisdictions subscribe to the rule that a lease provision
requiring the landlord’s consent to an assignment or sublease permits the
landlord to refuse arbitrarily or unreasonably. However, the board argues
that the current trend is the other way, and cites numerous cases in support
of that proposition. We note that every case cited by the board except two,

1113
which we discuss below, involved a commercial, not a residential, lease.
Although the significance of the distinction between commercial and
residential leases may be fairly debatable, we observe that in several of the
cases cited by the board the court specifically states that its holding is
limited to the commercial lease context. See Kendall v. Ernest Pestana,
Inc., 709 P.2d 837 (Cal. 1985).
Kruger v. Page Management Co., 432 N.Y.S.2d 295 (Sup. Ct. 1980),
is the only purely residential lease case cited by the board. We get little
help from that case because the reasonableness requirement in New York
has been statutorily imposed.
The board argues that we should be guided by the commercial lease
cases because the reasons for implying a reasonableness requirement in a
residential lease are at least as compelling as in a commercial lease. Our
review of the commercial lease cases, however, and particularly of the
rationale that appears to have motivated the courts in those cases to adopt a
reasonableness requirement, does not persuade us that we should adopt
such a rule in this case, which involves a residential lease in a municipality
governed by a rent control law.
Two major concerns emerge from the commercial lease cases. First,
courts have exhibited concern that commercial landlords may exercise
their power to withhold consent for unfair financial gain. In several of the
cases cited by the board, a commercial landlord refused to consent to a
proposed subtenant and then attempted to enter into a new or revised lease
for the same premises at a more favorable rental rate. However, in a rent
control jurisdiction like Brookline there is little economic incentive to
withhold consent in the residential lease context because the landlord has
such limited control over the rent that can be charged.
The second concern that appears to have motivated the commercial
lease decisions is a desire to limit restraints on alienation in light of the
fact that “the necessity of reasonable alienation of commercial building
space has become paramount in our ever-increasing urban society.” Homa-
Goff Interiors, Inc. v. Cowden, 350 So. 2d 1035, 1037 (Ala. 1977).
However, this court has previously, albeit not recently, ruled that a
commercial lease provision requiring a landlord’s consent prior to an
assignment, with no limitation on the landlord’s ability to refuse, is not an
unreasonable restraint on alienation. 68 Beacon St., Inc. v. Sohier, 194
N.E. 303 (Mass. 1935).
In light of our decision in 68 Beacon St., Inc., and in the absence of a
demonstrable trend involving residential leases in other jurisdictions, we
are not persuaded that there is such a “necessity of reasonable alienation of
[residential] building space” that we ought to impose on residential

1114
landlords a reasonableness requirement to which they have not agreed. We
are mindful that valid arguments in support of such a rule can be made, but
there are also valid counter-arguments, not the least of which is that such a
rule would be likely to engender a plethora of litigation about whether the
landlord’s withholding of consent was reasonable. The question is one of
public policy which, of course, the Legislature is free to address. We note
that the Legislature has spoken in at least four States: Alaska Stat.
§34.03.060; Del. Code tit. 25, §5512(b); Haw. Rev. Stat. §516-63; N.Y.
Real Prop. Law §226-b.

Notes and Questions

1. Duty of good faith and fair dealing. In commercial leases, the
trend is toward adopting an implied reasonableness term in lease clauses
that give the landlord the right to consent to sublet or assignment. See Dick
Broadcasting Co. v. Oak Ridge FM, Inc., 395 S.W.3d 653, 665-666 (Tenn.
2013) (the “traditional common law view that parties asked to consent to
assignment may refuse arbitrarily or unreasonably refuse . . . has steadily
eroded over time and is now a minority position among the courts that
have considered the issue”); Uno Restaurants, Inc. v. Boston Kenmore
Realty Corp., 805 N.E.2d 957 (Mass. 2004) (covenant of good faith and
fair dealing is implied in all leasehold agreements). This is the view taken
in URLTA, RURLTA, and the Restatement (Second) of Property, see
URLTA §1.302 (“every duty [under the URLTA] imposes an obligation of
good faith in its performance or enforcement”); RURLTA §105 (same);
Restatement (Second) of Property (Landlord and Tenant) §15.2(2) (1977)
(“A restraint on alienation without the consent of the landlord of the
tenant’s interest in the leased property is valid, but the landlord’s consent
to an alienation by the tenant cannot be withheld unreasonably, unless a
freely negotiated provision in the lease gives the landlord an absolute right
to withhold consent”). It also echoes the Restatement (Second) of
Contracts, which likewise provides in §205 that “[e]very contract imposes
upon each party a duty of good faith and fair dealing in its performance
and its enforcement.” See Warner v. Konover, 553 A.2d 1138, 1141-1142
(Conn. 1989) (applying this to a commercial landlord’s assignment
clause).
In contrast, in First Federal Savings Bank of Indiana v. Key Markets,
559 N.E.2d 600 (Ind. 1990), the court refused to imply a reasonableness
requirement into a landlord consent clause. It explained the result this way:

[C]ourts are bound to recognize and enforce contracts where the terms and
the intentions of the parties can be readily determined from the language in

1115
 the instrument. It is not the province of courts to require a party acting
pursuant to such a contract to be “reasonable,” “fair,” or show “good faith”
cooperation. Such an assessment would go beyond the bounds of judicial
duty and responsibility. It would be impossible for parties to rely on the
written expressions of their duties and responsibilities. Further, it would
place the court at the negotiation table with the parties. In the instant case,
the court would decide what is “fair” or “reasonable” concerning the
advantage or disadvantage of control of the leased property. The proper
posture for the court is to find and enforce the contract as it is written and
leave the parties where it finds them. It is only where the intentions of the
parties cannot be readily ascertained because of ambiguity or inconsistency
in the terms of a contract or in relation to extrinsic evidence that a court may
have to presume the parties were acting reasonably and in good faith in
entering into the contract.

Id. at 604. Should parties be able to contract for the standard of

reasonableness that will apply to their agreements? What are the best
arguments on both sides?
Note that the California legislature responded to the Kendall decision
by adopting the implied reasonableness test for commercial leases, Cal.
Civ. Code §§1995.020(b), 1995.260, but providing that it should apply
prospectively only to new leases, Cal. Civ. Code §1995.270, and that the
parties were substantially free to contract to the contrary, Cal. Civ. Code
§1995.240 (“[a] restriction on transfer of a tenant’s interest in a lease may
provide that the transfer is subject to any express standard or condition,
including, but not limited to, a provision that the landlord is entitled to
some or all of any consideration the tenant receives from a transferee in
excess of the rent under the lease”).
2. What is reasonable? In Tenet Healthsystem Surgical, L.L.C. v.
Jefferson Parish Hospital Service District No. 1, 426 F.3d 738, 743 (5th
Cir. 2005), a tenant leased space for an outpatient surgical center. The
lease gave the tenant the right to assign its lease with the consent of the
landlord, and indicated that such consent “shall not be unreasonably
withheld.” Two years into the lease term, the owner of an adjacent hospital
bought the property. Shortly thereafter, the tenant stopped operating and
sought consent to assign the lease to a new tenant who intended to open an
occupational medical clinic. The new landlord refused, and, when asked
why, explained that one reason was that the proposed assignee would
compete with its adjacent hospital. Id. at 740. In the ensuing suit, the
landlord argued that “a reasonable business person in its position would
deny consent to assign a lease that would bring new competition into the
immediate area where it does business.” The court disagreed, stating that

1116
“[i]n determining whether a landlord’s refusal to consent [is] reasonable in
a commercial context, only factors that relate to the landlord’s interest in
preserving the leased property or in having the terms of [the] prime lease
performed should be considered. Among factors a landlord can consider
are the financial responsibility of the proposed subtenant, the legality and
suitability of proposed use and nature of the occupancy. A landlord’s
personal taste or convenience are factors not properly considered. Rather
the landlord’s objection ‘must relate to ownership and operation of leased
property, not lessor’s general economic interest.’ ” Id. at 743. Why is it
unreasonable for a landlord to take potential competition from an assignee
into account? Would it have been unreasonable for the landlord to have
refused to lease to that party in the first place?
3. Commercial versus residential leases. Do the distinctions between
commercial and residential leases relied on by the court in Slavin make
sense to you? Note that Massachusetts subsequently extended Slavin to
commercial leases, refusing to adopt the Kendall approach. 21 Merchants
Row Corp. v. Merchants Row, Inc., 587 N.E.2d 788 (Mass. 1992). Do the
reasons for implying a reasonableness requirement differ in the residential
context? If the arguments applicable to commercial leases are inapplicable
to residential leases, what other arguments could you make on behalf of
the tenant? How would you argue that residential leases, but not
commercial leases, should be subject to an implied duty of
reasonableness?
4. Common law development. The court in Slavin finds the laws in
other states cited by the tenant to be inapposite since they are incorporated
into the statutes rather than the common law of those states. See, e.g., N.Y.
Real Prop. Law §226-b(2)(a) (tenants can sublet with landlord’s consent;
such consent cannot be unreasonably withheld). What difference does this
make? On one hand, it can be argued that this question should be, and has
been in other states, left to the legislature to address. On the other hand,
since the theory underlying contract law is that the court should enforce
the presumed intent of the parties, it might be argued that because these
laws reflect changing values and expectations, the presumption underlying
the common law rule no longer reflects the justified expectations of the
parties. Would it have made a difference to the Massachusetts Supreme
Judicial Court if the tenant could have identified another state that had
modernized its law by common law ruling rather than statute? Should that
make a difference? Doesn’t some state have to be first?

Problems

1117
 1. A law student in Massachusetts has a one-year lease, running from
September 1 through August 31, that states “no subletting or assignment
without the landlord’s consent.” The law student wants to move out on
June 1 and sublet the apartment for most of the summer so that she can
move to Washington, D.C., for a summer job. The landlord refuses to let
the student sublet the apartment over the summer. What are the tenant’s
options?
2. The tenant of property on which a grocery store is operating
arranges to sublease the property to a business owned by Japanese
Americans. The landlord refuses to agree because of prejudice against the
sublessees. What should the courts do if the landlord refuses to approve
the sublease based on racially discriminatory motives? Should a lease
provision granting the landlord the absolute right to approve or disapprove
any subleases be enforceable under these circumstances?
3. An office tenant has a 20-year lease with a clause requiring landlord
consent to sublet, such consent not to be unreasonably withheld. The
neighborhood where the office building sits has been redeveloped
significantly and rents for similar office space in the area are increasing
significantly. The tenant seeks permission from the landlord to sublet half
of its office space, and the landlord agrees on condition that the tenant
pays the landlord 25 percent of any profits that result from the higher rent
the tenant can now charge to any subtenant. Is this a reasonable exercise of
the landlord’s discretion?

§2.5 Tenant’s Right to Terminate Early

In what circumstances should tenants be able to terminate their leases
before the end of the term without the consent of the landlord? Several
states allow tenants who have suffered domestic violence to do so, and
also provide other tenant protections for such victims. In Colorado, for
example, residential tenants have the right to terminate their leases if they
give their landlords notice, such as a recent police report or a protection
order, if the tenant “seeks to vacate the premises due to fear of imminent
danger for self or children”; residential leases also cannot include
provisions that would allow landlords to penalize tenants if they seek
police or emergency assistance in response to domestic violence or abuse.
See Colo. Rev. Stat. §38-12-402. And Massachusetts provides tenants who
are victims of domestic violence, rape, sexual assault, or stalking with the
right to terminate their tenancy upon notice to their landlord, protects
tenants who have invoked the statute from being barred from future

1118
tenancies, and allows victims to have their landlords change their locks; it
also makes any waivers of these and the other rights provided under the
statute void and unenforceable. See Mass. Gen. Laws ch. 186, §§23-29.
Similar statutes in other states vary in terms of the notice required to be
provided to landlords, the type of evidence of domestic violence required,
affirmative obligations landlords have to change locks and preserve
confidentiality, and protections from discrimination based on a tenant’s
status as a victim of domestic violence.
Under the newly promulgated RURLTA, which has yet to be adopted
by any state, “a victim of an act of domestic violence, dating violence,
stalking, or sexual assault,” who “has a reasonable fear of suffering
psychological harm or a further act of domestic violence, dating violence,
stalking, or sexual assault if the victim continues to reside in the dwelling
unit,” has a unilateral right to be released from a lease with verification
and timely notice to the landlord within 30 days (or less if the perpetrator
is a co-tenant). RURLTA §§1102, 1104. Moreover, in addition to rights
that a landlord may obtain through a court order, RURLTA gives landlords
the right “to terminate the perpetrator’s interest in the lease by giving the
perpetrator notice in a record that the perpetrator’s interest will terminate
immediately or on a later specified date,” up to 30 days, and requires prior
notification to the victim. RURLTA §1108. RURLTA’s entire Article 11 is
designed to bring national uniformity to victim and landlord rights in the
context of domestic violence.

§2.6 The End of the Tenancy: Landlord’s Right to Recover

Possession versus Tenant’s Right to Remain
The landlord is entitled to evict the tenant if the tenant breaches
material terms of the lease. The main reason for eviction is failure to pay
rent or failure to pay rent on time. Is the landlord entitled to evict the
tenant who has not breached any terms of the leasehold? A tenant with a
term of years — a one-year lease, for example — cannot be evicted before
the end of the term unless the tenant has breached the lease. The landlord
has no obligation, however, to renew a leasehold. Thus a landlord is
entitled to refuse to renew a one-year lease for any reason. Landlords are
also entitled to end periodic tenancies, such as month-to-month tenancies,
by giving requisite notice.
There are some exceptions to the general principle that landlords may
choose not to renew. First, federal and state antidiscrimination statutes
prohibit landlords from not renewing leaseholds if the landlord’s
motivation is discriminatory. Similarly, most courts hold that tenants are

1119
protected from eviction if the landlord’s motivation is to retaliate against
them for asserting their right to habitable premises by calling the housing
inspector, for example, to report housing code violations.
Tenants in units that are subject to statutory or local rent control
ordinarily are protected from eviction and, in some cases, non-renewal
unless the landlord can show just cause. The District of Columbia, New
Jersey, and New Hampshire are the only jurisdictions that have adopted
statutes granting some or all tenants in private housing a right to continue
in possession unless the landlord has just cause to end the tenancy or
refuse to renew the leasehold. See D.C. Code §42-3505.1; N.H. Rev. Stat.
§540:2; N.J. Stat. §§2A:18-61.1 to 2A:18-61.12. See also Aimco
Properties LLC v. Dziewisz, 883 A.2d 310 (N.H. 2005) (expiration of one-
year lease is not “good cause” for eviction under N.H. Rev. Stat. §540:2).
Those statutes allow eviction if the tenant is not paying rent on time,
damaging the premises or violating reasonable rules in the lease. They also
allow eviction if the landlord or a member of the landlord’s family wants
to move in or the landlord wants to convert the property to a nonrental use.
The federal government subsidizes low-income families through a
program known as Section 8 housing, with the federal government paying
a significant portion of the tenants’ rent owed to private landlords. Under
one part of the program, the tenant is given a voucher, finds the apartment,
and then obtains the agreement of the landlord to participate. In 1981, the
federal statute was amended to prohibit eviction of tenants in Section 8
housing without “good cause.” 42 U.S.C. §1437f(d)(1)(B). Public housing
owned and operated by public authorities or governmental agencies is
similarly prohibited from evicting tenants in the absence of “serious or
repeated violation of the terms or conditions of the lease or for other good
cause.” 42 U.S.C. §1437d(l)(5).
Many municipalities, and some states, regulate the conversion of rental
housing to condominiums or cooperatives to protect tenants from eviction.
Some ordinances prohibit eviction of existing tenants when apartments are
converted. See Fore L Realty Trust v. McManus, 884 N.E.2d 994, 998
(Mass. App. Ct. 2008). Some laws protect particular classes of tenants,
such as the elderly or disabled. See Senior Citizens and Disabled Protected
Tenancy Act, N.J. Stat. §2A:18-61.22 et seq. (granting elderly and disabled
tenants protection from eviction for up to 40 years after conversion). Other
statutes give tenants preference in purchasing either the building or their
particular units within the building when it is converted by granting
tenants preemptive rights or rights of first refusal; these rights entitle them
to match any offers made by third parties and thus acquire the building or
particular units within it. See, e.g., D.C. Code §45-1631 et seq.; Allman v.

1120
Snyder, 888 A.2d 1161 (D.C. 2005) (tenants may assign their statutory
right of first refusal to prospective third-party purchasers).

Problem
A lease provides that the tenants in a condominium unit covenant that
they will not cause “any nuisance; any offensive noise, odor or fumes; or
any hazard to health.” The two tenants each smoke one pack of cigarettes a
day. In this older building, the smoke wafts upstairs to the neighboring
condominium apartments, whose occupants complain of the secondhand
smoke. After complaints by the neighbors, the landlord sues to evict the
tenants for smoking in their own apartment and violating the lease terms.
Before they took the apartment, the landlord had told the tenants that he
had lived in and smoked in that apartment for years and received no
complaints. Can the landlord evict them? See Stefanie Shaffer, Lighting
Up in Your Condo? Think Again, Natl. L.J., July 4, 2005, at 6.

§3 CONFLICTS ABOUT RENT

Most lawsuits brought by landlords against tenants are instituted
because the tenant has failed to pay rent. In most of these cases, the
landlord sues both for back rent owed and to regain possession (to evict
the tenant). A smaller number of cases involve attempts to evict tenants for
breaching other express or implied terms of the lease. These other terms
may include a covenant not to damage the apartment, a covenant requiring
the tenants not to interfere with the quiet enjoyment of neighboring tenants
in the building, covenants not to keep pets in the apartment, and covenants
not to sublet.
In some cases, the tenant breaches the lease by not paying the rent and
refuses to leave. Here the landlord may seek to receive back rent and to
evict the tenant. In other cases, the tenant breaches the lease by not paying
rent and moves out before the end of the lease term. Here the landlord
ordinarily attempts to re-rent the apartment and may sue the tenant for
back rent; if the new “rental price” is less than the rent under the breached
lease, the landlord may sue for the difference between the new rent and the
old for the remaining period of the lease.

§3.1 Landlord’s Remedies When Tenant Fails to Pay Rent

Possession and back rent. If the tenant wrongfully stops paying rent
or breaches other material terms in the lease and continues to occupy the
premises, the landlord may sue the tenant for back rent (rent already due

1121
but not paid) and for possession (to evict the tenant and to be able to re-
rent the apartment to someone else).8 Tenants may respond to such claims
by asserting defenses, such as rights based on the implied warranty of
habitability and retaliatory eviction.9 The tenant may also argue that the
landlord’s attempt to evict the tenant constitutes unlawful discrimination
based on family status, disability, race, or gender.10
The holdover tenant and the renewal of the tenancy. What happens
if the tenant wrongfully holds over after the end of the lease term and
continues to pay rent? The landlord may choose to accept a new tenancy
relationship with the holdover tenant. Most states hold that the new
tenancy is a periodic tenancy based on the rent payment; if the landlord
accepts a rent check for one’s month rent, a new month-to-month tenancy
is established. A minority of states hold that a new term is created if the
landlord accepts rent from a holdover tenant who was originally occupying
under a term of years. In these states, the tenant is bound to another term
of the same length as the original term. The tenant who holds over
wrongfully is obligated to pay rent to the landlord for the time during
which she occupies the premises.
The landlord is also free to take the opposite course of action, that is, to
treat the tenant as a tenant at sufferance or a holdover tenant and sue for
possession. If the landlord chooses the latter course, does the landlord have
the right to collect rent from the holdover tenant before the eviction
proceedings are completed? Some states hold that acceptance of the rent
check proffered by the holdover tenant necessarily creates a new tenancy
— regardless of whether the landlord intends to create a new tenancy. To
evict the tenant, the landlord may have to go through the procedures to
evict a month-to-month tenant, including providing the requisite notice.
The landlord may attempt to avoid this result by suing immediately for
possession and either (a) refusing to accept the tenant’s proffered checks
(or returning them to the tenant) or (b) cashing the checks while writing on
the back of each check that the landlord is not agreeing to renew the
tenancy but is merely using the check to cover the rental value of the
property from the tenant at sufferance.
Self-help. A major issue when the tenant breaches the lease and
refuses to leave is whether the landlord is entitled to engage in self-help to
remove the tenant. Almost all states now hold that the landlord may not
use self-help, at least in the residential context and often in the commercial
context as well. The law today is generally that the landlord must evict the
tenant through court proceedings. In Berg v. Wiley, 264 N.W.2d 145

1122
(Minn. 1978), the tenant operated a restaurant pursuant to a written lease.
The lease contained a covenant by the tenant not to make any changes in
the building structure without the landlord’s consent. After observing
continued violations of this provision and having made several attempts to
persuade the tenant to stop remodeling the building to no avail, the
landlord changed the locks on the door of the tenant’s restaurant, barring
the tenant from the premises. The tenant sued the landlord for wrongful
eviction. The court found for the tenant, holding that the only lawful
means to dispossess a tenant who continues to occupy the premises and
has not voluntarily surrendered her rights under the tenancy is to resort to
judicial process. In so doing, the court rejected the traditional rule allowing
landlords to use self-help to regain possession of leased premises if the
landlord is legally entitled to possession and the landlord’s means of
reentry are “peaceable” rather than “forcible.” The court argued that the
legislature had provided a summary procedure to allow landlords a
relatively quick judicial process for a court order allowing the landlord to
recover possession. This procedure protected the landlord’s rights
adequately and prevented the landlord from taking the law into his own
hands. Self-help, the court argued, is likely to become violent; moreover,
the landlord may be mistaken about his right to possession, and he should
not be “the judge of his own rights.” The court noted that the landlord
could also go to court for an immediate temporary restraining order to
prevent the tenant from destroying the property.
Summary process. Most states have statutes providing for a relatively
fast judicial determination of the landlord’s claim of a right to regain
possession of her property. The statutes are called by a variety of names,
including forcible entry and detainer, unlawful detainer, summary
proceedings, and summary ejectment. Summary process statutes often
limit the issues that can be addressed in the lawsuit; for many years they
were interpreted in ways that prevented tenants from raising defenses to
the landlord’s claim that she was entitled to possession of the premises.
These proceedings have become considerably less “summary” in
recent years, as they have been interpreted by courts or amended by
legislatures to allow tenants to raise an increasingly diverse number of
defenses — chief among them the implied warranty of habitability. Some
states, however, still prevent the tenant from raising defenses, such as the
landlord’s violation of the implied warranty of habitability, in summary
proceedings. The United States Supreme Court has upheld this practice,
holding that treating the “undertakings of the tenant and those of the
landlord as independent rather than dependent covenants” is not a

1123
fundamentally unfair procedure that would violate the tenant’s rights to
due process of law under the fourteenth amendment. See Lindsey v.
Normet, 405 U.S. 56, 68 (1972).
In the book Evicted: Poverty and Profit in the American City, Matthew
Desmond closely follows eight families in Milwaukee, Wisconsin, as they
struggle with cycles of eviction. According to Desmond, with the majority
of renters in poverty spending more than half of their income on housing,
Milwaukee experiences roughly 16,000 evictions annually. Desmond
tracks the causes of eviction — not just economic insecurity, but also
domestic violence, nuisance complaints, and even being the victim of a
crime — and the devastating consequences of eviction, including a record
of having been evicted, making renting again that much more difficult.
Representation and the access to justice gap. Another challenge
common in landlord-tenant cases, both for problems that arise during the
term of the lease and at termination, is lack of tenant representation. Many
landlord-tenant disputes are handled in specialized housing courts.
However, the majority of landlords in these courts are represented by
counsel and the overwhelming majority of tenants are not. There is
evidence that outcomes differ significantly when tenants have lawyers. See
generally Boston Bar Association Task Force on the Civil Right to
Counsel, The Importance of Representation in Eviction Cases and
Homelessness Prevention (2012) (reporting that in two pilot programs
providing free representation to tenants, representation significantly
reduced the risk of eviction and improved financial outcomes compared to
unrepresented tenants); see also D. James Greiner, Cassandra Wolos
Pattanayak & Jonathan Hennessy, The Limits of Unbundled Legal
Assistance: A Randomized Study in a Massachusetts District Court and
Prospects for the Future, 126 Harv. L. Rev. 901 (2013).
The Supreme Court has recognized a right to counsel for indigent
defendants in criminal cases, see Gideon v. Wainwright, 372 U.S. 335
(1963), but has declined to extend that right to civil cases, at least as a
general matter, see Turner v. Rogers, 564 U.S. 431, 445 (2011). Should
tenants facing eviction — which can have significant adverse
consequences, including homelessness — be granted the same right if they
cannot afford counsel? If not, how else might the legal system, including
courts and counsel for landlords, respond to the shortage of lawyers for
indigent tenants?

§3.2 Landlord’s Duty to Mitigate Damages

A different set of problems ensues if the tenant breaches the lease for a

1124
term of years by ceasing rent payments and moves out before the end of
the lease term. The right to sue for possession is of no use since the tenant
has already given up possession. In this situation, the landlord can choose
among three remedies.
1. Accept the tenant’s surrender. By moving out before the end of
the lease term and ceasing rent payments, the tenant makes an implied
offer to the landlord to end the term of years. The landlord may, if she
chooses, “accept the tenant’s surrender of the lease.” This means that the
landlord agrees that the tenant will not be legally obligated to pay the
future rent because the landlord has accepted possession of the property.
It is important to note, however, that the landlord’s acceptance of the
tenant’s surrender does not mean that the tenant is relieved of all financial
liability. The landlord may still choose to sue the tenant for back rent
owed but not paid for the time before the tenant abandoned the premises
by moving out. In addition, the landlord may sue immediately (without
waiting until the end of the lease term) for damages for breach of the lease
— which is different from the amount of the future rent. As in other
contractual settings you may have learned about, damages are likely to be
measured by an estimate of the amount the landlord lost because of the
tenant’s failure to perform his obligations under the contract. This amount
is not the remaining rent, but the agreed-upon rental price minus the
fair market price. The theory is that, because the landlord can re-rent the
apartment, all the landlord loses by the tenant’s breach is the difference
between the amount the tenant agreed to pay and the amount the landlord
can get from a replacement tenant, plus the advertising and search costs of
finding a replacement tenant and lost rent in the meantime. If the rental
price is the same as or below the market price, damages are zero (plus the
cost of locating the new tenant). The court is likely to add to the
computation of damages the reasonable cost of finding a replacement — a
cost the landlord would not have had to bear if the tenant had not
breached.
2. Re-let on the tenant’s account. The landlord may refuse to accept
the surrender; instead, the landlord may, after notice to the tenant,
actively look for a new tenant and re-let the apartment on the tenant’s
account. When a new tenant is found, the landlord may sue the former
tenant for the difference between the old rental price and the new rent
received from the new lessee, if the new rent is lower than the original
rent. The new rent must be reasonable; the landlord cannot rent the
apartment to her sister for $5 a month and expect to recover the difference
between the agreed-upon rent and the artificially low figure charged to her

1125
sister.
An issue that often arises in this context is how the landlord can make
clear that she is refusing to accept the tenant’s proffered surrender of the
lease. In some states, the very act of re-letting the apartment may be taken
as evidence that the landlord has accepted the surrender of the leasehold.
In those states, the landlord must notify the tenant that she is re-letting on
the tenant’s account and that she refuses to accept the surrender in order to
hold the tenant to the rent later. See OMV Associates, L.P. v. Clearway
Acquisition, Inc., 976 N.E.2d 185, 194 (Mass. App. Ct. 2012).
Why does it matter whether the landlord is held to have accepted the
surrender? Consider a situation in which the tenant under a one-year lease
moves out after six months. The landlord finds a new tenant, who agrees to
a month-to-month tenancy at the old rent. But this second tenant moves
out after four months, with two months left on the year lease. The landlord
looks for, but is unable to find, a new tenant. If the landlord has accepted
the first tenant’s surrender, then the landlord cannot sue the original tenant
for the last two months’ rent. If the landlord has not accepted the tenant’s
surrender, then the tenant will be obligated to reimburse the landlord for
the last two months’ rent.
3. Wait and sue for the rent at the end of the lease term versus
mitigate damages. The traditional rule is that the landlord may do
nothing, wait for the end of the lease term, and then sue the tenant for the
remaining unpaid back rent. Rent comes due periodically; under a one-
year lease with monthly rental payments, each rental payment is not due
until that month arrives. Thus, the landlord could not immediately sue for
the remaining rent in the middle of the lease term. To sue the tenant
immediately for monetary compensation in the middle of the lease term,
the landlord must ask for damages (rental price minus fair market price); to
sue for the entire rent itself, the landlord must wait until the lease term
ends.
Almost all states, however, now reject this option. Instead, they apply
the contract doctrine that requires the aggrieved party to mitigate
damages. The following case explores what this duty entails.

Sommer v. Kridel

378 A.2d 767 (N.J. 1977)

MORRIS PASHMAN, Justice.

1126
 A. Sommer v. Kridel
On March 10, 1972 the defendant, James Kridel, entered into a lease
with the plaintiff, Abraham Sommer, owner of the “Pierre Apartments” in
Hackensack, to rent apartment 6-L in that building. The term of the lease
was from May 1, 1972 until April 30, 1974, with a rent concession for the
first six weeks, so that the first month’s rent was not due until June 15,
1972.
One week after signing the agreement, Kridel paid Sommer $690. Half
of that sum was used to satisfy the first month’s rent. The remainder was
paid under the lease provision requiring a security deposit of $345.
Although defendant had expected to begin occupancy around May 1, his
plans were changed. He wrote to Sommer on May 19, 1972, explaining

I was to be married on June 3, 1972. Unhappily the engagement was

broken and the wedding plans cancelled. Both parents were to assume
responsibility for the rent after our marriage. I was discharged from the U.S.
Army in October 1971 and am now a student. I have no funds of my own,
and am supported by my stepfather.
In view of the above, I cannot take possession of the apartment and am
surrendering all rights to it. Never having received a key, I cannot return
same to you.
I beg your understanding and compassion in releasing me from the lease,
and will of course, in consideration thereof, forfeit the 2 months’ rent already
paid.
Please notify me at your earliest convenience.

Plaintiff did not answer the letter.

Subsequently, a third party went to the apartment house and inquired
about renting apartment 6-L. Although the parties agreed that she was
ready, willing and able to rent the apartment, the person in charge told her
that the apartment was not being shown since it was already rented to
Kridel. In fact, the landlord did not re-enter the apartment or exhibit it to
anyone until August 1, 1973. At that time it was rented to a new tenant for
a term beginning on September 1, 1973. The new rental was for $345 per
month with a six week concession similar to that granted Kridel.
Prior to re-letting the new premises, plaintiff sued Kridel in August
1972, demanding $7,000, the total amount due for the full two-year term
of the lease. Following a mistrial, plaintiff filed an amended complaint
asking for $5,000, the amount due between May 1, 1972 and September 1,
1973. The amended complaint included no reduction in the claim to reflect
the six week concession provided for in the lease or the $690 payment

1127
made to plaintiff after signing the agreement. Defendant filed an amended
answer to the complaint, alleging that plaintiff breached the contract, failed
to mitigate damages and accepted defendant’s surrender of the premises.
He also counterclaimed to demand repayment of the $345 paid as a
security deposit.
The trial judge ruled in favor of defendant. Despite his conclusion that
the lease had been drawn to reflect “the ‘settled law’ of this state,” he
found that “justice and fair dealing” imposed upon the landlord the duty to
attempt to re-let the premises and thereby mitigate damages. He also held
that plaintiff’s failure to make any response to defendant’s unequivocal
offer of surrender was tantamount to an acceptance, thereby terminating
the tenancy and any obligation to pay rent. As a result, he dismissed both
the complaint and the counterclaim. The Appellate Division reversed in a
per curiam opinion, and we granted certification.

B. Riverview Realty Co. v. Perosio

This controversy arose in a similar manner. On December 27, 1972,
Carlos Perosio entered into a written lease with plaintiff Riverview Realty
Co. The agreement covered the rental of apartment 5-G in a building
owned by the realty company at 2175 Hudson Terrace in Fort Lee. As in
the companion case, the lease prohibited the tenant from subletting or
assigning the apartment without the consent of the landlord. It was to run
for a two-year term, from February 1, 1973 until January 31, 1975, and
provided for a monthly rental of $450. The defendant took possession of
the apartment and occupied it until February 1974. At that time he vacated
the premises, after having paid the rent through January 31, 1974.
The landlord filed a complaint on October 31, 1974, demanding $4,000
in payment for the monthly rental from February 1, 1974 through October
31, 1974. Defendant answered the complaint by alleging that there had
been a valid surrender of the premises and that plaintiff failed to mitigate
damages. The trial court granted the landlord’s motion for summary
judgment against the defendant, fixing the damages at $4,000 plus $182.25
interest.
The Appellate Division affirmed the trial court, holding that it was
bound by prior precedents, including Joyce v. Bauman, 174 A. 693 (N.J.
1934). Nevertheless, it freely criticized the rule which it found itself
obliged to follow:

There appears to be no reason in equity or justice to perpetuate such an

unrealistic and uneconomic rule of law which encourages an owner to let
valuable rented space lie fallow because he is assured of full recovery from a

1128
 defaulting tenant. Since courts in New Jersey and elsewhere have abandoned
ancient real property concepts and applied ordinary contract principles in
other conflicts between landlord and tenant there is no sound reason for a
continuation of a special real property rule to the issue of mitigation.

We granted certification.

II
As the lower courts in both appeals found, the weight of authority in
this State supports the rule that a landlord is under no duty to mitigate
damages caused by a defaulting tenant.
This rule has been followed in a majority of states. Nevertheless, while
there is still a split of authority over this question, the trend among recent
cases appears to be in favor of a mitigation requirement.
The majority rule is based on principles of property law which equate a
lease with a transfer of a property interest in the owner’s estate. Under this
rationale the lease conveys to a tenant an interest in the property which
forecloses any control by the landlord; thus, it would be anomalous to
require the landlord to concern himself with the tenant’s abandonment of
his own property.
For instance, in Muller v. Beck, 110 A. 831 (N.J. 1920), where
essentially the same issue was posed, the court clearly treated the lease as
governed by property, as opposed to contract, precepts.11
Yet the distinction between a lease for ordinary residential purposes
and an ordinary contract can no longer be considered viable. As Professor
Powell observed, evolving “social factors have exerted increasing
influence on the law of estates for years.” 2 Powell on Real Property (1977
ed.), §221(1) at 180-81. The result has been that

[t]he complexities of city life, and the proliferated problems of modern

society in general, have created new problems for lessors and lessees and
these have been commonly handled by specific clauses in leases. This growth
in the number and detail of specific lease covenants has reintroduced into the
law of estates for years a predominantly contractual ingredient. Id. at 181.

Thus in 6 Williston on Contracts §890A at 592 (3d ed. 1962), it is stated:

There is a clearly discernible tendency on the part of courts to cast aside

technicalities in the interpretation of leases and to concentrate their attention,
as in the case of other contracts, on the intention of the parties.

1129
 This Court has taken the lead in requiring that landlords provide
housing services to tenants in accordance with implied duties which are
hardly consistent with the property notions expressed in Muller v. Beck,
supra. See Braitman v. Overlook Terrace Corp., 346 A.2d 76 (N.J. 1975)
(liability for failure to repair defective apartment door lock); Berzito v.
Gambino, 308 A.2d 17 (N.J. 1973) (construing implied warranty of
habitability and covenant to pay rent as mutually dependent); Marini v.
Ireland, 265 A.2d 526 (N.J. 1970) (implied covenant to repair); Reste
Realty Corp. v. Cooper, 251 A.2d 268 (N.J. 1969) (implied warranty of
fitness of premises for leased purpose).
Application of the contract rule requiring mitigation of damages to a
residential lease may be justified as a matter of basic fairness.12 Professor
McCormick first commented upon the inequity under the majority rule
when he predicted in 1925 that eventually

the logic, inescapable according to the standards of a “jurisprudence of

conceptions” which permits the landlord to stand idly by the vacant,
abandoned premises and treat them as the property of the tenant and recover
full rent, will yield to the more realistic notions of social advantage which in
other fields of the law have forbidden a recovery for damages which the
plaintiff by reasonable efforts could have avoided. McCormick, The Rights of
the Landlord upon Abandonment of the Premises by the Tenant, 23 Mich. L.
Rev. 211, 221-22 (1925).

Various courts have adopted this position.

The pre-existing rule cannot be predicated upon the possibility that a
landlord may lose the opportunity to rent another empty apartment because
he must first rent the apartment vacated by the defaulting tenant. Even
where the breach occurs in a multi-dwelling building, each apartment may
have unique qualities which make it attractive to certain individuals.
Significantly, in Sommer v. Kridel, there was a specific request to rent the
apartment vacated by the defendant; there is no reason to believe that
absent this vacancy the landlord could have succeeded in renting a
different apartment to this individual.
We therefore hold that antiquated real property concepts which served
as the basis for the pre-existing rule, shall no longer be controlling where
there is a claim for damages under a residential lease. Such claims must be
governed by more modern notions of fairness and equity. A landlord has a
duty to mitigate damages where he seeks to recover rents due from a
defaulting tenant.
If the landlord has other vacant apartments besides the one which the

1130
tenant has abandoned, the landlord’s duty to mitigate consists of making
reasonable efforts to re-let the apartment. In such cases he must treat the
apartment in question as if it was one of his vacant stock.
As part of his cause of action, the landlord shall be required to carry
the burden of proving that he used reasonable diligence in attempting to re-
let the premises. We note that there has been a divergence of opinion
concerning the allocation of the burden of proof on this issue. While
generally in contract actions the breaching party has the burden of proving
that damages are capable of mitigation, here the landlord will be in a better
position to demonstrate whether he exercised reasonable diligence in
attempting to re-let the premises.

III
The Sommer v. Kridel case presents a classic example of the unfairness
which occurs when a landlord has no responsibility to minimize damages.
Sommer waited 15 months and allowed $4658.50 in damages to accrue
before attempting to re-let the apartment. Despite the availability of a
tenant who was ready, willing and able to rent the apartment, the landlord
needlessly increased the damages by turning her away. While a tenant will
not necessarily be excused from his obligations under a lease simply by
finding another person who is willing to rent the vacated premises, here
there has been no showing that the new tenant would not have been
suitable. We therefore find that plaintiff could have avoided the damages
which eventually accrued, and that the defendant was relieved of his duty
to continue paying rent. Ordinarily we would require the tenant to bear the
cost of any reasonable expenses incurred by a landlord in attempting to re-
let the premises, but no such expenses were incurred in this case.
In Riverview Realty Co. v. Perosio, no factual determination was made
regarding the landlord’s efforts to mitigate damages, and defendant
contends that plaintiff never answered his interrogatories. Consequently,
the judgment is reversed and the case remanded for a new trial. Upon
remand and after discovery has been completed, the trial court shall
determine whether plaintiff attempted to mitigate damages with reasonable
diligence, and if so, the extent of damages remaining and assessable to the
tenant. As we have held above, the burden of proving that reasonable
diligence was used to re-let the premises shall be upon the plaintiff.
In assessing whether the landlord has satisfactorily carried his burden,
the trial court shall consider, among other factors, whether the landlord,
either personally or through an agency, offered or showed the apartment to
any prospective tenants, or advertised it in local newspapers. Additionally,

1131
the tenant may attempt to rebut such evidence by showing that he
proffered suitable tenants who were rejected. However, there is no
standard formula for measuring whether the landlord has utilized
satisfactory efforts in attempting to mitigate damages, and each case must
be judged upon its own facts.

Notes and Questions

1. The duty to mitigate damages. As Sommer notes, the traditional
rule that landlords have no duty to mitigate damages reflected the idea that
a lease was considered a conveyance of a property interest for the term.
Having transferred exclusive control of the property to the tenant, subject
only to a reversion or remainder, the landlord was entitled to the
continuing payment of rent in much the same way that an installment
contract can require payments over time.
Almost all states have now changed their laws through statute or
judicial decision to impose on both parties to residential leases a duty to
mitigate damages that emphasize the contractual nature of the lease. E.g.,
Alaska Stat. §34.03.230; Cal. Civ. Code §1951.2; Ky. Rev. Stat. §383.670.
URLTA §§1.105, 4.203(c) imposes such a duty, although the newly
promulgated RURLTA provides a safe harbor for landlords who make
reasonable efforts following tenant abandonment, see RURLTA §§104,
604. Most states also now extend the duty to commercial leases. See, e.g.,
Frenchtown Square Partnership v. Lemstone, Inc., 791 N.E.2d 417 (Ohio
2003) (commercial landlord has duty to mitigate damages); Austin Hill
Country Realty v. Palisades Plaza, 948 S.W.2d 293 (Tex. 1997) (same).
By sitting around and waiting for the unpaid rent to accumulate, the
landlord arguably increases damages that could have been avoided by re-
letting the apartment to another tenant. States that require the landlord to
mitigate damages place an obligation on the landlord to act reasonably in
seeking another tenant and respect the tenant’s interest in not being bound
unfairly to the lease. If the landlord does mitigate damages, he can still
recover from the tenant the reasonable costs of finding a new tenant, the
rent for the premises while the premises were vacant and the landlord was
looking for a new tenant, and the difference between the rental price and
the new rent paid by the replacement tenant if it is lower than the original
rent.
A few states retain the rule that the landlord has no duty to mitigate
damages. Bowdoin Square, L.L.C. v. Winn-Dixie Montgomery, Inc., 873
So. 2d 1091, 1100 (Ala. 2003); Ferrick v. Bianchini, 2013 Pa. Super. 116
(Super. Ct. 2013) (commercial); Holy Properties, Ltd. v. Kenneth Cole

1132
Products, Inc., 661 N.E.2d 694, 696 (N.Y. 1995); Rios v. Carillo, 861
N.Y.S.2d 129 (N.Y. App. Div. 2008). The Restatement (Second) of
Property also adheres to the traditional rule. Restatement (Second) of
Property (Landlord and Tenant) §12.1(3) & cmt. i (1977).
2. Effect of the failure to mitigate. The common law duty to mitigate
damages is not an enforceable obligation in the sense that the landlord
must attempt to re-let the premises. The landlord is perfectly free to leave
the premises vacant. The rule simply means that, in a lawsuit against the
tenant for back rent, the landlord can recover only the difference between
the market rent and the contract rent provided for in the rental agreement
with the original tenant, plus the costs of finding a replacement tenant.
However, URLTA goes further, providing that if a landlord fails to
mitigate, “the rental agreement is deemed to be terminated” and the
landlord can recover no damages past that point. See URLTA §4.203(c);
see also RURLTA §604(d)(4).
Landlords who want to protect themselves are well advised to attempt
to re-let the premises, even in jurisdictions that retain the traditional rule,
given the possibility that the law may be changed at any time and be
applied retroactively. If a landlord attempts to re-let and finds a new tenant
who then fails to pay part or all of the rent, the landlord may want to go
after the original tenant for the unpaid rent. If, however, the landlord has
accepted the original tenant’s surrender of the lease, he can go after only
the new tenant. How can the landlord increase the likelihood that the
courts will find that the landlord did not accept the tenant’s surrender of
the lease?
3. Arguments for and against the duty to mitigate. Some scholars
argue that the duty to mitigate damages is efficient because it encourages
landlords to rent the premises rather than leaving them vacant. Because the
landlord can be compensated by the tenant for all the extra costs of re-
letting the premises and still obtain the economic value of the leasehold,
re-renting gives the landlord the benefit of the bargain; he is in the
economic position he would have been in had the tenant performed.
Moreover, the old tenant has been able to get out of an arrangement that
was no longer in her interest; the new tenant has obtained an apartment,
thus being made better off. Placing no duty on the landlord would allow
him to leave the apartment vacant, thereby wasting a scarce resource.
Alternatively, it would force the tenant to give up a job opportunity
elsewhere, for example, and remain locked in to the apartment. Either
result creates a loss of social wealth relative to re-letting the premises.
Others argue, however, that there is no such efficiency loss. The

1133
landlord bargained for the right not to have to look for another tenant
before the end of the lease term. This right is a property right that the
landlord owns; the tenant has no right to take this right from the landlord
without offering adequate compensation. The only compensation that is
adequate is the remainder of the bargained-for rent. If the tenant wanted a
nine-month lease, she could have bargained for it. If the tenant wants to
breach the 12-month lease by moving out early, she should have to
compensate the landlord sufficiently to induce the landlord to agree to give
up his right not to have to look for a new tenant. If the tenant is unwilling
to compensate the landlord for the right to terminate the lease early, the
cost to the landlord outweighs the benefit to the plaintiff. And tenants in
many situations are as capable of subleasing or assigning their units as
landlords are at renting in the first place.
Is either of these arguments convincing? Should it make a difference
whether the landlord has limited a tenant’s right to sublease or assign?
Why?
4. Advice for tenants. In a jurisdiction that imposes a duty on
landlords to mitigate damages, what advice would you give a tenant who
wanted to leave before the end of the lease term? Should she give the
landlord notice before she leaves? Does the duty to mitigate damages
protect her sufficiently so that she can leave in confidence that she will be
relieved of rent obligations for the rest of the lease term? How can the
tenant minimize her legal exposure?
5. Rent acceleration clauses. Some landlords attempt to contract
around the duty to mitigate damages through an “acceleration clause,”
making the rest of the rent due immediately if the tenant abandons the
premises or otherwise breaches the lease in a material way. This is a form
of “liquidated damages,” whereby the parties agree to the amount of
damages due if one of them breaches. This remedy goes beyond waiting
until the rent is due to sue to collect it; it allows the landlord to obtain the
rest of the rent immediately upon breach and, if enforceable, would allow
the landlord also to rent out the premises to another tenant. Some courts
enforce such provisions on the ground that the parties voluntarily agreed to
them; however, they generally also police the term and will not enforce the
clause if it constitutes a “penalty” or if the amount owed is
“unconscionable.” See, e.g., Summers v. Crestview Apartments, 236 P.3d
586, 590 (Mont. 2010). As with other liquidated damages, they will be
deemed to be an unenforceable penalty if they do not constitute a
reasonable estimate of the actual damages the landlord is likely to suffer
because of the breach. Cummings Properties, L.L.C. v. National

1134
Communications Corp., 869 N.E.2d 617 (Mass. 2007). Most (but not all)
courts will not allow such a clause to waive the duty to mitigate damages;
while the remaining rent payments are what the landlord “could have
expected to receive . . . over the term of the lease,” the landlord is also
expected to attempt to re-let the premises and the accelerated rent
payments will be reduced by the damages that would have been avoided
by re-letting. HealthSouth Rehabilitation Corp. v. Falcon Management
Co., 799 So. 2d 177, 185-186 (Ala. 2001); Aurora Business Park
Association v. Albert, Inc., 548 N.W.2d 153, 157-158 (Iowa 1996);
Restatement (Second) of Property (Landlord and Tenant) §12.1 cmt. k
(1977).
6. Burden of proof. Sommer holds that the landlord has the burden to
persuade the decision maker that he tried to mitigate damages and to
justify the amount lost because of the inability to mitigate. This appears to
be the majority rule at least in the case of residential tenancies. However,
some states impose the burden on the tenant, and this appears to be the
majority rule in cases involving commercial leases, for those states that
have addressed the issue. See, e.g., Commercial Real Estate Investment,
L.C. v. Comcast of Utah II, Inc., 285 P.3d 1193, 1204 (Utah 2012). By
statute, Maine and Wisconsin have a shifting burden of proof on this issue,
requiring the landlord initially to prove reasonable efforts to comply and
then giving the tenant the opportunity to prove that the landlord was not
reasonable. See Me. Rev. Stat. tit. 14, §6010-A(3); Wis. Stat. §704.29(3).
Which approach is better?

Problems
1. A professional real estate company with a large portfolio of
properties manages a recently developed 16-story apartment building with
80 units. Each floor in the building contains the same mix of studio, one-
bedroom, and two bedroom apartments. Each apartment of a given type
has the same layout and standard finishes, and the views from each are
similar, although slightly better from higher floors. A tenant breaches her
one-year lease on a one-bedroom apartment and moves out after only three
months. At the time the landlord sets out to re-let the apartment, the
building has three other one-bedroom apartments available to rent, and a
handful of studio and two-bedroom apartments vacant as well. If a
prospective tenant comes to the building’s leasing office seeking an
apartment and does not specify any particular unit, must the landlord rent
the newly vacated unit before offering any other vacant units? What if the
prospective tenants are a couple with a small child?

1135
 2. A landlord who lives in a three-unit building rents two of the
apartments. The building is located in an urban area with many universities
and a shortage of rental housing; many prospective tenants look for
housing much of the time. Most of the tenants are students, many of whom
go elsewhere for the summer. Because the landlord lives in the building,
she is concerned about finding tenants who will not be disruptive. Because
the state imposes a duty to mitigate damages, however, tenants have
started leaving at the end of the school year and stopping rent payments.
This constitutes a breach of the year-long lease; however, they know that
the landlord will be able to find replacement tenants and that she has a
“duty to mitigate damages.” Because she can easily find new tenants, she
is unlikely to come after them for the money.
The landlord comes to you for advice. She would rather not have to
look for new tenants twice a year, in September and again in June.
Suppose she were to place a clause in the lease that states:

If Tenant abandons or vacates the Leased Premises during the Term of this
Lease, Landlord may elect to re-enter the premises and, at her option, re-let
the Leased Premises. If the Landlord elects not to re-let the Leased Premises,
Tenant shall be liable for the remainder of the rent due under the Lease until
its expiration. Landlord has no duty to mitigate damages.

Would such a clause be enforceable? Should it be?

§3.3 Security Deposits

Many landlords protect themselves from the possibility that tenants
may fail to pay rent or damage the premises by requiring a security
deposit, often in the amount of one or two months’ rent at the beginning of
the leasehold. Some states regulate security deposits by statutes that may
(1) limit the amount that can be required as a security deposit; (2) require
the landlord to place the deposit in a separate account; and (3) require the
landlord to repay the security deposit to the tenant with interest at the
termination of the leasehold, less any amounts deducted to pay for repairs
necessitated by damage caused by the tenant during the leasehold. URLTA
§2.101.

§3.4 Rent Control

A few municipalities (most notably, New York City) have laws
limiting the amount by which landlords can raise the rent. Such laws are
intended to allow landlords to obtain a reasonable return on their

1136
investment, while protecting the rights of tenants to continue living in their
homes. Rent control has been repeatedly upheld against claims that it
constitutes an unconstitutional taking of the landlord’s property rights. Yee
v. City of Escondido, California, 503 U.S. 519 (1992).
Rent control laws generally allow rents to rise to market levels when
the current tenant vacates the premises. This fact leads to a great deal of
game-playing on both sides. Landlords may try to harass tenants to get
them to move out so the landlord can raise the rent, and tenants may sublet
the apartment against the wishes of the landlord. In addition, tenants are
generally entitled to leave their apartments to spouses or other family
members living with the tenant before the tenant’s death. In the famous
case of Braschi v. Stahl Associates, 543 N.E.2d 49 (N.Y. 1989), the court
ruled that a partner in a same-sex couple was a “family member” entitled
to continue living in the apartment when his partner died. The rent control
ordinance was subsequently amended to reflect this result. N.Y. City Rent
& Eviction Regulations §2204.6(d)(3). But in Hudson View Properties v.
Weiss, 450 N.E.2d 234 (N.Y. 1983), the landlord sought to evict a tenant
from a rent-controlled apartment on the ground that she had breached a
term in her lease under which she covenanted not to allow anyone to
occupy the premises with her who was not a member of her “immediate
family.” She lived with a man “with whom she [had] a loving
relationship,” but the court decided that because the couple was not
married, the man was not a part of the tenant’s immediate family.

§4 TENANT’S RIGHTS TO QUIET ENJOYMENT

AND HABITABLE PREMISES
§4.1 The Covenant of Quiet Enjoyment and Constructive
Eviction

Minjak Co. v. Randolph

528 N.Y.S.2d 554 (App. Div. 1988)

Map: W. 20th Street, New York,

New York

1137
MEMORANDUM DECISION.
In July of 1983 petitioner-landlord commenced the within summary
non-payment proceeding against respondents [Diane] Randolph and
[Masabumi] Kikuchi, tenants of a loft space on the fourth floor of
petitioner’s building on West 20th Street in Manhattan, alleging non-
payment of rent since July 1981. The tenants’ answer set forth as
affirmative defenses that because they were unable to use two-thirds of the
loft space due to the landlord’s renovations and other conditions, they were
entitled to an abatement of two-thirds of the rent, and that as to the
remaining one-third space, they were entitled to a further rent abatement
due to the landlord’s failure to supply essential services. The tenants also
counterclaimed for breach of warranty of habitability, seeking both actual
and punitive damages and attorney’s fees.
[At trial] it was stipulated that rent was due and owing from October
1981 through November 1983 in the amount of $12,787 ($200 due for
October 1981, $450 due each month from November 1981 through
December 1982, and $567 per month since January 1983).
Respondents commenced residency of the loft space in 1976 pursuant
to a commercial lease. Petitioner offered a commercial lease even though
at the time of the signing of the lease the building was used predominantly
for residential purposes and the respondents had informed petitioner that
they would use the loft as their residence. The loft space measures 1700
square feet, approximately two-thirds of which is used as a music studio
for Mr. Kikuchi, where he composes, rehearses and stores his very
expensive electronic equipment and musical instruments. The remainder of
the space is used as the tenants’ residence.
Late in 1977, the fifth-floor tenant began to operate a health spa
equipment business which included the display of fully working jacuzzis,
bathtubs, and saunas. The jacuzzis and bathtubs were filled to capacity
with water. From November 1977 through February 1982, respondents
suffered at least 40 separate water leaks from the fifth floor. At times the
water literally poured into the bedroom and bedroom closets of
respondents’ loft, ruining their clothes and other items. Water leaked as
well into the kitchen, the bathroom and onto Mr. Kikuchi’s grand piano
and other musical instruments. Respondents’ complaints to petitioner went
unheeded.

CONTEXT

Masabumi Kikuchi was a well-known New York jazz musician who recorded

1138
 with luminaries including Miles Davis, Joe Henderson, Elvin Jones, Gil Evans,
and Sonny Rollins. He continued to live in the same loft space that was at issue
in Minjak for many years, see Ben Ratliff, Floating in Time, Hiding in Sight,
N.Y. Times, Mar. 23, 2012, and passed away in 2015.

In January of 1978 the fifth-floor tenant began to sandblast the walls,

causing sand to seep through openings around pipes and cracks in the
ceiling and into respondent’s loft. The sand, which continued to fall into
the loft even as the parties went to trial, got into respondent’s clothes, bed,
food and even their eyes.
In September of 1981 the landlord commenced construction work in
the building to convert the building into a Class A multiple building. To
convert the freight elevator into a passenger elevator, petitioner had the
elevator shaft on respondent’s side of the building removed. The workers
threw debris down the elevator shaft, raising “huge clouds of dust” which
came pouring into the loft and settled everywhere, on respondents’ clothes,
bed, food, toothbrushes and musical equipment. The musical equipment
had to be covered at all times to protect it from the dust. Respondents
began to suffer from eye and sinus problems, nausea, and soreness in their
throats from the inhalation of the dust. Respondents attempted to shield
themselves somewhat from the dust by putting up plastic sheets, only to
have the workmen rip them down.
To demonstrate the hazardous nature of some of the construction work,
respondents introduced evidence that as the landlord’s workers were
demolishing the stairs from the seventh floor down, no warning signs were
posted, causing one visitor to come perilously close to falling through a
hole in the stairs. The workers jackhammered a new entrance to the loft,
permitting the debris to fall directly onto the floor of respondents’ loft. The
workmen would mix cement right on respondents’ floor. A new entrance
door to the loft was sloppily installed without a door sill, and loose bricks
were left around the frame. A day later, brick fragments and concrete fell
on tenant Randolph’s head as she closed the door.
The record contains many more examples of dangerous construction
and other conduct interfering with respondents’ ability to use and enjoy
possession of their loft. From 1981 until the time of trial, Kikuchi was
completely unable to use the music studio portion of the loft. His musical
instruments had been kept covered and protected against the sand and later
the dust since 1978.
The jury rendered a verdict awarding respondents a rent abatement of
80% for July 1981 through November 1983, as compensatory damages on
the theory of constructive eviction from the music studio portion of the

1139
loft; a 40% rent abatement for January 1981 through November 1983, on
the remainder of the rent due for the residential portion of the premises, on
a theory of breach of warranty of habitability; a 10% rent abatement on the
rent attributable to the residential portion of the premises for all of 1979,
on a breach of warranty of habitability theory; and punitive damages in the
amount of $20,000. After trial the court granted respondents’ motion made
pursuant to Real Property Law Sec. 234 for reasonable attorney’s fees,
awarding respondents $5000. The court also granted petitioner’s motion to
set aside the verdict and for other relief, only to the extent of reducing the
award for punitive damages to $5000.
On appeal to the Appellate Term that court reversed the judgment.
Holding that the doctrine of constructive eviction could not provide a
defense to this non-payment proceeding, because tenants had not
abandoned possession of the demised premises, the court reversed the
jury’s award as to the 80% rent abatement predicated on the constructive
eviction theory.
We agree with the holding and reasoning of East Haven Associates v.
Gurian, 313 N.Y.S.2d 927 (Civ. Ct. 1970), that a tenant may assert as a
defense to the nonpayment of rent the doctrine of constructive eviction,
even if he or she has abandoned only a portion of the demised premises
due to the landlord’s acts in making that portion of the premises unusable
by the tenant. Indeed “compelling considerations of social policy and
fairness” dictate such a result.
The evidence at trial fully supported a finding that respondents were
compelled to abandon the music studio portion of the loft due to “the
landlord’s wrongful acts [which] substantially and materially deprive[d]
the tenant[s] of the beneficial use and enjoyment” of that portion of the
loft.
Petitioner does, however, correctly point out that as the constructive
eviction claim was asserted as a defense to the nonpayment of rent and
respondents did not request an abatement for any months other than those
in which they did not pay rent, the jury’s award of an 80% rent abatement
as to the months July, August, September and half of October of 1981
must be stricken.
The award for punitive damages, as reduced by the Civil Court to
$5000, should be reinstated as well. Although generally in breach of
contract claims the damages to be awarded are compensatory, in certain
instances punitive damages may be awarded when to do so would “deter
morally culpable conduct.” The determining factor is “the moral
culpability of the defendant,” and whether the conduct implies a “criminal
indifference to civil obligations.”

1140
 [I]t has been recognized that punitive damages may be awarded in
breach of warranty of habitability cases where the landlord’s actions or
inactions were intentional and malicious.
[W]e are satisfied that this record supports the jury’s finding of
morally culpable conduct in light of the dangerous and offensive manner
in which the landlord permitted the construction work to be performed, the
landlord’s indifference to the health and safety of others, and its disregard
for the rights of others, so as to imply even a criminal indifference to civil
obligations. One particularly egregious example of the landlord’s wanton
disregard for the safety of others was the way in which the stair demolition
was performed: steps were removed and no warning sign even posted. The
landlord’s indifference and lack of response to the tenants’ repeated
complaints of dust, sand and water leak problems demonstrated a complete
indifference to their health and safety and a lack of concern for the damage
these conditions could cause to the tenants’ valuable personal property.
Such indifference must be viewed as rising to the level of high moral
culpability. Accordingly, the award of punitive damages is sustained.

3000 B.C. v. Bowman Properties Ltd.

No. 1968, 2008 WL 5544414 (Pa. Com. Pl. 2008) (aff’d in part, vacated in part,
remanded by 3000 B.C v. Bowman, 990 A.2d 33 (Table) (Pa. Super. Ct. 2009))
MARK BERNSTEIN, J.
Plaintiff, 3000 B.C., is a professional spa, offering a variety of
therapeutic treatments including massage and facials. The success of their
business relied on their clients’ happiness and the ability to provide a
serene and tranquil environment. This objective was irrevocably destroyed
at 3000 B.C., when their Indian flute music was overwhelmed by
hammering, sawing, colorful language of construction workers, and by the
joyful sounds of gleeful children playing while awaiting their turn at the
Hair Cuttery occupying the apartment above. Defendant Bowman
Properties understood that 3000 B.C. required a tranquil environment to
run a spa because they had leased the property to 3000 B.C. for 12 years.
A covenant of quiet enjoyment is implied into every lease in the
Commonwealth of Pennsylvania. This covenant exists between the
landlord and the tenant and is breached when a tenant’s possession is
impaired by acts of the lessor. “There is an implied covenant for the quiet
enjoyment of the demised premises, and it is settled that any . . . act of the
landlord which results in an interference of the tenant’s possession, in
whole or in part, is an eviction for which the landlord is liable in damages
to the tenant.” Kelly v. Miller, 94 A. 1055, 1056 (Pa. 1915). A breach of

1141
the covenant can be demonstrated through constructive eviction, if the
tenant can establish that the utility of the premises has been substantially
and fundamentally impaired. The manner in which defendant leased to the
Hair Cuttery violated the covenant of quiet enjoyment.
In the case of a breach of a constructive eviction, [a] lessee may
recover “for all losses which he can prove he has actually sustained, or
which he will necessarily sustain, under the circumstances, as a result of
the unlawful eviction. The measure of damages has been liberally
extended to include . . . profits of the business.” Pollock v. Morelli, 369
A.2d 458, 462 (Pa. Super. 1976). As in any other contract action, the
purpose of damages is to restore the injured party to the financial position
it would have achieved had the contract been fulfilled. This means that the
injured party is “entitled to be reimbursed for the money actually paid out
and for all reasonable and necessary expenses incurred on the faith of the
contract.” Emerman v. Baldwin, 142 A.2d 440, 447 (Pa. Super. 1958).
Accordingly, the court in this non-jury trial must determine what the
financial position of 3000 B.C. would have been if constructive eviction
had not occurred. This analysis begins with determining the length of time
for which damages must be awarded. The lease from which the plaintiff
was evicted expired on August 1, 2006. Although plaintiff argues that the
12-year rental history would allow the court to presume that the lease
would have been repeatedly renewed and therefore calculate damages
beyond the August 1, 2006 termination date, the court rejects that
proposition. In Pennsylvania, a landlord can refuse to renew a lease for any
good reason, for no reason, or any bad reason, as long as no
constitutionally protected right is violated. Only speculation could
determine the length of a new lease of the adjusted rent if the court were to
calculate damages upon the leap of faith that the lease would be renewed.
To determine damages upon these assumptions is to rely on speculation
upon speculation. This speculation is impermissible.
[The court reviewed the proof presented as to damages. The court
began with 3000 B.C.’s losses from the start of the noise, in February
2005, through 3000 B.C.’s forced evacuation in December 2005, including
attorneys’ fees, moving expenses, and additional rent that 3000 B.C. was
required to pay. The court also awarded 3000 B.C. damages for spa credits
given to customers whose treatments had been destroyed as well as loss of
business good will, or the value of a business’ reputation, noting that the
disruption “necessarily causes consternation, hard feelings, ill will, and
dismay among clients in a business which had been providing healthful
therapeutic serenity to customers for over 12 years at the same location.”
The court, however, declined to award damages for the expense of

1142
retraining new staff for the new location, which the court found would
have occurred at the natural termination of the lease. All told, the court
awarded $236,233.45 in damages.]

Notes and Questions

1. Express and implied terms in the landlord-tenant relationship.
The landlord-tenant relationship is governed partly by the express terms
of any written lease. The landlord-tenant relationship is also governed by
implied terms. These terms need not be written down or even explicitly
discussed to be legally binding. They may or may not be waivable by the
parties. One important term implied in every landlord-tenant relationship
by common law or statute is the covenant of quiet enjoyment by which
the landlord impliedly promises not to disturb the tenant’s quiet enjoyment
of the property. Other implied terms that are frequently recognized include
reasonable rights of access across land or through non-leased portions of a
building, see, e.g., Kysar v. Amoco Product Co., 93 P.3d 1272 (N.M.
2004), or for parking next to a retail store, see Sierad v. Lilly, 22 Cal. Rptr.
580 (Dist. Ct. App. 1962).
2. Actual eviction. If the landlord breaches the lease by physically
barring the tenant from the property, the tenant’s obligation to pay rent
ceases entirely. The placement of new locks on the door constitutes actual
eviction. Olin v. Goehler, 694 P.2d 1129 (Wash. Ct. App. 1985); see also
Sengul v. CMS Franklin, Inc., 265 P.3d 320, 326 (Alaska 2011). The
tenant also may sue the landlord for damages for trespass and may seek an
injunction ordering the landlord to reconvey possession of the premises to
the tenant.
What happens if the landlord bars the tenant from only part of the
leased property? A partial actual eviction constitutes a breach of the lease
and provides the tenant with ample justification to move out before the end
of the lease term; the tenant will not be liable for the rent after moving out.
But see Eastside Exhibition Corp. v. 210 East 86th Street Corp., 965
N.E.2d 246 (N.Y. 2012) (relaxing the traditional rule by holding that a
commercial landlord’s interference with possession of 12 square feet of
space out of a total of 15,000 square feet does not constitute a partial
actual eviction entitling the tenant to a full rent abatement). What happens
if the tenant chooses to stay? The traditional rule relieves the tenant of the
obligation to pay rent completely even though the tenant continues to
occupy the rest of the premises. But the more recent trend seems to be to
abate the rent (reduce it) to the fair market value of the property that
remains. Restatement (Second) of Property (Landlord and Tenant) §6.1

1143
(1977).
3. Constructive eviction. A “constructive” eviction occurs when the
landlord substantially interferes with the tenant’s quiet enjoyment of the
premises. The defense of constructive eviction allows the tenant to stop
rent payments and move out before the end of the lease term. The theory is
that when the landlord allows the conditions in the apartment to deteriorate
such that living in the apartment is either impossible or uncomfortable, her
actions are functionally equivalent to physically barring the tenant from
the premises.
What happens if the tenant stops paying rent and fails to move out?
The traditional rule is that the tenant can raise a defense of constructive
eviction only if he moves out within a reasonable period of time. To
establish constructive eviction, the tenant must claim that the landlord’s
interference with the tenant’s quiet enjoyment of the premises is so
substantial that nobody in his right mind would stay there; the place is
uninhabitable and, therefore, the landlord’s actions are equivalent to
barring the door. If, however, the tenant stays, then this can be used as
evidence that the interference is not sufficiently serious to justify allowing
the tenant to stop paying rent or ending the leasehold. Barash v.
Pennsylvania Terminal Real Estate Corp., 256 N.E.2d 707 (N.Y. 1970).
East Haven Associates, Inc. v. Gurian, 313 N.Y.S.2d 927 (Civ. Ct.
1970), on which the court in Minjak relies, held that tenants could establish
a defense of partial constructive eviction. Under this doctrine, tenants
can show that the landlord’s actions have substantially deprived the tenant
of the use and enjoyment of a portion of the property. The defense of
partial constructive eviction may allow the tenant to continue living in the
remaining part of the premises from which the tenant does not claim to
have been constructively evicted. Minjak illustrates that the remedy for
partial constructive eviction for the tenant who wants to stay is likely to be
a partial, rather than complete, abatement of rent. The court in East Haven
explained the basis for the doctrine, id. at 930-931:

It cannot be seriously disputed that a major shortage in residential housing

has prevailed in our metropolitan area for several decades. The clear effect
has been to undermine so drastically the bargaining power of tenants in
relation to landlords that grave questions as to the fairness and relevance of
some traditional concepts of landlord-tenant law are presented.
The very idea of requiring families to abandon their homes before they can
defend against actions for rent is a baffling one in an era in which decent
housing is so hard to get, particularly for those who are poor and without
resources. It makes no sense at all to say that if part of an apartment has been

1144
 rendered uninhabitable, a family must move from the entire dwelling before
it can seek justice and fair dealing. See Arbern Realty Co. v. Clay Craft
Planters Co., 727 N.Y.S.2d 236 (App. Div. 2001) (applying the partial
constructive eviction doctrine in the context of a commercial lease).

The Restatement (Second) of Property (Landlord and Tenant) §6.1

(1977) provides that “there is a breach of the landlord’s obligations if,
during the period the tenant is entitled to possession of the leased property,
the landlord, or someone whose conduct is attributable to him, interferes
with a permissible use of the leased property by the tenant.” The Second
Restatement departs from traditional law in several respects. First, it
defines constructive eviction as interference that is “more than
insignificant” rather than requiring the interference to be “substantial.”
Reporter’s note 1. Second, it adopts view that the landlord is liable not
only for actions the landlord takes, but also for the acts of third parties
“performed on property in which the landlord has an interest, which
conduct could be legally controlled by him.” Cmt. d. Third, it rejects the
traditional requirement that the tenant abandon the premises before taking
advantage of the constructive eviction doctrine, on the ground that “it
makes the law completely unavailable to tenants who for one reason or
another cannot move, e.g., indigent urban apartment dwellers in many
cities, and available only at great risk to others, who must first deprive
themselves of such benefit as they are deriving from the premises before
getting a ruling on whether they were justified in doing so.” Reporter’s
note 6.
4. Relation to the implied warranty of habitability. The warranty of
habitability, considered in §4.2, below, obligates landlords to provide
premises that are safe and suitable for habitation. Breach of the warranty
entitles tenants to move out before the end of the lease term or to stay and
either stop paying rent or pay a reduced rent until the improper conditions
of the premises are fixed. Because of the development of the implied
warranty, litigation about constructive eviction now tends to focus less on
the physical condition of the premises and more on acts by the landlord
that interfere with quiet enjoyment, such as noise or harassment
attributable to the landlord. Constructive eviction applies, as well, when
the landlord undertakes some activity that interferes with the tenant’s
beneficial use of the premises, such as legal action. See, e.g., Kohl v. PNC
Bank National Association, 912 A.2d 237 (Pa. 2006) (landlord lawsuit
against tenant that substantially impairs tenant’s possessory interest in bad
faith, and primarily other than to seek legal redress constitutes breach of
the covenant of quiet enjoyment). Constructive eviction also remains a

1145
factor for physical conditions attributable to a landlord’s actions for
commercial tenants where the warranty of habitability may not apply. See,
e.g., Manhattan Mansions v. Moe’s Pizza, 561 N.Y.S.2d 331 (Civ. Ct.
1990).
5. Tenant’s duties to other tenants. Many written leases contain
express clauses obligating tenants not to disturb the quiet enjoyment of
other tenants, and many states have statutes, like the URLTA, that require
the tenant to “conduct himself and require other persons on the premises
with his consent to conduct themselves in a manner that will not disturb
his neighbors’ peaceful enjoyment of the premises.” URLTA §3.101(7).
Breach of this obligation would entitle the landlord to evict the tenant. If
the tenant’s conduct rises to the level of a common law nuisance, such as
excessive noise, others tenants may have remedies for damages or
injunctive relief.
6. Landlord’s liability for acts of other tenants. The traditional rule
provides that constructive eviction may be shown only if the landlord or
someone acting under the landlord has acted in a way that interfered with
the tenant’s interest in quiet enjoyment. Under this traditional rule, the
landlord is not responsible for the acts of other tenants unless the lease
specifically includes an obligation to control the conduct of other tenants.
The trend, however, appears to be in the direction of the approach adopted
by the Second Restatement. Restatement (Second) of Property (Landlord
and Tenant) §6.1 (1977); see, e.g., Arbern Realty Co. v. Clay Craft
Planters Co., Inc., 727 N.Y.S.2d 236, 237 (Sup. Ct. 2001) (landlord’s
failure to protect tenant’s access for loading and unloading of trucks and
parking from another tenant’s interference was a partial constructive
eviction); Blackett v. Olanoff, 358 N.E.2d 817 (Mass. 1976); see also
Bocchini v. Gorn Management Co., 515 A.2d 1179, 1184 (Md. Ct. Spec.
App. 1986) (noting that the traditional rule “has been increasingly
abandoned”).
In Blackett, supra, landlords who were renting apartments also leased
nearby premises to a cocktail lounge that was intending to play live music.
The lounge, however, played music almost daily until 1:30 or 2 in the
morning that was loud enough for neighboring residents to hear through
the granite walls of their building. In finding the landlord liable for
violation of the residential tenants’ covenant of quiet enjoyment, the court
paid particular attention to the fact that the landlord had the right under its
lease to the lounge to control lounge’s noise.
In the absence of such a clause, should a tenant have an implied duty
not to disturb his neighbors such that violation of the duty would constitute

1146
a breach of the lease and entitle the landlord to evict the tenant? Should the
landlord have not only the right but the obligation to evict a noisy tenant to
protect the interests of neighboring tenants? Should it be enough to find a
violation of a tenant’s covenant of quiet enjoyment that a landlord rents to
a new tenant whose use of the premises is likely to conflict with the
existing tenant’s use?

Problems
1. A client comes into your office with the following story. She is a
law student renting a third-floor apartment in a three-unit apartment house
near the law school. She shares the apartment with two roommates; all
three of them have signed the lease, which runs from September 1 to
August 31. It is now November 10. Starting in October, the tenant
occupying the second floor began making unwanted sexual comments to
your client as she walked up to her apartment. He has never touched her
and has not directly threatened to attack her. She is afraid of him because
of these comments, which he now makes daily. She believes he waits for
her to come home so that he can accost her on the stairway as she goes up
to her apartment. If it were not for this neighbor, she would be very happy
with the apartment, which is well maintained, reasonably priced, attractive,
and close to both school and shopping. At the same time, she is
considering moving out — something her roommates do not want her to
do. She asks you for advice about her legal rights.
a. What questions would you ask her?
b. What options does she have?
c. What legal advice would you give her?
2. May a tenant move out before the end of the lease term because of
secondhand smoke generated by another tenant in the building? In Poyck
v. Bryant, 820 N.Y.S.2d 774 (Civ. Ct. 2006), the court held that a tenant of
a condominium unit who was allergic to tobacco smoke and recovering
from cancer surgery could move out and be relieved of lease obligations
because of secondhand smoke generated by neighbors in another condo
when they smoked in common areas and in their condo. The court held
that the landlord could have attempted to get the condominium association
to stop the neighbors from smoking in common areas or he could have
better ventilated the apartment to solve the problem. Was the case
correctly decided?
3. Do tenants have a right to leave if a registered sex offender moves in
next door? See Knudsen v. Lax, 842 N.Y.S.2d 341, 350 (Civ. Ct. 2007)

1147
(yes, because this “resolution approximates the terms the parties would
have negotiated had they foreseen the circumstances that have given rise to
the dispute”).

§4.2 Warranty of Habitability

Before the 1970s, most courts held that landlords had no implied duty
to repair the rented premises and that leaseholds included no implied
representations that the apartment was in habitable condition. The only
exception to this principle was that landlords had a duty to fix latent
defects known to them and not easily discoverable by the tenant. If the
tenant wanted a warranty or a contractual obligation on the landlord to
maintain the apartment, she had to bargain for it.
Courts also held that the contractual obligations of the landlord and
tenant were independent rather than dependent. This meant that, contrary
to other kinds of contracts, the parties’ obligations to perform were not
contingent on the other party’s performance. Thus, the tenant’s obligation
to pay rent was enforceable by the landlord even if the landlord herself
was violating a covenant to repair the premises. The tenant’s only remedy
was to sue the landlord for damages. To terminate the lease, the tenant
needed to show constructive eviction; thus, any defects or failures to repair
that did not rise to the level of constructive eviction prevented the tenant
from lawfully getting out of the lease early, even if there was a covenant to
repair and the landlord was breaching the agreement.
In recent years, most states have repudiated both the lack of a duty to
repair or maintain and the independent covenants rule, at least in the
context of residential housing. Starting around 1970, there was a virtual
revolution in residential landlord-tenant law. Before 1970, courts viewed a
leasehold solely as a transfer of a property interest; the landlord granted
the tenant the right to possess the premises for a specified period of time,
conditional on an agreed-upon rent. The landlord’s obligations were
limited to transferring possession; constructive eviction was seen as a
failure to comply with this duty. The tenant had a duty to pay the rent and
not to commit waste by damaging the property. No other obligations
attended the relationship, which was governed by caveat emptor or caveat
lessee — let the buyer beware.
This tradition rapidly unraveled after the groundbreaking decision in
Javins v. First National Realty Corp. As you read the opinion below,
consider the reasons that Judge J. Skelly Wright gives to change the law.
Are they convincing?

1148
 Javins v. First National Realty Corp.

428 F.2d 1071 (D.C. Cir. 1970)

Map: (Wardman Court Apartments)

1350 Clifton Street, NW,
Washington, D.C.

J. SKELLY WRIGHT, Circuit Judge:

These cases present the question whether housing code violations
which arise during the term of a lease have any effect upon the tenant’s
obligation to pay rent.
We hold that a warranty of habitability, measured by the standards set
out in the Housing Regulations for the District of Columbia, is implied by
operation of law into leases of urban dwelling units covered by those
Regulations and that breach of this warranty gives rise to the usual
remedies for breach of contract.

I
By separate written leases, each of the appellants rented an apartment
in a three-building apartment complex in Northwest Washington known as
Clifton Terrace. The landlord, First National Realty Corporation, filed
separate actions in the Landlord and Tenant Branch of the Court of
General Sessions on April 8, 1966, seeking possession on the ground that
each of the appellants had defaulted in the payment of rent due for the
month of April. The tenants, appellants here, admitted that they had not
paid the landlord any rent for April. However, they alleged numerous
[1,500] violations of the Housing Regulations as “an equitable defense or
(a) claim by way of recoupment or set-off in an amount equal to the rent
claim,” as provided in the rules of the Court of General Sessions.
Appellants conceded at trial, however, that this offer of proof reached only
violations which had arisen since the term of the lease had commenced.

II
Since, in traditional analysis, a lease was the conveyance of an interest
in land, courts have usually utilized the special rules governing real
property transactions to resolve controversies involving leases. However,

1149
as the Supreme Court has noted in another context, “the body of private
property law . . . more than almost any other branch of law, has been
shaped by distinctions whose validity is largely historical.” Courts have a
duty to reappraise old doctrines in the light of the facts and values of
contemporary life — particularly old common law doctrines which the
courts themselves created and developed. As we have said before, “The
continued vitality of the common law . . . depends upon its ability to
reflect contemporary community values and ethics.”
The assumption of landlord-tenant law, derived from feudal property
law, that a lease primarily conveyed to the tenant an interest in land may
have been reasonable in a rural, agrarian society; it may continue to be
reasonable in some leases involving farming or commercial land. In these
cases, the value of the lease to the tenant is the land itself. But in the case
of the modern apartment dweller, the value of the lease is that it gives him
a place to live. The city dweller who seeks to lease an apartment on the
third floor of a tenement has little interest in the land 30 or 40 feet below,
or even in the bare right to possession within the four walls of his
apartment. When American city dwellers, both rich and poor, seek
“shelter” today, they seek a well known package of goods and services —
a package which includes not merely walls and ceilings, but also adequate
heat, light and ventilation, serviceable plumbing facilities, secure windows
and doors, proper sanitation, and proper maintenance.

Clifton Terrace was built between 1914 and 1915 as luxury apartments by the
prolific D.C. developer Harry Wardman. After struggling for decades, the
complex was eventually taken over by the U.S. Department of Housing and
Urban Development and underwent a $37 million renovation that was
completed in 2004. It is now listed on the National Register of Historic Places.

Clifton Terrace in 1930. Picture courtesy of the D.C. Public Library Commons.

1150
 Some courts have realized that certain of the old rules of property law
governing leases are inappropriate for today’s transactions. In order to
reach results more in accord with the legitimate expectations of the parties
and the standards of the community, courts have been gradually
introducing more modern precepts of contract law in interpreting leases.
In our judgment the trend toward treating leases as contracts is wise
and well considered. Our holding in this case reflects a belief that leases of
urban dwelling units should be interpreted and construed like any other
contract.

III
Modern contract law has recognized that the buyer of goods and
services in an industrialized society must rely upon the skill and honesty of
the supplier to assure that goods and services purchased are of adequate
quality. In interpreting most contracts, courts have sought to protect the
legitimate expectations of the buyer and have steadily widened the seller’s
responsibility for the quality of goods and services through implied
warranties of fitness and merchantability.
The rigid doctrines of real property law have tended to inhibit the
application of implied warranties to transactions involving real estate.
Now, however, courts have begun to hold sellers and developers of real
property responsible for the quality of their product. For example, builders
of new homes have recently been held liable to purchasers for improper
construction on the ground that the builders had breached an implied
warranty of fitness. In other cases courts have held builders of new homes
liable for breach of an implied warranty that all local building regulations
had been complied with.
Despite this trend in the sale of real estate, many courts have been
unwilling to imply warranties of quality, specifically a warranty of
habitability, into leases of apartments. Recent decisions have offered no
convincing explanation for their refusal; rather they have relied without
discussion upon the old common law rule that the lessor is not obligated to
repair unless he covenants to do so in the written lease contract. However,
the Supreme Courts of at least two states, in recent and well reasoned
opinions, have held landlords to implied warranties of quality in housing
leases. Lemle v. Breeden, 462 P.2d 470 (Haw. 1969); Reste Realty Corp. v.
Cooper, 251 A.2d 268 (N.J. 1969). In our judgment, the old no-repair rule
cannot coexist with the obligations imposed on the landlord by a typical
modern housing code, and must be abandoned in favor of an implied
warranty of habitability. In the District of Columbia, the standards of this

1151
warranty are set out in the Housing Regulations.

IV

A
In our judgment the common law itself must recognize the landlord’s
obligation to keep his premises in a habitable condition. This conclusion is
compelled by three separate considerations. First, we believe that the old
rule was based on certain factual assumptions which are no longer true; on
its own terms, it can no longer be justified. Second, we believe that the
consumer protection cases discussed above require that the old rule be
abandoned in order to bring residential landlord-tenant law into harmony
with the principles on which those cases rest. Third, we think that the
nature of today’s urban housing market also dictates abandonment of the
old rule.
The common law rule absolving the lessor of all obligation to repair
originated in the early Middle Ages. Such a rule was perhaps well suited to
an agrarian economy; the land was more important than whatever small
living structure was included in the leasehold, and the tenant farmer was
fully capable of making repairs himself. These historical facts were the
basis on which the common law constructed its rule; they also provided the
necessary prerequisites for its application.
Court decisions in the late 1800’s began to recognize that the factual
assumptions of the common law were no longer accurate in some cases.
For example, the common law, since it assumed that the land was the most
important part of the leasehold, required a tenant to pay rent even if any
building on the land was destroyed. Faced with such a rule and the
ludicrous results it produced, in 1863 the New York Court of Appeals
declined to hold that an upper story tenant was obliged to continue paying
rent after his apartment building burned down. The court simply pointed
out that the urban tenant had no interest in the land, only in the attached
building.
These as well as other similar cases demonstrate that some courts
began some time ago to question the common law’s assumptions that the
land was the most important feature of a leasehold and that the tenant
could feasibly make any necessary repairs himself. Where those
assumptions no longer reflect contemporary housing patterns, the courts
have created exceptions to the general rule that landlords have no duty to
keep their premises in repair.
It is overdue for courts to admit that these assumptions are no longer

1152
true with regard to all urban housing. Today’s urban tenants, the vast
majority of whom live in multiple dwelling houses, are interested, not in
the land, but solely in “a house suitable for occupation.” Furthermore,
today’s city dweller usually has a single, specialized skill unrelated to
maintenance work; he is unable to make repairs like the “jack-of-all-
trades” farmer who was the common law’s model of the lessee. Further,
unlike his agrarian predecessor who often remained on one piece of land
for his entire life, urban tenants today are more mobile than ever before. A
tenant’s tenure in a specific apartment will often not be sufficient to justify
efforts at repairs. In addition, the increasing complexity of today’s
dwellings renders them much more difficult to repair than the structures of
earlier times. In a multiple dwelling repair may require access to
equipment and areas in the control of the landlord. Low and middle
income tenants, even if they were interested in making repairs, would be
unable to obtain any financing for major repairs since they have no long-
term interest in the property.
Our approach to the common law of landlord and tenant ought to be
aided by principles derived from the consumer protection cases referred to
above. In a lease contract, a tenant seeks to purchase from his landlord
shelter for a specified period of time. The landlord sells housing as a
commercial businessman and has much greater opportunity, incentive and
capacity to inspect and maintain the condition of his building. Moreover,
the tenant must rely upon the skill and bona fides of his landlord at least as
much as a car buyer must rely upon the car manufacturer. In dealing with
major problems, such as heating, plumbing, electrical or structural defects,
the tenant’s position corresponds precisely with “the ordinary consumer
who cannot be expected to have the knowledge or capacity or even the
opportunity to make adequate inspection of mechanical instrumentalities,
like automobiles, and to decide for himself whether they are reasonably fit
for the designed purpose.” Henningsen v. Bloomfield Motors, Inc., 161
A.2d 69, 78 (N.J. 1960).
Since a lease contract specifies a particular period of time during
which the tenant has a right to use his apartment for shelter, he may
legitimately expect that the apartment will be fit for habitation for the time
period for which it is rented. We point out that in the present cases there is
no allegation that appellants’ apartments were in poor condition or in
violation of the housing code at the commencement of the leases. Since the
lessees continue to pay the same rent, they were entitled to expect that the
landlord would continue to keep the premises in their beginning condition
during the lease term. It is precisely such expectations that the law now
recognizes as deserving of formal, legal protection.

1153
 Even beyond the rationale of traditional products liability law, the
relationship of landlord and tenant suggests further compelling reasons for
the law’s protection of the tenants’ legitimate expectations of quality. The
inequality in bargaining power between landlord and tenant has been well
documented. Tenants have very little leverage to enforce demands for
better housing. Various impediments to competition in the rental housing
market, such as racial and class discrimination and standardized form
leases, mean that landlords place tenants in a take it or leave it situation.
The increasingly severe shortage of adequate housing further increases the
landlord’s bargaining power and escalates the need for maintaining and
improving the existing stock. Finally, the findings by various studies of the
social impact of bad housing has led to the realization that poor housing is
detrimental to the whole society, not merely to the unlucky ones who must
suffer the daily indignity of living in a slum.
Thus we are led by our inspection of the relevant legal principles and
precedents to the conclusion that the old common law rule imposing an
obligation upon the lessee to repair during the lease term was really never
intended to apply to residential urban leaseholds. Contract principles
established in other areas of the law provide a more rational framework for
the apportionment of landlord-tenant responsibilities; they strongly suggest
that a warranty of habitability be implied into all contracts for urban
dwellings.

B
We believe, in any event, that the District’s housing code requires that
a warranty of habitability be implied in the leases of all housing that it
covers. The housing code — formally designated the Housing Regulations
of the District of Columbia — was established and authorized by the
Commissioners of the District of Columbia on August 11, 1955. Since that
time, the code has been updated by numerous orders of the
Commissioners. The 75 pages of the Regulations provide a comprehensive
regulatory scheme setting forth in some detail: (a) the standards which
housing in the District of Columbia must meet; (b) which party, the lessor
or the lessee, must meet each standard; and (c) a system of inspections,
notifications and criminal penalties. The Regulations themselves are silent
on the question of private remedies.
Two previous decisions of this court, however, have held that the
Housing Regulations create legal rights and duties enforceable in tort by
private parties. The District of Columbia Court of Appeals gave further
effect to the Housing Regulations in Brown v. Southall Realty Co., 237

1154
A.2d 834 (D.C. 1968). There the landlord knew at the time the lease was
signed that housing code violations existed which rendered the apartment
“unsafe and unsanitary.” Viewing the lease as a contract, the District of
Columbia Court of Appeals held that the premises were let in violation of
Sections 2304 and 2501 of the Regulations and that the lease, therefore,
was void as an illegal contract. In the light of Brown, it is clear not only
that the housing code creates privately enforceable duties, but that the
basic validity of every housing contract depends upon substantial
compliance with the housing code at the beginning of the lease term. The
Brown court relied particularly upon Section 2501 of the Regulations
which provides:

Every premises accommodating one or more habitations shall be maintained

and kept in repair so as to provide decent living accommodations for the
occupants. This part of this Code contemplates more than mere basic repairs
and maintenance to keep out the elements; its purpose is to include repairs
and maintenance designed to make a premises or neighborhood healthy and
safe.

By its terms, this section applies to maintenance and repair during the
lease term. Under the Brown holding, serious failure to comply with this
section before the lease term begins renders the contract void. We think it
untenable to find that this section has no effect on the contract after it has
been signed. To the contrary, by signing the lease the landlord has
undertaken a continuing obligation to the tenant to maintain the premises
in accordance with all applicable law.
This principle of implied warranty is well established. Courts often
imply relevant law into contracts to provide a remedy for any damage
caused by one party’s illegal conduct.13
[T]hat the housing code must be read into housing contracts — a
holding also required by the purposes and the structure of the code itself.
The duties imposed by the Housing Regulations may not be waived or
shifted by agreement if the Regulations specifically place the duty upon
the lessor. Criminal penalties are provided if these duties are ignored. This
regulatory structure was established by the Commissioners because, in
their judgment, the grave conditions in the housing market required serious
action. Yet official enforcement of the housing code has been far from
uniformly effective. Innumerable studies have documented the desperate
condition of rental housing in the District of Columbia and in the nation.
We therefore hold that the Housing Regulations imply a warranty of
habitability, measured by the standards which they set out, into leases of

1155
all housing that they cover.

V
In the present cases, the landlord sued for possession for nonpayment
of rent. Under contract principles, however, the tenant’s obligation to pay
rent is dependent upon the landlord’s performance of his obligations,
including his warranty to maintain the premises in habitable condition. In
order to determine whether any rent is owed to the landlord, the tenants
must be given an opportunity to prove the housing code violations alleged
as breach of the landlord’s warranty.
At trial, the finder of fact must make two findings: (1) whether the
alleged violations14 existed during the period for which past due rent is
claimed, and (2) what portion, if any or all, of the tenant’s obligation to
pay rent was suspended by the landlord’s breach. If no part of the tenant’s
rental obligation is found to have been suspended, then a judgment for
possession may issue forthwith. On the other hand, if the jury determines
that the entire rental obligation has been extinguished by the landlord’s
total breach, then the action for possession on the ground of nonpayment
must fail.15
The jury may find that part of the tenant’s rental obligation has been
suspended but that part of the unpaid back rent is indeed owed to the
landlord. In these circumstances, no judgment for possession should issue
if the tenant agrees to pay the partial rent found to be due. If the tenant
refuses to pay the partial amount, a judgment for possession may then be
entered.

Notes and Questions

1. Common law evolution and the judicial role. The United States
Court of Appeals for the District of Columbia, the federal court to which
Judge J. Skelly Wright had been appointed by President Kennedy,
regularly heard landlord-tenant matters in the 1960s. In a letter to
Professor Edward Rabin, Judge Wright reflected on why there were such
significant changes in landlord-tenant law in that period. “I was indeed
influenced,” Judge Wright noted, “by the fact that, during the nationwide
racial turmoil of the sixties and the unrest caused by the injustice of
racially selective service in Vietnam, most of the tenants in Washington,
D.C. slums were poor and black and most of the landlords were rich and
white. There is no doubt in my mind that these conditions played a
subconscious role in influencing my landlord and tenant decisions.”
Edward H. Rabin, The Revolution in Landlord-Tenant Law: Causes and

1156
Consequences, 69 Cornell L. Rev. 517, 549 (1984) (quoting an October
14, 1982 letter from Judge J. Skelly Wright). Were these legitimate
considerations to influence Judge Wright? Would it have been possible for
a judge sitting in the District of Columbia to rule on landlord-tenant
matters at the time without considering them?
Allowing the tenant to raise the landlord’s violation of the housing
code or analogous failures to provide habitable premises makes eviction
proceedings considerably more complicated, drawn out, and expensive.
Because of this, the defense seems to contradict the policy underlying
summary process statutes, whose purpose was to provide the landlord with
relatively expeditious proceedings for eviction of tenants who were
violating the terms of the lease. Is the implied warranty of habitability
compatible with the policies underlying summary process statutes? If so,
how?
It may (or may not) be helpful to note that many states responded to
the judicial creation of the implied warranty of habitability by
incorporating it into their landlord-tenant legislation. To the extent the
implied warranty violated the purpose or intent of the summary process
statutes, these legislative enactments explicitly or implicitly amended the
summary process procedure by allowing tenants to raise the warranty as a
defense to a claim for possession.
Did Judge Wright engage in illegitimate judicial activism to create a
new defense to the landlord’s claim for possession? Or was the Javins
decision a legitimate implementation of the policies underlying the
housing code?
2. Relation to building and housing codes. Building codes set
minimum requirements for a building’s structural safety, water and waste
systems, mechanical equipment, electrical wiring, and other standards.
Housing codes more directly regulate the safety and sanitary conditions of
residential buildings, typically addressing requirements for minimum
dwelling space, ventilation, and adequate services. These codes are
generally administered and enforced by local government agencies. Many
housing codes also provide statutory rights to tenants, such as the right to
escrow rent while violations are outstanding or even to terminate the lease.
See, e.g., Mich. Comp. Laws §125.53; Ohio Rev. Code §5321.07B. If a
condition in a rental unit fails to meet the standards of the housing code, a
tenant may have distinct rights under her lease and the housing code.
3. Majority rule. The implied warranty of habitability has been
adopted in almost all states for residential tenancies. However, there are
still a few holdouts. See, e.g., Harper v. Coleman, 705 So. 2d 388 (Ala.

1157
Civ. App. 1996), rev’d on other grounds by Ex parte Coleman, 705 So. 2d
392 (Ala. 1997).
Is the warranty waivable or disclaimable? If so, then it is merely a
presumption or default position that the courts will assume to be the
agreement of the parties in the absence of language to the contrary. If the
implied warranty is nondisclaimable or nonwaivable, it constitutes a
compulsory term in the contract that the parties have no power to alter by
agreement. Javins provided that “[a]ny private agreement to shift the
duties would be illegal and unenforceable.” 428 F.2d at 1082 n.58. This
position is supported in most jurisdictions by statute or common law. See,
e.g., Hilder v. St. Peter, 478 A.2d 202, 210 (Vt. 1984); Mass. Gen. Laws
ch. 186, §14.
Some states measure the landlord’s obligations by reference to state or
local housing codes, holding that the warranty is breached when the
landlord fails to comply with applicable building code provisions so as to
materially impair health and safety. Other courts, however, have measured
the landlord’s obligations independently of the applicable housing code,
holding that landlords have an obligation to conform with “general
community standards of suitability for occupancy.” Robert S. Schoshinski,
American Law of Landlord and Tenant §3:17, at 128 (1980). See Detling
v. Edelbrock, 671 S.W.2d 265, 270 (Mo. 1984) (habitability to be judged
by community standards, including but not limited to local housing codes).
Examples of problems that are likely to violate the implied warranty
include lack of heat or hot water, broken windows, pest infestation, and
leaky roofs.
If a landlord fails to provide a necessary service, such as heat or hot
water, does the tenant have an immediate right to a rent reduction when the
problem occurs to compensate for the lowered rental value of the premises,
or does the landlord have a grace period within which to fix the problem?
Many courts hold that the implied warranty is not violated until the
landlord has been notified of the problem and has a reasonable opportunity
to fix it. Chiodini v. Fox, 207 S.W.3d 174, 177 (Mo. Ct. App. 2006).
However, some courts find a violation the moment the condition occurs,
Knight v. Hallsthammar, 623 P.2d 268, 273 (Cal. 1981) (breach of
warranty existed whether or not landlord had reasonable time to repair
defects existing when he purchased the building), and others hold that the
violation starts when the landlord is notified, Berman & Sons, Inc. v.
Jefferson, 396 N.E.2d 981, 985-986 (Mass. 1979) (breach occurred when
landlord received notice of lack of heat and hot water, even though he
promptly fixed the problem). Which approach is better?
For commercial leases, most courts have adopted the modern view that

1158
the covenants in commercial leases are dependent rather than independent;
some, however, have retained the older view that they are independent.
Compare Wesson v. Leone Enterprises, Inc., 774 N.E.2d 611 (Mass. 2002)
(covenants in commercial lease are dependent), with Universal
Communications Network, Inc. v. 229 West 28th Owner, LLC, 926
N.Y.S.2d 479, 480 (N.Y. App. Div. 2011) (covenants in commercial lease
independent unless lease terms state otherwise). On the other hand, while a
few states find an implied warranty of suitability for intended purposes to
commercial leases, e.g., Davidow v. Inwood N. Professional Group, 747
S.W.2d 373 (Tex. 1988), most still do not do so, holding that commercial
leases have no implied warranties unless they state so explicitly. Pinzon v.
A & G Props., 874 A.2d 347, 351 (D.C. 2005); Propst v. McNeill, 932
S.W.2d 766 (Ark. 1996); B.W.S. Investments v. Mid-Am Restaurant, Inc.,
459 N.W.2d 759 (N.D. 1990). And those few states that do recognize
warranties for commercial leases make them disclaimable. See Gym-N-I
Playgrounds, Inc. v. Snider, 220 S.W.2d 905 (Tex. 2007). Does it make
sense to distinguish commercial from residential leases in terms of the
expectations of the parties and the other grounds Judge Wright discussed
in Javins?
4. Remedies. Various remedies are available to vindicate the tenant’s
rights under the implied warranty of habitability. In most states, the
remedies available to tenants come from a combination of common law
doctrines and specific statutory provisions, some of which may explicitly
modify or limit common law remedies. See URLTA §§4.104-4.105; see
also RURLTA §§401-409. The most important remedies are discussed
below.
a. Rescission, or the right to move out before the end of the lease
term. The landlord’s violation of his contractual obligation to provide
a habitable apartment entitles the tenant to stop performance of her
contractual obligations. Thus, the tenant may repudiate the contract and
move out before the end of the lease term without being liable for rent
for the months remaining on the lease. This is the case when breach of
the warranty of habitability results in a material change in housing
conditions even when that change would not amount to constructive
eviction. Wesson v. Leone Enterprises, Inc., supra (finding this result
in the case of a commercial lease). Suppose the tenant moves out five
months before the end of the lease term, and the landlord sues the
tenant for the remaining five months’ rent. If the tenant can show that
the landlord violated the implied warranty of habitability, then the
tenant has a defense to the landlord’s claim for the remaining rent.

1159
 b. Rent withholding. If the landlord breaches the implied warranty
of habitability, the tenant ordinarily has the right to stop paying rent
and continue living in the premises. If the landlord sues the tenant for
back rent owed, the tenant may raise the violation of the warranty as a
defense to the claim for back rent. If the landlord has breached the
implied warranty, then the tenant’s failure to pay rent does not
constitute a breach of the tenant’s contractual obligations; rather, the
tenant had a legal right to stop paying rent under the circumstances.
This distinguishes the implied warranty of habitability from
constructive eviction, which ordinarily requires the tenant to move out
to become entitled to stop paying rent before the end of the lease term.
If the landlord sues the tenant for possession on the grounds of
nonpayment of rent, the tenant can raise the violation of the warranty
as a defense to the eviction proceedings. If the defense is established,
the landlord will not be allowed to evict the tenant, who will be able to
continue living in the apartment.
It is advisable for tenants who are contemplating rent withholding to
determine whether any statutes regulate their ability to withhold rent.
These statutes may, for example, require that the tenant give notice to
the landlord of the defect in the premises before the tenant is entitled to
withhold rent. They may also limit rent withholding to situations in
which the tenant has verified the complaint by calling a local housing
inspector to document the existence and seriousness of the housing
code violation.
It is also advisable for tenants who stop paying rent to the landlord to
deposit the usual rental amount in a separate account, called an escrow
account. If it turns out that the tenant was not entitled to withhold rent,
the court will order the tenant to pay back rent to the landlord. If the
tenant is unable to pay this back rent within a reasonable period of
time, the tenant can be evicted. It is therefore advisable for the tenant to
save, rather than spend, the money that would otherwise be going to
the landlord as the monthly rent. Some states may have statutes
requiring tenants to make rental payments to an escrow account. In the
alternative, these statutes may allow the landlord to go to court for an
order requiring the tenant to pay the rent into an escrow account held
by the court clerk pending adjudication.
c. Rent abatement. When the landlord violates the implied warranty
of habitability, the tenant ordinarily is entitled to a reduction in the
rent, also known as rent abatement. The tenant can sue the landlord
for a declaratory judgment that the landlord has violated the implied
warranty of habitability and ask the court to order the landlord to

1160
reimburse the tenant for all or a portion of the rent previously paid to
the landlord during the period of the violation.
Usually, however, the tenant withholds rent, waits to be sued by the
landlord for back rent or possession, then argues that the rent should be
abated for the period of the violation. When the case is adjudicated, the
court ordinarily will determine what, if any, portion of the rent
withheld should be paid back to the landlord. If the violation of the
implied warranty is quite serious, the landlord may get nothing for the
period of the violation. If the violation is less serious, the court may
rule that the tenant is obligated to pay a portion of the rent, such as 25
or 50 percent.
The amount of the rent deduction depends on the test used in the
jurisdiction. Some states apply a fair market value test. The amount of
rent owed to the landlord during the period of the violation is based on
the fair market value of the premises “as is” or with the defect. Most
states simply reduce the rent by a percentage amount that reflects the
seriousness of the violation and the amount of discomfort experienced
by the tenant.
d. Repair and deduct. The tenant may be able to pay for needed
repairs herself and then deduct the cost of the repairs from the rent paid
to the landlord. Local statutes may regulate this practice by limiting the
amount deducted or the kinds of repairs allowed.
e. Injunctive relief, or specific performance. Some states, by
statute or common law, allow tenants to bring a lawsuit against the
landlord for an injunction ordering the landlord to comply with the
housing code by making needed repairs.
f. Administrative remedies. Finally, many states provide for
administrative remedies. The local housing code may include
procedures for enforcement by local housing inspectors. For example,
the aggrieved tenant may be able to call the local housing inspector to
ask for a rapid inspection of the apartment. If the inspector finds
material violations of the housing code, the inspector may then contact
the landlord herself and order repairs to be made. If the landlord fails to
make repairs, the inspector may be empowered to bring a court action
for injunctive relief, ordering the landlord to comply with the housing
code. The inspector may also seek civil damages against the landlord
as provided by statute; these damages are paid to the state rather than to
the tenant.
g. Criminal penalties. Building codes may provide for criminal
penalties, including fines and imprisonment, for landlords who fail to

1161
 fix dangerous and unlawful conditions in their apartment buildings.
Judges have even ordered recalcitrant landlords to live for a period of
time in one of their substandard buildings as punishment for continued
and unconscionable violations of the law. Luz Delgado, Landlord
Forced to Live in His Decrepit Property, Boston Globe, June 10, 1992,
at 50.
h. Compensatory damages. In most cases, tenants raise the implied
warranty of habitability as a defense to claims by landlords for back
rent or possession. Sometimes, however, tenants bring claims for
compensatory damages against landlords for violation of the implied
warranty either as independent lawsuits or as counterclaims to landlord
suits. A claim for damages may seek an amount of money that exceeds
the rent rather than merely a reduction in the rent or reimbursement for
some of the rent already paid. See Hilder v. St. Peter, supra (tenant
claim for damages). Damages might exceed the amount of the rent if
the violation harms valuable personal property of the tenant, such as
the expensive musical equipment owned by the tenant in Minjak (see
§4.1, above), or if the tenant seeks reimbursement for the costs of
staying in a hotel while the premises were uninhabitable. Ordinarily,
however, courts are likely to assume that a judgment for breach of the
duty of habitability cannot exceed the agreed-upon rent on the ground
that the rental amount constitutes the value of what was lost by the
tenant.
Damages for personal injury may require a showing of negligence
on the part of the landlord, which may or may not be present in the
context of a violation of the implied warranty. This issue, as well as the
question of damages for infliction of severe emotional distress, is
discussed below in §4.4.
5. Natural disasters and other events beyond a landlord’s control.
In Park West Management Corp. v. Mitchell, 391 N.E.2d 1288 (1979), a
17-day strike by an apartment complex owner’s staff interrupted
maintenance and left piles of rotting garbage, which created conditions so
serious that the New York City Department of Health declared a health
emergency. Some tenants withheld rent for the period of the strike and
when the landlord sued for nonpayment, one tenant asserted the implied
warranty of habitability as a defense. The New York Court of Appeals
agreed with the tenant that the landlord was responsible for conditions in
the complex notwithstanding the strike, holding that “conditions
occasioned by . . . acts of third parties or natural disaster are within the
scope of the warranty.” Id. at 1294.

1162
 There is a general consensus among scientists that climate change is
likely increasing the frequency and intensity of certain weather-related
events such as extreme coastal high water, although there remain
significant questions of measurement. See Sonia Seneviratne et al.,
Changes in Climate Extremes and Their Impacts on the Natural Physical
Environment, in Managing the Risks of Extreme Events and Disasters to
Advance Climate Change Adaptation 178-180 (A Special Report of
Working Groups I and II of the Intergovernmental Panel on Climate
Change, Cambridge University Press 2012). If this trend continues,
questions of liability for natural disaster, and how best to adapt to a
changing climate, are likely to loom larger in many areas of property law,
including landlord-tenant. Cf. John A. Lovett, Property and Radically
Changed Circumstances: Hurricane Katrina and Beyond, 74 Tenn. L.
Rev. 463, 495-510 (2007).
In the wake of Hurricane Sandy in 2012, New York City experienced
severe flooding, with many tenants losing electricity, heat, and other
essential services. See Damon Howard, Landlord-Tenant Obligations in
the Aftermath of Hurricane Sandy, 248 N.Y. L.J. 4 (2012). Should the
warranty of habitability apply to these kinds of wide-scale disasters? If not,
why not? Who is likely to be in a better position to respond, landlords or
tenants? Or is another institutional response necessary?
6. Impact of the implied warranty? How important is the implied
warranty of habitability in practice? The promise of the warranty — and
the broader revolution in landlord-tenant law of which it was a part —
requires tenants to have the resources and knowledge to assert their rights
in litigation. It also requires capable advocates and courts that are
institutionally equipped to resolve the often complex questions raised by
issues such as failure to repair and landlord retaliation. Indeed, one reason
why Javins was brought was that a Neighborhood Legal Services Program
office was located at Clifton Terrace. See Richard H. Chused, Saunders
(a.k.a. Javins) v. First National Realty Corporation, in Property Stories
136 (Gerald Korngold & Andrew P. Morriss eds. 2d ed. 2009).
Professor David Super argues that formal limitations in the doctrine,
notably that tenants who withhold rent in many states must show that they
did so solely to contest repair issues and the practice of landlords obtaining
protective orders requiring tenants to deposit rent as condition of raising a
warranty defense, have undermined the warranty. Super also points to a
court system with few resources and a propensity to favor landlords as
repeat players as factors in limiting the warranty’s impact. See David A.
Super, The Rise and Fall of the Implied Warranty of Habitability, 99 Cal.

1163
L. Rev. 389 (2011). How might these shortcomings be remedied? Would
our legal system be better off without an affirmative obligation on the part
of landlords to maintain habitable premises, even if relatively few tenants
are able to succeed in pressing claims in court based on this duty?
7. Habitability in the Uniform Residential Landlord and Tenant Act.
The URLTA codifies a version of the implied warranty of habitability. The
excerpts below contain the primary relevant provisions. RURLTA, while
largely consistent with its predecessor act, would add a list of specific
landlord duties on issues such as waterproofing and weather protection,
plumbing, hot and cold running water, adequate ventilation and heating,
good working electrical lighting, pest control, hazardous materials
(including lead paint), among others. RURLTA §302(a).
As you read the URLTA provisions below, consider the extent to
which the provisions track the common law warranty or modify it.

§1.403. Prohibited Provisions in Rental Agreements

(a) A rental agreement may not provide that the tenant:
(1) agrees to waive or forego rights or remedies under this Act;
(2) authorizes any person to confess judgment on a claim arising out
of the rental agreement;
(3) agrees to pay the landlord’s attorney’s fees; or
(4) agrees to the exculpation or limitation of any liability of the
landlord arising under law or to indemnify the landlord for that liability
or the costs connected therewith.
(b) A provision prohibited by subsection (a) included in a rental
agreement is unenforceable. If a landlord deliberately uses a rental
agreement containing provisions known by him to be prohibited, the tenant
may recover in addition to his actual damages an amount up to [3] months’
periodic rent and reasonable attorney’s fees.

§1.404. Separation of Rents and Obligations to Maintain Property

Forbidden
A rental agreement, assignment, conveyance, trust deed, or security
instrument may not permit the receipt of rent free of the obligation to
comply with Section 2.104(a).

§2.104. Landlord to Maintain Premises

(a) A landlord shall
(1) comply with the requirements of applicable building and housing
codes materially affecting health and safety;

1164
 (2) make all repairs and do whatever is necessary to put and keep the
premises in a fit and habitable condition;
(3) keep all common areas of the premises in a clean and safe
condition;
(4) maintain in good and safe working order and condition all
electrical, plumbing, sanitary, heating, ventilating, air-conditioning, and
other facilities and appliances, including elevators, supplied or required
to be supplied by him;
(5) provide and maintain appropriate receptacles and conveniences
for the removal of ashes, garbage, rubbish, and other waste incidental to
the occupancy of the dwelling unit and arrange for their removal; and
(6) supply running water and reasonable amounts of hot water at all
times and reasonable heat [between [October 1] and [May 1]] except
where the building that includes the dwelling unit is not required by law
to be equipped for that purpose, or the dwelling unit is so constructed
that heat or hot water is generated by an installation within the exclusive
control of the tenant and supplied by a direct public utility connection.
(b) If the duty imposed by paragraph (1) of subsection (a) is greater
than any duty imposed by any other paragraph of that subsection, the
landlord’s duty shall be determined by reference to paragraph (1) of
subsection (a).
(c) The landlord and tenant of a single family residence may agree in
writing that the tenant perform the landlord’s duties specified in
paragraphs (5) and (6) of subsection (a) and also specified repairs,
maintenance tasks, alterations, and remodeling, but only if the transaction
is entered into in good faith.
(d) The landlord and tenant of any dwelling unit other than a single
family residence may agree that the tenant is to perform specified repairs,
maintenance tasks, alterations, or remodeling only if
(1) the agreement of the parties is entered into in good faith and is
set forth in a separate writing signed by the parties and supported by
adequate consideration;
(2) the work is not necessary to cure noncompliance with subsection
(a)(1) of this section; and
(3) the agreement does not diminish or affect the obligation of the
landlord to other tenants in the premises.

§3.101. Tenant to Maintain Dwelling Unit

A tenant shall
(1) comply with all obligations primarily imposed upon tenants by
applicable provisions of building and housing codes materially affecting

1165
 health and safety;
(2) keep that part of the premises that he occupies and uses as clean
and safe as the condition of the premises permit;
(3) dispose from his dwelling unit all ashes, garbage, rubbish, and
other waste in a clean and safe manner;
(4) keep all plumbing fixtures in the dwelling unit or used by the
tenant as clear as their condition permits;
(5) use in a reasonable manner all electrical, plumbing, sanitary,
heating, ventilating, air-conditioning, and other facilities and appliances
including elevators in the premises;
(6) not deliberately or negligently destroy, deface, damage, impair,
or remove any part of the premises or knowingly permit any person to
do so; and
(7) conduct himself and require other persons on the premises with
his consent to conduct themselves in a manner that will not disturb his
neighbors’ peaceful enjoyment of the premises.

§4.101. Noncompliance by the Landlord in General

(a) Except as provided in this Act, if there is a material noncompliance
by the landlord with the rental agreement or a noncompliance with Section
2.104 materially affecting health and safety, the tenant may deliver a
written notice to the landlord specifying the acts and omissions
constituting the breach and that the rental agreement will terminate upon a
date not less than [30] days after receipt of the notice if the breach is not
remedied in [14] days, and the rental agreement shall terminate as
provided in the notice subject to the following:
(1) If the breach is remedial by repairs, the payment of damages or
otherwise and the landlord adequately remedies the breach before the
date specified in the notice, the rental agreement shall not terminate by
reason of the breach.
(2) If substantially the same act or omission which constituted a
prior noncompliance of which notice was given recurs within [6]
months, the tenant may terminate the rental agreement upon at least [14
days’] written notice specifying the breach and the date of termination
of the rental agreement.
(3) The tenant may not terminate for a condition caused by the
deliberate or negligent act or omission of the tenant, a member of his
family, or other person on the premises with his consent.
(b) Except as provided in this Act, the tenant may recover actual
damages and obtain injunctive relief for noncompliance by the landlord
with the rental agreement or Section 2.104. If the landlord’s

1166
noncompliance is willful the tenant may recover reasonable attorney’s
fees.
(c) The remedy provided in subsection (b) is in addition to any right of
the tenant arising under Section 4.101(a).
(d) If the rental agreement is terminated, the landlord shall return all
security recoverable by the tenant under Section 2.101 and all prepaid rent.

§4.103. Self-Help for Minor Defects

(a) If the landlord fails to comply with the rental agreement or Section
2.104, and the reasonable cost of compliance is less than [$100], or an
amount equal to [one-half] the periodic rent, whichever amount is greater,
the tenant may recover damages for the breach under Section 4.101(b) or
may notify the landlord of his intention to correct the condition at the
landlord’s expense. If the landlord fails to comply within [14] days after
being notified by the tenant in writing or as promptly as conditions require
in case of emergency, the tenant may cause the work to be done in a
workmanlike manner and, after submitting to the landlord an itemized
statement, deduct from his rent the actual and reasonable cost or the fair
and reasonable value of the work, not exceeding the amount specified in
this subsection.
(b) A tenant may not repair at the landlord’s expense if the condition
was caused by the deliberate or negligent act or omission of the tenant, a
member of his family, or other person on the premises with his consent.

§4.104. Wrongful Failure to Supply Heat, Water, Hot Water, or

Essential Services
(a) If contrary to the rental agreement or Section 2.104 the landlord
willfully or negligently fails to supply heat, running water, hot water,
electric, gas, or other essential service, the tenant may give written notice
to the landlord specifying the breach and may
(1) take reasonable and appropriate measures to secure reasonable
amounts of heat, hot water, running water, electric, gas, and other
essential service during the period of the landlord’s noncompliance and
deduct their actual and reasonable cost from the rent; or
(2) recover damages based upon the diminution in the fair rental
value of the dwelling unit; or
(3) procure reasonable substitute housing during the period of the
landlord’s noncompliance, in which case the tenant is excused from
paying rent for the period of the landlord’s noncompliance.
(b) In addition to the remedy provided in paragraph (3) of subsection
(a) the tenant may recover the actual and reasonable cost or fair and

1167
reasonable value of the substitute housing not in excess of an amount equal
to the periodic rent, and in any case under subsection (a) reasonable
attorney’s fees.
(c) If the tenant proceeds under this section, he may not proceed under
Section 4.101 or Section 4.103 as to that breach.
(d) Rights of the tenant under this section do not arise until he has
given notice to the landlord or if the condition was caused by the
deliberate or negligent act or omission of the tenant, a member of his
family, or other person on the premises with his consent.

§4.105. Landlord’s Noncompliance as Defense to Action for Possession

or Rent
(a) In an action for possession based upon nonpayment of the rent or in
an action for rent when the tenant is in possession, the tenant may
[counterclaim] for any amount he may recover under the rental agreement
or this Act. In that event the court from time to time may order the tenant
to pay into court all or part of the rent accrued and thereafter accruing, and
shall determine the amount due to each party. The party to whom a net
amount is owed shall be paid first from the money paid into court, and the
balance by the other party. If no rent remains due after application of this
section, judgment shall be entered for the tenant in the action for
possession. If the defense or counterclaim by the tenant is without merit
and is not raised in good faith, the landlord may recover reasonable
attorney’s fees.
(b) In an action for rent when the tenant is not in possession, he may
[counterclaim] as provided in subsection (a) but is not required to pay any
rent into court.

Problems
1. Assume your state has adopted the URLTA and imposes a warranty
of habitability on residential tenancies but imposes no implied warranty of
habitability or suitability in commercial tenancies. Assume the same facts
as in Minjak. The tenants rent a loft — a large open space — pursuant to a
written agreement entitled “Commercial Lease,” stating that the premises
are leased for “commercial purposes.” The landlord knows that the tenants
will be using the space for work purposes, storing and using equipment to
make electronic music, but the landlord knows also that the tenants intend
to live in the space, treating it as their residence. The landlord fails to
maintain the premises in a safe condition, allowing hazardous conditions
— such as flooding in the tenants’ apartment caused by the operation of a

1168
health club with jacuzzis upstairs, the presence of huge clouds of dust
caused by the landlord’s renovation work in common areas, and the
formation of holes in the stairway — to develop unchecked. Two questions
arise.
a. How would the courts interpret the lease — as a residential lease,
a commercial lease, or a mixed residential/commercial lease?
b. If the courts interpret the lease as a commercial or a mixed
residential/commercial lease, and the tenants are using the space as
their residence, is it still subject to the implied warranty of habitability,
or does the “commercial” designation constitute an effective waiver by
the tenant of the implied warranty?
2. Assume you are in a jurisdiction that has adopted the URLTA
making the implied warranty of habitability nondisclaimable in residential
leaseholds (see §§1.403, 1.404) but has refused to adopt §2.104(d). The
legislature is considering a proposed amendment to allow tenants to waive
the protections of the implied warranty, possibly by deleting §1.404 from
the statute. This does not mean that the landlord would be relieved of the
obligation to comply with the relevant provisions of the housing code,
which regulates the conditions in rental housing. Rather, the tenant would
not be able to raise the landlord’s failure to maintain the apartment in a
habitable condition as a defense to a claim for possession or back rent.
Thus, by waiving the protection of the implied warranty, the tenant agrees
to pay rent regardless of any housing code violations; also, such violations
do not entitle the tenant to move out before the end of the lease term and
stop paying rent.
The local real estate board, an association of landlords, argues that
landlords and tenants should be free to make whatever arrangements they
wish. The board argues also that continued payment of the rent is essential
to provide the landlord funds to pay for repairs to the apartment. The local
tenants’ association, on the other hand, argues that the tenant’s right to
withhold rent if the landlord fails to maintain the apartment in a habitable
condition is the tenant’s most powerful — and perhaps her only effective
— way to induce recalcitrant landlords to comply with the housing code.
Suppose you are testifying before a legislative committee on the
proposed amendment to the statute.
a. What arguments would you make on behalf of the real estate
board to allow tenants to waive the protections of the implied warranty
of habitability?
b. What arguments would you make on behalf of the tenants’
association to make the protections of the implied warranty of

1169
 habitability nondisclaimable?
3. Tenants living in an apartment in a 20-unit building in New England
in the wintertime awake to find that they have no heat. They call the
building manager to fix the problem, and he says he will talk to the
landlord and call them back. Two hours later, the manager calls to say that
the furnace is broken and it is not clear when it will be fixed. The
temperature outside the apartment is 30 degrees Fahrenheit and the
temperature inside is now about 55 degrees. The tenants then read in the
morning newspaper that the landlord, who owns ten buildings in the
surrounding area, is in financial straits and may be forced to declare
bankruptcy. The tenants call you for advice. What rights do they have
under the URLTA, and how should they proceed? As the landlord’s
lawyer, what advice would you give?

§4.3 Retaliatory Eviction

Hillview Associates v. Bloomquist

440 N.W.2d 867 (Iowa 1989)

JAMES H. ANDREASEN, Justice.
Gracious Estates Mobile Home Park (Gracious Estates) is located in
Des Moines. It is owned by Hillview Associates (Hillview), a partnership
based in California. The general partner of Hillview is William
Cavanaugh, a resident of California. Management of Gracious Estates has
been delegated to a company known as Tandem Management Services,
Inc. (Tandem), also owned by Cavanaugh and the other general partners of
Hillview. Tandem employed Kathy Nitz as a regional manager, Gennie
Smith as park manager and Doug Cavanaugh as property manager at
Gracious Estates.
In January 1987 tenants at Gracious Estates began to meet informally
to discuss their concerns over the physical condition of the trailer court and
recent increases in rent. On January 28, 1987, the first meeting of a
tenant’s association was held in the clubhouse of Gracious Estates, and
approximately 125 tenants came to the meeting. This meeting resulted in
an agenda of specific concerns for the health, safety and quality of living
in Gracious Estates. A volunteer leadership committee was established for
the association, now known as the Gracious Estates Tenant’s Association.
In the course of organizing and articulating complaints, tenants contacted
the Iowa Attorney General’s office and their state representative.
On February 9, 1987, a meeting was held between approximately five

1170
members of the association, Ms. Nitz and the park maintenance supervisor.
The tenants lodged several complaints at this meeting. This meeting lasted
approximately one hour and was relatively calm. The relationship between
the tenant’s association and the management of Gracious Estates began to
erode. The tenants were frustrated with the lack of action taken by the
management of Gracious Estates.
A meeting with Ms. Nitz was scheduled for April 15, 1987. A meeting
did occur on April 15 between representatives of the tenants association
and Ms. Nitz. This “meeting” was held in Nitz’s private office and lasted
approximately five to ten minutes. The discussion quickly disintegrated
into a shouting match which climaxed in a physical altercation between
Nitz and one of the tenants, Kimber Davenport.
After this meeting, the management of the trailer court served
ultimatums on all tenants requiring them to sign the park rules or be
evicted. Management also sought out tenants not in the tenant’s
association in an attempt to start a rival tenants’ association favorable to
management. On April 22, 1987, Hillview served a thirty-day notice of
termination on the following tenants: Tom and Sandra Bloomquist;
Kimber and Reva Davenport; Richard and Nellie Swartz; and Donald and
Judith Ray. At least one member of each of these married couples was
present at the April 15 meeting. A former secretary of Ms. Nitz testified
that “they’d [management] get these now, and then the rest later. That way
it wouldn’t look like they were doing it because they were members of an
association.”
Hillview later discovered that the thirty-day notice did not provide
specific grounds for termination as required by statute. On June 4, 1987,
Hillview again served each of these tenants with a notice of termination
which provided a sixty-day period for them to leave. At the end of the
sixty-day period, the tenants remained in possession. Hillview then served
three-day notices to quit. The tenants remained in the park and Hillview
filed a forcible entry and detainer action.
In this summary action for forcible entry and detainer, the tenants
raised the defenses of retaliatory eviction and waiver.

III
The Iowa Legislature adopted remedial legislation for mobile home
tenants in the Mobile Home Parks Residential Landlord and Tenant Act.
Iowa Code §562B.32 (1987).
[The Act] prohibits retaliatory conduct by landlords:

1. Except as provided in this section, a landlord shall not retaliate by

1171
 increasing rent or decreasing services or by bringing or threatening to bring
an action for possession or by failing to renew a rental agreement after any of
the following:

(a) The tenant has complained to a governmental agency charged with

responsibility for enforcement of a building or housing code of a violation
applicable to the mobile home park materially affecting health and safety.
For this subsection to apply, a complaint filed with a governmental body
must be in good faith.
(b) The tenant has complained to the landlord of a violation under section
562B.16 [requiring landlords to maintain the premises in habitable
condition].
(c) The tenant has organized or become a member of a tenant’s union or
similar organization.
(d) For exercising any of the rights and remedies pursuant to this chapter.

2. If the landlord acts in violation of subsection 1 of this section, the tenant

has a defense in an action for possession. In an action by or against the
tenant, evidence of a complaint within six months prior to the alleged act of
retaliation creates a presumption that the landlord’s conduct was in
retaliation. The presumption does not arise if the tenant made the complaint
after notice of termination of the rental agreement. For the purpose of this
subsection, “presumption” means that the trier of fact must find the existence
of the fact presumed unless and until evidence is introduced which would
support a finding of its nonexistence.
3. Notwithstanding subsections 1 and 2 of this section, a landlord may
bring an action for possession if either of the following occurs:

(a) The violation of the applicable building or housing code was caused
primarily by lack of reasonable care by the tenant or other person in the
household or upon the premises with the tenant’s consent.
(b) The tenant is in default of rent three days after rent is due.

Iowa Code §562B.32 (1987).

IV
In 1968 the United States Court of Appeals for the District of
Columbia held that a landlord was not free to evict a tenant in retaliation
for the tenant’s report of housing code violations. As a matter of statutory
construction and for reasons of public policy, such an eviction would not
be permitted. Edwards v. Habib, 397 F.2d 687, 699 (D.C. Cir. 1968).
However, a tenant who proves a retaliatory purpose is not entitled to
remain in possession in perpetuity. If the illegal purpose is dissipated, the

1172
landlord can, in the absence of legislation or a binding contract, evict the
tenant for legitimate reasons or even for no reason at all. The question of
permissible or impermissible purpose is one of fact for the court or jury.
In 1979 the Iowa Legislature adopted the Uniform Residential
Landlord and Tenant Act and the Mobile Home Parks Residential
Landlord and Tenant Act. Both acts prohibit retaliatory conduct. See Iowa
Code §§562A.36 & 562B.32. In an action by or against the tenant,
evidence of a complaint within six months prior to the alleged act of
retaliation creates a presumption that the landlord’s conduct was in
retaliation. For the purpose of the statutory subsection “presumption”
means the trier of fact must find the existence of the fact presumed unless
and until evidence is introduced which could support a finding of its
nonexistence.
As a matter of statutory construction, we hold this statutory
presumption imposes a burden upon the landlord to produce evidence of
legitimate nonretaliatory reasons to overcome the presumption. The tenant
may then be afforded a full and fair opportunity to demonstrate pretext.
The burden of proof of the affirmative defense of retaliatory termination of
the lease remains upon the tenant. If the landlord does not meet the burden
of producing evidence of a nonretaliatory reason for termination, the
statutory presumption would compel a finding of retaliatory lease
termination. If the landlord does produce evidence of a nonretaliatory
purpose for terminating the lease, then the fact-finder must determine from
all the evidence whether a retaliatory termination has been proven by a
preponderance of the evidence. Although the burden of producing
evidence shifts to the landlord once the tenant has offered evidence of a
complaint within six months of the notice of termination, the burden of
proof remains with the tenant to establish the affirmative defense.
In deciding whether a tenant has established a defense of retaliatory
eviction, we consider the following factors, among others, tending to show
the landlord’s primary motivation was not retaliatory.
(a) The landlord’s decision was a reasonable exercise of business
judgment;
(b) The landlord in good faith desires to dispose of the entire leased
property free of all tenants;
(c) The landlord in good faith desires to make a different use of the
leased property;
(d) The landlord lacks the financial ability to repair the leased
property and therefore, in good faith, wishes to have it free of any
tenant;
(e) The landlord was unaware of the tenant’s activities which were

1173
 protected by statute;
(f) The landlord did not act at the first opportunity after he learned of
the tenant’s conduct;
(g) The landlord’s act was not discriminatory. Restatement (Second)
of Property §14.8 comment f (1977).

V
We find the tenants have offered substantial evidence of a retaliatory
termination. They were active, vocal members of a newly-formed tenant’s
association. They made good faith complaints about the landlord’s failure
to maintain the mobile home park in a clean and safe condition. An
employee of the landlord testified that certain leases were terminated
because the tenants were active members of the tenants association. In
response, the landlord has offered substantial evidence of a nonretaliatory
reason for termination. The tenants who actively participated in the
disturbance and physical abuse of Ms. Nitz during the April 15 meeting
were notified of lease termination, other active members of the association
were not.
According to Ms. Nitz, the tenants surrounded her desk on April 15
and implored her to call California. One of the tenants, Kimber Davenport,
placed both hands in the middle of Nitz’s desk, leaned over the desk,
shouted that Nitz had a “truck-driver’s mentality” and that she wasn’t a
lady. Nitz asked the tenants to leave and all but Mr. and Mrs. Rathburn
refused. Ms. Nitz then left her office and, after a cooling-off period,
returned and demanded that the other tenants leave the office. She again
demanded that they leave and threatened to call the police if they did not.
The tenants began to leave. Mr. Davenport was the last to leave, and as he
left he continued the verbal abuse of Ms. Nitz and gestured to her with his
finger close to her face. According to Ms. Nitz, she pushed his finger away
and Davenport struck her in the face, knocking her into a doorjamb. At
that point, another tenant, Don Carlson, entered the room and physically
removed Davenport.
Davenport’s testimony concerning the April 15 meeting was very
different from Ms. Nitz’s testimony. Davenport testified at the forcible
entry and detainer trial that he was polite and reasonable during this
meeting. Further, he claimed that he did not place his hands on Nitz’s
desk, shout at her, or strike her. Rather, he testified that he pushed her
away with an open hand. Davenport’s testimony loses credibility when it is
compared with his prior testimony in a criminal case concerning this
incident. In his prior testimony, Davenport admitted that he placed his

1174
hands in the middle of Ms. Nitz’s desk, shouted insults at her, and struck
her.
Several conclusions can fairly be drawn from the evidence. First, the
April 15 meeting was initiated by members of a tenant’s association in an
attempt to address grievances with the management of the trailer court.
This meeting disintegrated into a shouting match. The tenants were told to
leave three times and they left only after a threat to call the police. We,
like the trial court, conclude that Davenport did strike Ms. Nitz in the face
as he left the room. He was the principal agitator, quickly leaving the topic
of improvements for the park and launching into a personal attack on Ms.
Nitz.
Under Iowa law, tenants may organize and join a tenant’s association
free from fear of retaliation. The tenants may participate in activities
designed to legitimately coerce a landlord into taking action to improve
living conditions. The presumption of retaliatory eviction in Iowa Code
§562B.32 protects legitimate activities of tenant unions or similar
organizations.
The resolution of landlord-tenant grievances will normally involve
some conflicts and friction between the parties. Arguments, even heated
arguments with raised voices, cannot fairly be described as being in
violation of proper conduct. There is, however, a limit to the type of
conduct that will be tolerated. Kimber Davenport crossed beyond the line
of legitimate behavior. Davenport has failed to establish by a
preponderance of the evidence that the termination of his lease was
retaliatory. The termination of the Davenports’ lease was legitimate and
thus cannot be said to be retaliation arising from his complaints or union
activities.
Although the statutory presumption of retaliation has been neutralized
by the evidence produced by Hillview, we find the evidence of retaliatory
eviction concerning tenants Bloomquist, Swartz, and Ray, to be more
convincing. Although they were present at the April 15 meeting and did
participate in the arguments, they did not encourage or participate in the
assault of Ms. Nitz. The landlord’s response by an attempted termination
of their leases can reasonably be attributed to their active membership in
the tenant’s organization and in response to legitimate complaints they had
made.
We reject Hillview’s argument that there must be specific intent to
retaliate on the part of Hillview’s general partner before the tenants can
prevail on a defense of retaliatory eviction. The evidence reveals that the
local and regional managers of Gracious Estates made the decision to evict
these tenants. The general partner ratified this decision without direct

1175
participation in the decision-making process.
The acts of an agent are attributable to the principal. In this situation,
to require specific intent by the general partner of a multi-state real estate
business would frustrate the intention of Iowa Code §562B.32. Hillview’s
interpretation would allow mid-level managers to retaliate against tenant
associations and seek refuge by keeping top-level directors uninformed of
specific disputes with individual tenants. Tenants Bloomquist, Swartz, and
Ray have established by a preponderance of the evidence their affirmative
defense of retaliatory eviction. Tenants Davenport have not.

Imperial Colliery Co. v. Fout

373 S.E.2d 489 (W. Va. 1988)

THOMAS B. MILLER, Justice:
Danny H. Fout, the defendant below, appeals a summary judgment
dismissing his claim of retaliatory eviction based on the provisions of W.
Va. Code §§55-3A-3(g), which is our summary eviction statute. Imperial
Colliery had instituted an eviction proceeding and Fout sought to defend
against it, claiming that his eviction was in retaliation for his participation
in a labor strike.
This case presents two issues: (1) whether a residential tenant who is
sued for possession of rental property under W. Va. Code §§55-3A-1, et
seq., may assert retaliation by the landlord as a defense, and (2) whether
the retaliation motive must relate to the tenant’s exercise of a right
incidental to the tenancy.
Fout is presently employed by Milburn Colliery Company as a coal
miner. For six years, he has leased a small house trailer lot in Burnwell,
West Virginia, from Imperial Colliery Company. It is alleged that Milburn
and Imperial are interrelated companies. A written lease was signed by
Fout and an agent of Imperial in June, 1983. This lease was for a primary
period of one month, and was terminable by either party upon one month’s
notice. An annual rental of $1.00 was payable in advance on January 1 of
each year. No subsequent written leases were signed by the parties.
On February 14, 1986, Imperial advised Fout by certified letter that his
lease would be terminated as of March 31, 1986. Fout’s attorney
corresponded with Imperial before the scheduled termination date. He
advised that due to various family and monetary problems, Fout would be
unable to timely vacate the property. Imperial voluntarily agreed to a two-
month extension of the lease. A second letter from Fout’s attorney, dated
May 27, 1986, recited Fout’s personal problems and requested that
Imperial’s attempts to oust Fout be held “in abeyance” until they were

1176
resolved. A check for $1.00 was enclosed to cover the proposed extension.
Imperial did not reply.
On June 11, 1986, Imperial sued for possession of the property,
pursuant to W. Va. Code §§55-3A-1, et seq., in the Magistrate Court of
Kanawha County. Fout answered and removed the suit to the circuit court
on June 23, 1986. He asserted as a defense that Imperial’s suit was brought
in retaliation for his involvement in the United Mine Workers of America
and, more particularly, in a selective strike against Milburn. Imperial’s
retaliatory motive was alleged to be in violation of the First Amendment
rights of speech and assembly, and of the National Labor Relations Act, 29
U.S.C. §§151, et seq. Fout also counter-claimed, seeking an injunction
against Imperial and damages for annoyance and inconvenience.
Our initial inquiry is whether retaliation by the landlord may be
asserted by the tenant as a defense in a suit under W. Va. Code §55-3A-
3(g).
It appears that the first case that recognized retaliatory eviction as a
defense to a landlord’s eviction proceeding was Edwards v. Habib, 397
F.2d 687 (D.C. Cir. 1968). [In that case,] the court reviewed at length the
goals sought to be advanced by local sanitary and safety codes. It
concluded that to allow retaliatory evictions by landlords would seriously
jeopardize the efficacy of the codes. A prohibition against such retaliatory
conduct was therefore to be implied, even though the regulations were
silent on the matter.
Many states have protected tenant rights either on the Edwards theory
or have implied such rights from the tenant’s right of habitability. Others
have utilized statutes analogous to section 5.101 of the Uniform
Residential Landlord and Tenant Act, 7B U.L.A. 503 (1985),16 which is
now adopted in fifteen jurisdictions. Similar landlord and tenant reform
statutes in seventeen other states also provide protection for tenancy-
related activities.
Under W. Va. Code §37-6-30, a tenant is, with respect to residential
property, entitled to certain rights to a fit and habitable dwelling. In Teller
v. McCoy, 253 S.E.2d 114 (W. Va. 1978), we spoke at some length of the
common law right of habitability which a number of courts had developed
to afford protection to the residential tenant. We concluded that these
rights paralleled and were spelled out in more detail in W. Va. Code §37-
6-30.
The central theme underlying the retaliatory eviction defense is that a
tenant should not be punished for claiming the benefits afforded by health
and safety statutes passed for his protection. These statutory benefits
become a part of his right of habitability. If the right to habitability is to

1177
have any meaning, it must enable the tenant to exercise that right by
complaining about unfit conditions without fear of reprisal by his landlord.
After the seminal decision in Edwards, other categories of tenant
activity were deemed to be protected. Such activity was protected against
retaliation where it bore a relationship to some legitimate aspect of the
tenancy. For example, some cases provided protection for attempts by
tenants to organize to protect their rights as tenants. Others recognized the
right to press complaints directly against the landlord via oral
communications, petitions, and “repair and deduct” remedies.
A few courts recognize that even where a tenant’s activity is only
indirectly related to the tenancy relationship, it may be protected against
retaliatory conduct if such conduct would undermine the tenancy
relationship. Typical of these cases is Windward Partners v. Delos Santos,
577 P.2d 326 (Haw. 1978). There a group of month-to-month tenants gave
testimony before a state land use commission in opposition to a proposal to
redesignate their farm property from “agricultural” to “urban” uses. The
proposal was sponsored by the landlord, a land developer. As a result of
coordinated activity by the tenants, the proposal was defeated. Within six
months, the landlord ordered the tenants to vacate the property and brought
suit for possession.
The Hawaii Supreme Court noted that statutory law provided for
public hearings on proposals to redesignate property, and specifically
invited the views of the affected tenants. The court determined that the
legislative policy encouraging such input would be jeopardized “if . . .
[landlords] were permitted to retaliate against . . . tenants for opposing
land use changes in a public forum.” 577 P.2d at 333.
The Legislature, in giving approval to the retaliation defense, must
have intended to bring our State into line with the clear weight of case law
and statutory authority outlined above. We accordingly hold that
retaliation may be asserted as a defense to a summary eviction proceeding
under W. Va. Code §§55-3A-1, et seq., if the landlord’s conduct is in
retaliation for the tenant’s exercise of a right incidental to the tenancy.
Fout seeks to bring this case within the Windward line of authority. He
argues principally that Imperial’s conduct violated a public policy which
promotes the rights of association and free speech by tenants. We do not
agree, simply because the activity that Fout points to as triggering his
eviction was unrelated to the habitability of his premises.
From the foregoing survey of law, we are led to the conclusion that the
retaliatory eviction defense must relate to activities of the tenant incidental
to the tenancy. First Amendment rights of speech and association unrelated
to the tenant’s property interest are not protected under a retaliatory

1178
eviction defense in that they do not arise from the tenancy relationship.
Such rights may, of course, be vindicated on other independent grounds.

Notes and Questions

1. Retaliatory eviction. In the famous case of Robinson v. Diamond
Housing Corp., 463 F.2d 853 (D.C. Cir. 1972), the landlord, Diamond
Housing, had brought an earlier lawsuit against the month-to-month
tenant, Mrs. Robinson, for possession on the ground of nonpayment of
rent. The landlord lost that lawsuit when the tenant successfully raised the
defense of the landlord’s violation of the warranty of habitability, id. at
858:

Specifically, Mrs. Robinson introduced evidence showing that large pieces of

plaster were missing throughout the house, that there was no step from the
front walk to the front porch, that the front porch was shaky and unsafe, that
there was a wall in the back bedroom which was not attached to the ceiling
and which moved back and forth when pressed, that nails protruded along the
side of the stairway, that there was a pane of glass missing from the living
room window, and that the window frame in the kitchen was so far out of
position that one could see into the back yard through the space between it
and the wall.

The landlord brought a second lawsuit against the tenant, attempting to

end the month-to-month tenancy by providing 30 days’ notice. (Recall that
periodic tenancies renew automatically unless one of the parties notifies
the other that it intends to end the relationship.) The landlord hoped to
evict Mrs. Robinson not because of nonpayment of rent but simply
because the landlord wanted to end the periodic tenancy. The tenant
argued that the landlord’s attempt to end the periodic tenancy and evict her
was in retaliation for her earlier assertion of her legal right to remain in the
apartment because of the landlord’s breach of the implied warranty of
habitability. She argued that the landlord’s retaliatory motivation
constituted a defense to his claim for possession and that she had the right
to continue to possess the property.
The landlord argued that he was unable or unwilling to make the
legally required repairs on the premises necessary to put the housing in
compliance with the housing code and that he intended to take the
apartment off the rental market. If he were not entitled to end the month-
to-month tenancy and evict the tenant under these circumstances, he would
never be able to do so, and the court would have substantially transferred
to the tenant the landlord’s possessory rights in the property.

1179
 The court held that the tenant could successfully raise the defense of
retaliatory eviction under these circumstances. Judge J. Skelly Wright
argued, id. at 860-868:

“In large measure, the scope and effectiveness of tenant remedies for
substandard housing will be determined by the degree of protection given
tenants against retaliatory actions by landlords. If a landlord is free to evict or
otherwise harass a tenant who exercises his right to secure better housing
conditions, few tenants will use the remedies for fear of being put out on the
street.” Daniels, Judicial and Legislative Remedies for Substandard Housing:
Landlord-Tenant Law Reform in the District of Columbia, 59 Geo. L.J. 909,
943 (1971).
The danger stems not from the possibility that landlords might take low-
cost units off the market altogether, but rather from the possibility that they
will do so selectively in order to “make an example” of a troublesome tenant
who has the temerity to assert his legal rights in court.
[However,] Diamond says that it intends to take the unit off the market
altogether when Mrs. Robinson leaves — the very thing which this court has
suggested a landlord do when he is unwilling or unable to repair the
premises. Whatever limitations the law imposes on how it chooses its
tenants, Diamond claims an absolute right to choose not to have any tenants.
First, then, it should be noted that the Edwards defense deals with the
landlord’s subjective state of mind — that is, with his motive. If the
landlord’s actions are motivated by a desire to punish the tenant for
exercising his rights or to chill the exercise of similar rights by other tenants,
then they are impermissible.
It is commonplace, however, that a jury can judge a landlord’s state of
mind only by examining its objective manifestations. Thus when the
landlord’s conduct is “inherently destructive” of tenants’ rights, or
unavoidably chills their exercise, the jury may, under well recognized
principles, presume that the landlord intended this result. An unexplained
eviction following successful assertion of a defense [based on the landlord’s
breach of the implied warranty of habitability] falls within this inherently
destructive category and hence gives rise to the presumption. Once the
presumption is established, it is then up to the landlord to rebut it by
demonstrating that he is motivated by some legitimate business purpose
rather than by the illicit motive which would otherwise be presumed. We
wish to emphasize, however, that the landlord’s desire to remove a tenant
who is not paying rent is not such a legitimate purpose. [Brown v. Southall
Realty Co., 237 A.2d 834 (D.C. 1968)] and the housing code guarantee the
right of a tenant to remain in possession without paying rent when the
premises are burdened with substantial housing code violations making them
unsafe and unsanitary. The landlord of such premises who evicts his tenant
because he will not pay rent is in effect evicting him for asserting his legal

1180
 right to refuse to pay rent.
It does not follow, however, that mere desire to take the unit off the market
is by itself a legitimate business reason which will justify an eviction.
Expression of such a desire begs the further question of why the landlord
wishes to remove the unit. If he wishes to remove the unit for some sound
business reason, then of course he is free to do so. But a landlord who fails to
come forward with a substantial business reason for removing a unit from the
market — such as, for example, his financial inability to make the necessary
repairs — may be presumed to have done so for an illicit reason.
None of this is to say that the landlord may not go out of business entirely
if he wishes to do so or that the jury is authorized to inspect his motives if he
chooses to commit economic harakiri. There would be severe constitutional
problems with a rule of law which required an entrepreneur to remain in
business against his will. Thus we hold that the landlord’s right to
discontinue rental of all his units in no way justifies a partial closing
designed to intimidate the remaining tenants.

Judge Roger Robb wrote a blistering dissent, id. at 871-872:

I cannot accept the proposition espoused by the majority that when a

landlord states under oath and without contradiction that he wishes to remove
a housing unit from the market it will be presumed that his reasons are
“illicit,” unless he is able to prove to the satisfaction of a jury that he is
financially unable to make necessary repairs or has some other “substantial
business reason” for removing the unit from the market. I find no warrant in
law for any such presumption or requirement of proof.
The theory of the majority seems to be that if not an outlaw a landlord is at
least a public utility, subject to regulation by the court in conformity with its
concept of public convenience and necessity. I reject that notion, which in
practical application will commit to the discretion of a jury the management
of a landlord’s business and property.
The majority suggests that its decision will promote the development of
more and better low-cost housing. This reasoning passes my understanding.
In my judgment the majority’s Draconian treatment of landlords will
inevitably discourage investment in housing for rental purposes.

Which position is more convincing?

2. How long may the tenant stay? How long may the tenant stay in
the premises if the landlord is denied the right to evict the tenant? Most
courts hold that the landlord may not evict the tenant until the landlord can
show a legitimate, nonretaliatory business reason for the eviction. They
may not refuse to renew a lease (or grant a periodic tenancy in place of a
term of years) for a retaliatory reason. However, the Utah Supreme Court

1181
criticized this approach. Noting that “we cannot saddle the landlord with a
perpetual tenant,” and requiring the landlord to show that “his actions are
not the result of retaliatory motives” will be a very difficult burden for a
landlord to overcome, the court held that the tenant “should be permitted
to remain until the landlord has made the repairs required by law.”
Building Monitoring System, Inc. v. Paxton, 905 P.2d 1215, 1219 (Utah
1995). The court held that the tenant may be evicted any time after repairs
have been made as long as the tenant is also given “sufficient time, without
the pressure normally exerted in a holdover eviction proceeding, to find
other suitable housing.”
Although the URLTA prohibits retaliatory action by the landlord, see
§5.101; see also RURLTA §901, it does not explain how long the tenant
may stay. A number of states have dealt with the issue by statute. Some
states expressly apply the retaliatory eviction doctrine to the landlord’s
refusal to renew a tenancy, including a term of years. D.C. Code §45-
2552(a); 765 Ill. Comp. Stat. 720/1; N.J. Stat. §2A:42-10.10(d).
Some states have interpreted their statutes to apply to nonrenewal of a
tenancy and not just eviction. See, e.g., Houle v. Quenneville, 787 A.2d
1258, 1263 (Vt. 2001) (interpreting 9 Vt. Stat. §4465, Vermont’s statutory
prohibition against retaliation, to apply to the nonrenewal of a fixed term
lease). In contrast, some states have held that their statutes prohibit
retaliatory eviction of month-to-month tenants but allow landlords to
refuse to renew term-of-years or fixed term leases for retaliatory reasons.
Frenchtown Villa v. Meadors, 324 N.W.2d 133 (Mich. Ct. App. 1982)
(interpreting Mich. Comp. Laws §600.5720). Still other states adopt a
middle position, prohibiting retaliatory eviction for a specified time. For
example, California prohibits a landlord from retaliating against a tenant
for exercising rights protected by the implied warranty for 180 days but
allows landlords freedom to seek not to renew a periodic tenancy or to
increase the rent or otherwise change the terms of the leasehold after that
time. Cal. Civ. Code §1942.5. Accord, Conn. Gen. Stat. §47a-20
(prohibiting eviction for six months after a protected act by a tenant). New
York has passed a statute that applies the retaliatory eviction doctrine to
nonrenewal of a term of years but provides that “a landlord shall not be
required . . . to offer a new lease or a lease renewal for a term greater than
one year and after such extension of a tenancy for one year shall not be
required to further extend or continue such tenancy.” N.Y. Real Prop. Law
§223-b(2).
3. Tenant remedies, landlord rights. Under URLTA, if a landlord
violates the act by retaliating against a tenant, the tenant has several

1182
remedies. The tenant may recover possession of the premises, terminate
the lease, and recover damages; the tenant also has a defense in any
retaliatory action for possession of the premises. URLTA §§4.107,
5.101(b); see also RURLTA §902. URLTA, however, provides that a
landlord may recover possession if “(1) the violation of the applicable
building or housing code was caused primarily by lack of reasonable care
by the tenant, a member of his family, or other person on the premises with
his consent; or (2) the tenant is in default in rent; or (3) compliance with
the applicable building or housing code requires alteration, remodeling, or
demolition which would effectively deprive the tenant of use of the
dwelling unit.” URLTA §5.101(c); see also RURLTA § 901(c) (providing
seven grounds on which a landlord may be excused from a claim of
retaliation).
4. Tenant screening. Landlords regularly screen tenants on criteria
such as credit scores and criminal records. A substantial industry has
emerged providing landlords with information about prospective tenants,
and among the information that has become available is whether a tenant
has been the subject of an eviction action (regardless of the outcome) or
even appeared in housing court. See Motoko Rich, A Blacklist for Renters,
N.Y. Times, Apr. 8, 2004, at F-1. Moreover, even minor disputes with
landlords that result in a judgment against a tenant, for example over the
amount of rent due, can have a significant impact on a tenant’s credit
score, even if the judgment is promptly paid. This can, in turn, impact the
tenant’s future ability not only to rent, but also to obtain a mortgage or any
other debt.
If a conflict between a landlord and a tenant may impact a tenant’s
credit score or place a tenant on a landlord “blacklist,” does this undermine
tenant protections against retaliation? Should tenants be able to litigate
against landlords in a way that would protect their anonymity when they
seek to rent again? Cf. Lior Jacob Strahilevitz, Pseudonymous Litigation,
77 U. Chi. L. Rev. 1239 (2010) (noting that the failure to be able to sue
under a pseudonym may deter some litigation).

Problem
A landlord owns five buildings. Two of the buildings, including
Building 1, are in Cambridge, Massachusetts. The other buildings are in
the nearby towns of Somerville, Arlington, and Brookline. The buildings
have old furnaces that do not work well. All the tenants have month-to-
month leases. Some of the tenants in each building meet to form a tenants’
association to complain to the landlord about inadequate heat and hot

1183
water. The landlord promises to fix the problem but does nothing about it.
The members of the tenants’ association agree to stop paying rent. In
Building 1, about half the tenants stop paying rent. In the other buildings,
anywhere from 10 percent to 25 percent of the tenants similarly withhold
rent.
The landlord responds by suing to evict all the tenants in Building 1 on
the ground that the landlord intends to convert the building to
nonresidential use as an office building. It is crucial to note that the
landlord does not ask for possession on the ground that the tenants have
breached their leases by not paying rent; they are legally entitled to stop
paying rent. Rather, the landlord seeks only to end the periodic tenancies
by providing the statutorily required one month’s notice.
The tenants respond by raising the defense of retaliatory eviction. They
appeal to Hillview Associates v. Bloomquist and to Robinson v. Diamond
Housing, arguing that the landlord has no right to evict tenants if the
landlord’s motive is to retaliate against them for asserting rights guaranteed
by the implied warranty of habitability. The landlord responds by arguing
that there is an exception in both Hillview and Robinson for landlords who
want to go out of business. The landlord claims that he has an absolute
right to convert the building from rental housing to use as an office
building, regardless of his motive. The tenants, however, argue that the
landlord cannot take advantage of that exception unless the landlord goes
out of the rental housing business entirely. Since the landlord is retaining
four other buildings, they argue, the defense is not available. They
conclude that the landlord is using the eviction of these tenants as a way to
intimidate the other tenants and prevent them from complaining to the
authorities or withholding rent, thus losing the right to evict them, if their
allegations are proven.
What should the court do?

§4.4 Landlord’s Tort Liability to Tenants

Strict liability versus negligence. Damages for the landlord’s
violation of the implied warranty of habitability are generally limited to
the amount of the rent or less. Can the tenant sue the landlord for damages
that exceed the amount of the rent during the period of the violation? This
question raises the extent of the landlord’s tort liability to the tenant for
injuries resulting from the landlord’s violation of her duty to provide
habitable premises. Are landlords liable for injuries to tenants caused by
defects in the premises that may or may not result from the landlord’s
failure to take adequate care in maintaining the habitability of the

1184
premises?
Under the traditional rule, landlords were immune from liability to
tenants for injuries arising out of the condition of the premises. See Bowles
v. Mahoney, 202 F.2d 320 (D.C. Cir. 1952). Some states retain this rule.
Isbell v. Commercial Investment Associates, 644 S.E.2d 72 (Va. 2007).
Under the current practice in most states, however, landlords are liable to
tenants for injuries arising out of the landlord’s negligence, including
negligent failure to comply with housing codes or the implied warranty of
habitability. E.g., New Haverford Partnership v. Stroot, 772 A.2d 792
(Del. 2001) (landlord may be liable for negligently caused injury from
toxic mold in building).
Should landlords be liable only when tenants can prove that the
landlord acted negligently (acting so as to cause a foreseeable and
unreasonable risk of harm), or should a strict liability standard apply,
making the landlord liable if a defect in the premises caused the plaintiff’s
injuries, regardless of whether the landlord could have foreseen and
prevented the harm by reasonable maintenance? A negligence claim is
based on an allegation that the landlord is at fault or has acted
unreasonably by not taking proper precautions or investing sufficiently in
safety. A strict liability claim is based on the unreasonably dangerous
condition of the building or the landlord’s failure to comply with the
housing code, regardless of whether a reasonable landlord would have
known of and corrected the defect.
California adopted a strict liability standard in Becker v. IRM, 698 P.2d
116 (Cal. 1985), but overruled Becker in Peterson v. Superior Court, 899
P.2d 905 (Cal. 1995). In Becker, a tenant was injured when he slipped and
fell against a shower door made of untempered glass that shattered. The
court held that the landlord was strictly liable for damages arising out of a
latent defect in the premises.

Absent disclosure of defects, the landlord in renting the premises makes an

implied representation that the premises are fit for use as a dwelling and the
representation is ordinarily indispensable to the lease. The tenant purchasing
housing for a limited period is in no position to inspect for latent defects in
the increasingly complex modern apartment buildings or to bear the expense
of repair whereas the landlord is in a much better position to inspect for and
repair latent defects. The tenant’s ability to inspect is ordinarily substantially
less than that of a purchaser of the property.
The tenant renting the dwelling is compelled to rely upon the implied
assurance of safety made by the landlord. It is also apparent that the landlord
by adjustment of price at the time he acquires the property, by rentals or by
insurance is in a better position to bear the costs of injuries due to defects in

1185
 the premises than the tenants.
In these circumstances, strict liability in tort for latent defects existing at
the time of renting must be applied to insure that the landlord who markets
the product bears the costs of injuries resulting from the defects “rather than
the injured persons who are powerless to protect themselves.”
The cost of protecting tenants is an appropriate cost of the enterprise.
Within our marketplace economy, the cost of purchasing rental housing is
obviously based on the anticipated risks and rewards of the purchase, and
thus it may be expected that along with numerous other factors the price of
used rental housing will depend in part on the quality of the building and
reflect the anticipated costs of protecting tenants, including repairs,
replacement of defects and insurance. Further, the landlord after purchase
may be able to adjust rents to reflect such costs. The landlord will also often
be able to seek equitable indemnity for losses.
We conclude that the absence of a continuing business relationship
between builder and landlord does not preclude application of strict liability
in tort for latent defects existing at the time of the lease because landlords are
an integral part of the enterprise and they should bear the cost of injuries
resulting from such defects rather than the injured persons who are powerless
to protect themselves.

698 P.2d at 122-124. However, in overruling Becker, the Peterson court

explained, 899 P.2d at 912-913:

The effect of imposing upon landlords liability without fault is to compel

them to insure the safety of their tenants in situations in which injury is
caused by a defect of which the landlord neither knew nor should have
known.
A landlord or hotel owner, unlike a retailer, often cannot exert pressure
upon the manufacturer to make the product safe and cannot share with the
manufacturer the costs of insuring the safety of the tenant, because a landlord
or hotel owner generally has no “continuing business relationship” with the
manufacturer of the defective product. As one commentator has observed: “If
the objective of the application of the stream of commerce approach is to
distribute the risk of providing a product to society by allowing an injured
plaintiff to find a remedy for injury along the chain of distribution, it will
probably fail in the landlord/tenant situation. The cost of insuring risk will
not be distributed along the chain of commerce but will probably be absorbed
by tenants who will pay increased rents. One could argue that this was not
the effect sought by the court in earlier cases which anticipated that the cost
of risk would be distributed vertically in the stream of commerce.” (Alice L.
Perlman, Becker v. IRM Corporation: Strict Liability in Tort for Residential
Landlords, 16 Golden Gate L. Rev. 349, 360 (1986).)

1186
 The prevailing rule is that the landlord is liable for harms to tenants
only if she has acted negligently. This means that the landlord may be
relieved of liability if the injury is caused by a latent defect of which the
landlord could not reasonably have been aware. The South Carolina
Supreme Court declined to adopt a strict liability standard in Young v.
Morrisey, 329 S.E.2d 426, 428 (S.C. 1985), citing the “compelling
reasons” of a trial court in New Jersey:

(1) A landlord is not engaged in mass production whereby he places his

product — the apartment — in a stream of commerce exposing it to a large
number of customers; (2) he has not created the product with a defect which
is preventable by greater care at the time of manufacture or assembly; (3) he
does not have the expertise to know and correct the condition, so as to be
saddled with responsibility for a defect regardless of negligence; (4) an
apartment includes several rooms with many facilities constructed by many
artisans with differing types of expertise, and subject to constant use and
deterioration from many causes; (5) it is a commodity wholly unlike a
product which is expected to leave a manufacturer’s hands in a safe condition
with an implied representation upon which the consumer relies; (6) the tenant
may expect that at the time of letting there are no hidden dangerous defects
known to the landlord of which the tenant has not been warned, but he does
not expect that all will be perfect in his apartment for all the years of his
occupancy; (7) to apply strict liability would impose an unjust burden on
property owners; how can a property owner prevent a latent defect or repair
when he has no way of detecting it? And if he can’t prevent the defect, why
should he be liable? [Dwyer v. Skyline Apartments, Inc., 301 A.2d 463 (N.J.
Super. Ct. App. Div. 1973), aff’d mem., 311 A.2d 1 (1973).]17

Damages for emotional distress. A number of courts have allowed

tenants to recover damages for intentional infliction of emotional distress
resulting from a landlord’s violation of statutory duties and the implied
warranty of habitability. McNairy v. C.K. Realty, 59 Cal. Rptr. 3d 429 (Ct.
App. 2007); Hilder v. St. Peter, 478 A.2d 202 (Vt. 1984). See also Thomas
v. Goudreault, 786 P.2d 1010, 1014-1018 (Ariz. Ct. App. 1989)
(interpreting the Arizona version of the Uniform Residential Landlord and
Tenant Act to allow the tenant to recover damages for emotional distress).
These cases ordinarily involve extreme and outrageous conduct such as the
sexual harassment, persistent lack of heat, and severe pest infestation
present in Haddad v. Gonzalez, 576 N.E.2d 658 (Mass. 1991). See also
Chryar v. Wolf, 21 P.3d 428 (Colo. Ct. App. 2000) (landlord liable for
damages for emotional distress when he wrongfully put the tenant’s
personal belongings on the street with a sign inviting people to take them);

1187
Rodriguez v. Cambridge Housing Authority, 823 N.E.2d 1249 (Mass.
2005) (landlord public housing authority liable for damages for severe
emotional distress suffered by tenant and her son when she was violently
attacked in her apartment by trespassers after the landlord negligently
failed to change the locks on her apartment after it had been invaded and
she had been attacked inside). Accord, Simon v. Solomon, 431 N.E.2d 556
(Mass. 1981).
Intervening criminal conduct. Courts have increasingly held
landlords liable for negligently failing to provide sufficient security in the
building, such as functioning locks on the front door to the building, when
such failures have allowed intruders to enter the building and rape or
otherwise attack a tenant. See Rodriguez, supra; Hemmings v. Pelham
Wood LLP, 862 A.2d 443 (Md. 2003); Smith ex rel. Koss v. Lagow
Construction & Developing Co., 642 N.W.2d 187 (S.D. 2002).

Problems
1. A tenant notifies the landlord that another tenant in the building is
selling drugs out of his apartment. The landlord does nothing. The tenant is
held up at gunpoint and robbed in the hallway of the building by a
customer of the drug dealer. The tenant sues the landlord for negligent
infliction of emotional distress.
a. What is the tenant’s argument that she should be able to hold the
landlord responsible for damages?
b. What is the landlord’s argument that he is not responsible for the
harm?
c. How should the court rule?
2. The problem of lead paint poisoning in children has resulted in
substantial legislative activity. In 1992, Congress passed the Residential
Lead-Based Paint Hazard Reduction Act, 42 U.S.C. §§4851-4856, which
requires sellers and landlords to provide buyers or lessees of most property
built before 1978 with a “lead hazard information pamphlet” and to
disclose the presence of any known lead-based paint. 42 U.S.C. §4852d.
See 40 C.F.R. §§745.101-745.107. States have also passed laws regulating
lead paint in residential rental housing. Massachusetts, for example,
requires landlords of families with children to remove or cover lead paint
in the units. See, e.g., Mass. Gen. Laws ch. 111, §197 (2011).
Assume a state statute provides that “whenever a child under six years
of age resides in any premises in which any paint, plaster or other
accessible structural material contains dangerous levels of lead, the owner

1188
shall remove or contain said paint, plaster or other accessible structural
materials.” The statute also provides that a “landlord who fails to comply
with the act shall be liable to any child injured because of that failure for
damages.”
A landlord fails to comply with the act, and a four-year-old child
becomes ill with lead poisoning after eating paint chips that fell from a
window sill. The child’s father sues the landlord for negligence, arguing
that the landlord’s failure to remove the lead paint in the apartment posed a
foreseeable risk of harm to his child and caused his child’s illness. The
landlord seeks to reduce whatever liability may be found against her by
arguing that the tenant was “contributorily negligent,” i.e., that if the father
had been more vigilant, he would have prevented the child from ingesting
the paint chips and the harm would not have occurred.
a. What is the child’s argument that the statute does not allow the
landlord to raise a defense of contributory negligence?
b. What is the landlord’s argument that such a defense is consistent
with the statute?
c. How should the court rule?

§4.5 Minimum Standards Revisited

Advocates debating the advisability and legitimacy of imposing
minimum standards on landlords, particularly in the context of tenant
rights such as a nonwaivable implied warranty of habitability, tenant
protections against retaliatory eviction, and expanded landlord tort
liability, make both rights-based and economic arguments.18 Many of
these arguments apply in the broader debate about regulating landlord and
tenant relations, including rent control, regulation of security deposits, and
even tenant civil rights protections.
As to rights-based arguments, recall the discussion of freedom of
contract in §1.4, above, in the context of determining whether a given
agreement creates a lease or another property relationship. Similar
arguments play out for habitability and other tenant rights. On one side,
advocates might argue that making particular terms nondisclaimable
prevents tenants from agreeing to waive the right to withhold rent in return
for lower rent, even if they wish to do so. After all, our legal system allows
those accused of crime the right to waive even the most fundamental
constitutional trial rights, so why not tenants? On the other side is the
argument that no one would voluntarily agree to rent an apartment that did
not comply with minimum standards of habitability or similarly waive
other central aspects of a rented home; the fact that people agree to do so is

1189
evidence not that they affirmatively wanted to agree but that they were
forced to agree because they had no legally or practically available
alternatives. Consent in this context is illusory because choice is
fundamentally constrained.
Another rights-based argument has to do with the fairness of imposing
particular burdens on landlords. Because landlords may have a limited
ability to pass along the cost of providing habitable premises to tenants and
the cost of other tenant rights, the result is a redistribution of wealth from
landlords to tenants. Some would argue that this targeted redistribution is
unfair because it places the burden of dealing with poverty on a small
subset of the population (that is, landlords) when the obligation to care for
poor people should be shared by all members of the community through
general taxes to support rental subsidies or welfare programs. The
counterargument is that it would be unfair for landlords to make a living
by providing substandard housing; in creating an ongoing relationship with
their tenants, it is only fair for landlords to conduct those relationships in
accordance with minimum standards of decency. Just as it is unlawful to
enter a contract of slavery, it should be unlawful to enter a contract by
which one agrees to allow someone else to live in deplorable conditions.
The debate about mandatory landlord-tenant regulations also raises
important questions about individual self-determination and its limits. A
concern about paternalism would suggest that individual citizens are the
best judges of their own interests; the state should not prevent people from
entering into voluntary agreements on the grounds that it is not in their
best interest to do so. Institutionally, the argument continues, courts and
legislatures are ill equipped to determine what private arrangements best
satisfy people’s needs, and a legal structure that begins with freedom of
contract as the baseline best allows individuals to pursue their ends in their
own way. Countering these propositions are the arguments that any
contract by which tenants waive basic rights to habitability is unlikely to
represent the actual intent of the parties and because of a variety of well-
recognized cognitive limitations, people are actually relatively poor judges
of their own long-term interests in many situations. More importantly,
some contractual agreements are so fundamentally unfair or
unconscionable that they should not be enforced even if the parties have
voluntarily and knowingly agreed to them.
Economic arguments, by contrast, tend to focus less on fairness or the
relationship between the state and the individual, and more on incentives
and the consequences for allocative efficiency of mandatory lease terms.
For example, if tenants are willing to live in less well-maintained
apartments, they should be able to enter into a contract for lower rent and

1190
then have money available to use for other things such as food and
clothing. Some also argue that landlords will respond to the additional
legal and economic exposure created by new tenant rights by attempting to
raise the rent. Either this will pass along the costs of the warranty to
tenants or, if tenants are unable to pay a greater rent, may induce landlords
to reduce their investment in housing or even leave the rental market,
hurting tenants — the very people the change in law is meant to help.
On the other hand, substandard housing creates significant externalities
— third-party effects that are not internalized by the parties — such as
medical problems for residents and community blight. And predicting, a
priori, what effects rights such as the implied warranty will have on the
market depends on a host of factors affecting both demand and supply.
Whether tenants are harmed or the implied warranty simply redistributes
wealth between landlords and tenants without decreasing the supply of
housing turns on how price sensitive is demand for housing. Landlords
may not be able to pass along costs to tenants and if landlords are earning
“economic rents,” which exceed the minimum required to keep the
investment in its current use, then other housing providers may be able to
enter the market to increase supply. If supply is constrained, and landlords
are earning economic rents with high profits, a reduction in those profits
may allow them to stay in business while complying with the warranty and
still earn more than they could in other businesses.
Which of these arguments do you find convincing, and why? Are they
mutually exclusive?

1. Although leaseholds have their origins in the feudal estates system as with the
estates we discussed in Chapter 10, leaseholds had elements of contract from their
earliest common law development. See Milton R. Friedman & Patrick A.
Randolph, Friedman on Leases 1-7 (5th ed. 2004).
2. Legislation may require the landlord to use court proceedings to evict the
holdover tenant and to provide a minimum amount of notice before the tenant can
be evicted.
3. These terms are similarly used in the context of the life estate. See Chapter 10,
§3.2.
4. One exception is that a landlord generally may not transfer an interest in a
tenancy at will to a new owner. See Restatement (Second) of Property (Landlord
and Tenant) §15.1(1) (1977).
5. Distinguish subleases and assignments from roommate situations where each
tenant in a given premises is directly obligated to the landlord under the lease. In
such co-tenant situations, there can be an agreement as well between the
roommates, which can be formal or informal, to govern matters such as occupancy

1191
and mutual obligations. If one co-tenant defaults on the obligation to pay rent, the
other tenant can bring an action to recover the proportional share that is owed.
Foley v. Wilson, 126 So. 3d 340 (Fla. Dist. Ct. App. 2013).
6. We are presented only with a commercial lease and therefore do not address
the question whether residential leases are controlled by the principles articulated
in this opinion.
7. There are many examples of the narrow effect given to lease terms purporting
to restrict assignment. Covenants against assignment without the prior consent of
the lessor have been held not to affect the lessee’s right to sublease, to mortgage
the leasehold, or to assign his or her interest to a cotenant. Such covenants also do
not prevent transfer of a leasehold interest by will, by bankruptcy, by the personal
representative of a deceased tenant, or by transfer among partners, or spouses.
Covenants against assignment furthermore do not prohibit transfer of the stock of a
corporate tenant, or assignment of a lease to a corporation wholly owned by the
tenant.
8. Eviction is generally a civil matter. Arkansas, however, has a criminal
eviction statute that makes it a misdemeanor to refuse willfully to vacate leased
premises after a ten-day notice by the landlord for failure to pay rent. See Ark.
Code. §18-16-101; Human Rights Watch, Pay the Rent or Face Arrest: Abusive
Impacts of Arkansas’s Draconian Evictions Law (2013).
9. These doctrines are covered later in this chapter.
10. See Chapter 13.
11. It is well settled that a party claiming damages for a breach of contract has a
duty to mitigate his loss.
12. [W]e reserve for another day the question of whether a landlord must
mitigate damages in a commercial setting.
13. As a general proposition, it is undoubtedly true that parties to a contract
intend that applicable law will be complied with by both sides. We recognize,
however, that reading statutory provisions into private contracts may have little
factual support in the intentions of the particular parties now before us. But, for
reasons of public policy, warranties are often implied into contracts by operation of
law in order to meet generally prevailing standards of honesty and fair dealing.
When the public policy has been enacted into law like the housing code, that policy
will usually have deep roots in the expectations and intentions of most people. See
Costigan, Implied-in-Fact Contracts and Mutual Assent, 33 Harv. L. Rev. 376,
383-85 (1920).
14. The jury should be instructed that one or two minor violations standing alone
which do not affect habitability are de minimis and would not entitle the tenant to a
reduction in rent.
15. As soon as the landlord made the necessary repairs rent would again become
due. Our holding, of course, affects only eviction for nonpayment of rent. The
landlord is free to seek eviction at the termination of the lease or on any other legal
ground.
16. Section 5.101 of the Uniform Act provides, in part:

1192
 (a) Except as provided in this section, a landlord may not retaliate by
increasing rent or decreasing services or by bringing or threatening to bring
an action for possession after:
(1) the tenant has complained to a governmental agency charged with
responsibility for enforcement of a building or housing code of a violation
applicable to the premises materially affecting health and safety; or
(2) the tenant has complained to the landlord of a violation [of the
requirement to maintain the premises] under Section 2.104; or
(3) the tenant has organized or become a member of a tenant’s union or
similar organization.

17. Young was superseded in 1986 by the South Carolina Landlord-Tenant Act
for residential tenancies. See Byerly v. Connor, 415 S.E.2d 796 (S.C. 1992);
Robinson v. Code, 682 S.E.2d 495 (S.C. Ct. App. 2009).
18. Many of these arguments have been identified and categorized by Professor
Duncan Kennedy. Duncan Kennedy, Distributive and Paternalist Motives in
Contract and Tort Law, with Special Reference to Compulsory Terms and Unequal
Bargaining Power, 41 Md. L. Rev. 563 (1982).

1193
PART FIVE

THE LEGAL FRAMEWORK

OF THE MARKET
FOR REAL ESTATE

1194
CHAPTER 12

Real Estate Transactions

§1 REAL ESTATE TRANSACTIONS:

STRUCTURE AND ROLES
The purchase and sale of real property involves a host of complex
issues, whether the transaction involves a single-family house, a
condominium unit, a shopping center, an office building, or undeveloped
land. At the same time, many aspects of these transactions have become
routine, particularly for home sales. In many jurisdictions, such
transactions generally involve standardized forms, with responsibility for
various issues allocated in relatively set ways among the parties. More
complex real estate transactions introduce significant variations, and it is
in such transactions that lawyers are now most heavily involved. This
chapter introduces the basic structure of real estate transactions, including
real estate finance, and highlights several issues that are likely to be
important in any transaction.

§1.1 Attorneys’ Transactional Roles

In real estate transactions, as with “deals” more generally, attorneys
can play several different roles that are distinct from resolving disputes.
Lawyers, of course, are often responsible for memorializing the terms of
the parties’ agreements and counseling their clients to understand exactly
what the agreements mean. This function is increasingly less important in
residential real estate, where brokers often help the parties fill the blanks
on form contracts and attorneys appear to be involved in a minority of
transactions. Michael Braunstein, Structural Change and Inter-
Professional Competitive Advantage: An Example Drawn from Residential
Real Estate Conveyancing, 62 Mo. L. Rev. 241, 262 (1997) (citing
evidence that attorneys appear to be involved in only 40 percent of
residential transactions).1 The increasing marginalization of lawyers in
residential sales may reduce the cost of such transactions, but it may also
leave the parties legally vulnerable. If the parties’ understanding of the
meaning and effect of their deal diverges from the provisions contained in

1195
form contracts, courts will have to respond. Some argue, however, that
litigation has sufficiently clarified the rights of the parties (or will do so in
the future) and that ordinary home purchasers do not need the participation
of an attorney in the transaction to protect their rights. Braunstein, supra,
at 271-279. Lawyers, however, remain central to contracting in most other
types of real estate transactions.
Lawyers in real estate transactions work to identify and allocate risks
for both sides. Lawyers, for example, are responsible for regulatory
compliance in the transaction. Real estate conveyancing is regulated in a
number of ways by federal, state, and local governments. For example, the
federal Real Estate Settlement Procedures Act (RESPA), 12 U.S.C.
§§2601-2617, requires the disclosure of all settlement costs charged to
home borrowers and sellers at closing, among other things.2 Other
common risks include matters related to the parties, such as the capacity of
a buyer to obtain sufficient financing; the physical state of the property,
such as the condition of a building or the presence of environmental
hazards; and questions about title to the property, such as whether the
seller has the right to convey or an encumbrance limits the use of the
property. Particularly in more complicated transactions, lawyers must also
negotiate and structure agreements in ways that can bridge divides
between the parties and ideally add value. There are a variety of tools that
transactional lawyers can bring to bear to help parties reach agreement,
such as contingencies, disclosure requirements, warranties, and
indemnification provisions.
When you read the Offer to Purchase Real Estate and Standard Form
Purchase and Sale Agreement, reproduced below, pay attention to how the
agreements allocate and respond to common risks and uncertainties and
creates mechanisms that may make it easier for parties to achieve their
ultimate goal of closing the deal and transferring the property.

§1.2 Phases of the Transaction

From the simplest home sale to the most complex multi-phase
development, most real estate transactions follow a similar structure, and it
is useful to organize legal issues along a timeline that reflects that
structure. The first phase of most real estate transactions is pre-
contracting. Here, sellers typically prepare to market property while
buyers engage in the search for property. Brokers are the dominant
professionals at this stage of the transaction. If the seller and buyer reach
agreement on the basic terms of an agreement, which can sometimes be
memorialized in a term sheet or informal letter agreement, they will then

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enter into a contract called a purchase and sale agreement. It is at this
stage that lawyers generally enter the scene.
The contract and background common law doctrines then govern what
is known as the executory period. During this phase of the transaction,
buyers primarily engage in due diligence, investigating the property and its
state of title, and often work to arrange for financing. At the same time,
sellers have responsibilities as well, such as preparing to lift encumbrances
on the property, such as loans that will be paid off from the proceeds of the
transaction, and responding to the buyer’s concerns about the property.
If the parties meet their respective obligations, the fourth phase of the
transaction is closing. It is at this crucial moment that the lender will fund
the loan, the buyer will pay the purchase price, and the seller will convey
the property through a deed. Finally, there may be legal issues between the
parties post-closing, including liability for problems that were not known
at the time of closing and title-related matters that can emerge years after
the property changes hands.
Because most real estate transactions involve borrowing by the
purchaser to finance the purchase, there are typically two transactions
playing out in parallel. The first is the actual conveyance of the property
and the second is the funding of the loan to the purchaser. These parallel
tracks typically come together at the closing, but real estate attorneys must
pay attention to their intersection throughout the transaction. We will
address real estate financing in detail later in the chapter.

A. Pre-Contracting and the Role of Brokers

Some sales are made directly by the owner with the buyer. The owner
may sell the property directly to a friend, family member, business
associate, or acquaintance. In other cases, the owner advertises the
property on-line and shows the place directly to prospective buyers. In
most cases, however, sellers hire real estate brokers (also called agents or
realtors) to help sell the property. The seller normally signs a contract with
the broker by which the broker agrees to look for prospective buyers and
show the property to them, perhaps for a set period of time such as six
months, in exchange for a commission, which is often 5 percent to 7
percent of the sale price.
There are three basic types of broker listing agreements.

1. Exclusive right to sell. The broker has the right to collect the
commission if the property is sold to anyone during the period of
the contract, even if the sale is to a buyer that the owner found

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 without the broker’s help.
2. Exclusive agency. The broker gets the commission, or a share of
the commission, if the property is sold by her efforts or the efforts
of any other broker, but not if the property is sold by the owner.
3. Open, or nonexclusive. The broker is entitled to a commission
only if she is the first person to procure a buyer who is ready,
willing, and able to buy.

In many communities, brokers use multiple listing services

established by the local real estate board. Each broker who is a member of
the listing service registers every exclusive listing she receives with the
listing service. Other brokers will then have access to that information and
can attempt to sell the property as well. If any sale goes through, the
commission is shared by the listing service and the broker who arranged
for the sale. Any broker who finds a buyer will share the commission with
the broker hired by the seller.
Disputes sometimes break out between brokers and sellers when the
broker finds a buyer who makes a down payment and signs a purchase and
sale agreement but then, for whatever reason, the deal falls through. It is
quite clear that the seller has a duty to pay the commission if the seller
himself wrongfully backs out of the deal after the broker has found a
ready, willing, and able buyer. But what happens if the buyer refuses to
complete the transaction by paying the rest of the purchase price?
When the buyer backs out of the deal, brokers sometimes allege that
they have the right to their commission because they fulfilled their
contractual obligation to find a ready, willing, and able buyer. Until the
middle of the twentieth century, the prevailing rule was that the broker’s
commission was indeed earned and due at the time the purchase and sale
agreement was signed, regardless of whether the sale was actually
completed. The rule still holds in a number of jurisdictions and is often
reflected in standard form brokerage agreements. See Roger Bernhardt &
Dale Whitman, When Is a Commission Due: Problems with Broker Listing
Agreements, 27 Prob. & Prop. (Jan.-Feb. 2013). This result does not
accord with the expectations of most sellers, who contemplated that the
commission would be paid only if the deal went through since the
commission is normally taken out of the purchase price paid by the buyer.
It can also create a problem for sellers if an offer is made at the full asking
price in a market where sellers may be able to command a premium above
that price. Bernhardt & Whitman, supra (discussing RealPro, Inc. v. Smith
Residual Co., 138 Cal. Rptr. 3d 255 (Ct. App. 2012)).
Although still in the minority, a substantial number of courts have

1198
changed the traditional rule, holding that the broker’s commission is
earned and due only if the sale is completed. See, e.g., McCully, Inc. v.
Baccaro Ranch, 816 N.W.2d 728 (Neb. 2012); Tristram’s Landing, Inc. v.
Wait, 327 N.E.2d 727 (Mass. 1975). The seller has a duty to pay the
commission if the seller defaults and backs out of the deal without a good
reason, but the commission is not due if the buyer refuses to go forward.
This emerging rule is based on the fact that the “owner hires the broker
with the expectation of becoming liable for a commission only in the event
a sale of the property is consummated, unless the title does not pass
because of the owner’s improper or frustrating conduct.” Ellsworth Dobbs,
Inc. v. Johnson, 236 A.2d 843, 853 (N.J. 1967). Although some courts find
this rule to be nondisclaimable, id. at 856, others allow the parties to
contract around it. Sparks v. Fiduciary National Title Insurance Co., 294
F.3d 259, 266 (1st Cir. 2002). Many states, however, retain the traditional
rule. 11 Thompson on Real Property, Thomas Editions §95.05(b).
Unauthorized practice of law. Every state requires lawyers to be
licensed to practice law, and brokers who provide legal advice or draft
complex legal documents for their clients may be subject to penalties for
the unauthorized practice of law. Toledo Bar Association v. Chelsea Title
Agency of Dayton, Inc., 800 N.E.2d 29 (Ohio 2003) (unauthorized practice
of law for title agency to prepare deed for client when not written by
licensed attorney). Brokers often provide standard purchase and sale
agreements for sellers and buyers to use. If they do no more than fill the
blanks on such forms, these activities are thought be an “incident to the
business” of providing brokerage services, and courts are unlikely to find a
violation of the laws prohibiting nonlawyers from “practicing law.”
However, if brokers draft deeds, mortgages, or other documents that
transfer interests in real property, express opinions on the status of titles or
zoning law and the like, or conduct closings, they may be found to have
engaged in the unauthorized practice of law. These restrictions on the
conduct of brokers are intended to “protect[] the public from the
potentially severe economic and emotional consequences which may flow
from erroneous advice given by persons untrained in the law.” Matrix
Financial Services Corp. v. Frazer, 714 S.E.2d 532, 534 (S.C. 2011).
Accord, Doe v. McMaster, 585 S.E.2d 773, 776-777 (S.C. 2003)
(unauthorized practice of law to prepare closing documents such as deeds
and title opinions); Ex parte Watson, 589 S.E.2d 760 (S.C. 2003) (finding
it unauthorized practice of law to examine public records and issue an
opinion regarding title in connection with tax foreclosure sale).
Some states have begun to loosen these regulations to allow brokers to

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perform functions that used to be performed by lawyers on the ground that
this serves the public interest by lowering the costs of buying and selling
real estate. The Supreme Court of New Jersey, for example, authorized
brokers and title companies to conduct closings in an area of the state
where it was typical for neither seller nor buyer to be represented by a
lawyer at the closing. In re Opinion No. 26 of the Commission on
Unauthorized Practice of Law, 654 A.2d 1344 (N.J. 1995). While holding
that they were engaged in the practice of law, their activity was not
“unauthorized” because it was in the public interest for them to help
owners conduct real estate transactions, and there was not sufficient
warrant to force every owner and every buyer to hire a lawyer in order to
buy or sell real estate. See also Countrywide Home Loans, Inc. v. Kentucky
Bar Association, 113 S.W.3d 105 (Ky. 2003) (allowing laypersons to
conduct real estate closings as long as they do not give legal advice);
Dressell v. Ameribank, 664 N.W.2d 151 (Mich. 2003) (not unauthorized
practice of law for title company to prepare leases, mortgages, and deeds).
Broker’s duties to buyer. It has become increasingly common for
buyers to hire their own brokers to advise them. Buyer’s brokers can be
paid a percentage of the sale price (often splitting the commission with the
seller’s broker), a fixed fee, or an hourly rate.
What duties, however, does a seller’s agent have to the buyer?
Although the seller’s agent is formally working for the seller, many buyers
feel that the broker is also working for them. Although they have no
contract with the seller’s broker, courts may impose certain fiduciary or
other obligations toward the buyer. For example, if the seller’s broker fails
to reveal relevant information to the buyer, the buyer may sue the broker
for fraud. See Jackowski v. Borchelt, 278 P.3d 1100 (Wash. 2012)
(fraudulent concealment claim by purchaser against seller’s broker).
Dual agency. Conflicts may arise when a real estate agency provides
broker’s services to both buyers and sellers, since the buyer’s broker will
be attempting to minimize the sale price, while the seller’s agent will try to
get as much as possible for the property. Unless the law prohibits it, a
single person may be in the business of representing both buyers and
sellers, and it is possible that the seller will deal with a buyer who has
engaged the same agent. While one might argue that such an agent would
facilitate the deal, she also might fail to represent one or both sides
adequately. See Estate of Eller v. Bartron, 31 A.3d 895 (Del. 2011). Many
states have passed statutes that regulate such potential conflicts of interest,
mainly by requiring disclosure that a broker is acting as a dual agent. See
Ga. Code §§10-6A-10 and 10-6A-12(a).

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 Many states now also allow a designated agency, in which one broker
in the agency represents the seller, while another represents the buyer in
the transaction. Ann Morales Olazábal, Redefining Realtor Relationships
and Responsibilities: The Failure of State Regulatory Responses, 40 Harv.
J. Legis. 65, 75-76 (2003). Some states are now experimenting with
allowing brokers to act as transaction brokers, in which they do not
represent either the seller or the buyer; instead, they act as professionals,
giving independent advice on the transaction. Id. at 87-91. See Ga. Code
§10-6A-3(14). If brokers are not the agent of either the seller or the buyer,
they cannot be liable for breach of fiduciary duty. While this may relieve
the broker of worry about possible liability, it may also remove incentives
to promote the interest of one or both parties to the transaction, and for this
reason every state that has adopted this idea has imposed some statutory
duties on transaction brokers. Morales Olazábal, supra, at 90-91.
Buyer’s duties to broker. What happens if the buyer attempts to
arrange with the seller to buy the property independent of the broker to
save the cost of the broker’s commission? Ordinarily, the broker can sue
the seller for breach of the listing agreement. But suppose the seller no
longer has the money for some reason; can the broker sue the buyer as
well? Some courts have held that “when a prospective buyer solicits a
broker to find or to show him property which he might be interested in
buying, and the broker finds property satisfactory to him which the owner
agrees to sell at the price offered, and the buyer knows the broker will earn
a commission for the sale from the owner, the law will imply a promise on
the part of the buyer to complete the transaction with the owner.”
Ellsworth Dobbs, 236 A.2d at 859. This approach has been adopted in
California, Donnellan v. Rocks, 99 Cal. Rptr. 692 (Ct. App. 1972), but
rejected in Michigan and Virginia, Rich v. Emerson-Dumont Distributing
Corp., 222 N.W.2d 65 (Mich. Ct. App. 1974); Professional Realty Corp. v.
Bender, 222 S.E.2d 810 (Va. 1976).
Brokers and consumer protection. The primary function that brokers
serve in real estate transactions is to help parties connect and reach
mutually satisfactory agreements more efficiently than the parties could on
their own. Ethics concerns and consumer disputes, however, arise when
brokers are dishonest or treat parties unfairly. See Bryan Miller, The
Moral: Get It in Writing, N.Y. Times, Sept. 4, 2016, at RE1. State
licensing agencies and departments of consumer protection offer avenues
for redress when clients have grievances with real estate agents. The trade
association for brokers, the National Association of Realtors (NAR), has
issued a Code of Ethics, although it has been criticized as “vague and

1201
difficult to enforce.” Id. (quoting Richard E. Maloney, director of the
Connecticut state division of trade practices).
The Internet, moreover, has lowered information costs in searching for
properties and potential purchasers and this is increasingly challenging the
intermediary role that brokers have traditionally played. As brokers and
the NAR have sought to maintain their position, regulators have intervened
to protect consumers. In 2005, the U.S. Justice Department sued the NAR
for antitrust violations relating to an NAR policy that limited the ability of
brokers to put all multiple-listing service listings on-line for their
customers. In 2008, the NAR settled the complaint, agreeing not to
discriminate against Internet-based brokerage companies. See United
States v. National Association of Realtors, Final J., Civil Action No. 05 C
5140 (Nov. 18, 2008). How would you expect brokers to react to the
increasing ubiquity of real estate–related search engines?

B. Contracting: The Purchase and Sale Agreement

When a buyer finds a place that she likes and can afford, she makes an
offer to buy it. The offer may be oral or in writing. The buyer may offer to
pay the entire sale price set by the seller. Depending on the market, the
buyer may offer some lower amount or, in so-called seller’s markets, may
even offer more than the asking price. The seller may accept the offer or
make a counteroffer. The buyer and seller may negotiate about other terms
of the transaction as well, including when the seller would be able to move
out and transfer possession, who will pay back taxes, which side has the
burden of repairing any known defects, and the like.3 When the parties
agree on a price and on the general terms of the transaction, they proceed
to the next step in the transaction: the sales contract, often called the
purchase and sale agreement.
In the purchase and sale agreement, the seller agrees to convey title at a
date in the future when the closing will take place. The buyer generally
makes a deposit (sometimes called earnest money) that can be modest or
in some markets as much as 10 percent of the purchase price; the buyer
also promises to pay the rest of the purchase price at the closing.
Sometimes buyers will make an initial, nominal payment when an offer is
made and then a larger down payment later after inspections are done. The
date of the closing is negotiated by the parties, and, in residential
transactions, is often one or two months after the purchase and sale
agreement is signed. The contract then governs the mutual obligations of
the parties during the executory period as well as the conditions that must

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be met for the transaction to close. We will consider in detail several issues
related to the purchase and sale agreement later in the chapter.

C. The Executory Period

Under the purchase and sale agreement, the buyer’s obligations are
normally made contingent on (1) the seller’s ability to convey marketable
title; (2) the buyer’s ability to get adequate financing for the rest of the
purchase price; and (3) inspections of the premises for structural defects,
termites, and environmental hazards, such as radon and toxic waste
generated by a leaking oil tank. The seller’s performance is usually
conditioned only on the buyer’s paying the purchase price at the closing,
but it may also be conditioned on the seller’s finding a new place to live.
As a result, during the period between the execution of the agreement and
closing, the parties must arrange to remove all of these contingencies.
Inspections. Buyers will arrange for the various inspections of the
premises. This is generally done by hiring professionals to examine the
property and provide opinions on the condition of the property. In a single-
family home sale, a simple home inspection may suffice; for commercial
real estate transactions, a variety of experts may be engaged for what is
called due diligence, such as structural engineers and environmental
experts, and the terms and timing of inspection rights can be important
aspects of the contract.
Mortgage financing. Buyers will generally also attempt to get
financing, usually by seeking a loan from a bank or other lending
institution. The bank and the buyer will enter into a loan agreement that
will specify how large a down payment the buyer must make, the interest
to be paid on the loan, and the time period over which the loan will be
repaid. The bank is also likely to insist on a mortgage to accompany the
loan. A mortgage constitutes an agreement by the buyer that if the buyer
defaults on the loan payments or other material terms of the mortgage
agreement (such as maintaining insurance on the property and keeping it in
good repair), the bank will be able to foreclose on the property by
arranging for it to be sold, with the proceeds of the sale being used to
satisfy the buyer’s debt to the bank.
The bank will be unwilling to lend the money without assuring itself
that the buyer will be able to repay the loan and that the seller actually
owns the property, meaning that no other property interests encumber the
property (such as other mortgages) that would impair the value of the
property as collateral for the loan. The bank will therefore ask the buyer

1203
for information about her credit history, job history, and current assets and
salary. The bank will also make arrangements to assure itself that the seller
has clear title to the house. It will do this by either (1) searching the title
itself in the registry of deeds, (2) requiring the buyer to hire a lawyer to do
this and provide evidence of a satisfactory result, or (3) requiring the buyer
to buy title insurance from an insurance company that will research the
title and agree to guarantee the seller’s title in return for a fee from the
buyer. We will examine title problems in greater depth later in the chapter.
If the buyer cannot obtain financing, the inspection reveals serious
defects, the seller’s title is not marketable, or some other contingency is
not met, the buyer may be excused from the deal, although in many
situations, buyers and sellers seek to remedy concerns if that is possible. If
all conditions are met or waived, the parties proceed to closing.
Risk of loss during the executory period and equitable conversion.
What happens if the house burns down after the purchase and sale
agreement has been signed but before the closing? Who bears the risk of
loss — the seller or the buyer — if the contract does not answer this
question? Must the buyer complete the transaction despite the loss, or may
the buyer rescind and get her earnest money deposit back? Many courts
hold that the risk of loss is on the buyer, under the doctrine of equitable
conversion. If the contract gives the buyer the equitable right to have the
contract specifically enforced, and many real estate contracts do, it is
appropriate to treat the buyer for certain purposes as if the transaction had
already been completed. Thus, some courts treat the buyer as the equitable
owner during the executory period, despite the fact that the seller may
retain the right to possess the property until the closing. See, e.g., Trustees
of Zion Baptist Church v. Conservators of Estate of Peay, 525 S.E.2d 291
(Va. 2000); see also Jackson v. Scheible, 902 N.E.2d 807, 813 (Ind. 2009)
(buyer liable to third parties for conditions on the property after purchase
and sale agreement executed).
The rule that treats buyers as equitable owners has been subject to
much criticism. “To say that equity will specifically enforce the contract
certainly does not compel one to disregard reality and view the contract as
already performed.” William B. Stoebuck & Dale A. Whitman, The Law of
Property §10.13 at 787 (3d ed. 2000). This allocation of the risk rarely
comports with the parties’ expectations. Moreover, the seller is usually in a
better position to exercise care to avoid the loss and to carry insurance on
the property. For these reasons, some courts reject the doctrine and place
the risk of loss during the executory period on the seller, thereby allowing
the buyer to get out of the deal or reduce the amount of the price owed by

1204
the amount of the damage suffered. Brush Grocery Kart, Inc. v. Sure Fine
Market, Inc., 47 P.3d 680 (Colo. 2002) (“It is counterintuitive . . . that
merely contracting for the sale of real property should not only relieve the
vendor of his responsibility to maintain the property until execution but
also impose a duty on the vendee to perform despite the intervention of a
material, no-fault casualty loss preventing him from ever receiving the
benefit of his bargain.”); Skelly Oil Co. v. Ashmore, 365 S.W.2d 582 (Mo.
1963). This is also the approach taken by the Uniform Vendor and
Purchaser Risk Act, which has been adopted in ten states. Stoebuck &
Whitman, supra, at 795.
In practice, most purchase and sale agreements explicitly place the risk
of loss on the vendor during the executory period and most vendors have
property insurance. Even in states that force the buyer to complete the
contract at the agreed-upon price, most courts will not tolerate the seller’s
getting both the purchase price and the insurance proceeds, while the buyer
pays full market value and gets a burned-out property. Instead, the courts
are likely to impose a constructive trust on the insurance proceeds and
require that the purchase price be reduced by the amount of those proceeds
so that the seller does not receive a windfall.

D. Closing

Closings either take place in person, where the parties gather with their
representatives and execute various agreements, or through escrow, where
the parties submit executed documents to an escrow agent with
instructions to complete the closing if specified conditions are met.
At the closing, the buyer pays the remaining amount of the purchase
price above the deposit. Simultaneously, the buyer executes the loan and
mortgage agreements with the lender and the lender pays the amount it has
agreed to fund. The buyer or the lender, or often a title company working
for one of the parties, may make a last-minute check of the records in the
recording office to make sure that the state of title has not changed
between the time the title search was first conducted and the time of the
closing.
In exchange for payment of the full purchase price, the seller delivers a
deed to the buyer. The deed recites that the grantor (seller) conveys the
property to the grantee (buyer). It describes the property and is signed by
the grantor. It may contain reference to easements and covenants
restricting the use of the property. The deed may also contain various
warranties by which the seller covenants that he has good title to the
property. The deed will generally be recorded immediately in the

1205
appropriate recorder’s office, often by a title company involved in the
closing.4
RESPA, 12 U.S.C. §§2601-2617, regulates closings in two primary
ways. First, it requires disclosure of all settlement costs. This is intended to
help the parties ensure that there are no hidden fees and that the work done
in relation to closing can be matched to specific charges. Substantively,
RESPA also protects real estate buyers from having to pay kickbacks or
other unearned or undisclosed fees by prohibiting acceptance of fees for
rendering of real estate settlement services, such as loan processing, title
searches, surveys, preparation of documents, in connection with federally
related mortgage loans “other than for services actually performed.” 12
U.S.C. §2607(b). In Freeman v. Quicken Loans, Inc., 132 S. Ct. 2034
(2012), the Supreme Court considered whether RESPA applies to
unearned fees that are not split with other settlement services providers.
Rejecting a policy statement from the U.S. Department of Housing and
Urban Development that interpreted the statute to apply to any unearned
fee, the Court held that RESPA only regulates settlement charges that are
“divided between two or more persons.” Id. at 2044.
Attorneys involved in closing may also be subject to federal anti-
money-laundering statutes. For example, parties responsible for real estate
closings must report to the Internal Revenue Service any cash payments of
$10,000 or more received at a closing or connected with a transaction. 26
U.S.C. §6050I. Further, Title III of the USA PATRIOT Act, passed shortly
after September 11, 2001, amended the Bank Secrecy Act, 31 U.S.C.
§§5311-5355, to require every “financial institution” to develop internal
anti-money-laundering programs designed to prevent the financing of
terrorism. 31 U.S.C. §5318(h). The definition of “financial institution”
includes reference to “persons involved in real estate closings and
settlements,” 31 U.S.C. §5312(a)(2)(U). See 31 C.F.R. pt. 103.

E. Post-Closing

Ordinarily, the deed replaces the purchase and sale agreement at the
closing and is treated as the complete contractual arrangement between the
parties. This doctrine is known as merger. If the parties intend the
promises in the purchase and sale agreement to be enforceable post-
closing, the parties must normally provide explicitly that the purchase and
sale agreement (or specific terms in it) will survive the deed. Otherwise,
the buyer will be limited to remedies associated with or contained in the
deed; in that case, the buyer may sue the seller for breach of warranties
in the deed but not for breach of the purchase and sale agreement.

1206
 Some obligations survive the deed even though they are not explicitly
carved out. For example, if the seller lies to the buyer about the condition
of the building, the buyer may be able to sue the seller for fraud even after
the closing has taken place. Under these circumstances, the buyer may ask
for damages or to rescind the deal by transferring title back to the seller
and recovering the purchase price.

§2 PURCHASE AND SALE AGREEMENTS:

FORM, FORMALITIES, AND REMEDIES
§2.1 The Terms of the Agreement
Review the following Offer to Purchase Real Estate and Standard
Form Purchase and Sale Agreement from the Greater Boston Real Estate
Board. As you do, see if you can identify the primary legal and practical
risks involved in purchasing a home that the documents address, from both
the buyer’s perspective as well as the seller’s. What mechanisms, if any,
do the documents include to allocate or mitigate these risks? What
important contingency discussed above is not mentioned in these
agreements?

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1208
1209
1210
1211
 Problems
How do the Offer to Purchase Real Estate and the Standard Form
Purchase and Sale Agreement address the following situations?
1. After signing the Offer to Purchase Real Estate, but before executing
the Standard Form Purchase and Sale Agreement, the seller receives a
much higher offer for the property and would like to accept it.
2. Assume the parties sign the Standard Form Purchase and Sale
Agreement. The buyer is concerned about possible environmental
conditions on the property and wants to have an environmental consultant
conduct an inspection. What if the seller told the buyer before they signed
the contract that “there is nothing to worry about” in response to a question
by the buyer about these environmental concerns?
3. The seller’s property is damaged in an electrical fire a week before
the scheduled closing. Does it matter whether the seller had property
insurance?
4. The buyer, in examining the state of the property’s title, discovers a

1212
judgment lien against the property, arising from a tort suit between the
seller and a third party.
5. The buyer unexpectedly loses her job shortly after signing the
Standard Form Purchase and Sale Agreement and is now unable to obtain
the loan that she thought she could.
6. The seller agrees to remove an old outbuilding from the property,
but says that he needs another two weeks after closing to complete the
project.

§2.2 Statute of Frauds versus Part Performance and

Estoppel

Burns v. McCormick

135 N.E. 273 (N.Y. 1922)

Map: Hornell, New York

BENJAMIN N. CARDOZO, J.
In June, 1918, one James A. Halsey, an old man, and a widower, was
living, without family or housekeeper, in his house in Hornell, New York.
He told the plaintiffs, [who are husband and wife,] so it is said, that if they
gave up their home and business in Andover, New York, and boarded and
cared for him during his life, the house and lot, with its furniture and
equipment, would be theirs upon his death. They did as he asked, selling
out an interest in a little draying business in Andover, and boarding and
tending him till he died, about five months after their coming. Neither deed
nor will, nor memorandum subscribed by the promisor, exists to
authenticate the promise. The plaintiffs asked specific performance. The
defense is the statute of frauds (Real Property Law [Consol. Laws, ch. 50]
§259).
We think the defense must be upheld. Not every act of part
performance will move a court of equity, though legal remedies are
inadequate, to enforce an oral agreement affecting rights in land. There
must be performance “unequivocally referable” to the agreement,
performance which alone and without the aid of words of promise is

1213
unintelligible or at least extraordinary unless as an incident of ownership,
assured, if not existing.
“An act which admits of explanation without reference to the alleged
oral contract or a contract of the same general nature and purpose is not, in
general, admitted to constitute a part performance.” Woolley v. Stewart,
118 N.E. 847, 848 (N.Y. 1918).
What is done must itself supply the key to what is promised. It is not
enough that what is promised may give significance to what is done. The
housekeeper who abandons other prospects of establishment in life and
renders service without pay upon the oral promise of her employer to give
her a life estate in land must find her remedy in an action to recover the
value of the service. Her conduct, separated from the promise, is not
significant of ownership, either present or prospective. On the other hand,
the buyer who not only pays the price, but possesses and improves his
acre, may have relief in equity without producing a conveyance. His
conduct is itself the symptom of a promise that a conveyance will be made.
Laxer tests may prevail in other jurisdictions. We have been consistent
here.
Promise and performance fail when these standards are applied. The
plaintiffs make no pretense that during the lifetime of Mr. Halsey they
occupied the land as owners or under claim of present right. They did not
even have possession. The possession was his; and those whom he invited
to live with him were merely his servants or his guests. He might have
shown them the door, and the law would not have helped them to return.
Whatever rights they had were executory and future. The tokens of their
title are not, then, to be discovered in acts of possession or dominion. The
tokens must be found elsewhere if discoverable at all. The plaintiffs did,
indeed, while occupants of the dwelling, pay the food bills for the owner
as well as for themselves, and do the work of housekeepers. One who
heard of such service might infer that it would be rewarded in some way.
There could be no reasonable inference that it would be rewarded at some
indefinite time thereafter by a conveyance of the land. The board might be
given in return for lodging. The outlay might be merely an advance to be
repaid in whole or part. “Time and care” might have been bestowed “From
a vague anticipation that the affection and gratitude so created would, in
the long run, insure some indefinite reward.” Maddison v. Alderson, L.R. 8
App. Cas. [467,] 486. This was the more likely since there were ties of
kinship between one of the plaintiffs and the owner. Even if there was to
be a reward, not merely as of favor, but as of right, no one could infer,
from knowledge of the service, without more, what its nature or extent
would be. Mr. Halsey paid the taxes. He paid also for the upkeep of the

1214
land and building. At least, there is no suggestion that the plaintiffs had
undertaken to relieve him of those burdens. He was the owner while he
lived. Nothing that he had accepted from the plaintiffs evinces an
agreement that they were to be the owners when he died.
We hold, then, that the acts of part performance are not solely and
unequivocally referable to a contract for the sale of land. Since that is so,
they do not become sufficient because part of the plaintiffs’ loss is without
a remedy at law. At law the value of board and services will not be
difficult of proof. The loss of the draying business in Andover does not
permit us to disregard the statute, though it may go without requital. We
do not ignore decisions to the contrary in other jurisdictions. They are not
law for us. Inadequacy of legal remedies, without more, does not dispense
with the requirement that acts, and not words, shall supply the framework
of the promise. That requirement has its origin in something more than an
arbitrary preference of one form over others. It is “intended to prevent a
recurrence of the mischief” which the statute would suppress. Maddison v.
Alderson, supra, L.R. 8 App. Cas. at 478. The peril of perjury and error is
latent in the spoken promise. Such, at least, is the warning of the statute,
the estimate of policy that finds expression in its mandate. Equity, in
assuming what is in substance a dispensing power, does not treat the
statute as irrelevant, nor ignore the warning altogether. It declines to act on
words, though the legal remedy is imperfect, unless the words are
confirmed and illuminated by deeds. A power of dispensation, departing
from the letter in supposed adherence to the spirit, involves an assumption
of jurisdiction easily abused, and justified only within the limits imposed
by history and precedent. The power is not exercised unless the policy of
the law is saved.
In conclusion, we observe that this is not a case of fraud. No
confidential relation has been abused. No inducement has been offered
with the preconceived intention that it would later be ignored. The most
that can be said against Mr. Halsey is that he made a promise which the
law did not compel him to keep, and that afterwards he failed to keep it.
We cannot even say of his failure that it was willful. He had made a will
before the promise. Negligence or mere inertia may have postponed the
making of another. The plaintiffs left the preservation of their agreement,
if they had one, to the fallible memory of witnesses. The law exacts a
writing.

Hickey v. Green

442 N.E.2d 37 (Mass. App. Ct. 1982)

1215
 Map: Massasoit Avenue, Plymouth,
Massachusetts

R. AMMI CUTTER, JUSTICE.

Mrs. Gladys Green owns a lot (Lot S) in the Manomet section of
Plymouth. In July, 1980, she advertised it for sale. On July 11 and 12,
Hickey and his wife discussed with Mrs. Green purchasing Lot S and
“orally agreed to a sale” for $15,000. Mrs. Green on July 12 accepted a
deposit check of $500, marked by Hickey on the back, “Deposit on Lot . . .
Massasoit Ave. Manomet . . . Subject to Variance from Town of
Plymouth.” Mrs. Green’s brother and agent “was under the impression that
a zoning variance was needed and [had] advised Hickey to write” the
quoted language on the deposit check. It turned out, however, by July 16
that no variance would be required. Hickey had left the payee line of the
deposit check blank, because of uncertainty whether Mrs. Green or her
brother was to receive the check and asked “Mrs. Green to fill in the
appropriate name.” Mrs. Green held the check, did not fill in the payee’s
name, and neither cashed nor endorsed it. Hickey “stated to Mrs. Green
that his intention was to sell his home and build on Mrs. Green’s lot.”
“Relying upon the arrangements with Mrs. Green,” the Hickeys
advertised their house on Sachem Road in newspapers on three days in
July, 1980, and agreed with a purchaser for its sale and took from him a
deposit check for $500 which they deposited in their own account. On July
24, Mrs. Green told Hickey that she “no longer intended to sell her
property to him” but had decided to sell to another for $16,000. Hickey
told Mrs. Green that he had already sold his house and offered her $16,000
for Lot S. Mrs. Green refused this offer.
The Hickeys filed this complaint seeking specific performance. Mrs.
Green asserts that relief is barred by the Statute of Frauds contained in
Mass. Gen. Laws ch. 259, §1. The trial judge granted specific
performance. Mrs. Green has appealed.
The present rule applicable in most jurisdictions in the United States is
succinctly set forth in Restatement (Second) of Contracts, §129 (1981).
The section reads, “A contract for the transfer of an interest in land may be
specifically enforced notwithstanding failure to comply with the Statute of
Frauds if it is established that the party seeking enforcement, in reasonable
reliance on the contract and on the continuing assent of the party against
whom enforcement is sought, has so changed his position that injustice

1216
can be avoided only by specific enforcement” (emphasis supplied).5 The
earlier Massachusetts decisions laid down somewhat strict requirements
for an estoppel precluding the assertion of the Statute of Frauds.
Frequently there has been an actual change of possession and improvement
of the transferred property, as well as full payment of the full purchase
price, or one or more of these elements.
It is stated in Park, Real Estate Law, §883, at 334, that the “more
recent decisions indicate a trend on the part of the [Supreme Judicial]
[C]ourt to find that the circumstances warrant specific performance.” This
appears to be a correct perception.
The present facts reveal a simple case of a proposed purchase of a
residential vacant lot, where the vendor, Mrs. Green, knew that the
Hickeys were planning to sell their former home (possibly to obtain funds
to pay her) and build on Lot S. The Hickeys, relying on Mrs. Green’s oral
promise, moved rapidly to make their sale without obtaining any adequate
memorandum of the terms of what appears to have been intended to be a
quick cash sale of Lot S. So rapid was action by the Hickeys that, by July
21, less than ten days after giving their deposit to Mrs. Green, they had
accepted a deposit check for the sale of their house, endorsed the check,
and placed it in their bank account. Above their signatures endorsing the
check was a memorandum probably sufficient to satisfy the Statute of
Frauds. At the very least, the Hickeys had bound themselves in a manner
in which, to avoid a transfer of their own house, they might have had to
engage in expensive litigation. No attorney has been shown to have been
used either in the transaction between Mrs. Green and the Hickeys or in
that between the Hickeys and their purchaser.
There is no denial by Mrs. Green of the oral contract between her and
the Hickeys. This, under §129 of the Restatement, is of some
significance.6 There can be no doubt (a) that Mrs. Green made the promise
on which the Hickeys so promptly relied, and also (b) she, nearly as
promptly, but not promptly enough, repudiated it because she had a better
opportunity. The stipulated facts require the conclusion that in equity Mrs.
Green’s conduct cannot be condoned. This is not a case where either party
is shown to have contemplated the negotiation of a purchase and sale
agreement. If a written agreement had been expected, even by only one
party, or would have been natural (because of the participation by lawyers
or otherwise), a different situation might have existed. It is a permissible
inference from the agreed facts that the rapid sale of the Hickeys’ house
was both appropriate and expected. These are not circumstances where
negotiations fairly can be seen as inchoate.
No public interest behind Mass. Gen. Laws ch. 259, §1 in the simple

1217
circumstances before us, will be violated if Mrs. Green fairly is held to her
precise bargain by principles of equitable estoppel.

Notes and Questions

1. Gender roles and the construction of social reality. In Burns v.
McCormick, Justice Cardozo distinguished the acts of a “housekeeper who
abandons other prospects of establishment in life and renders service
without pay upon the oral promise of her employer to give her a life estate
in land” from “the buyer who not only pays the price, but possesses and
improves his acre.” Cardozo explained that “[h]er conduct, separated from
the promise, is not significant of ownership, either present or prospective,”
while “[h]is conduct is itself the symptom of a promise that a conveyance
will be made.” When discussing the housekeeper, Cardozo refers to “her”
conduct; but when discussing a hypothetical buyer, he refers to “his”
conduct. Why does he make this shift in gender? Plaintiffs were a married
couple. Is there any evidence Cardozo considered the circumstances of the
husband’s conduct?
Why does Cardozo refer to the person providing personal services as a
“housekeeper,” while calling the one who improves the land a “buyer”?
Doesn’t the use of this language beg the question? Why is performing
personal service less indicative of a contractual arrangement than payment
of money? Does Cardozo assume that “housework” is normally performed
by women for no compensation? Are housekeepers likely to engage in
personal service in exchange for a chance of an indefinite reward, while
those who work the land are unlikely to do so?
Cardozo suggests that the housekeeper’s conduct is compatible with
several explanations, while the “buyer’s” conduct is susceptible of only
one. According to Cardozo’s understanding of social custom, a
housekeeper might go to work for an employer, without wages, and pay
for the food bills for both her employer and herself in exchange for
lodging and the vague expectation of “some indefinite reward” that might
be bestowed “in the long run.” No “buyer,” however, would pay a
substantial sum of money and improve real property without having
received a promise to convey the property to the buyer. Is it true that no
other explanation might fit the set of facts, which includes (a) paying a
large sum of money and (b) improving real property? Recall the cases
about easements by estoppel and constructive trusts in Chapter 8.
2. The family versus the market. Consider the following descriptions
of the relationship among gender roles, the family, and the market.
In upholding the decision of the Illinois Supreme Court to deny Myra

1218
Bradwell admission to the Illinois bar because she was a woman, Justice
Joseph P. Bradley wrote a famous concurring opinion for the United States
Supreme Court, in which he wrote:

[T]he civil law, as well as nature herself, has always recognized a wide
difference in the respective spheres and destinies of man and woman. Man is,
or should be, woman’s protector and defender. The natural and proper
timidity and delicacy which belongs to the female sex evidently unfits it for
many of the occupations of civil life. The constitution of the family
organization, which is founded in the divine ordinance, as well as in the
nature of things, indicates the domestic sphere as that which properly belongs
to the domain and functions of womanhood.

Bradwell v. Illinois, 83 U.S. (16 Wall.) 130, 141 (1873) (Bradley, J.,
concurring).
Professor Frances Olsen explains the “images of the proper role of the
state in the market and the family” underlying Justice Bradley’s opinion:

The maintenance of the private marketplace was believed to require the

state to limit and direct its own action in order to maximize the opportunity
of individuals to enter into whatever contracts they might wish to form. The
expression of the will of the contracting parties was supposed to define the
terms of the parties’ relations; the state was not to tamper with these terms
but was to treat each individual as an abstract equal. At the same time, the
state was expected to enforce relations that were considered to be voluntarily
defined by individuals through their contracts. In this sense, the arena of the
marketplace was fully legalized, and the terms dictated by the will of the
parties were enforceable by the power of the state through the courts.
Within the family, however, privatization meant delegalization. The state
refused to give legal effect to any effort by the parties to define the rights,
duties, and liabilities of their own marriage. Once a man and a woman were
married, they could no longer enter enforceable contracts with each other.
Within the family, privatization created a limited “state of nature,” in which
the state refused to protect one family member from the harmful acts of any
other family member. These refusals were an important part of what it meant
for the family to be private and for the state not to intervene in the family
relationship. It was generally not considered state intrusion, however, when
the state undertook to define the marriage relation and to enforce the roles it
decided each family member would fill. The notion that the family was
private did not mean that the members should determine their own roles.

Frances Olsen, The Family and the Market: A Study of Ideology and Legal
Reform, 96 Harv. L. Rev. 1497, 1521-1522 (1983).

1219
 In Fitzpatrick v. Michael, 9 A.2d 639 (Md. 1939), a case somewhat
similar to Burns, the court refused specifically to enforce an employer’s
agreement to leave a substantial interest in his estate to a woman who
worked as his nurse and remained with him until his death. The court held
that specific performance is warranted only if the proffered services are
sufficiently “rare and unusual.” The court concluded that the claimant’s
work as “a nurse, chauffeur, companion, gardener, and housekeeper . . .
involved no more than doing such things as a housewife often does as a
part of the ordinary routine of life.” Professor Mary Joe Frug notes that the
court’s dramatic devaluation of the kind of work Ms. Fitzpatrick
performed for Mr. Michael ignored the social significance of the kind of
work women have traditionally done, thereby indicating that “women’s”
work is inferior to “men’s.” In addition to nourishing this idea about
gender, however, the court’s distorted treatment of women’s work
functions as an analytical shortcut in the opinion: by analogizing Ms.
Fitzpatrick’s work to a “housewife’s” work, the court avoids explaining
why her services for Mr. Michael were not “rare and unusual.” Mary Joe
Frug, Re-reading Contracts: A Feminist Analysis of a Contracts Casebook,
34 Am. U. L. Rev. 1065, 1081 (1985).
The reluctance of courts to enforce oral contracts for the transfer of
property in exchange for personal services has not always universally held
true, even if it has prevailed. Historian Hendrik Hartog has noted that from
the middle of the nineteenth century to the middle of the twentieth,
examples could be found of chancellors in equity crediting emotionally
compelling stories of lives sufficiently transformed — opportunities lost
and paths not taken — by sacrifices made in reliance on oral contracts to
convey property in return for care to allow the enforcement of such
contracts. Hendrik Hartog, Someday All This Will Be Yours: A History of
Inheritance and Old Age 169-205 (2012). Conflicts over agreements like
this became less common after the establishment of Social Security and
Medicare reduced the need of elderly individuals to make promises
regarding inheritance to ensure that someone would look after them in
their old age.
Should an exception to the Statute of Frauds be made for agreements
among family members? After all, doesn’t the proposal to “put it in
writing” suggest that one does not trust the other person? Would the world
be a better place if family members asked one other to put everything in
writing?
3. Satisfying the requirements of the Statute of Frauds. Many cases
address what constitutes a writing sufficiently specific to satisfy the Statute

1220
of Frauds.

In general, [a writing] must do the following with reasonable certainty: (1)

identify the parties to the contract and show that a contract has been made by
them or offered by the signatory to the other; (2) indicate the nature of the
contract and its subject matter; (3) state the essential terms of the promises to
be performed under the contract.

2 E. Allan Farnsworth, Contracts §6.7, at 160 (2004). See Clay v. Hanson,

536 A.2d 1097 (D.C. 1988) (holding that a series of writings did not
satisfy the Statute of Frauds because it did not contain an adequate
description of the property and because the first writing did not identify the
buyer and the second writing did not refer to the first writing to
incorporate it by reference). Additionally, the statute requires the signature
of the party to be bound (or, as the original statute put it, “to be charged,”
Farnsworth, supra, §6.8, at p. 171). See, e.g., Moorman v. Blackstock, Inc.,
661 S.E.2d 404, 410-411 (Va. 2008).
A federal statute, the Electronic Signatures in Global and National
Commerce Act (E-Sign Act), 15 U.S.C. §§7001-7031, confirms the
validity of electronic signatures and contracts, as does §7 of the Uniform
Electronic Transactions Act (UETA), a uniform statute promulgated by the
National Conference of Commissioners for Uniform State Laws that has
been adopted in several states. Under the E-SIGN Act and the UETA, e-
mails and other electronic communications satisfy the signature
requirement of the Statute of Frauds. See Waddle v. Elrod, 367 S.W.3d
217 (Tenn. 2012) (e-mail laying out the terms of transfer of land as part of
a settlement agreement satisfied the Statute of Frauds under Tennessee’s
version of the UETA, Tenn. Code §47-10-101 et seq.).
Professor Patrick Randolph has noted that “if you sent me an email that
said: ‘I’ll buy your property at 450 W. Meyer in Chicago for $50,000,’ and
I typed at the top of this message ‘OK’ and hit ‘return,’ it’s quite likely
that we’d have a binding real estate contract. All you’d have to show is
that the typing of the words ‘OK’ indicated my intent to express
agreement.” Patrick A. Randolph Jr., Has E-SIGN Murdered the Statute of
Frauds?, 15 Prob. & Prop. 23, 24 (July-Aug. 2001). Electronic
communications have become ubiquitous in real estate transactions, but
courts have found ways to limit their enforceability, focusing on other
requirements for a valid agreement, such as intent and the authority to act
on behalf of the parties to a transaction. See, e.g., Leist v. Tugendhaft, 882
N.Y.S.2d 521 (N.Y. App. Div. 2009). Does the relative informality of
electronic communications undermine one of the goals of the Statute of

1221
Frauds, which is to remind the parties of the significance of the transaction
before it becomes binding? On the other hand, should real property be
treated differently from other types of assets, often of great value, that can
be traded electronically today?
4. General exceptions to the Statute of Frauds
a. Part performance. The part performance doctrine allows an oral
sales contract to be enforced if the buyer has substantially changed her
position and taken steps to complete the transaction. Kiernan v.
Creech, 268 P.3d 312, 317 (Alaska 2012). Justice Cardozo in Burns
applied the traditional rule that the buyer must take steps that are
“unequivocally referable” to a land sales contract. Today courts do not
require this degree of certainty, instead relying on three factors that
ordinarily will suggest that a contract has been made: (1) payment of
all or a substantial part of the purchase price; (2) taking possession of
the property; and (3) making substantial improvements on the land.
See, e.g., Sullivan v. Porter, 861 A.2d 625 (Me. 2004); Sharp v.
Sumner, 528 S.E.2d 791 (Ga. 2000). The states differ on whether all
three elements are required or only one or two. Payment of part of the
purchase price is generally not enough to trigger the doctrine because
the buyer can be made whole by having the money returned (with
interest). However, payment of the purchase price in combination with
one or both of the other factors is likely to be sufficient because they
ordinarily would not occur without a promise to convey. Many cases
rely on a combination of payment of part of the purchase price plus the
taking of possession as sufficient to take the case out of the Statute of
Frauds and allow enforcement.
b. Estoppel. An alternative basis for the part performance doctrine is
estoppel. “[I]f one party to the transaction induces the other to make a
substantial change of position to his or her detriment in good faith
reliance on the first party’s actions, then the first party may be estopped
from denying the transaction.” 14-81A Powell on Real Property
§81A.02[3][e]. When the seller makes a promise on which the buyer
relies substantially, it is not fair to allow the seller to claim that she did
not make a promise if this would cause detriment to the buyer who
reasonably relied on the promise to convey. Roussalis v. Wyoming
Medical Center, 4 P.3d 209 (Wyo. 2000); see also Harvey v. Dow, 11
A.3d 303, 307 (Me. 2011) (parents’ “general promise to give [their
daughter] land at some time” coupled with their “acquiescence,
support, and encouragement” of their daughter’s “construction of a
house on a parcel of their land,” demonstrated the parents’ “intention to

1222
 make a present conveyance of that property”). The buyer who has
taken substantial steps to complete the transaction by taking possession
or making improvements will ordinarily suffer hardship if the contract
is not enforced. The seller may also seek specific enforcement of the
contract if she has changed her position in reliance on the sale
occurring, such as investing the proceeds in the purchase of another
property.
How would Burns v. McCormick come out under the standard
adopted in Hickey v. Green? Was the plaintiffs’ reliance reasonable? Is
the result unjust? How would Hickey v. Green have come out if Gladys
Green had denied that she made the promise? How important should an
admission of a promise be, if there is one? See Brown v. Branch, 758
N.E.2d 48, 53 (Ind. 2001) (finding oral promise to convey title to a
house to his girlfriend not enforceable despite the fact that the
girlfriend quit her job, dropped out of college, and moved back to
Indiana from Missouri; refusal to enforce the promise would not inflict
“an unjust and unconscionable injury and loss”).
c. Constructive trust. A third method of avoiding the Statute of
Frauds is the constructive trust doctrine, which may be applied to
prevent unjust enrichment when “property has been acquired in such
circumstances that the holder of the legal title may not in good
conscience retain the beneficial interest.” Davis v. Barnfield, 833 So.
2d 58, 64 (Ala. Ct. App. 2002); accord Rawlings v. Rawlings, 240 P.3d
754 (Utah 2010). This doctrine may apply if the funds of one person
are used to acquire property, but title is held in the name of another.
5. Formality versus informality. Would it be better to enforce the
Statute of Frauds rigidly rather than creating equitable exceptions? Do
these exceptions enable the court to obtain justice in the individual case, or
do they reward negligence and undermine predictability? Is it compatible
with the judicial role to read exceptions into general statutes such as the
Statute of Frauds? Which rule is more likely to accord with the will of the
parties? Which rule is more likely to reduce the costs of transactions?
Which rule is more likely to prevent fraud?
In 1996, New Jersey amended its Statute of Frauds to eliminate the
requirement that a contract for the sale of real of real property must be in
writing. The statute only requires “a description of the real estate sufficient
to identify it, the nature of the interest to be transferred, the existence of
the agreement and the identity of the transferor and the transferee are
proved by clear and convincing evidence.” N.J. Stat. §25:1-13. A claimant
may appeal to part performance or reliance to prove the existence of the

1223
agreement by clear and convincing evidence but the statute authorizes
enforcement even without part performance or reliance by the buyer as
long as the evidence of the existence and terms of the agreement is
sufficiently strong. See Barron v. Kipling Woods, LLC, 838 A.2d 490 (N.J.
Super. Ct. App. Div. 2004). Is this a good change in the law?

§2.3 What Constitutes a Breach of the Contract

A. Misrepresentation and Fraudulent Nondisclosure

Johnson v. Davis

480 So. 2d 625 (Fla. 1985)

JAMES C. ADKINS, Justice.
In May of 1982, the Davises entered into a contract to buy for
$310,000 the Johnsons’ home, which at the time was three years old. The
contract required a $5,000 deposit payment, an additional $26,000 deposit
payment within five days and a closing by June 21, 1982.
Before the Davises made the additional $26,000 deposit payment, Mrs.
Davis noticed some buckling and peeling plaster around the corner of a
window frame in the family room and stains on the ceilings in the family
room and kitchen of the home. Upon inquiring, Mrs. Davis was told by
Mr. Johnson that the window had had a minor problem that had long since
been corrected and that the stains were wallpaper glue and the result of
ceiling beams being moved. There is disagreement among the parties as to
whether Mr. Johnson also told Mrs. Davis at this time that there had never
been any problems with the roof or ceilings. The Davises thereafter paid
the remainder of their deposit and the Johnsons vacated the home. Several
days later, following a heavy rain, Mrs. Davis entered the home and
discovered water “gushing” in from around the window frame, the ceiling
of the family room, the light fixtures, the glass doors, and the stove in the
kitchen.
Two roofers hired by the Johnsons’ broker concluded that for under
$1,000 they could “fix” certain leaks in the roof and by doing so make the
roof “watertight.” Three roofers hired by the Davises found that the roof
was inherently defective, that any repairs would be temporary because the
roof was “slipping,” and that only a new $15,000 roof could be
“watertight.”
The Davises filed a complaint alleging breach of contract, fraud and
misrepresentation, and sought rescission of the contract and return of their

1224
deposit. The Johnsons counterclaimed seeking the deposit as liquidated
damages.
We agree with the district court’s conclusions under a theory of fraud
and find that the Johnsons’ statements to the Davises regarding the
condition of the roof constituted a fraudulent misrepresentation entitling
respondents to the return of their $26,000 deposit payment. In the state of
Florida, relief for a fraudulent misrepresentation may be granted only
when the following elements are present: (1) a false statement concerning
a material fact; (2) the representor’s knowledge that the representation is
false; (3) an intention that the representation induce another to act on it;
and (4) consequent injury by the party acting in reliance on the
representation.
The evidence adduced at trial shows that after the buyer and the seller
signed the purchase and sales agreement and after receiving the $5,000
initial deposit payment the Johnsons affirmatively repeated to the Davises
that there were no problems with the roof. The Johnsons subsequently
received the additional $26,000 deposit payment from the Davises. The
record reflects that the statement made by the Johnsons was a false
representation of material fact, made with knowledge of its falsity, upon
which the Davises relied to their detriment as evidenced by the $26,000
paid to the Johnsons.
The doctrine of caveat emptor does not exempt a seller from
responsibility for the statements and representations which he makes to
induce the buyer to act, when under the circumstances these amount to
fraud in the legal sense. To be grounds for relief, the false representations
need not have been made at the time of the signing of the purchase and
sales agreement in order for the element of reliance to be present. The fact
that the false statements as to the quality of the roof were made after the
signing of the purchase and sales agreement does not excuse the seller
from liability when the misrepresentations were made prior to the
execution of the contract by conveyance of the property. It would be
contrary to all notions of fairness and justice for this Court to place its
stamp of approval on an affirmative misrepresentation by a wrongdoer just
because it was made after the signing of the executory contract when all of
the necessary elements for actionable fraud are present. Furthermore, the
Davises’ reliance on the truth of the Johnsons’ representation was justified
and is supported by this Court’s decision in Besett v. Basnett, 389 So. 2d
995 (Fla. 1980), where we held “that a recipient may rely on the truth of a
representation, even though its falsity could have been ascertained had he
made an investigation, unless he knows the representation to be false or its
falsity is obvious to him.”

1225
 In determining whether a seller of a home has a duty to disclose latent
material defects to a buyer, the established tort law distinction between
misfeasance and nonfeasance, action and inaction must carefully be
analyzed. The highly individualistic philosophy of the earlier common law
consistently imposed liability upon the commission of affirmative acts of
harm, but shrank from converting the courts into an institution for forcing
men to help one another. This distinction is deeply rooted in our case law.
Liability for nonfeasance has therefore been slow to receive recognition in
the evolution of tort law.
In theory, the difference between misfeasance and nonfeasance, action
and inaction is quite simple and obvious; however, in practice it is not
always easy to draw the line and determine whether conduct is active or
passive. That is, where failure to disclose a material fact is calculated to
induce a false belief, the distinction between concealment and affirmative
representations is tenuous. Both proceed from the same motives and are
attended with the same consequences; both are violative of the principles
of fair dealing and good faith; both are calculated to produce the same
result; and, in fact, both essentially have the same effect.
Still there exists in much of our case law the old tort notion that there
can be no liability for nonfeasance. The courts in some jurisdictions,
including Florida, hold that where the parties are dealing at arms’ length
and the facts lie equally open to both parties, with equal opportunity of
examination, mere nondisclosure does not constitute a fraudulent
concealment. The Fourth District affirmed that rule of law in Banks v.
Salina, 413 So. 2d 851 (Fla. Dist. Ct. App. 1982), and found that although
the sellers had sold a home without disclosing the presence of a defective
roof and swimming pool of which the sellers had knowledge, “[i]n
Florida,” there is no duty to disclose when parties are dealing at arms
length. Id. at 852.
These unappetizing cases are not in tune with the times and do not
conform with current notions of justice, equity and fair dealing. One
should not be able to stand behind the impervious shield of caveat emptor
and take advantage of another’s ignorance. Our courts have taken great
strides since the days when the judicial emphasis was on rigid rules and
ancient precedents. Modern concepts of justice and fair dealing have given
our courts the opportunity and latitude to change legal precepts in order to
conform to society’s needs. Thus, the tendency of the more recent cases
has been to restrict rather than extend the doctrine of caveat emptor. The
law appears to be working toward the ultimate conclusion that full
disclosure of all material facts must be made whenever elementary fair
conduct demands it.

1226
 The harness placed on the doctrine of caveat emptor in a number of
other jurisdictions has resulted in the seller of a home being liable for
failing to disclose material defects of which he is aware. This philosophy
was succinctly expressed in Lingsch v. Savage, 29 Cal. Rptr. 201 (Ct. App.
1963):

It is now settled in California that where the seller knows of facts materially
affecting the value or desirability of the property which are known or
accessible only to him and also knows that such facts are not known to or
within the reach of the diligent attention and observation of the buyer, the
seller is under a duty to disclose them to the buyer.

In Posner v. Davis, 395 N.E.2d 133 (Ill. 1979), buyers brought an action
alleging that the sellers of a home fraudulently concealed certain defects in
the home which included a leaking roof and basement flooding. Relying
on Lingsch, the court concluded that the sellers knew of and failed to
disclose latent material defects and thus were liable for fraudulent
concealment. Numerous other jurisdictions have followed this view in
formulating law involving the sale of homes.
We are of the opinion, in view of the reasoning and results in Lingsch,
Posner and the aforementioned cases decided in other jurisdictions, that
the same philosophy regarding the sale of homes should also be the law in
the state of Florida. Accordingly, we hold that where the seller of a home
knows of facts materially affecting the value of the property which are not
readily observable and are not known to the buyer, the seller is under a
duty to disclose them to the buyer. This duty is equally applicable to all
forms of real property, new and used.
In the case at bar, the evidence shows that the Johnsons knew of and
failed to disclose that there had been problems with the roof of the house.
Mr. Johnson admitted during his testimony that the Johnsons were aware
of roof problems prior to entering into the contract of sale and receiving
the $5,000 deposit payment. Thus, we agree with the district court and find
that the Johnsons’ fraudulent concealment also entitles the Davises to the
return of the $5,000 deposit payment plus interest.

JOSEPH A. BOYD, JR., Chief Justice, dissenting.

I respectfully but strongly dissent to the Court’s expansion of the
duties of sellers of real property. This ruling will give rise to a flood of
litigation and will facilitate unjust outcomes in many cases. If, as a matter
of public policy, the well settled law of this state on this question should
be changed, the change should come from the legislature.

1227
 Homeowners who attempt to sell their houses are typically in no better
position to measure the quality, value, or desirability of their houses than
are the prospective purchasers with whom such owners come into contact.
Based on this and related considerations, the law of Florida has long been
that a seller of real property with improvements is under no duty to
disclose all material facts, in the absence of a fiduciary relationship, to a
buyer who has an equal opportunity to learn all material information and is
not prevented by the seller from doing so. This rule provides sufficient
protection against overreaching by sellers.
I do not agree with the Court’s belief that the distinction between
nondisclosure and affirmative statement is weak or nonexistent. It is a
distinction that we should take special care to emphasize and preserve.
Imposition of liability for seller’s nondisclosure of the condition of
improvements to real property is the first step toward making the seller a
guarantor of the good condition of the property.
Although as described in the majority opinion this change in the law
sounds progressive, high-minded, and idealistic, it is in reality completely
unnecessary. Prudent purchasers inspect property, with expert advice if
necessary, before they agree to buy. Prudent lenders require inspections
before agreeing to provide purchase money. Initial deposits of earnest
money can be made with the agreement to purchase being conditional
upon the favorable results of expert inspections. It is significant that in the
present case the major portion of the purchase price was to be financed by
the Johnsons who were to hold a mortgage on the property. If they had
been knowingly trying to get rid of what they knew to be a defectively
constructed house, it is unlikely that they would have been willing to lend
$200,000 with the house in question as their only security.

Notes and Questions

1. Misrepresentation. Traditionally, the courts have differentiated
misrepresentation, suppression, and nondisclosure as bases for claims of
fraud in real estate transactions. An outright lie or misrepresentation of
facts has always constituted fraud and may give rise to liability for
damages as well as a right to rescind the sale. If the misrepresentation is
about a condition of the premises that is apparent to the buyer, a fraud
claim may be denied on the ground that a reasonable buyer would have
inspected the premises and discovered the evident defect, and thus any
reliance on the seller’s statement was unreasonable. Certain statements of
material fact, however, can be fraudulent even if a buyer might be able to
investigate, if the seller creates a situation where a reasonable buyer would

1228
not undertake that investigation. See, e.g., Bowman v. Presley, 212 P.3d
1210, 1221 (Okla. 2009) (firm statement about a home’s square footage
can serve as a “positive assurance upon which a purchaser may rely
without being compelled independently to determine the truth or falsity of
the fact represented”).

ELEMENTS

Fraudulent misrepresentation generally consists of

1. a false statement concerning a material fact;
2. that the maker of the statement knows is false;
3. made with the intent to induce reliance; and
4. consequent injury to the party relying on the statement.

A recurring issue in misrepresentation cases is whether a statement

constitutes a fact or an opinion. For example, the statement that “It’s a
great house” is often characterized as an opinion, which can shield the
seller from liability for fraud. In Ray v. Montgomery, 399 So. 2d 230 (Ala.
1980), the court held that the statement that a house “was supported by
hewn pine timbers, had good support, was ‘a nice house,’ was solid, and
was in good condition” was an opinion and could not constitute fraud,
even though the seller knew that the house was afflicted with termite
damage. Do you agree? Compare Cooper & Co., Inc. v. Lester, 832 So. 2d
628, 633 (Ala. 2000) (opinion may be the basis for fraud claim if actual
fraudulent intent in making such a representation is proven).
2. Caveat emptor or obligation to disclose? Courts traditionally held
that sellers are under no obligation to disclose defects in the houses they
are selling. Real estate sales were governed by the doctrine of caveat
emptor — let the buyer beware. This traditional rule, which generally
relieved sellers for liability arising from property defects, is still followed
in some states. See, e.g., Teer v. Johnston, 60 So. 3d 253, 258 (Ala. 2010)
(caveat emptor applies to sales of used real property); Urman v. South
Boston Savings Bank, 674 N.E.2d 1078 (Mass. 1997) (no common law
duty to disclose latent defects; exception if duty is imposed by statute).
A number of states continue to apply this rule in the context of
apparent defects. As long as the seller does not affirmatively lie to the
buyer about the condition of the premises (making a fraudulent

1229
misrepresentation), buyers are generally charged with notice of what an
inspection of the premises would have revealed. Puget Sound Service
Corp. v. Dalarna Management Corp., 752 P.2d 1353 (Wash. Ct. App.
1988). However, some courts make exceptions to this principle if the seller
acts to conceal the defect or other otherwise suppress knowledge of it by a
potential buyer. Osterhaus v. Toth, 249 P.3d 888, 905 (Kan. 2011); Kracl
v. Loseke, 461 N.W.2d 67 (Neb. 1990); Restatement (Second) of Torts
§550 (1977).
In recent years, there has been a trend to require sellers and brokers of
real estate to disclose information about latent defects known to the seller
and not readily discoverable by a buyer. Violation of this duty to disclose
constitutes fraud and will entitle the buyer to rescind the sale and/or obtain
damages caused by the fraud. Hess v. Chase Manhattan Bank, USA, 220
S.W.2d 758 (Mo. 2007); Shapiro v. Sutherland, 76 Cal. Rptr. 2d 101, 107
(Ct. App. 1998); Timm v. Clement, 574 N.W.2d 368 (Iowa 1997). Some
states limit this disclosure obligation to defects that pose a danger to health
or safety. Blaylock v. Cary, 709 So. 2d 1128 (Ala. 1997); Conahan v.
Fisher, 463 N.W.2d 118 (Mich. Ct. App. 1990); Restatement (Second) of
Torts §353 (1977). Some states go further and require sellers to reveal
facts of which they are aware that materially affect the value or desirability
of the property. Hermansen v. Tasulis, 48 P.3d 235 (Utah 2002) (for
brokers); Assilzadeh v. California Federal Bank, 98 Cal. Rptr. 2d 176, 182
(Ct. App. 2000).

ELEMENTS

Sellers generally have a duty to disclose

1. known facts;
2. that are material to the sale; and
3. are not within reach of diligent attention of buyer.

3. What information must be disclosed? A claim that a defendant

fraudulently failed to disclose certain information is premised on the
assumption that the defendant had a duty to disclose that information to the
plaintiff. This naturally raises the question of what information must be
disclosed. In general, states that impose liability for nondisclosure require
disclosure of nonobvious information that a reasonable buyer would want

1230
to know about and that might affect the terms of the transaction —
especially the market value of the property — or induce the buyer to back
out of the deal. Logue v. Flanagan, 584 S.E.2d 186, 190 (W. Va. 2003)
(holding that “where a vendor is aware of defects or conditions which
substantially affect the value or habitability of the property and the
existence of which are unknown to the purchaser and would not be
disclosed by a reasonably diligent inspection, then the vendor has a duty to
disclose the same to the purchaser”).
Many cases imposing liability on sellers or brokers for fraudulent
nondisclosure concern information about defective conditions that pose a
risk of harm and that would not be apparent to a reasonable observer. For
example, defendants have been found liable for fraudulent nondisclosure
when they have failed to disclose that the building was infested by
termites, Obde v. Schlemeyer, 353 P.2d 672 (Wash. 1960), that the home
was built on collapsible soil, Hess v. Canberra Development Co., LC, 254
P.3d 161 (Utah 2011), and that the property was located next to a landfill
contaminated with toxic waste and that federal environmental officials had
written a report advising against use of the site for human habitation,
Strawn v. Canuso, 657 A.2d 420 (N.J. 1995), superseded by N.J. Stat.
§§46:3C-1 to 46:3C-12.
Failure to disclose defective conditions may give rise to liability even
when they have not been proven to be dangerous but are nonetheless
material to the transaction in the sense that most buyers would want to
know about them. See, e.g., Roberts v. Estate of Barbagallo, 531 A.2d
1125 (Pa. Super. Ct. 1988) (imposing liability for fraudulent nondisclosure
on both the seller and the real estate broker hired by the seller because they
failed to reveal that the house was insulated with ureaformaldehyde foam
insulation, a substance that had been banned in future house construction
by the federal government).
Other kinds of information have also been deemed relevant. For
example, in Reed v. King, 193 Cal. Rptr. 130 (Ct. App. 1983), the seller
was held liable for failing to disclose that a woman and her four children
were murdered in the house ten years prior to the sale. In holding that the
disclosure of murder would be relevant to most buyers, the court argued,
id. at 133:

The murder of innocents is highly unusual in its potential for so disturbing

buyers they may be unable to reside in a home where it has occurred. This
fact may foreseeably deprive a buyer of the intended use of the purchase.
Murder is not such a common occurrence that buyers should be charged with
anticipating and discovering this disquieting possibility. Accordingly, the

1231
 fact is not one for which a duty of inquiry and discovery can sensibly be
imposed upon the buyer.

The court argued that one way to demonstrate that a fact is material is
to show that knowledge of the fact would affect the market value of the
property.

Reputation and history can have a significant effect on the value of realty.
“George Washington slept here” is worth something, however physically
inconsequential that consideration may be. Ill-repute or “bad will”
conversely may depress the value of property. Failure to disclose such a
negative fact where it will have a foreseeably depressing effect on income
expected to be generated by a business is tortious.

Id. Compare Milliken v. Jacono, 60 A.3d 133 (Pa. Super. Ct. 2013) (no
duty to disclose that murder-suicide took place in a listed house); Deptula
v. Simpson, 164 P.3d 640, 646 (Alaska 2007) (no duty to disclose that
previous owner had died and partially decomposed in house).
Stambovsky v. Ackley, 572 N.Y.S.2d 672 (App. Div. 1991), involved a
particularly unusual variation on the obligation to disclose. The seller of an
old Victorian-style house in Nyack, New York, had promoted the house as
being haunted, going as far as reporting in the local and national press that
there were three ghosts on the premises. The seller, however, did not
mention this to the out-of-town buyers, a couple from New York City. The
court found that “the most meticulous inspection and the search would not
reveal the presence of poltergeists at the premises or unearth the property’s
ghoulish reputation in the community,” id. at 676, and such a reputation
“goes to the very essence of the bargain between the parties, greatly
impairing both the value of the property and its potential for resale.” id. at
674. Accordingly, the seller had a duty to disclose the reputation of the
house and, as a result of her failure to do so, the buyers could rescind the
contract.
The house at issue in Stambovsky eventually sold in 1995 to new
buyers, a family who knew about its haunting reputation but still found the
house’s “vibe” to be “warm and inviting.” John Patrick Shultz, Nyack’s
Legally Haunted House, At Home in Nyack Blog (Oct. 29, 2010),
available at http://athomeinnyack.wordpress.com/2010/10/29/nyacks-
legally-haunted-house/. The house has since sold multiple times, for
$1,725,000 in 2012 and again in 2015 for $1,770,000, see
http://www.zillow.com/homedetails/1-Laveta-Pl-Nyack-NY-
10960/32384985_zpid/, despite the home’s well-known history. If you
were buying a house today, would you Google the address?

1232
 4. Legislation. More than half the states have passed legislation
requiring sellers to disclose defects in real property to prospective buyers.
See, e.g., Cal. Civ. Code §§1102-1102.17; N.J. Stat. §§46:3C-1 to 46:3C-
12 (interpreted by Nobrega v. Edison Glen Associates, 772 A.2d 368 (N.J.
2001)). However, the obligations vary widely and may not extend to
commercial property. See, e.g., Futura Realty v. Lone Star Building
Centers (East) Inc., 578 So. 2d 363 (Fla. Dist. Ct. App. 1991). Some states
allow sellers to avoid disclosure by getting the buyer to sign a contract
disclaiming reliance on any information by the seller. See Craig W.
Dallon, Theories of Real Estate Broker Liability and the Effect of the “As
Is” Clause, 54 Fla. L. Rev. 395 (2002). Would you favor passage of
disclosure legislation in your state? A number of states regulate the scope
of disclosures for certain conditions, such as off-site environmental
hazards. See, e.g., The New Residential Real Estate Off-Site Conditions
Disclosure Act, N.J. Stat. §§46:3C-1 to 46:3C-12. Why might brokers be
in favor of statutes regulating disclosures?
Note that in 1992 Congress passed the Residential Lead-Based Paint
Hazard Reduction Act, 42 U.S.C. §§4851-4856, requiring sellers and
landlords of housing built before 1978 to provide buyers or lessees with a
“lead hazard information pamphlet” and to disclose the presence of any
known lead-based paint. Id. §4852d. See 40 C.F.R. §§745.101-745.107.
5. The duty to disclose and the problem of trust. If contracting
parties have no duty to disclose information relevant to a transaction, then
they must protect themselves by undertaking an independent investigation.
The question whether there is a duty to disclose therefore poses a conflict
between self-reliance and reliance on others with whom one enters market
relationships. It also presents questions about the extent to which the law
should encourage an atmosphere of trust or distrust in contractual
relationships.
For example, Bonnco Petrol, Inc. v. Epstein, 560 A.2d 655 (N.J. 1989),
concerned the sale of a home to a commercial entity. After extended
negotiations, the “buyer” agreed to lease the property from the owner with
an option to purchase that could be exercised at a specified date. The
“seller” entrusted the buyer to amend the written contract drafts to accord
with their oral agreement. The buyer, however, included a term in the
contract that varied from the oral agreement. The seller skimmed the
documents before signing them, relying on the buyer’s claim that he
amended the documents in accord with the parties’ mutual understanding.
The court found that the buyer misrepresented, by his silence, that the
agreement signed by the seller conformed with earlier samples. The New

1233
Jersey Supreme Court concluded: “Silence in the face of an obligation to
disclose amounts to equitable fraud.” Justice Marie Garibaldi explained:
“[I]t matters little that [the seller] failed to read the agreement carefully
before signing. ‘One who engages in fraud . . . may not urge that one’s
victim should have been more circumspect or astute.’ We find, therefore,
that equitable fraud has occurred. There was an inaccurate assertion (in the
form of a nondisclosure) as to a material element of the bargain, on which
the [sellers] justifiably relied. Their reliance was justifiable because they
entrusted the drafting of the documents to [buyer].” Id. at 661.
Would it be better to encourage everyone to read a contract carefully
before signing? What rule would better reduce transaction costs? Which
rule better discourages fraud? What arguments could you make on both
sides of these questions?
6. Waiver. In Danann Realty Corp. v. Harris, 157 N.E.2d 597 (N.Y.
1959), plaintiff alleged that it was induced to lease a building held by
defendants because of oral representations, falsely made by the defendants,
as to the operating expenses of the building and as to the profits to be
derived from the investment. The court quoted the following clause
contained in the contract:

The Purchaser has examined the premises agreed to be sold and is familiar
with the physical condition thereof. The Seller has not made and does not
make any representations as to the physical condition, rents, leases, expenses,
operation or any other matter or thing affecting or related to the aforesaid
premises, except as herein specifically set forth, and the Purchaser hereby
expressly acknowledges that no such representations have been made, and
the Purchaser further acknowledges that it has inspected the premises and
agrees to take the premises “as is.” It is understood and agreed that all
understandings and agreements heretofore had between the parties hereto are
merged in this contract, which alone fully and completely expresses their
agreement, and that the same is entered into after full investigation, neither
party relying upon any statement or representation, not embodied in this
contract, made by the other. The Purchaser has inspected the buildings
standing on said premises and is thoroughly acquainted with their condition.

Id. at 598 (emphasis supplied by court).

The court held that generally a merger clause stating that the written
agreement embodies the whole agreement does not protect the defendant
from a claim of fraud. The court distinguished this case, however, noting
that the contractual language was more specific, id. at 599-600:

[Here] plaintiff has in the plainest language announced and stipulated that

1234
 it is not relying on any representations as to the very matter as to which it
now claims it was defrauded. Such a specific disclaimer destroys the
allegations in plaintiff’s complaint that the agreement was executed in
reliance upon these contrary oral representations.
[W]here a person has read and understood the disclaimer of representation
clause, he is bound by it. [We have previously held,] as a matter of law, the
allegation of plaintiffs “that they relied upon an oral statement made to them
in direct contradiction of this provision of the contract.” Ernst Iron Works v.
Duralith Corp., 200 N.E. 683, 685 (N.Y. 1936). The presence of such a
disclaimer clause “is inconsistent with the contention that plaintiff relied
upon the misrepresentation, and was led thereby to make the contract.”
Kreshover v. Berger, 119 N.Y.S. 737, 738 (App. Div. 1909).
[T]he plaintiff made a representation in the contract that it was not relying
on specific representations not embodied in the contract, while, it now
asserts, it was in fact relying on such oral representations. Plaintiff admits
then that it is guilty of deliberately misrepresenting to the seller its true
intention. To condone this fraud would place the purchaser in a favored
position. This is particularly so, where, as here, the purchaser confirms the
contract, but seeks damages. If the plaintiff has made a bad bargain he cannot
avoid it in this manner.
If the language here used is not sufficient to estop a party from claiming
that he entered the contract because of fraudulent representations, then no
language can accomplish that purpose. To hold otherwise would be to say
that it is impossible for two businessmen dealing at arm’s length to agree that
the buyer is not buying in reliance on any representations of the seller as to a
particular fact.

Justice Stanley H. Fuld dissented, id. at 600-602, 606:

If a party has actually induced another to enter into a contract by means of

fraud, I conceive that language may not be devised to shield him from the
consequences of such fraud. The law does not temporize with trickery or
duplicity, and this court, after having weighed the advantages of certainty in
contractual relations against the harm and injustice which result from fraud,
long ago unequivocally declared that “a party who has perpetrated a fraud
upon his neighbor may [not] contract with him, in the very instrument by
means of which it was perpetrated, for immunity against its consequences,
close his mouth from complaining of it, and bind him never to seek redress.
Public policy and morality are both ignored if such an agreement can be
given effect in a court of justice. The maxim that fraud vitiates every
transaction would no longer be the rule, but the exception.” Bridger v.
Goldsmith, 38 N.E. 458, 459 (N.Y. 1894). “In the realm of fact it is entirely
possible for a party knowingly to agree that no representations have been
made to him, while at the same time believing and relying upon

1235
 representations which in fact have been made and in fact are false but for
which he would not have made the agreement. To deny this possibility is to
ignore the frequent instances in everyday experience where parties accept
and act upon agreements containing exculpatory clauses in one form or
another, but where they do so, nevertheless, in reliance upon the honesty of
supposed friends, the plausible and disarming statements of salesmen, or the
customary course of business. To refuse relief would result in opening the
door to a multitude of frauds and in thwarting the general policy of the law.”
Bates v. Southgate, 31 N.E.2d 551, 558 (Mass. 1941).
The guiding rule [is] that fraud vitiates every agreement which it touches.
Contrary to the intimation in the court’s opinion, the nonreliance clause
cannot possibly operate as an estoppel against the plaintiff. Essentially
equitable in nature, the principle of estoppel is to be invoked to prevent fraud
and injustice, not to further them. The statement that the representations in
question were not made was, according to the complaint, false to the
defendant’s knowledge. Surely, the perpetrator of a fraud cannot close the
lips of his victim and deny him the right to state the facts as they actually
exist.

The Danann rule continues to be the law in many jurisdictions. See Teer v.
Johnston, 60 So. 3d 253 (Ala. 2010); Alires v. McGehee, 85 P.3d 1191
(Kan. 2004); Citibank, N.A. v. Plapinger, 485 N.E.2d 974 (N.Y. 1985)
(reaffirming the Danann rule). See also Florrie Young Roberts, Let the
Seller Beware: Disclosures, Disclaimers, and “As Is” Clauses, 31 Real
Est. L.J. 303, 315 (2003).
Other courts, however, reject the Danann rule, holding instead that a
fraud claim is still available despite an “as is” clause or a “non-reliance”
clause when the seller affirmatively lies about the condition of the
premises. Rodgers v. Wright, 366 P.3d 1264, 1271 (Wyo. 2016); Bowman
v. Presley, 212 P.3d 1210 (Okla. 2009). In Mulkey v. Waggoner, 338
S.E.2d 755 (Ga. Ct. App. 1985), the seller failed to deliver to the purchaser
a certificate, required by the contract, declaring the property free of
termites and termite damage. At the closing, buyer Sheryl Waggoner
refused to go ahead unless seller Z.A. Mulkey promised to give her such a
certificate to complete the transaction. The seller’s broker wrote into the
sales contract the words: “The sale is as is condition.” After the closing,
when Waggoner discovered wood beetle damage and the fact that Mulkey
had hired an exterminator two years earlier, she sued Mulkey for fraud.
The court rejected defendant’s argument that the “as is” clause in the
contract absolutely precluded plaintiff from claiming that defendant had
fraudulently induced her to sell. “[W]e are satisfied that an ‘as is’ clause
concerns itself with obvious defects or at least those which are reasonably

1236
discernible. Had Mrs. Waggoner purchased the house unseen and accepted
it with a patent defect easily exposed, the arguments of Mulkey may have
had more validity.” The clause could not be used to immunize the seller
from liability for false oral statements upon which the buyer reasonably
relied. Accord, McClain v. Octagon Plaza, L.L.C., 71 Cal. Rptr. 3d 885
(2008) (enforcing Cal. Civ. Code §1668); Snyder v. Lovercheck, 992 P.2d
1079 (Wyo. 1999). Can you distinguish the relevant facts in Danann and
Mulkey?
If sellers cannot enclose a clause in the contract of sale stating that the
buyer agrees to buy the property “as is” or that the buyer is not relying on
any oral statements made by the seller, how can sellers protect themselves
from buyers who falsely allege that the seller made an oral statement on
which the buyer relied?

Problem
Sellers of a home seek to move because their ten-year old son was
sexually molested by an older minor boy living next door. The older boy
was found guilty of the offense in juvenile court. The sellers feel torn
about whether they should disclose this fact to potential buyers. They want
to protect any families that might move into the home; at the same time,
they know that revealing this information may make it much harder to sell
their home. They are also aware that they cannot refuse to sell their home
to a family with children because the federal Fair Housing Act, 42 U.S.C.
§3601 et seq., prohibits discrimination against families with children. In
addition, they know that juvenile records are supposed to be sealed to
protect the identity of juvenile offenders, although they are not directly
bound by that confidentiality provision and may lawfully reveal the
information. Do they have an obligation to reveal the information? Should
they? If they do not have such an obligation, does the broker have a duty to
reveal the information?

B. Seller’s Failure to Provide Marketable Title

A purchase and sale agreement ordinarily requires the seller to be able

to deliver “marketable title” at the date set for the closing and if the
contract is silent, courts will often imply that obligation. The seller’s
inability to provide marketable title will excuse the buyer from the deal.
What kinds of defects in the title are sufficiently serious to justify allowing
the buyer to rescind the contract or refuse to close? In Conklin v. Davi, 388
A.2d 598 (N.J. 1978), the validity of the title to a portion of the premises
was based on the sellers’ claim to have acquired the property by adverse

1237
possession. The buyers argued that they were justified in repudiating the
agreement in the absence of record title, which the sellers could have
acquired either by seeking a deed from the record owner or by bringing
suit to quiet title to the property. The court rejected this argument, holding
instead that a “marketable title” was one “free from reasonable doubt, but
not from every doubt.” Title based on adverse possession, the court
concluded, is marketable if the adverse possession can be “clearly
established.”
The main defects that make the title unmarketable are encumbrances
and chain of title defects. Encumbrances are property interests in persons
other than the grantor that seriously affect the value or usability of the
property. These include possessory interests, such as conflicting titles and
leases, and nonpossessory interests, such as easements, covenants,
mortgages, and liens. Because many typical encumbrances have the
potential to make title unmarketable, it is common for sales contracts to
include explicit exceptions for matters in the public record, as the Standard
Form Purchase and Sale Agreement reproduced above in §2 does in clause
4(e). How else does the Form Agreement address questions of
encumbrances that might undermine marketable title?
Chain of title defects are mistakes or irregularities in the documents or
procedures by which title has been transferred or encumbered over time.
For example, a prior deed may turn out to have been forged, or the present
deed may misdescribe the property.
Two other standards for title can be found in purchase and sale
agreements, although contracts often combine requirements. Some
contracts require title to be “insurable,” which shifts the standard to the
state of title that a reputable title insurance company would be willing to
insure. See, e.g., 111-38 Management Corp. v. Benitez, 70 A.D.3d 911
(N.Y. App. Div. 2010) (distinguishing marketable title from insurable
title). Some purchase and sale agreements, by contrast, require that title be
valid “of record,” which means that not only must title be good, but also
that that fact be reflected in the public records. A requirement of record
validity would thus not be met by an adverse possession claim because the
public record would indicate an owner other than the seller. Given the
possible uncertainties of adverse possession litigation and the fact that
buyers may well hesitate to buy property so acquired, should a buyer be
forced to conclude the transaction?

C. Seller’s Breach of Warranty of Habitability for New Residential

Real Estate

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 In contrast to the traditional caveat emptor doctrine still applicable in
some states to the sale of used residential housing, most states protect
buyers of newly constructed residential real estate by imposing an implied
warranty of habitability. See, e.g., 2012 La. Acts 112. The implied
warranty goes by many names, including “habitability,” “fitness,”
“quality,” or “good workmanship.” See, e.g., Curry v. Thornsberry, 128
S.W.3d 438 (Ark. 2003); Albrecht v. Clifford, 767 N.E.2d 42 (Mass.
2002). Breach of this warranty may allow the buyer to rescind the sale or
obtain damages.

D. Buyer’s Failure to Make Good Faith Efforts to Obtain

Financing

Does a financing contingency imply an obligation to try in good faith

to get a loan? In Bushmiller v. Schiller, 368 A.2d 1044 (Md. Ct. Spec.
App. 1977), the buyer changed her mind after signing the purchase and
sale agreement and made no serious effort to obtain financing. The buyer
argued that her obligations under the contract were contingent on her
getting financing and that since she had not obtained financing she was
free to back out of the deal and recover her $13,000 deposit. The seller
claimed that the agreement contained an implied good faith term under
which the buyer impliedly promised to make good faith efforts to obtain
financing. Since the buyer failed to do this, the seller argued that he was
entitled to keep the $13,000 deposit and to recover damages from the
buyer of the difference between the contract price and the lower price at
which the seller could sell the property to a third party. The court held that
the buyer must undertake “reasonable efforts” to obtain financing and that
the buyer was not contractually justified in simply changing her mind
about the house.

§2.4 Remedies for Breach of the Purchase and Sale

Agreement

A. Buyer’s Remedies

A buyer whose seller has breached the purchase and sale agreement
has four remedies. See generally 2 Friedman on Contracts and
Conveyances of Real Property §7.2 (7th ed. 2005 & Supp. 2012).
1. Specific performance. The buyer can obtain an injunction ordering
the seller to convey the property to the buyer by transferring title in

1239
exchange for the agreed-upon contract price. Tauber v. Quann, 938 A.2d
724 (D.C. 2007).
2. Damages. The buyer may seek damages, measured in most states by
the difference between the ‘property’s market value at the time of breach
and contract price (expectation or benefit of the bargain damages), return
of the deposit, and any additional expenses occasioned by the breach. A
significant number of states, however, follow the English rule of Flureau
v. Thornhill, 96 Eng. Rep. 638 (1776), and refuse to give the buyer
expectation damages if the seller acted in good faith and believed he had
good title at the time he entered the agreement; in these situations, the
buyer may recover only the deposit, plus expenses. The buyer is entitled to
expectation damages only if the seller did not in good faith believe he had
good title, willfully or arbitrarily refused to complete the sale, or failed to
perfect title when it was easy to do so. On one hand, the good faith rule has
been severely criticized for treating real estate contracts differently from
other types of contracts without justification. On the other hand, the
different treatment has been justified by the difficulties with the recording
system and the fact that reasonable sellers may be mistaken about the state
of their title. Does the Flureau rule still make sense, given the generally
high quality of public records about title in the United States?
3. Rescission. The buyer may seek to rescind the deal and recover the
down payment or deposit.
4. Vendee’s lien. This remedy is based on the premise that the seller’s
breach of the purchase and sale agreement creates a debt owed by the
seller to the buyer, that is, the amount of the deposit, which is secured by a
lien on the property. The court can therefore order the property sold to
raise the funds to pay back the deposit. A vendee’s lien can also establish
the buyer’s priority of recovery for the deposit in a foreclosure brought by
other interests, such as a bank that loans money to the seller. See Benz v.
D.L. Evans Bank, 268 P.3d 1167 (Idaho 2012). In some states, legislation
has limited the circumstances in which a vendee’s lien can be established.
See Goebel v. Glover, 881 A.2d 493, 496 (Conn. Ct. App. 2005) (equitable
vendee’s lien denied where purchase and sale agreement was not
witnessed and acknowledged as required by statute).

B. Seller’s Remedies

The seller whose buyer has breached the purchase and sale agreement
also has four remedies. See generally Friedman, supra, at §7.1.

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 1. Specific performance. The seller may be able to sue the buyer for
the purchase price in exchange for the seller’s handing over to the buyer
the deed to the property, thus forcing the buyer to comply with the terms
of the contract. This remedy may not be available everywhere. The theory
behind specific performance for the buyer is that land is unique and that a
money judgment will not put the buyer in the position she would have
been in had the contract been performed. While this is true, money is not
unique; the seller should not care whether the purchase price comes from
the buyer or someone else. Nonetheless, the seller may be able to get
specific performance either on the ground of mutuality (each side should
have the same options as to remedies) or on the ground of the seller’s
inability to find another buyer. But see Kesler v. Marshall, 792 N.E.2d 893
(Ind. Ct. App. 2003) (denying specific performance to a seller who failed
to mitigate damages by attempting to find another buyer).
2. Damages. The seller may elect to sue for damages, which are
generally measured by the contract price minus the market price of the
parcel at the time of the breach, plus other expenses occasioned by the
breach. Some courts consider this unfair to the seller in a context where the
market is rapidly declining, assessing damages instead as the difference
between the contract price and the price obtained in a sale to a new buyer.
3. Rescission and forfeiture of down payment. The seller may
simply attempt to rescind the deal, keeping the down payment or earnest
money deposit paid by the buyer. Usually, the purchase and sale
agreement explicitly provides the seller with the right to keep the down
payment if the buyer breaches the contract. See, e.g., Uzan v. 845 UN
Limited Partnership, 778 N.Y.S.2d 171 (App. Div. 2004) (seller could
retain a deposit that amounted to 25 percent of the purchase price and
exceeded $8 million when the buyer refused to go ahead with the deal).
4. Vendor’s lien. This remedy is used generally to secure unpaid
amounts owed to a seller under a purchase and sale agreement. The
remedy presumes that the property belongs equitably to the buyer, who is
obligated to purchase the property; it also presumes that the seller has a
lien on the buyer’s equitable title and that the property can be sold to
satisfy the buyer’s obligation to pay the rest of the purchase price to the
seller.

§3 DEEDS
§3.1 Essential Terms

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 The deed must (1) identify the parties; (2) describe the property being
conveyed; (3) state the grantor’s intent to convey the property interest in
question; and (4) contain the grantor’s signature. The deed need not be
recorded to transfer title; delivery of the deed to the grantee is sufficient.
Most deeds are — and should be — recorded to protect the grantee’s
rights. To be recorded, most states require the deed to be acknowledged by
a public notary or other official and some require one or more witnesses to
the transaction. Thus, although acknowledgments are not necessary to
transfer title (except in a few states), they usually accompany the transfer
of the deed to enable the deed to be recorded.
The land being conveyed must be described in the deed. See Firma,
Inc. v. Twillman, 126 S.W.3d 790 (Mo. Ct. App. 2004) (deed invalid when
it failed to describe the property with reasonable certainty). The
description must be sufficiently precise to locate the boundaries of the
property. Those boundaries may be defined by reference to official
surveys, plats, or by “metes and bounds.” Most of the land in the United
States has been surveyed under the Government Survey System devised by
Thomas Jefferson and first adopted by the Continental Congress in 1785.
The system divides the land by a series of north-south and east-west lines
and defines so-called townships, which are further subdivided into
“sections.”7 These sections may be further divided into halves and
quarters, or even smaller divisions. Property can be located within these
quarter sections by reference to these official land parcels.
Property may also be described by a plat or subdivision map. A plat is
a map produced by a private developer (not a government official) that
describes the lots being created in a subdivision. These lots are generally
the ones that actually will be bought and sold; their borders are often not
straight. Often the subdivision is given a name and divided into “Blocks,”
with each Block being further subdivided into “lots.” The plat is generally
approved by a local agency before being filed in the recording office.
Deeds may then describe the lot being sold by reference to the plat. So, for
example, a lot being conveyed might be described as Block G, Lot 1 of
Gerry’s Landing Subdivision, recorded at Middletown County Registry of
Deeds, Plat 46, in Plat Book 114, page 75.
Property may also be described by metes and bounds. This system
starts at a defined point (usually described by a natural or artificial
“monument” such as a fence or a street edge) and identifies the direction
and distance of the first border, then the second border, and so on, until
returning to the original point. In effect, it describes how one would walk
around the borders of the property. Direction is notated in degrees (and
minutes and seconds) east or west of due north or south. The convention is

1242
to state north or south first and then describe the east or west deviation. So
a border that runs in a northwesterly direction would be notated as “North
45 degrees West 30 feet.” Subsequent borders take a similar form until one
returns to the starting place.
If a deed contains a mistaken description of the property, either party
may sue to reform the deed.

Sample Deed

Johannes Brahms, Grantor, of 24 Main Street, Unit #6, Middletown,

Middlesex County, Massachusetts, for consideration paid, and in full
consideration of THREE HUNDRED EIGHTEEN THOUSAND FIVE
HUNDRED DOLLARS ($318,500), grants to Clara and Robert
Schumann, Grantees, wife and husband, of 75 Broad Street, Middletown,
Massachusetts, as joint tenants with QUITCLAIM COVENANTS, Unit #6
in the 24 Main Street Condominium (a condominium subject to
Massachusetts General Laws, chapter 183A) in Middletown, Middlesex
County, Massachusetts, created by Master Deed dated August 23, 2002,
recorded on August 25, 2002, at the Middlesex County Registry of Deeds,
Book 14632, page 75, together with an undivided 15.22 percent interest in
said Unit and in the Common Areas of the buildings and land described in
the Master Deed, being the lot marked “F” on the plan of land drawn by
Wolfgang Amadeus Mozart, Civil Engineer, September 1942, which plan
is filed with Middlesex Registry of Deeds, Book 10479, page 214 (being
lot F on the plan filed with said Deed as filed plan No. 95) and said lot F is
bounded and further described as follows: southwesterly by Main Street,
by a slightly curved line, seventy-five feet; northwesterly by lot “E” on
said plan one hundred twenty-six and 45/100 feet; northeasterly by land of
owner unknown seventy-five feet; and southeasterly by the lot marked “G”
on said plan, one hundred eighteen and 24/100 feet; containing, according
to the plan, 9,315 square feet.
Being the same premises conveyed to Grantor by deed of Ludwig van
Beethoven by deed dated July 31, 2000, and recorded at Book 12469, page
143.
Said premises are conveyed subject to the restrictions and conditions as
set forth in paragraph 7 of said Master Deed, including:

(1) no Unit shall be used other than for residential purposes by one (1)
family;
(2) the architectural integrity of the Building and the Units shall be
preserved without modifications, including but not limited to the

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 following restrictions: that no balcony, enclosure, awning, screen,
antenna, sign, banner or other device, and no exterior change,
addition, structure, projection, decoration or other feature shall be
erected or placed upon or attached to any Unit; no addition to or
change or replacement (except, so far as practicable, with identical
kind) of any exterior light, door knocker or other exterior hardware,
exterior Unit door, or door frames shall be made and no painting or
other decoration shall be done on any exterior part of surface of
any Unit;
(3) no Unit shall be leased without the consent of the Condominium
Association.

The restrictions set forth in paragraphs (1), (2) & (3) above shall be for
the benefit of all of the Unit Owners and the 24 Main Street Condominium
Association, and:

(1) shall be administered on behalf of said Owners by the Trustees of

said 24 Main Street Condominium Association, duly chosen as
provided for in the Master Deed;
(2) shall be enforceable by the Trustees on behalf of the Condominium
Association, insofar as permitted by law;
(3) may be waived in specific cases by the Trustees; and
(4) shall, as permitted by law be perpetual and run with the land, and
may be extended from time to time in such manner as permitted or
required by law for the continued enforceability thereof.

Said premises are also conveyed subject to easements, rights,

conditions, and restrictions of record insofar as the same may be now in
force and applicable.
WITNESS my hand and seal this 6th day of December 2017.
Johannes Brahms
THE COMMONWEALTH OF MASSACHUSETTS
Middlesex, ss. December 6, 2017
Then personally appeared the above-named Johannes Brahms and
acknowledged the foregoing instrument to be his free act and deed before
me.
Notary Public
Print Name:
My Commission Expires:

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 §3.2 Delivery
A deed must be delivered to the grantee to effectuate a transfer of
ownership. The purpose of the delivery requirement is to ensure that the
grantor intends to part with the property and to clarify who owns it. When
property is sold, this requirement usually raises no problems since few
people will hand over such a large sum of money as the purchase price for
real property without getting something in return. When, however, people
give real property as a gift, ordinarily to family members, problems of
delivery can occur.
First, a person sometimes obtains physical possession of a deed, and
may even record the deed, when the owner does not intend to transfer
ownership. Possession of the deed or recording it, or both, may give rise to
a presumption that the grantor intended to transfer ownership of the land.
Most courts hold that this presumption can be overcome by extrinsic
evidence that the original owner did not intend to transfer ownership, such
as oral testimony that the owner intended to transfer ownership only at her
death or evidence of an installment land contract, providing that the buyer
would obtain title only after all payments are made to the seller. Stockwell
v. Stockwell, 790 N.W.2d 52 (S.D. 2010); Salter v. Hamiter, 887 So. 2d
230 (Ala. 2004); Blancett v. Blancett, 102 P.3d 640 (N.M. 2004). See In re
Estate of Hardy, 805 So. 2d 515 (Miss. 2002) (recording deed creates
presumption of delivery but no delivery was found when grantor retained
deeds until her death, they were found in her purse, and there was no other
evidence of intent to transfer title).
Second, someone may make out a deed in front of a notary public
granting ownership of her home to her daughter, place the deed in a safety
deposit box in her bank, and tell her daughter that she has given her the
property on the condition that the daughter allow her to continue living in
the house until her death. What happens if the woman then dies leaving a
will providing that all of her property be divided equally between her
daughter and her son? The son claims a half interest in the house; her
daughter claims that she owns it because her mother gave it to her before
she died. Has the deed been “delivered”?
Some courts are reluctant to find delivery unless the deed has been
physically handed over to the donee or to a third party who has
instructions to deliver the deed. Smith v. Lockridge, 702 S.E.2d 858, 863
(Ga. 2010). Most courts find that “delivery” can occur even if the deed is
not physically delivered to the donee under a doctrine of constructive
delivery. This doctrine holds that writing a deed and engaging in conduct
that demonstrates intent to transfer ownership is sufficient to constitute

1245
delivery. Intent to transfer ownership is more likely to be established if the
deed is physically deposited in a safety deposit box or with a third party.
Montgomery v. Callison, 700 S.E.2d 507 (W. Va. 2010). Many courts hold
that delivery of a deed to a third party, such as an attorney, with
instructions to hand over the deed to the grantee at the grantor’s death
constitutes delivery of a vested remainder to the grantee, with a life estate
retained by the grantor. In re Craddock, 403 B.R. 355 (Bankr. M.D.N.C.
2009). Which rule strikes you as the better approach?

§3.3 Title Covenants

A. Warranties of Title

Perhaps the most important elements of a real estate transaction are the
seller’s ability to convey title to the property to the buyer and the buyer’s
ability to rest assured that the buyer’s ownership rights will be secure
against other claimants. The buyer (or the mortgage lender’s lawyer) will
certainly want to search the seller’s record title. But the title search may
not reveal some important defects in the chain of title. For this reason, the
buyer may want additional assurances.
One form of additional assurance is the title covenant or warranty of
title contained in the deed. Six standard covenants have developed and are
explained below.
1. Present covenants. These covenants are breached, if at all, at the
time of the conveyance (the closing). That is when the statute of
limitations starts to run.
a. Covenant of seisin. This covenant is the grantor’s promise that he
owns the property interest (the estate) he is purporting to convey to the
grantee. Thus, an owner of a leasehold would breach this covenant if
he purported to convey a fee simple. Similarly, an owner of a one-half
interest as a tenant in common would breach the covenant if he
purported to convey full ownership of the property as a sole fee simple
owner.
b. Covenant of the right to convey. This constitutes the grantor’s
promise that he has the power to transfer the interest purportedly
conveyed to the grantee. Although in most cases the same as the
covenant of seisin, it might differ in several instances. For example, a
life estate burdened by an enforceable restraint on alienation would
violate this covenant if the owner purported to convey it to the grantee.
Similarly, if the property were adversely possessed by someone other

1246
 than the seller, the seller would have record title (seisin) of the property
but not the right to convey it.
c. Covenant against encumbrances. This is the grantor’s promise
that no mortgages, leases, liens, unpaid property taxes, or easements
encumber the property other than those acknowledged in the deed
itself.
2. Future covenants. These covenants are breached, if at all, after the
closing, when the disturbance to the grantee’s possession occurs. The
statute of limitations starts to run when the grantee’s possession is
disturbed.
a. Covenant of warranty. By this covenant, the grantor promises to
compensate the grantee for any monetary losses occasioned by the
grantor’s failure to convey the title promised in the deed.
b. Covenant of quiet enjoyment. The grantor promises by this
covenant that the grantee’s possession will not be disturbed by any
other claimant with a superior lawful title. This covenant is
substantially the same as the covenant of warranty.
c. Covenant for further assurances. Rarely used, this covenant
requires the seller to take further steps to cure defects in the grantor’s
title, such as paying an adverse possessor to leave the property or
paying the owner of an encumbrance to release the encumbrance.

Deeds are generally classified as general warranty, special warranty, or

quitclaim. A general warranty deed covenants against all defects in title.
A special warranty deed limits the covenant to defects in title caused by
the grantor’s own acts but not by the acts of prior owners. It can also cover
defects, such as the allowance of adverse possession, that were the result
of the current owner’s failure to act. Finally, a quitclaim deed contains no
warranty (or covenant) of title whatsoever. It purports to convey whatever
interests in the property are owned by the grantor. It does not, however,
promise that the grantor in fact owns the property interest that the grantor
claims to own — or, indeed, any interest. It suffices to transfer whatever
property interests the grantor has to the grantee, but does not provide the
buyer with any real assurance that the grantor has the right to convey the
interest the grantor purports to convey.
Some states have standardized the covenants by statute. These
covenants may be contained in the deed by reference to the statute in
which they are defined. They are thereby incorporated into the deed by
reference.

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 B. Remedies for Breach of Warranty of Title

The most widely used covenant is the covenant of warranty. If it turns

out that the seller did not have the right to convey the property interest the
deed purported to convey, the buyer can sue the seller for breach of the
warranty of title. This covenant runs with the land and can be enforced by
subsequent grantees as well. The damages for breach of the covenants of
warranty, seisin, right to convey, and quiet enjoyment are generally
measured by the price paid for the property that has been lost. This price is
generally near the fair market value of the property at the time of the
closing.
If the breach is discovered after the closing, the ousted buyer will not
be able to recover the market value of the property at the time the buyer
was ousted; moreover, the market value may be much higher than the
original price. This result has often been criticized since it may very well
not leave the buyer in the position the buyer would have been in had the
original contract been performed; if the price of land has been rising since
the closing, the buyer may not be able to purchase a similar piece of
property for the same amount the buyer paid for the premises from which
she was ousted. Stoebuck & Whitman, supra, at 913-914. At the same
time, allowing the buyer to obtain from the seller more than the value paid
places an uncertain and possibly onerous obligation on the seller for many
years into the future. The availability of title insurance may suggest a
better way to handle the problem.
The damages for breach of the covenant against encumbrances is either
the cost of removing the encumbrance (that is, paying off the mortgage or
buying out the covenant or easement) or the difference between the value
of the property without the encumbrance and with it.

§4 REAL ESTATE FINANCE

§4.1 The Basic Structure of Real Estate Finance
Very few people can afford to buy property without borrowing money.
Homeowners and businesses accordingly turn to lending institutions, such
as banks and mortgage companies, to borrow money to finance the
purchase of real estate. Traditionally, for home buyers, the lender would
check out the credit history of the prospective borrower, his current
employment, family assets, and other financial information to decide
whether to lend money. The lender will also want information about the
value of the home and how much of a down payment the borrower will be

1248
making. This is because the property will serve as collateral to secure
repayment of the loan. In commercial real estate, this underwriting process
is generally more complex, but follows the same basic structure.

Terms:
A real estate lender is typically called the mortgagee. The buyer-homeowner is
called the mortgagor. The mortgagor (homeowner) thus grants a mortgage to
the mortgagee (lender).

Borrowing money to finance a real estate purchase usually entails two

separate contracts. The first is the note. This constitutes the borrower’s
promise to repay the principal amount of the loan with interest, in the
amounts and at the times specified in the note. For example, imagine that
Béla Bartók borrows $270,000 to buy a $300,000 house, paying the
remaining $30,000 owed to the seller of the house from his savings. Bartók
would sign a note with the lender that recites the terms and conditions of
the loan, for example an obligation to repay the $270,000 at 5 percent
interest over 30 years. Traditionally, in a “fully amortized” loan, part of
each installment payment represents interest and part represents repayment
of the principal. (In the beginning, most of the payment is allocated to
interest.) The note creates a personal liability in Bartók to repay the
borrowed money, and the lender can sue Bartók for defaulting on Bartók’s
promises contained in the note.
The second contract is the mortgage. To obtain greater security for the
repayment of the note, the lender will require Bartók to execute a
mortgage on the property Bartók is buying. The mortgage will contain a
series of promises by Bartók, including the promise to pay off the note in
accordance with its terms, to maintain insurance on the property, to pay
property taxes when due, and to maintain the property so that it does not
become dilapidated and lose its market value, thereby impairing the
lender’s security. The mortgage also gives the lender a security interest in
the property. This means that if Bartók defaults on his loan payments or
violates any other material term of the mortgage, the lender has the ability
to declare the entire amount of the loan due, force the property to be sold,
and use the proceeds of the sale to pay off the rest of the note. The sale
may be conducted privately or under judicial supervision, depending on
the rules in the jurisdiction in which the property is located. The forced
sale of the property is called foreclosure or foreclosing the mortgage. We
will explore a number of questions about the foreclosure process below, in
§4.3, as well as how courts react to attempts by lenders to avoid the debtor

1249
protections in foreclosure altogether, in §4.4.
The terms and conditions of commercial lending, such as interest rates,
the period of repayment (or amortization), and the rights that go along with
a lender’s security interest, can vary significantly. Financing for home
purchases has been more standardized, but there is still some variation.
Most home loans have traditionally been long term, often 30 years, have
carried a fixed rate of interest, and require a substantial down payment by
the borrower, sometimes as much as 25 percent. Richard K. Green &
Susan M. Wachter, The American Mortgage in Historical and
International Context, 19 J. Econ. Persp. 93, 99-101 (2005). In the run-up
to the subprime crisis, home mortgages with more exotic terms, such as
interest rates that fluctuate (called adjustable rate mortgages), with short
terms that include balloon payments, which are large one-time payments
that substantially exceed the regular payment amount, or loans that require
little or no down payment, became more common.
Borrowers also use their property as collateral for debt that is not used
for purchasing the property. In the residential context this is generally
called home equity lending, where homeowners borrow money using the
value in their home above what is owed on other debt as collateral. This
kind of debt can be used to pay for home renovations and similar
investments, but it can also be used for expenses unrelated to the property,
such as medical bills, education, or even general consumer spending.8

§4.2 Mortgage Regulation and the Subprime Crisis

A. Regulating Mortgage Markets

Markets are structured by law, and they need regulation to function

effectively. Real estate finance is no exception, and federal, state, and local
laws shape many aspects of mortgage markets, which we can only touch
on briefly here.9 Beyond the consumer protections mortgagors have when
they default on their mortgage and face foreclosure, there are two other
primary ways in which the law structures mortgage markets. First, public
institutions seek to expand consumer credit, particularly for those
underserved by traditional lending practices. Second, the federal
government and to some extent the states regulate the terms and conditions
of how individual loans are provided, a process called origination, as well
as how loans are managed by lenders or companies working for lenders,
which is called servicing the loan. We will turn to this avenue of
regulation in §4.2.B, below.
In terms of access to credit, a number of institutions have been created,

1250
primarily at the federal level, to increase the availability, or reduce the
cost, of mortgage funds. In response to the Great Depression, for example,
Congress in 1932 passed the Federal Home Loan Bank Act, Pub. L. No.
72-304, 47 Stat. 725 (1932). The act created the Federal Home Loan Bank
Board and 12 regional banks to give loans to local institutions that finance
home mortgages in order to encourage them to lend money to home
buyers. As a further prod to home lenders, Congress in the National
Housing Act of 1934, Pub. L. No. 84-345, 48 Stat. 847 (1934), created the
Federal Housing Administration (FHA), an agency that insures private
mortgages.
Other federal institutions designed to spur home lending include the
Federal National Mortgage Association (Fannie Mae), created in 1938, and
the Federal Home Loan Mortgage Corporation (Freddie Mac), created in
1970. These government-sponsored entities (GSEs) buy mortgages from
lenders and sell securities to investors backed by the expected payments
from borrowers on those mortgages. This fosters a secondary market in
mortgages, bringing investment from capital markets to lending
institutions to allow those institutions to make more mortgage loans.10
The Home Mortgage Disclosure Act of 1975 (HMDA), 12 U.S.C.
§§2801-2810, was passed to respond to the problem of lenders failing in
many communities “to provide adequate home financing to qualified
applicants on reasonable terms and conditions” Id. §2801(a). The statute
was intended to generate “sufficient information to enable [citizens and
public officials] to determine whether depository institutions are filling
their obligations to serve the housing needs of the communities and
neighborhoods in which they are located.” Id. §2801(b). HMDA requires
banks to keep records of the loans they make and to disclose them publicly
to facilitate the ability to determine whether banks are engaged in
discriminatory lending patterns.
Similarly, the Community Reinvestment Act of 1977 (CRA), 12 U.S.C.
§§2901-2908, encourages lending institutions to provide credit in the local
communities in which they operate, especially for the “credit needs [of]
low- and moderate-income neighborhoods, consistent with the safe and
sound operation of [the] institution.” Id. §2903(a)(1). There are no
penalties for noncompliance but banks that do not comply with the
statutory requirements may be denied the right to establish new bank
branches or to engage in mergers with other institutions.

B. Securitization and the Subprime Crisis

For many years, mortgage banking was a staid profession with a

1251
conservative outlook and a regulatory environment largely set by New
Deal responses to the Great Depression. But beginning in the 1980s, a new
regulatory environment emerged with less government oversight, more
competition among mortgage providers, and new forms of mortgages and
mortgage markets. See generally Financial Crisis Inquiry Commission,
The Financial Crisis Inquiry Report: Final Report of the National
Commission on the Causes of the Financial and Economic Crisis in the
United States (2011); see also id. at xviii (“The sentries were not at their
posts, in no small part due to the widely accepted faith in the self-
correcting nature of the markets and the ability of financial institutions to
effectively police themselves.”).
State usury laws had traditionally regulated the interest rates that could
be charged for loans financing the purchase of a home. In 1980, with
interest rates at historic highs, Congress passed the Depository Institutions
Deregulation and Monetary Control Act, 12 U.S.C. §1735f-7a(a)(1), that
preempted state usury laws, allowing banks to charge whatever they
wanted. Lending institutions soon realized they could induce people to buy
homes even if interest rates were high by offering adjustable rate
mortgages (ARMs) with initially low interest rate payments that increased
over time. These loans appeared secure because the value of real estate
was rising, borrowers hoped they could refinance before higher interest
rates kicked in, and lenders could always recoup their investment by
foreclosure. Over time, lenders began offering these loans to lower-income
families as well as more traditional borrowers; to compensate for the
added risk posed by these loans, the interest rates were very high. Some
lenders decided that they could make money by giving loans to borrowers
who could not pay them back when the higher interest rates kicked in.
They even loaned money to people without any proof of their income or
ability to pay.11
Lenders were willing to offer such risky loans in part because they
increasingly sold the loans to other entities that took over the risk.
Traditionally, lenders had often kept the mortgage and with it the risk of
non-payment. The market to buy the loans increased as mortgage loans
were increasingly securitized, which involves bundling many loans and
selling shares in these bundled loans to investors. These securities were
called collateralized debt obligations (CDOs) or mortgage-backed
securities (MBSs) because the mortgages in the real property were
collateral or security for the debts. The structure of the securities became
extremely complex. A typical structure involves many different parties and
multiple steps of securitization. Mortgages, which may be of different
types, geographies, and origins, are pooled together into a trust, which is

1252
then divided into tranches that have different risk and reward
characteristics. The securities were themselves often rebundled and resold,
removing them still further from essential information about the mortgages
that backed the securities. Each time the mortgage pool was sliced or
repackaged, informational problems occurred, creating more risk.
The market for these securities grew tremendously in the 1990s and
early 2000s, both in absolute dollar terms and as a part of the national and
world financial markets. In 1995, only 30 percent of mortgages were
securitized, but by 2006, this number had climbed to over 80 percent.
Benjamin J. Keys, Tanmoy K. Mukherjee, Amit Seru & Vikrant Vig, Did
Securitization Lead to Lax Screening? Evidence from Subprime Loans,
125 Q. J. Econ. 307, 314 (2010). Importantly, the quality of mortgages
declined during this time period. Subprime mortgages grew from 9.5
percent, or $70 billion, of total mortgage originations to 23.5 percent, or
$600 billion, in 2006. See Financial Crisis Inquiry Report, supra, at 70.
Nevertheless, as the United States experienced prolonged growth in
housing prices, the real estate sector and related financial industries
generated high returns, and mortgage-backed securities, together with the
real estate market, experienced a boom.
Lending institutions also bought and sold a complicated form of
insurance for mortgage-backed securities called credit default swaps,
which were unregulated and not backed by any security. Companies sold
this insurance because defaults on securities backed by real estate were
thought to be unlikely, even if particular borrowers defaulted on their
loans, because the rising value of land would recover the debts. But
because many institutions were on both sides of these transactions (both
insuring and being insured) and because many institutions held risky debt,
any problem in the payment schedule, combined with a decrease in the
value of land, had the possibility of making the whole system unravel.
And unravel it did, partly because borrowers were over their heads and
could not afford to make the higher payments when their ARMs jumped to
the new higher interest rates and partly because the housing bubble burst.
As long as house prices continued to rise, borrowers could refinance their
loans when they became too burdensome. When house prices and sales
began to drop, the decline had a nationwide effect, eroding the security for
subprime mortgages. Many borrowers now owed more on their loans than
the value of the real estate securing those loans. As people began to stop
making mortgage payments, foreclosures increased significantly.
A “death spiral” was in place: “Falling prices meant that firms using
debt securities as collateral had to mark them to market and put up cash,
requiring the sale of more securities, which caused market prices to

1253
plummet further downward.” Steven L. Schwarcz, Understanding the
Subprime Financial Crisis, 60 S.C. L. Rev. 549, 553 (2009). The impact
was dramatic. In the face of huge losses on the securities, and with
bankruptcies of important institutions across several markets, fear began to
seize lenders and investors. Banks, which had already taken huge losses
from their holdings in the mortgage sector, were unable to secure funding
from capital providers. Some major companies, notably Lehman Brothers,
went bankrupt, and many others were reorganized, sold, or taken over by
the federal government. Credit markets froze and the subprime crisis
spread from mortgage-backed securities to the entire global economy. See
Kathleen C. Engel & Patricia A. McCoy, The Subprime Virus: Reckless
Credit, Regulatory Failure, and Next Steps (2011).12
In the years since the crash, the legal system has had to grapple with
the fallout, as the next case illustrates.

Commonwealth v. Fremont Investment & Loan

897 N.E.2d 548 (Mass. 2008)

BOTSFORD, MARGOT, J.
[Fremont Investment & Loan and its parent company, Fremont General
Corporation (collectively, Fremont)] is an industrial bank chartered by the
State of California. Between January, 2004, and March, 2007, Fremont
originated 14,578 loans to Massachusetts residents secured by mortgages
on owner-occupied homes. Of the loans originated during that time period,
roughly 3,000 remain active and roughly 2,500 continue to be owned or
serviced by Fremont. An estimated fifty to sixty per cent of Fremont’s
loans in Massachusetts were subprime.13 Because subprime borrowers
present a greater risk to the lender, the interest rate charged for a subprime
loan is typically higher than the rate charged for conventional or prime
mortgages. After funding the loan, Fremont generally sold it on the
secondary market, which largely insulated Fremont from losses arising
from borrower default.
In originating loans, Fremont did not interact directly with the
borrowers; rather, mortgage brokers acting as independent contractors
would help a borrower select a mortgage product, and communicate with a
Fremont account executive to request a selected product and provide the
borrower’s loan application and credit report. If approved by Fremont’s
underwriting department, the loan would proceed to closing and the broker
would receive a broker’s fee.
Fremont’s subprime loan products offered a number of different

1254
features to cater to borrowers with low income. A large majority of
Fremont’s subprime loans were adjustable rate mortgage (ARM) loans,
which bore a fixed interest rate for the first two or three years, and then
adjusted every six months to a considerably higher variable rate for the
remaining period of what was generally a thirty-year loan.14 Thus,
borrowers’ monthly mortgage payments would start out lower and then
increase substantially after the introductory two-year or three-year period.
To determine loan qualification, Fremont generally required that
borrowers have a debt-to-income ratio of less than or equal to fifty per cent
— that is, that the borrowers’ monthly debt obligations, including the
applied-for mortgage, not exceed one-half their income. However, in
calculating the debt-to-income ratio, Fremont considered only the monthly
payment required for the introductory rate period of the mortgage loan, not
the payment that would ultimately be required at the substantially higher
“fully indexed” interest rate.15 As an additional feature to attract subprime
borrowers, who typically had little or no savings, Fremont offered loans
with no down payment. Instead of a down payment, Fremont would
finance the full value of the property, resulting in a “loan-to-value ratio”
approaching one hundred per cent. Most such financing was accomplished
through the provision of a first mortgage providing eighty per cent
financing and an additional “piggy-back loan” providing twenty per
cent.16
As of the time the Attorney General initiated this case in 2007, a
significant number of Fremont’s loans were in default. An analysis by the
Attorney General of ninety-eight of those loans indicated that all were
ARM loans with a substantial increase in payments required after the first
two (or in a few cases, three) years, and that ninety per cent of the ninety-
eight had a one hundred per cent loan-to-value ratio.
On March 7, 2007, Fremont executed a “stipulation and consent to the
issuance of an order to cease and desist” (consent agreement) with the
Federal Deposit Insurance Corporation (FDIC), settling charges of
unsound banking practices brought by that agency. The consent agreement
ordered Fremont, inter alia, to cease and desist from originating ARM
products to subprime borrowers in ways described as unsafe and unsound,
including making loans with low introductory rates without considering
borrowers’ ability to pay the debt at the fully indexed rate, and with loan-
to-value ratios approaching one hundred per cent. In entering into the
consent agreement, Fremont did not admit to any wrongdoing.
On or about July 10, 2007, Fremont entered into a term sheet letter
agreement (term sheet agreement) with the Massachusetts Attorney

1255
General, agreeing to give the Attorney General ninety days’ notice before
foreclosing on any Massachusetts residential mortgage loan. If the
Attorney General objected, Fremont agreed to negotiate in good faith to
resolve the objection, possibly by modifying the loan agreement. If no
resolution could be reached, the Attorney General was granted an
additional fifteen days in which to determine whether to seek an
injunction.
As it turned out, the Attorney General objected to every proposed
foreclosure that Fremont identified except those where the home was not
owner-occupied and Fremont had been unable to contact the borrower. On
October 4, 2007, the Attorney General filed this action.
The judge granted a preliminary injunction in a memorandum of
decision dated February 25, 2008. In his decision, the judge found no
evidence in the preliminary injunction record that Fremont encouraged or
condoned misrepresentation of borrowers’ incomes on stated income
loans, or that Fremont deceived borrowers by concealing or
misrepresenting the terms of its loans. However, the judge determined that
the Attorney General was likely to prevail on the claim that Fremont’s
loans featuring a combination of the following four characteristics
qualified as “unfair” under Mass. Gen. Laws ch. 93A, §2: (1) the loans
were ARM loans with an introductory rate period of three years or less; (2)
they featured an introductory rate for the initial period that was at least
three per cent below the fully indexed rate; (3) they were made to
borrowers for whom the debt-to-income ratio would have exceeded fifty
per cent had Fremont measured the borrower’s debt by the monthly
payments that would be due at the fully indexed rate rather than under the
introductory rate; and (4) the loan-to-value ratio was one hundred per cent,
or the loan featured a substantial prepayment penalty (defined by the judge
as greater than the “conventional prepayment penalty” defined in Mass.
Gen. Laws ch. 183C, §2) or a prepayment penalty that extended beyond
the introductory rate period.
The judge reasoned that Fremont as a lender should have recognized
that loans with the first three characteristics just described were “doomed
to foreclosure” unless the borrower could refinance the loan at or near the
end of the introductory rate period, and obtain in the process a new and
low introductory rate.17 The fourth factor, however, would make it
essentially impossible for subprime borrowers to refinance unless housing
prices increased, because if housing prices remained steady or declined, a
borrower with a mortgage loan having a loan-to-value ratio of one hundred
per cent or a substantial prepayment penalty was not likely to have the
necessary equity or financial capacity to obtain a new loan. The judge

1256
stated that, “[g]iven the fluctuations in the housing market and the inherent
uncertainties as to how that market will fluctuate over time . . . it is unfair
for a lender to issue a home mortgage loan secured by the borrower’s
principal dwelling that the lender reasonably expects will fall into default
once the introductory period ends unless the fair market value of the home
has increased at the close of the introductory period. To issue a home
mortgage loan whose success relies on the hope that the fair market value
of the home will increase during the introductory period is as unfair as
issuing a home mortgage loan whose success depends on the hope that the
borrower’s income will increase during that same period.”
The judge concluded that the balance of harms favored granting the
preliminary injunction, and that the public interest would be served by
doing so. The injunction he granted requires Fremont to do the following:
(1) to give advance notice to the Attorney General of its intent to foreclose
on any of its home mortgage loans; and (2) as to loans that possess each of
the four characteristics of unfair loans just described and that are secured
by the borrower’s principal dwelling (referred to in the injunction as
“presumptively unfair” loans), to work with the Attorney General to
“resolve” their differences regarding foreclosure — presumably through a
restructure or workout of the loan. If the loan cannot be worked out,
Fremont is required to obtain approval for foreclosure from the court. The
judge made clear that the injunction in no way relieved borrowers of their
obligation ultimately to prove that a particular loan was unfair and
foreclosure should not be permitted, or their obligation to repay the loans
they had received.

Discussion
Fremont argues that the judge committed two “fundamental” errors of
law in concluding that the Attorney General was likely to prevail on the
merits of her ch. 93A claim: first, the judge in effect, and improperly,
applied the provisions of the Massachusetts Predatory Home Loan
Practices Act, Mass. Gen. Laws ch. 183C, to Fremont’s loans, even though
the loans are not subject to ch. 183C; and second, the judge failed to
recognize that under Mass. Gen. Laws ch. 93A, §3, Fremont’s loans are
exempt from ch. 93A because all of Fremont’s challenged loan terms were
permitted under the Federal and Massachusetts laws and regulatory
standards governing mortgage lenders. Fremont also contends that the
judge erred in determining that the public interest would be served by the
preliminary injunction order. We address these arguments separately
below. Before doing so, we consider a basic claim that lies underneath all

1257
of Fremont’s legal challenges to the injunction.

Retroactive Application of Unfairness Standards

Fremont’s basic contention is that, while the terms of its subprime
loans may arguably seem “unfair” within the meaning of Mass. Gen. Laws
ch. 93A, §2, if judged by current standards applicable to the mortgage
lending industry, they did not violate any established concept of unfairness
at the time they were originated; the judge, in Fremont’s view, applied new
rules or standards for defining what is “unfair” in a retroactive or ex post
facto fashion — a result that is not in accord with the proper interpretation
of ch. 93A, §2, and also represents “bad policy,” because (among other
reasons) lenders cannot know what rules govern their conduct, which will
reduce their willingness to extend credit, hurting Massachusetts
consumers. We do not agree that the judge applied a new standard
retroactively.
General Laws ch. 93A, §2 (a), makes unlawful any “unfair or
deceptive acts or practices in the conduct of any trade or commerce.”
Chapter 93A creates new substantive rights, and in particular cases,
“mak[es] conduct unlawful which was not unlawful under the common
law or any prior statute.” Kattar v. Demoulas, 739 N.E.2d 246, 257 (Mass.
2000). The statute does not define unfairness, recognizing that “[t]here is
no limit to human inventiveness in this field.” Id. at 257. What is
significant is the particular circumstances and context in which the term is
applied. It is well established that a practice may be deemed unfair if it is
“within at least the penumbra of some common-law, statutory, or other
established concept of unfairness.” PMP Assocs., Inc. v. Globe Newspaper
Co., 321 N.E.2d 915, 918 (Mass. 1975).
Fremont highlights the judge’s statement that at the time Fremont
made the loans in question between 2004 and March of 2007, loans with
the four characteristics the judge identified as unfair were not considered
by the industry or more generally to be unfair; Fremont argues this
acknowledgment by the judge is proof that the judge was creating a new
definition or standard of unfairness. The argument lacks merit. First, the
judge’s statement that Fremont’s combination of loan features were not
recognized to be unfair does not mean the converse: that the loans were
recognized to be fair. More to the point, at the core of the judge’s decision
is a determination that when Fremont chose to combine in a subprime loan
the four characteristics the judge identified, Fremont knew or should have
known that they would operate in concert essentially to guarantee that the
borrower would be unable to pay and default would follow unless

1258
residential real estate values continued to rise indefinitely — an
assumption that, in the judge’s view, logic and experience had already
shown as of January, 2004, to be unreasonable. The judge concluded that
the Attorney General was likely to prove that Fremont’s actions, in
originating loans with terms that in combination would lead predictably to
the consequence of the borrowers’ default and foreclosure, were within
established concepts of unfairness at the time the loans were made, and
thus in violation of Mass. Gen. Laws ch. 93A, §2. The record supports this
conclusion.
Fremont correctly points out that as a bank in the business of mortgage
lending, it is subject to State and Federal regulation by a variety of
agencies.18 Well before 2004, State and Federal regulatory guidance
explicitly warned lending institutions making subprime loans that, even if
they were in compliance with banking-specific laws and regulations and
were “underwrit[ing] loans on a safe and sound basis, [their] policies could
still be considered unfair and deceptive practices” under Mass. Gen. Laws
ch. 93A. Consumer Affairs and Business Regulation Massachusetts
Division of Banks, Subprime Lending (Dec. 10, 1997). More particularly,
the principle had been clearly stated before 2004 that loans made to
borrowers on terms that showed they would be unable to pay and therefore
were likely to lead to default, were unsafe and unsound, and probably
unfair. Thus, an interagency Federal guidance published January 31, 2001,
jointly by the Office of the Comptroller of the Currency (OCC), the Board
of Governors of the Federal Reserve System, the FDIC, and the Office of
Thrift Supervision, stated: “Loans to borrowers who do not demonstrate
the capacity to repay the loan, as structured, from sources other than the
collateral pledged are generally considered unsafe and unsound” (emphasis
supplied).19 Expanded Guidance for Subprime Lending Programs at 11
(Jan. 31, 2001). On February 21, 2003, one year before the first of
Fremont’s loans at issue, the OCC warned that certain loans could be
unfair to consumers:

When a loan has been made based on the foreclosure value of the
collateral, rather than on a determination that the borrower has the capacity
to make the scheduled payments under the terms of the loan, based on the
borrower’s current and expected income, current obligations, employment
status, and other relevant financial resources, the lender is effectively
counting on its ability to seize the borrower’s equity in the collateral to
satisfy the obligation and to recover the typically high fees associated with
such credit. Not surprisingly, such credits experience foreclosure rates higher
than the norm.

1259
 [S]uch disregard of basic principles of loan underwriting lies at the heart
of predatory lending.

OCC Advisory Letter, Guidelines for National Banks to Guard Against

Predatory and Abusive Lending Practices, AL 2003-2 at 2 (Feb. 21, 2003).
The record here suggests that Fremont made no effort to determine
whether borrowers could “make the scheduled payments under the terms
of the loan.” Rather, as the judge determined, loans were made in the
understanding that they would have to be refinanced before the end of the
introductory period. Fremont suggested in oral argument that the loans
were underwritten in the expectation, reasonable at the time, that housing
prices would improve during the introductory loan term, and thus could be
refinanced before the higher payments began. However, it was
unreasonable, and unfair to the borrower, for Fremont to structure its loans
on such unsupportable optimism. As a bank and mortgage lender, Fremont
had been warned repeatedly before 2004 (in the context of guidance on
loan safety and soundness) that it needed to consider the performance of its
loans in declining markets. See, e.g., Consumer Affairs and Business
Regulation, Massachusetts Division of Banks, Subprime Lending (Dec. 10,
1997) (“[M]ost subprime loans have been originated during robust
economic conditions and have not been tested by a downturn in the
economy. Management must ensure that the institution has adequate
financial and operational strength to address these concerns effectively”).
Fremont cannot now claim that it was taken by surprise by the effects of an
economic decline, or that it should not be held responsible.
Finally, the conclusion that Fremont’s loans featuring the four
characteristics at issue violated established concepts of unfairness is
supported by the consent agreement that Fremont entered into with the
FDIC on March 7, 2007, the date Fremont stopped making loans. The
consent agreement contains no admission of wrongdoing by Fremont, and
we do not consider it as evidence of liability on Fremont’s part. However,
we view it as evidence of existing policy and guidance provided to the
mortgage lending industry. The fact that the FDIC ordered Fremont to
cease and desist from the use of almost precisely the loan features that are
included in the judge’s list of presumptively unfair characteristics indicates
that the FDIC considered that under established mortgage lending
standards, the marketing of loans with these features constituted unsafe
and unsound banking practice with clearly harmful consequences for
borrowers. Such unsafe and unsound conduct on the part of a lender,
insofar as it leads directly to injury for consumers, qualifies as “unfair”
under Mass. Gen. Laws ch. 93A, §2.

1260
 General Laws ch. 93A, §3
Fremont argues that the Commonwealth’s claim is barred by Mass.
Gen. Laws ch. 93A, §3, because Fremont’s actions were permitted by the
law as it existed at the time it originated the loans. We disagree.
General Laws ch. 93A, §3, provides:

“Nothing in this chapter shall apply to transactions or actions otherwise

permitted under laws as administered by any regulatory board or officer
acting under statutory authority of the commonwealth or of the United States.
For the purpose of this section, the burden of proving exemptions from the
provisions of this chapter shall be upon the person claiming the exemptions.”

This provision must be read together with Mass. Gen. Laws ch. 93A,
§2. That section “ ‘created new substantive rights,” ’ and thus “[t]he fact
that particular conduct is permitted by statute or by common law principles
should be considered, but it is not conclusive on the question of
unfairness.” Schubach v. Household Fin. Corp., 376 N.E.2d 140, 142
(Mass. 1978) (quoting Commonwealth v. DeCotis, 316 N.E.2d 748, 755
n.8 (Mass. 1974)). A defendant’s burden in claiming the exemption is “a
difficult one to meet. To sustain it, a defendant must show more than the
mere existence of a related or even overlapping regulatory scheme that
covers the transaction. Rather, a defendant must show that such scheme
affirmatively permits the practice which is alleged to be unfair or
deceptive” (emphasis in original). Fleming v. Nat’l Union Fire Ins. Co.,
837 N.E.2d 1113, 1121 (Mass. 2005).
The judge concluded, as have we, that the Attorney General is likely to
succeed on her claim that Fremont’s practice of originating loans bearing
the particular combination of four features identified in the preliminary
injunction was unfair. To carry its burden under Mass. Gen. Laws ch. 93A,
§3, of demonstrating that a regulatory scheme “affirmatively permits the
practice which is alleged to be unfair,” Fremont must show that some
regulatory scheme affirmatively permitted the practice of combining all of
those features. Fremont has not done so. Rather, it cites authority
demonstrating, it asserts, that each of the four features was permitted by
statute and regulatory authorities. Assuming, without deciding, that
Fremont is correct that every feature was affirmatively permitted
separately, it was Fremont’s choice to combine them into a package that it
should have known was “doomed to foreclosure”; the relevant question is
whether some State or Federal authority permitted that combination. No
authority did.

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 Notes and Questions
1. Regulating mortgage terms. Fremont addressed the substantive
standards that should govern home lending. Several states have passed
legislation regulating the terms and conditions of subprime mortgages,
attempting to prevent the kinds of abusive practices that Fremont
addressed. Among the strongest in the nation is the Minnesota statute,
passed in 2007. It prohibits (1) making a residential loan to someone
without regard to the borrower’s ability to pay; (2) refinancing mortgages
when no economic benefit accrues to the borrowing; and (3) certain
prepayment penalties. See Minn. Stat. §§58.13(1)(a)(24) to (26), 58.137,
609.822. Similar legislation has passed in Colorado (Colo. Rev. Stat. §38-
40-105); Illinois (205 Ill. Comp. Stat. 635/5-6); Maryland (Md. Code
Ann., Com. Law §12-127(b)-(c)); Nevada (Nev. Rev. Stat. §598D.100(1)
(b)); New Mexico (N.M. Stat. §58-21B-13(C)(24)); New York (N.Y.
Banking Law §6(g-m)); Ohio (Ohio Rev. Code Ann. §§1345.031(B)(2),
1345.031(B)(14)); West Virginia (W. Va. Code R. §106-5-11); and other
states.
Several of the characteristics in Fremont that marked the loans in that
case as “unfair” involved what the lenders knew about the borrowers’
ability to repay when they originated the loans. The Dodd-Frank Wall
Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124
Stat. 1376 (2010) (Dodd-Frank Act), which was passed in response to the
subprime mortgage crisis, for the first time sets national standards to
address this issue. See 15 U.S.C. §1639c(a)(1) (“[N]o creditor may make a
residential mortgage loan unless the creditor makes a reasonable and good
faith determination based on verified and documented information that, at
the time the loan is consummated, the consumer has a reasonable ability to
repay the loan, according to its terms, and all applicable taxes, insurance . .
. and assessments.”). Lenders are now required to evaluate this ability to
repay through documentation about the borrower and, for adjustable rate
mortgages, lenders must evaluate ability to repay based on the required
payments over the life of the loan, not just an introductory “teaser” rate. 15
U.S.C. §1639c(a)(3). See generally Adam Leitman Bailey & John M.
Desiderio, A Lender’s Duty to Investigate Its Borrower, 29 Prob. & Prop.
(Mar.-Apr. 2015) (surveying federal and state regulations on borrower
ability to repay).
The Dodd-Frank Act established a presumption that certain “qualified
mortgages” comply with this provision, 15 U.S.C. §1639c(b), and a new
agency that the statute created, the Consumer Financial Protection Bureau
(CFPB), has issued regulations that spell out what constitutes a qualified

1262
mortgage. See Ability-to-Repay and Qualified Mortgage Standards Under
the Truth in Lending Act (Regulation Z), 78 Fed. Reg. 6407 (Jan. 30, 2013)
(to be codified at 12 C.F.R. pt. 1026). The Dodd-Frank Act also
established specific prerequisites and underwriting criteria for qualified
mortgages, and these standards have also been elaborated by regulation.
The Dodd-Frank Act generally excludes loans that are negative
amortizing, which means that the balance increases despite regular
payments; loans that require payments of interest but not principal; loans
that have balloon payments; or that have terms that exceed 30 years. The
act and its implementing regulations also exclude loans where lenders fail
to verify the assets or income of the borrower, and loans that require
borrowers to pay certain fees and “points,” which are up-front payments to
reduce the interest rate of a loan.
A 1994 amendment to TILA called the Home Ownership and Equity
Protection Act (HOEPA) regulated the terms and conditions of certain
loans that have particularly high interest rates or high fees, primarily loans
used for refinancing or home-equity loans. Home-equity loans are loans
that are not used to purchase homes but instead use a home as collateral to
finance borrowing for other purposes, such as home renovation. The
Dodd-Frank Act significantly expanded HOEPA’s reach, applying it to
almost all “high-cost” mortgages. 15 U.S.C. §1602. The law allows
borrowers to get out of the deal within three business days of receiving a
notice of their rights. It also bans certain loan terms, such as balloon
payments, negative amortization, and most prepayment penalties. The law
also prohibits lending to a person who is not financially able to pay back
the loan and requires pre-loan consumer counseling for high-cost
mortgages. See High-Cost Mortgage and Homeownership Counseling
Amendments to the Truth in Lending Act (Regulation Z) and
Homeownership Counseling Amendments to the Real Estate Settlement
Procedures Act (Regulation X), 12 C.F.R. pts. 1024 and 1026.
2. Regulating the process of origination. A number of statutes focus
on fair treatment for individual borrowers or seek to help consumers
navigate the loan transaction itself. These are procedural regulations, as
opposed to substantive regulations of the terms and conditions of the
actual loans themselves. The Truth in Lending Act (TILA), 15 U.S.C.
§1639, and the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C.
§§2601-2617, for example, have long required disclosure of the basic
terms of lending agreements. Lenders must provide such disclosures at two
stages of the transaction: first when consumers apply for financing, so that
they can better shop for loans, and then again when it comes time to close

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the loan, in order to ensure that the promised terms were actually provided.
3. Fair lending and access to credit. The Fair Housing Act, 42 U.S.C.
§§3601-3619, prohibits discriminatory practices by real estate finance
providers. Similarly, the Equal Credit Opportunity Act of 1974, 15 U.S.C.
§§1691-1691f, prohibits discriminatory practices in any “credit
transaction.” Anyone who is denied credit is entitled to demand a
“statement of reasons” for the denial from the creditor. Id. §1691(d)(2).
The Fair Housing Act and the Equal Credit Opportunity Act are covered in
depth in Chapter 13, §5.
4. Regulating loan servicing. Another area of regulation that has
taken on new urgency in the wake of the subprime crisis involves what are
called loan servicers, which are companies that lenders hire to collect
mortgage payments, pay real estate taxes on behalf of borrowers, and
manage other aspects of “servicing” loans. In the wake of the subprime
crisis, the role of loan servicers has garnered increasing scrutiny, given
their control over the borrower-lender relationship in many instances, and
a number of problems that consumers have faced with servicers. See Peter
Swire, What the Fair Credit Reporting Act Should Teach Us About
Mortgage Servicing, Center for American Progress (Jan. 2011). The CFPB
recently issued regulations under RESPA and TILA to set national
standards to govern loan servicers. The rules cover a number of topics, but
most significantly require periodic billing statements and statements when
borrowers pay off their loans, mandate notice before an adjustable rate
mortgage first changes its interest rate, and limit the servicer’s ability to
charge for insurance on behalf of a borrower. The new rules, recognizing
the central role that servicers play not just in managing loans but also in
the process of foreclosure, require early intervention when a borrower is
having difficulty repaying her loan and continuity of contact with
delinquent borrowers. The regulations also set forward specific steps that
servicers must take to mitigate losses for home loans, in order to keep
borrowers in their homes if possible. See Mortgage Servicing Rules Under
the Real Estate Settlement Procedures Act (Regulation X) and Mortgage
Servicing Rules Under the Truth in Lending Act (Regulation Z), 12 C.F.R.
pt. 1024; 12 C.F.R. pt. 1026.
5. Structural responses to the subprime crisis. The subprime crisis
led to significant government intervention to save the banks and to help the
millions of homeowners facing foreclosure. These foreclosures would
affect not only the families losing their homes but neighbors as well. A
neighborhood dotted with foreclosed homes lowers the property values of
those who remain, and in a recession, it is difficult to find buyers for those

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homes. See Kristopher S. Gerardi et al., Foreclosure Externalities: New
Evidence, NBER Working Paper No. 18353 (2012). Owners are also
reluctant to sell at the low market values because they will suffer big
losses in their wealth.
In the years after the subprime crisis hit, the federal government
created a series of programs to facilitate refinancing for borrowers who
owe more on their property than the property is worth or are otherwise at
risk for default, see Peter W. Salsich, Jr., Homeownership-Dream or
Disaster?, 21 J. Affordable Hous. & Community Dev. L. 17, 40-50 (2012),
but these programs have been faulted for not more directly restructuring
at-risk mortgages. See, e.g., Dan Immergluck, Too Little, Too Late, and
Too Timid: The Federal Response to the Foreclosure Crisis at the Five-
Year Mark, 23 Housing Policy Debate 199, 216 (2013).20 The federal
government, as well as state and local governments, also worked to
mitigate the neighborhood-level consequences of the increase in, and
concentration of, foreclosures. Id. at 218-222 (describing efforts such as
the federal Neighborhood Stabilization Program). The other main area of
regulatory response to the subprime crisis has occurred mostly at the state
level, where the process of foreclosure itself has seen significant changes,
both judicial and statutory. We will consider those reforms in the next
section.

§4.3 Defaults and the Right to Foreclose

If a mortgagor defaults on her loan, she has the right to prevent loss of
her property by paying off the debt before foreclosure; indeed, some states
allow the mortgagor to prevent foreclosure by paying the arrears only. This
debtor protection is called the equity of redemption, a name that alludes
to the origin of mortgages in the courts of equity in England — and is why
people often refer to the value an owner has in her property as “equity.”
Originally, the owner-borrower would convey title to the property to the
lender with a condition subsequent, allowing the borrower to pay off the
debt on a certain day and thereby get the deed back. If the borrower did not
pay off the debt on the appointed day, she would lose the property forever.
Since the land was usually worth more than the debt, the lender would
often get a windfall.
Borrowers began to ask the equity courts for relief from this result, and
the chancellor responded by granting the borrower extra time to pay off the
debt, thereby redeeming the property (getting it back). In so doing, the
court effectively rewrote the contract, changing the terms of the condition.
At first, this was subject to the equity court’s discretion, but by the

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seventeenth century it was a matter of right. The borrower’s interest came
to be called the equity of redemption, while the mortgagee held title.21 See
Ann M. Burkhart, Lenders and Land, 64 Mo. L. Rev. 249 (1999)
(excellent overview of history of mortgage law and regulation).
Allowing the borrower some extra time to get the property back by
paying off the debt protected the mortgagor’s interest but left the
mortgagee without any clear remedy. For this reason, the equity courts put
a time limit on the mortgagor’s right to redeem. The equity courts began a
procedure to allow the lender to cut off, or foreclose, the equity of
redemption. At first, courts used a procedure called strict foreclosure,
which would give the borrower extra time to pay off the debt but provide
that if the debt remained unpaid by a particular date, title would vest in the
mortgagee without a sale. Because of perceived unfairness of strict
foreclosure, this procedure has been substantially abolished in the United
States and is available in only a couple of states where it is subject to
judicial discretion. See Conn. Gen. Stat. §§49-15, 49-24; Vt. Stat. tit. 12,
§4528.
Today most foreclosures involve a sale of the mortgaged property,
either through a judicial proceeding or by a private sale, depending on the
contractual arrangements between the parties and state law. In a judicial
sale, the mortgagee will bring a foreclosure action in which they must
prove the existence of the mortgage, the right to foreclose, and the
mortgagor’s default. If the mortgagee meets these burdens, and the
borrower has no other defenses, the court will issue a foreclosure decree.
The decree provides for public sale of the property by a court officer,
payment of the proceeds to the mortgagee and any other creditors with
liens on the property, and transfer of any surplus funds to the mortgagor.
Several states allow the mortgagor to waive the protection of a judicial
sale by granting the mortgagee a power of sale.22 If so, the mortgagee can
conduct the public sale itself or through a public official such as a sheriff,
after notice to all interested parties, without the need for judicial
proceedings. A similar arrangement is the deed of trust, which is
prevalent in some states. Under this arrangement, the borrower or trustor
conveys title to a third party (called the trustee) as security for the
trustor’s payment of its debt obligation to the lender (called the
beneficiary). If the trustor defaults, the trustee can arrange a public
nonjudicial sale of the property to satisfy the debt. In practice, unlike in an
ordinary trust, the borrower who grants a deed of trust to secure real estate
generally continues to act as the true owner, and the trustee’s functions
come into play if that owner defaults.
Some states have enacted a statutory right of redemption, which

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allows the mortgagor to buy back the property for the price bid at the
foreclosure sale for a designated period (typically six months to a year)
after foreclosure.23 These statutes generally allow the mortgagor to
remain in possession of the property in the meanwhile. The statutory right
of redemption is meant to encourage market prices at the foreclosure sale
on the theory that if bids are below fair market price, the mortgagor has
time go to borrow the money to buy back the property for the (artificially
low) price paid at the foreclosure sale. However, the ability of the
mortgagor to redeem the property after foreclosure may actually decrease
the market value of the property at the time of the foreclosure sale since
the buyer cannot possess the property immediately and, in fact, has no
assurance it will ever be able to possess the property.
Upon a foreclosure sale, the mortgagor’s equity of redemption is cut
off. If the sale does not bring in enough proceeds to pay off the debt, many
states allow the lender to bring an action for a deficiency judgment
personally against the mortgagor for the rest of the debt. Some states,
however, prohibit deficiency judgments or require lenders to bring any
deficiency action at the same time as they bring a foreclosure action. See,
e.g., Coker v. JPMorgan Chase Bank, N.A., 364 P.3d 176 (Cal. 2016)
(applying Cal. Civ. Proc. Code §580b).
In the wake of the subprime crisis, many aspects of foreclosure
practice that had once been fairly routine have become complicated by the
realities of securitization. Consider the following case.

U.S. Bank National Association v. Ibanez

941 N.E.2d 40 (Mass. 2011)

RALPH GANTS, J.
On December 1, 2005, Antonio Ibanez took out a $103,500 loan for
the purchase of property at 20 Crosby Street in Springfield, secured by a
mortgage to the lender, Rose Mortgage, Inc. (Rose Mortgage). The
mortgage was recorded the following day. Several days later, Rose
Mortgage executed an assignment of this mortgage in blank, that is, an
assignment that did not specify the name of the assignee. The blank space
in the assignment was at some point stamped with the name of Option One
Mortgage Corporation (Option One) as the assignee, and that assignment
was recorded on June 7, 2006. Before the recording, on January 23, 2006,
Option One executed an assignment of the Ibanez mortgage in blank.
According to U.S. Bank, Option One assigned the Ibanez mortgage to
Lehman Brothers Bank, FSB, which assigned it to Lehman Brothers

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Holdings Inc., which then assigned it to the Structured Asset Securities
Corporation, which then assigned the mortgage, pooled with
approximately 1,220 other mortgage loans, to U.S. Bank, as trustee for the
Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 2006-Z. With this last assignment, the Ibanez and other
loans were pooled into a trust and converted into mortgage-backed
securities that can be bought and sold by investors — a process known as
securitization.
According to U.S. Bank, the assignment of the Ibanez mortgage to
U.S. Bank occurred pursuant to a December 1, 2006, trust agreement,
which is not in the record. What is in the record is the private placement
memorandum (PPM), dated December 26, 2006, a 273-page, unsigned
offer of mortgage-backed securities to potential investors. The PPM
describes the mortgage pools and the entities involved, and summarizes
the provisions of the trust agreement, including the representation that
mortgages “will be” assigned into the trust. According to the PPM, “[e]ach
transfer of a Mortgage Loan from the Seller [Lehman Brothers Holdings
Inc.] to the Depositor [Structured Asset Securities Corporation] and from
the Depositor to the Trustee [U.S. Bank] will be intended to be a sale of
that Mortgage Loan and will be reflected as such in the Sale and
Assignment Agreement and the Trust Agreement, respectively.” The PPM
also specifies that “[e]ach Mortgage Loan will be identified in a schedule
appearing as an exhibit to the Trust Agreement.” However, U.S. Bank did
not provide the [lower court] judge with any mortgage schedule
identifying the Ibanez loan as among the mortgages that were assigned in
the trust agreement.
In June, 2007, U.S. Bank caused to be published in the Boston Globe
the notice of the foreclosure sale required by Mass. Gen. Laws c. 244, §14.
The notice identified U.S. Bank as the “present holder” of the mortgage.
At the foreclosure sale on July 5, 2007, the Ibanez property was purchased
by U.S. Bank, as trustee for the securitization trust, for $94,350, a value
significantly less than the outstanding debt and the estimated market value
of the property. The foreclosure deed (from U.S. Bank, trustee, as the
purported holder of the mortgage, to U.S. Bank, trustee, as the purchaser)
and the statutory foreclosure affidavit were recorded on May 23, 2008. On
September 2, 2008, more than one year after the sale, and more than five
months after recording of the sale, American Home Mortgage Servicing,
Inc., “as successor-in-interest” to Option One, which was until then the
record holder of the Ibanez mortgage, executed a written assignment of
that mortgage to U.S. Bank, as trustee for the securitization trust. This
assignment was recorded on September 11, 2008.

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 [A similar sequence occurred with respect to a mortgage that Mark and
Tammy LaRace gave on May 19, 2005 to Option One as security for a
$103,200 loan; Option One assigned the LaRace mortgage to Bank of
America, who then assigned it to the Asset Backed Funding Corporation
(ABFC). ABFC pooled the mortgage with others and assigned it to Wells
Fargo, as trustee for the ABFC 2005-OPT 1 Trust, ABFC Asset-Backed
Certificates, Series 2005-OPT 1, pursuant to a pooling and servicing
agreement. In June 2007, Wells Fargo, as trustee, published a statutory
notice of sale in the Boston Globe, identifying itself as the “present holder”
of the mortgage. At the subsequent foreclosure sale, Wells Fargo, as
trustee, purchased the LaRace property for $120,397.03, significantly
below its estimated market value.]
The plaintiffs [U.S. Bank and Wells Fargo] brought actions under
Mass. Gen. Laws ch. 240, §6, seeking declarations that the defendant
mortgagors’ titles had been extinguished and that the plaintiffs were the
fee simple owners of the foreclosed properties. As such, the plaintiffs bore
the burden of establishing their entitlement to the relief sought. To meet
this burden, they were required “not merely to demonstrate better title . . .
than the defendants possess, but . . . to prove sufficient title to succeed in
[the] action.” [Sheriff’s Meadow Foundation, Inc. v. Bay-Courte
Edgartown, Inc., 516 N.E.2d 144, 146 (Mass. 1987).] There is no question
that the relief the plaintiffs sought required them to establish the validity of
the foreclosure sales on which their claim to clear title rested.
Massachusetts does not require a mortgage holder to obtain judicial
authorization to foreclose on a mortgaged property. See Mass. Gen. Laws
ch. 183, §21; Mass. Gen. Laws ch. 244, §14. Where a mortgage grants a
mortgage holder the power of sale, as did both the Ibanez and LaRace
mortgages, it includes by reference the power of sale set out in Mass. Gen.
Laws ch. 183, §21, and further regulated by Mass. Gen. Laws ch. 244,
§§11-17C. Under Mass. Gen. Laws ch. 183, §21, after a mortgagor
defaults in the performance of the underlying note, the mortgage holder
may sell the property at a public auction and convey the property to the
purchaser in fee simple, “and such sale shall forever bar the mortgagor and
all persons claiming under him from all right and interest in the mortgaged
premises, whether at law or in equity.” Even where there is a dispute as to
whether the mortgagor was in default or whether the party claiming to be
the mortgage holder is the true mortgage holder, the foreclosure goes
forward unless the mortgagor files an action and obtains a court order
enjoining the foreclosure.
Recognizing the substantial power that the statutory scheme affords to
a mortgage holder to foreclose without immediate judicial oversight, we

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adhere to the familiar rule that “one who sells under a power [of sale] must
follow strictly its terms. If he fails to do so there is no valid execution of
the power, and the sale is wholly void.” Moore v. Dick, 72 N.E. 967
(Mass. 1905). One of the terms of the power of sale that must be strictly
adhered to is the restriction on who is entitled to foreclose. The “statutory
power of sale” can be exercised by “the mortgagee or his executors,
administrators, successors or assigns.” Mass. Gen. Laws ch. 183, §21. Any
effort to foreclose by a party lacking “jurisdiction and authority” to carry
out a foreclosure under these statutes is void. Chace v. Morse, 76 N.E. 142
(Mass. 1905).
The plaintiffs claim that the securitization documents they submitted
establish valid assignments that made them the holders of the Ibanez and
LaRace mortgages before the notice of sale and the foreclosure sale. We
turn, then, to the documentation submitted by the plaintiffs to determine
whether it met the requirements of a valid assignment. Focusing first on
the Ibanez mortgage, U.S. Bank argues that it was assigned the mortgage
under the trust agreement described in the PPM, but it did not submit a
copy of this trust agreement to the judge. The PPM, however, described
the trust agreement as an agreement to be executed in the future, so it only
furnished evidence of an intent to assign mortgages to U.S. Bank, not
proof of their actual assignment. Even if there were an executed trust
agreement with language of present assignment, U.S. Bank did not
produce the schedule of loans and mortgages that was an exhibit to that
agreement, so it failed to show that the Ibanez mortgage was among the
mortgages to be assigned by that agreement. Finally, even if there were an
executed trust agreement with the required schedule, U.S. Bank failed to
furnish any evidence that the entity assigning the mortgage — Structured
Asset Securities Corporation — ever held the mortgage to be assigned.
The last assignment of the mortgage on record was from Rose Mortgage to
Option One; nothing was submitted to the judge indicating that Option
One ever assigned the mortgage to anyone before the foreclosure sale.
Thus, based on the documents submitted to the judge, Option One, not
U.S. Bank, was the mortgage holder at the time of the foreclosure, and
U.S. Bank did not have the authority to foreclose the mortgage.
[Wells Fargo was similarly unable to demonstrate authority to
foreclose based on the documentation relating to the securitization of the
LaRace mortgage in the record.]
Where a plaintiff files a complaint asking for a declaration of clear title
after a mortgage foreclosure, a judge is entitled to ask for proof that the
foreclosing entity was the mortgage holder at the time of the notice of sale
and foreclosure, or was one of the parties authorized to foreclose under

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Mass. Gen. Laws ch. 183, §21, and Mass. Gen. Laws ch. 244, §14. A
plaintiff that cannot make this modest showing cannot justly proclaim that
it was unfairly denied a declaration of clear title.
We do not suggest that an assignment must be in recordable form at
the time of the notice of sale or the subsequent foreclosure sale, although
recording is likely the better practice. Where a pool of mortgages is
assigned to a securitized trust, the executed agreement that assigns the pool
of mortgages, with a schedule of the pooled mortgage loans that clearly
and specifically identifies the mortgage at issue as among those assigned,
may suffice to establish the trustee as the mortgage holder. However, there
must be proof that the assignment was made by a party that itself held the
mortgage. A foreclosing entity may provide a complete chain of
assignments linking it to the record holder of the mortgage, or a single
assignment from the record holder of the mortgage.
Conclusion. For the reasons stated, we agree with the judge that the
plaintiffs did not demonstrate that they were the holders of the Ibanez and
LaRace mortgages at the time that they foreclosed these properties, and
therefore failed to demonstrate that they acquired fee simple title to these
properties by purchasing them at the foreclosure sale.

ROBERT CORDY, J., concurring.

I concur fully in the opinion of the court, and write separately only to
underscore that what is surprising about these cases is not the statement of
principles articulated by the court regarding title law and the law of
foreclosure in Massachusetts, but rather the utter carelessness with which
the plaintiff banks documented the titles to their assets. There is no dispute
that the mortgagors of the properties in question had defaulted on their
obligations, and that the mortgaged properties were subject to foreclosure.
Before commencing such an action, however, the holder of an assigned
mortgage needs to take care to ensure that his legal paperwork is in order.
Although there was no apparent actual unfairness here to the mortgagors,
that is not the point. Foreclosure is a powerful act with significant
consequences, and Massachusetts law has always required that it proceed
strictly in accord with the statutes that govern it.
The type of sophisticated transactions leading up to the accumulation
of the notes and mortgages in question in these cases and their
securitization, and, ultimately the sale of mortgage-backed securities, are
not barred nor even burdened by the requirements of Massachusetts law.
The plaintiff banks, who brought these cases to clear the titles that they
acquired at their own foreclosure sales, have simply failed to prove that the
underlying assignments of the mortgages that they allege (and would have)

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entitled them to foreclose ever existed in any legally cognizable form
before they exercised the power of sale that accompanies those
assignments. The court’s opinion clearly states that such assignments do
not need to be in recordable form or recorded before the foreclosure, but
they do have to have been effectuated.

Notes and Questions

1. Problems of proof and authority in foreclosure. When a bank
obtains a mortgage on a home, the Statute of Frauds requires it to be in
writing, and the mortgagee generally records the mortgage. If the mortgage
is assigned to another institution, the purchaser of the bank’s rights should
record its interest as well, although as Ibanez makes clear, recording is not
legally required to effectuate the transfer. In some cases, the institutions
that buy mortgages neither record the transaction nor obtain sufficient
proof of their interest. Ibanez illustrates what can happen if a party seeks to
foreclose on a mortgage but is unable to demonstrate that it is, in fact,
authorized to do so. This has become an increasingly important aspect of
foreclosure litigation in the aftermath of the housing crisis. See generally
Bradley T. Borden, David J. Reiss & W. KeAupuni Akina, Show Me the
Note!, 19 Bank & Lender Liab. 3 (2013) (surveying challenges to the
authority to foreclose based on deficiencies in proof relating to holding the
note or the mortgage); Nestor M. Davidson, New Formalism in the
Aftermath of the Housing Crisis, 93 B.U. L. Rev. 389 (2013) (raising
concerns about trends in these cases).
In Ibanez, U.S. Bank and Wells Fargo were both acting as a trustee for
entities that purported to own the underlying mortgages. Mortgage
servicers, as well, often file foreclosure lawsuits on behalf of mortgagees,
but they are not the “owners” of the mortgages they service. Accordingly,
servicers may be required to present proof of ownership of the mortgage
for the foreclosure to proceed. Some courts have refused to allow loan
servicers to bring foreclosure lawsuits on behalf of the underlying
mortgagee. See Bayview Loan Servicing, L.L.C. v. Nelson, 890 N.E.2d 940
(Ill. App. Ct. 2008) (denying a loan servicer the power to bring a
foreclosure suit).
Similar problems may arise with the Mortgage Electronic
Registration Systems, Inc. (MERS). In 1993, mortgage lenders who
engaged in trades of mortgages established a private organization, MERS,
to hold those mortgages for the benefit of the mortgagees. MERS does not
actually “own” the mortgage; it has no right to the payments from the
borrower; nor does it act as the loan servicer. Rather, it acts as the agent of

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the mortgagees, and MERS is listed as either the “nominee” of the lender
or as the record owner of the mortgage in the recording office. This is
designed to eliminate the need for new recordings when mortgages are
transferred, allowing mortgages to be traded more cheaply and quickly. In
a number of cases, borrowers have challenged the ability of MERS to
initiate foreclosures, and the courts have disagreed about whether MERS is
entitled to foreclose. Compare, e.g., Brandrup v. ReconTrust Co., N.A.,
303 P.3d 301 (Or. 2013) (MERS not eligible to serve as beneficiary under
Oregon Deed of Trust Act and did not show authorization as an agent of
lender); Mortgage Electronic Registration Systems, Inc. v. Saunders, 2
A.3d 289 (Me. 2010) (MERS lacks standing to initiate foreclosure), with
Mortgage Electronic Registration Systems, Inc. v. White, 896 A.2d 797
(Conn. 2006) (upholding MERS-initiated foreclosure as nominee for
lenders). MERS no longer allows foreclosures under its name, but this has
not stopped challenges from arising. See, e.g., Bucci v. Lehman Brothers
Bank, FSB, 68 A.3d 1069, 1079-1080 (R.I. 2013) (noting the policy
change, but finding a challenge to MERS’s authority to act on behalf of a
lender not moot); see also Edwards v. Mortgage Electronic Registration
Systems, Inc., 300 P.3d 43 (Ind. 2013) (the fact that MERS acts as nominee
for lender does not preclude foreclosure).
2. The purpose of recording mortgage transfers. MERS raises
broader questions about the function of the public records system when it
comes to mortgage transfers. The New York Court of Appeals has held
that the recording office is obligated to record mortgages held by MERS,
even though it is not itself the mortgagee. MERSCORP, Inc. v. Romaine,
861 N.E.2d 81 (N.Y. 2006). Partially dissenting, Chief Judge Judith Kaye
noted that MERS makes it more difficult for the recording system to
achieve its purpose, which is to create a public system that puts potential
buyers on notice of who owns interests in real estate. She noted that one
result of MERS is that it may be difficult (or impossible) for a homeowner
to determine who owns the underlying mortgage. The mortgage can be
sold, and the borrower may be dealing only with the loan servicer rather
than the mortgagee. The loan servicer does not see it as its job to engage in
such negotiations (particularly since loan servicers often get higher fees for
conducting foreclosures than for collecting routine loan payments). If so,
then there is a transactional barrier to renegotiation that may lead to an
unnecessary foreclosure, with the third-party effects such foreclosures
engender. Id. at 88-89. To solve these problems, some scholars have begun
to call for a public national registry. See, e.g., Tanya Marsh, Foreclosures
and the Failure of the American Land Title Recording System, 111 Colum.

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L. Rev. Sidebar 19 (2011).
3. Challenging judicial versus nonjudicial foreclosures. In a judicial
foreclosure, there is an initial lawsuit before a sale can take place, which
affords home borrowers the opportunity to contest the basis for the
foreclosure and raise any affirmative defenses they might have. With a
power-of-sale foreclosure or deed of trust, borrowers must affirmatively
challenge the sale, or bring claims after the sale if there were infirmities in
the process or result of the sale. Some borrowers in default may also file
for bankruptcy, a process that includes an automatic stay of claims,
including foreclosure. 11 U.S.C. §362(a)(1). Ibanez was somewhat
unusual in that the successful bidders at the foreclosure sale, U.S. Bank
and Wells Fargo, brought a quiet title action, which then allowed the
original borrowers to contest the validity of the foreclosure itself. Does this
procedural posture matter?
4. Fair Debt Collection Practices Act. A 1977 statute, the Fair Debt
Collection Practices Act, 15 U.S.C. §§1692-1692p (FDCPA), prohibits the
use of unfair or abusive practices in the collection of debts by third parties
acting on behalf of lenders. Debt collectors, for example, are barred from
communicating with borrowers if borrowers are represented by counsel or
inform the debt collector that they do not wish to be contacted. Id. §1692c.
And debt collectors may not use or threaten violence or use obscene or
profane language. Id. §1692d. The FDCPA also contains a number of
affirmative requirements for debt collectors, including identifying
themselves as debt collectors, informing the borrower of the amount of the
debt, and notifying the borrower of the right to contest the debt. Id.
§1692g.
With the subprime crisis, borrowers are increasingly invoking the
FDCPA in defending against practices related to foreclosure, and lawyers
involved in foreclosures may be subject to the FDCPA. Courts have taken
differing views about whether foreclosures constitute “debt collection,” as
opposed to the realization of a security interest. Compare, e.g., Diessner v.
Mortgage Electronic Registration Systems, Inc., 618 F. Supp. 2d 1184,
1188-1189 (D. Ariz. 2009), aff’d, 384 F. App’x 609 (9th Cir. 2010), with,
e.g., Glazer v. Chase Home Finance LLC, 704 F.3d 453, 462 (6th Cir.
2013); Kaltenbach v. Richards, 464 F.3d 524, 529 (5th Cir. 2006).

§4.4 Foreclosure Sales

A common problem in foreclosure sales arises with the price bid for
the property. Anyone can bid on the property, including the mortgagor and

1274
the mortgagee. Although publicity should generate knowledge about the
sale and offers from anyone interested in the property, it is often the case
that the mortgagee is the only entity or person bidding at the foreclosure
sale. Can you see why? In such a case, there is a danger that the mortgagee
will make a low bid; the mortgagee will get the property for less than its
fair market value but be able to sell it for fair market value and pocket the
excess. If the sale price is less than the unpaid debt, the mortgagee can not
only resell the property but, in many states, can file a deficiency judgment
against a mortgagor who has other assets. Under what circumstances, then,
should courts set aside the sale entirely? Consider the following case.

Baskurt v. Beal

101 P.3d 1041 (Alaska 2004)

WARREN W. MATTHEWS, Justice.
This case involves two parcels of land originally owned by Marion and
Mortimer Moore. In 1953 Mortimer was granted a homestead patent to a
forty-acre parcel which he conveyed to his wife, Marion, in 1959. The
following year, Marion acquired a second parcel to the north of the
homestead property, Parcel 1. In 1974 the majority of the homestead
property was sold, leaving Parcel 2, which adjoined Parcel 1 to the south.
The two parcels were never replatted or otherwise legally merged into a
single parcel.
The Moores divorced in 1976. In 1991 Mortimer and Marion
simultaneously sold their respective parcels to Charles McAlpine. The
following day, McAlpine conveyed the parcels to Annette Beal by
quitclaim deed. These transactions were financed by two separate
promissory notes signed by McAlpine: Note A for $95,000 payable to
Mortimer; and Note B for $135,000 payable to Marion. Each note was to
be paid to the respective seller through its own separate escrow account.
The two promissory notes were secured by a single deed of trust
covering both parcels containing the following special condition: “This
deed of trust is covered by 2 Promissory Notes, and Trustor is aware that
default on either of the 2 Note [sic], will constitute default under the other
Note and foreclosure laws of the State of Alaska shall apply.” The deed of
trust also provided that “[u]pon default by Trustor in payment of any
indebtedness secured hereby . . . Trustee . . . shall,” at the option of the
Beneficiary, “sell said property[,] . . . either as a whole or in separate
parcels and in such order as it may determine, at public auction to the
highest and best bidder. . . .”
In 1994 Annette paid off the $95,000 owed on Note A for Parcel 1 to

1275
Mortimer. At that time, there was some discussion regarding paying off
Note B, but Marion preferred to continue to receive monthly payments
rather than being paid off in a single lump sum. Marion did agree to a
reduction of the interest rate on Note B. The 1991 deed of trust was
modified to reflect the payoff of the note to Mortimer and the change in
interest rate on Marion’s note.
In the fall of 1999, after an erratic payment history, Annette fell behind
in her payments. Sarah Baskurt, the Moores’ daughter [as trustee for a trust
established by Marion Moore], took steps to commence foreclosure,
including contacting attorney Jim Christie to conduct the foreclosure.
Christie and Land Title Company of Alaska, Inc., made the arrangements
for the foreclosure. At that time, Annette owed $26,780.81 on Parcel 2,
having paid approximately eighty percent of the original $135,000
purchase price.
The foreclosure sale was held on April 26, 2000, inside the main
entrance of the Nesbett Memorial Courthouse in Anchorage. Prior to
arriving at the sale, Baskurt, who wanted to bid on the property but
believed she lacked the financial strength and knowledge of property
development to do so on her own, contacted friends to see if they would be
interested in bidding on the property as her partner. Robert and Joyce
Wainscott agreed and Baskurt and Joyce Wainscott formed a partnership
for the purpose of acquiring and developing or reselling the property.
Baskurt, who believed the property was worth at least $250,000, brought a
check for $151,000 to the sale. The Wainscotts brought a check for
$100,000 to the sale. The trio had at least $251,000 available to put toward
the purchase price of the property. [They later agreed to add Baskurt’s
neighbor, Allen Rosenthal, whom Baskurt knew to have considerable
experience in home construction, to the partnership.]
The foreclosure sale, conducted by Christie, was by public outcry.
Baskurt made the opening and only bid for $26,781.81, a dollar over the
remaining debt owed on the property, on behalf of the partnership. There
were no other bids, and the property was sold to Baskurt, Joyce, and
Rosenthal via a trustee’s deed.
On May 17, 2000, Annette filed a complaint seeking to have the
foreclosure sale set aside. Baskurt, Wainscott, and Rosenthal (collectively
“Purchasers”) subsequently moved for summary judgment, arguing there
was no basis for setting aside the sale. Purchasers’ motion for summary
judgment was denied because a question of fact remained whether “the
parties intended for both parcels to be subject to foreclosure upon default
of one note when the other note had been satisfied.” After a three-day
bench trial, the superior court set aside the foreclosure sale as both void

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and voidable. Final judgment setting aside the foreclosure sale and
awarding attorney’s fees and costs to Annette was entered on February 28,
2003. Purchasers appeal.
Pursuant to Alaska Stat. §34.20.070 a trustee under a deed of trust
executed as security for the payment of an indebtedness may, in the case of
default or noncompliance with the terms of the deed, foreclose and sell the
property according to the terms provided in the deed. However, defects in
the mechanics of the trustee’s exercise of the power to foreclose may
render the foreclosure sale voidable. Generally, mere inadequacy of price
is not sufficient by itself to require setting aside a foreclosure sale.
However, if the inadequacy of the sale price is (1) “so gross as to shock the
conscience and raise a presumption of fraud or unfairness,” or (2) is
coupled with other irregularities in the sale procedures, then invalidation
of the sale may be justified.
Gross inadequacy is measured by reference to the fair market value of
the property at the time of the sale.24 Fair market value for these purposes
has been defined as

not the fair “forced sale” value of the real estate, but the price which would
result from negotiation and mutual agreement, after ample time to find a
purchaser, between a vendor who is willing, but not compelled to sell, and a
purchaser who is willing to buy, but not compelled to take a particular piece
of real estate.25

Courts determine adequacy of price by comparing the fair market value to

the purchase price of the property at the foreclosure sale. Jurisdictions vary
on what percentage of fair market value renders the purchase price grossly
inadequate. Foreclosure sale prices of fifty percent or more of fair market
value are routinely upheld. Even prices garnering less than fifty percent of
fair market value are often upheld. However, several courts have upheld
the invalidation of a foreclosure sale that produced a price of twenty
percent of fair market value or less. The New Mexico Supreme Court has
enunciated the standard that when the price falls into the ten to forty
percent range, it should not be confirmed “absent good reasons why it
should be.”26
The Restatement adopts the position that although “ ‘gross inadequacy’
cannot be defined in terms of a specific percentage of fair market value,”
generally, “a court is warranted in invalidating a sale where the price is
less than twenty percent of fair market value and, absent other foreclosure
defects, is usually not warranted in invalidating a sale that yields in excess
of that amount.”27 The Restatement adopts a sliding-scale approach to the

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cumulative effect that price and irregular procedures have on the fairness
of the sale:

Even where the foreclosure price for less than fair market value cannot be
characterized as “grossly inadequate,” if the foreclosure proceeding is
defective under local law in some other respect, a court is warranted in
invalidating the sale and may even be required to do so. Such defects may
include, for example, . . . selling too much or too little of the mortgaged real
estate. For example, even a slight irregularity in the foreclosure process
coupled with a sale price that is substantially below fair market value may
justify or even compel the invalidation of the sale. . . . On the other hand,
even a sale for slightly below fair market value may be enough to require
invalidation of the sale where there is a major defect in the foreclosure
process.28

In McHugh [v. Church, 583 P.2d 210, 213 (Alaska 1978)], we

considered the effect of selling property in bulk as opposed to by parcel.
Though we declined to adopt “a flat rule requiring the trustee to sell real
property in separate lots or parcels, rather than as a whole unit,” we
recognized that a trustee under a deed of trust is a dual fiduciary owing
duties to both the trustor and the beneficiary. Among the duties owed by
the trustee is the duty to take reasonable and appropriate steps to avoid
sacrifice of the debtor’s property and interest.
Bearing these principles in mind, we turn to the facts of this case.
Purchasers contend that there was no basis to set the foreclosure sale aside
as voidable. They argue, among other things, that the sale should not have
been set aside on the basis of an inadequate price since under McHugh, an
inadequate price is an insufficient basis for setting aside a foreclosure sale.
Further, they contend that the sale should not have been set aside on the
ground that the parcels were sold together because under McHugh, the
trustee was under no duty to sell the parcels separately.
We are not convinced by Purchasers’ argument. The test for whether a
sale is voidable based on price inadequacy is whether the price paid was
grossly inadequate when compared to the fair market value of the property
on the date of the foreclosure sale. The trial court found that the 1991 sales
price of $225,000 was the best indicator of fair market value. The fact that
the foreclosure purchase price of $26,781.10 was less than fifteen percent
of the sale price indicates that the gross inadequacy standard was met. The
trial court so found, and Purchasers identify no circumstances indicating
that this finding is erroneous.
The superior court also found that the sale of either parcel alone would
likely have generated sufficient proceeds to satisfy the amount due. By

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conducting the sale in bulk rather than selling only one parcel, the court
found that the trustee failed in its duty to act reasonably to protect Beal’s
interests. This finding is supported by the evidence and is in accordance
with our observation in McHugh that a trustee has a duty to take
reasonable steps to act impartially and in such a way as “not to sacrifice
the debtor’s property.” When coupled with the inadequacy of the price, the
trustee’s unreasonable failure to sell only one parcel initially justifies
invalidating the sale.29
We conclude that the superior court properly set aside the sale based
on the grossly inadequate sale price and the trustee’s failure to sell only
one parcel in breach of its duty to act reasonably to protect Beal’s interests.

Notes and Questions

1. The process of foreclosure sales. Most foreclosure sales take place
by public auction, which typically involves a single opportunity for
interested purchasers to come to a single location in order to bid. State law
sets the terms of the required public notice of the sale and other conditions
that must be met. Although this process can help borrowers in distress
reduce carrying costs and market properties quickly, scholars have argued
that “it would be difficult to design a sale procedure less apt to result in
market prices than the usual foreclosure auction. The absence of so many
features that buyers in negotiated sales have come to expect virtually
ensures that below-market prices will prevail.” Grant S. Nelson & Dale A.
Whitman, Reforming Foreclosure: The Uniform Nonjudicial Foreclosure
Act, 53 Duke L.J. 1399, 1423 (2004). Indeed, many institutional lenders
have come to view foreclosure less as process to liquidate the property for
its immediate value than as a way to transfer title to themselves so that
they can sell it outside of the bidding process. Id.
2. Ensuring a fair price at foreclosure sales. States have developed
several mechanisms to ensure that the price bid at the foreclosure sale is
near the fair market value. First, the mortgagor has the right to bid at the
foreclosure sale. This enables the mortgagor to go to another lender, which
may be willing to lend the mortgagor the money so long as the property is
worth more than the unpaid debt, and the property will constitute the
security for its new loan. If the mortgagee bids too low, the mortgagor may
be able to counter with a higher bid, forcing the mortgagee to bid more to
get the property. Second, there must be public notice of the sale so that
others can bid on the property. Third, some states prohibit deficiency
judgments. This decreases the mortgagee’s incentive to bid below the fair
market value of the property. Fourth, many states allow a mortgagor to sue

1279
a mortgagee for unjust enrichment if the mortgagee buys the property at a
low price and resells it within a short period of time for a much higher
price. The mortgagee may be forced to disgorge the profits and turn them
over to the mortgagor. This procedure protects the mortgagor’s right to the
excess proceeds and prevents the mortgagee from bidding low, reselling
the property, and keeping those proceeds itself.
As the Baskurt court noted, when a party challenges a foreclosure
based on the price obtained through the sale, courts generally require either
a level of inadequacy that “shocks the conscience” sufficient to “raise a
presumption of fraud or unfairness,” or is coupled with other irregularities
in the sale procedures. Some courts are reluctant to set aside foreclosure
sales, even with very low proceeds, in the absence of some irregularity. In
Phillips v. Blazier-Henry, 302 P.3d 349 (Idaho 2013), for example, a lower
court in a foreclosure action had issued a writ of execution in the amount
$87,211.07 for unpaid debt, interest, and fees. At the subsequent sheriff’s
sale, a bidder purchased the mortgaged property for $1,000. The lender
sued to set aside the sale, arguing that a substitution of counsel prevented
the lender from making a bid for the outstanding amount of the debt,
something called a credit bid. The lower court agreed to set aside the sale,
finding that the inadequacy of price “shocked the conscience” of the court.
On appeal, the Idaho Supreme Court reversed, holding that inadequacy of
price alone is insufficient to warrant setting aside a sale; “additional
circumstances” even if “very slight” are required, such as an irregularity in
the bidding process. Id. at 354.
3. Priorities in foreclosure. A lender who forecloses on a property
may be the only lienholder; in such circumstances, the main questions
about the use of the proceeds of the sale are whether there is any surplus
after repaying the debt for the borrower to recover, and, if there is a
shortfall, whether the lender may seek a deficiency judgment against the
borrower. See §4.3, above. It is not uncommon, however, for a single
property in foreclosure to have multiple liens, such as a mortgage loan
taken out to purchase the property and a later home equity loan to finance
renovations, or a judgment lien that has attached to the property, or a
homeowners association assessment fee lien. In that situation, courts are
required to decide how the proceeds of the sale should be divided among
the lienholders.
In general, proceeds are paid out in full to each lienholder in turn based
on their priority, which is usually set by the order in which the relevant
security interest was recorded in the public records. 12 Thompson on Real
Property, Thomas Editions §101.06(a). We will discuss the system of

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recording interests in land in detail in §5, below, but for now it is sufficient
to understand that a mortgage, when recorded, will be entitled to any funds
that flow from a foreclosure before any interests that are recorded later.
These are called senior liens, and later-recorded interests are thus junior.
When someone has a “first” mortgage and a “second” mortgage, it means
that they have two mortgages recorded first and second. If the first
mortgagee forecloses, the second mortgagee is only entitled to any
proceeds of the sale if the first mortgagee’s debt is fully paid.30
There are some exceptions to this first-in-time principle for
determining lien priority. For example, in most states, a purchase-money
mortgage can take priority over other liens, even those recorded
beforehand (such as a judgment lien). Similarly, in many states,
mechanics’ liens may take priority over subsequently recorded mortgages.
And liens to secure the payment of property taxes can also take priority
over subsequently recorded mortgages.

Terms:
A purchase-money mortgage is one used to acquire property, rather than to
use property as collateral for other purposes, such as renovations. A
mechanics’ or materialman’s lien is a security interest in property granted to
someone who provides materials or labor for that property.

Lienholders can also agree among themselves to change the order of

priorities that would otherwise apply through a process called
subordination. For example, a bank may not be willing to lend funds for
the construction of a building on undeveloped land unless it has priority
over the bank that financed the purchase of that land. The first lender
might be willing to subordinate its lien to the later construction lender
because those latter funds will be used to enhance the value of the
property. An owner would thus negotiate a subordination agreement
between the two lenders that would reverse their priorities in the event of a
foreclosure.31
4. Necessary parties to a foreclosure and the effects of non-joinder.
For judicial foreclosures, a mortgagee is generally required to join all
junior lienholders. This is because a foreclosure is meant to allow a
mortgagee to sell the collateral with only claims that existed when the
security interest attached. If a borrower could add additional loans and
have those mortgages remain after a foreclosure, the original lender’s
security interest would not be very secure. By joining all junior

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lienholders, a senior mortgagee can discharge junior liens and sell the
property free and clear of those interests. A junior lienholder who is not
joined to the foreclosure action is generally not discharged through the
foreclosure action.
A junior lienholder generally cannot discharge the security of a more
senior mortgage, so if a junior lienholder forecloses, the property is sold
subject to any senior mortgages.32 This does not mean that the buyer is
personally obligated to pay a senior mortgage, but it does mean that the
new owner takes title subject to the risk that that mortgage will be
foreclosed.
What about foreclosures pursuant to a power of sale in a mortgage or
under a deed of trust, which do not require a court proceeding? Although
such foreclosures are not supervised by the court, they generally have the
same effect on liens. Mortgages that are senior to the lien being foreclosed
are not discharged in a nonjudicial foreclosure sale, but junior liens
generally are. The notice that senior lienholders are required to give junior
lienholders before exercising a power of sale or foreclosing under a deed
of trust can vary. See Nelson & Whitman, supra, at 1431.
5. Tenant eviction after foreclosure. The same principle of priorities
means that tenants can face eviction from their homes when their landlords
lose their properties through foreclosure, if the tenant rented after a
mortgage was recorded. Banks that buy foreclosed properties often want to
evict the tenants because they believe it is easier to sell unoccupied
property. Although this may be true for many types of property, it is not
clear that it is true for property devoted to residential tenancy purposes,
especially in a time of recession when it may not be so easy to find tenants
who are creditworthy and able to pay the rent on time. At the same time,
mortgage providers generally are not in the business of managing property
in a landlord capacity. Mortgage foreclosure laws protect the right of
borrowers to stay in their homes by making good on defaulted mortgage
payments. The federal Protecting Tenants at Foreclosure Act and its state
analogues, see Chapter 11, §2.3, as well as some rent-control statutes, can
provide similar protection for tenants from eviction.
One issue that can arise after foreclosure is whether the purchaser at a
foreclosure sale can use self-help to obtain possession from the former
owner. While some jurisdictions do allow self-help, most require
purchasers to use statutory eviction procedures. See Nickens v. Mount
Vernon Realty Group LLC, 54 A.3d 742, 751 n.14 (Md. 2012) (approving
changing the locks while a holdover was out of town following
foreclosure, but noting that only 14 jurisdictions still allow such self-help).

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Is there any reason to allow self-help after foreclosure if a statutory
eviction process is available?
6. Reforming foreclosure process. During the Great Depression,
some states passed laws protecting homeowners from foreclosure under
certain circumstances. In Home Building & Loan Association v. Blaisdell,
290 U.S. 398 (1934), the Supreme Court upheld the constitutionality of the
1933 Minnesota Mortgage Moratorium Act, which temporarily authorized
courts to extend periods of redemption — the time during which the
homeowner-mortgagor could pay off the loan to the mortgagee — without
being subject to a foreclosure sale. There has been no similar legislation
broadly halting foreclosures during the subprime crisis; however, the crisis
has ushered in important changes to foreclosure law in a number of states.
Although the details vary, much of this reform effort has focused on giving
home lenders and the servicers who work for them greater obligations to
undertake loss mitigation, which involves finding alternatives to
foreclosure, as well as on raising the procedural protections that
homeowners have in foreclosure itself. See Frank S. Alexander et al.,
Legislative Responses to the Foreclosure Crisis in Nonjudicial
Foreclosure States, 31 Rev. Banking & Fin. L. 341 (2011).
In 2012, for example, California passed the Homeowners Bill of
Rights, 2012 Cal. Stat., c. 86 (A.B. 278); 2012 Cal Stat. c. 87 (S.B. 900).
The new statutory regime bars mortgage servicers from foreclosing if a
homeowner is in the process of seeking a modification of her loan, a
process known as dual tracking that raised significant concerns following
the subprime crisis. It also requires that parties filing or recording a notice
of default, an affidavit in a foreclosure action, and other documents, must
have “competent and reliable evidence” of the borrower’s default and the
lender’s right to foreclose, and authorizes civil penalties for signing
unverified mortgage documents. Cal. Civ. Code §2924.17. These reforms
respond to a practice that came to light during the subprime crisis, called
robo-signing, which involved servicers and others signing foreclosure-
related documents, often by the thousands, without knowledge of the
underlying facts.
Similarly, the Illinois Supreme Court recently issued a series of rules,
which took effect in May 2013, to respond to abusive foreclosure
practices. Under the rules, lenders are required to file a current copy of the
note and an affidavit specifying the amounts due and owing and how the
lender can identify those amounts. Lenders seeking to foreclose must also
show that they informed borrowers about mortgage counseling programs,
mediation, free legal representation, interpretive services for non-English

1283
speakers, and loan modification procedures. Finally, lenders have to attest
to compliance with any loss mitigation requirements that apply to the loan.
See Ill. Sup. Ct. R. 99.1, 113, and 114.
In 2015, the National Conference of Commissioners on Uniform State
Laws promulgated the Uniform Home Foreclosure Procedures Act, as an
attempt to fill gaps in state law and promote consistency. The act, which as
of 2016 had yet to be adopted by any state, offers provisions on
foreclosure resolution to improve foreclosure through a mediation-like
process and a number of provisions to resolve ambiguities in lender status.
See Emma R. Olson, Finding the Middle Ground, or the Act All Intended
Parties Believe Favors the Other Guy: An Overview of the Uniform Home
Foreclosure Procedures Act, 30 Prob. & Prop. 18 (Mar.-Apr. 2016). For a
comprehensive overview of current foreclosure practices by state, see John
Rao et al., Foreclosures and Mortgage Servicing: Including Loan
Modifications (5th ed. 2014).

§4.5 Alternative Financing Arrangements

A. Installment Land Contracts

An installment land contract is an alternative way to finance real estate.

Under an installment land contract, the buyer makes a down payment to
the seller and signs a contract promising to pay the rest of the purchase
price to the seller at specified times and in specified amounts. At the end
of the contract, the seller will convey title to the property to the buyer. The
contract normally allows the seller to regain possession of the property on
the buyer’s default. It also ordinarily allows the seller to keep the
payments already made by the buyer as liquidated damages for the
buyer’s breach of the agreement. Liquidated damages are damages for
breach of contract set in advance by the parties themselves as part of their
agreement.
This arrangement poses the same problems for the buyer as the
mortgage does, but states often provide such buyer-borrowers fewer
procedural protections than are granted to mortgagors. Some states
implicitly or explicitly prohibit installment land contracts by making the
protections of the mortgage foreclosure statute nonwaivable. Other states
treat some installment land contracts like mortgages. States that allow
installment land contracts may permit the seller to regain possession of the
property but will examine the amounts paid by the buyer to determine
whether they are grossly disproportionate to the damages suffered by the
seller. Damages that are too high are considered a penalty or a forfeiture,

1284
and the court will order the seller to disgorge part of that amount back to
the buyer. Another issue raised when a buyer defaults on an installment
land contract is whether the buyer has a right of redemption. Does the
buyer have the right after default to continue in possession of the property
by paying off all or some of the rest of the purchase price?
Consider the following case.

Sebastian v. Floyd

585 S.W.2d 381 (Ky. 1979)

Map: Covington, Kentucky

J. CALVIN AKER, Justice.

This case presents the question whether a clause in an installment land
sale contract providing for forfeiture of the buyer’s payments upon the
buyer’s default may be enforced by the seller.
The movant, Jean Sebastian, contracted on November 8, 1974, to buy a
house and lot situated in Covington, Kentucky, from Perl and Zona Floyd,
respondents in this motion for review. Sebastian paid $3,800.00 down and
was to pay the balance of the $10,900.00 purchase price, plus taxes,
insurance, and interest at the rate of 8% per annum, in monthly
installments of $120.00. A forfeiture clause in the contract provided that if
Sebastian failed to make any monthly payment and remained in default for
60 days, the Floyds could terminate the contract and retain all payments
previously made as rent and liquidated damages.
During the next 21 months, Sebastian missed seven installments.
Including her down payment, she paid the Floyds a total of $5,480.00,
rather than the $6,320.00 which was called for by the terms of the contract.
Of this amount, $4,300.00, or nearly 40% of the contract price, had been
applied against the principal.
The Floyds brought suit in the Kenton Circuit Court against Sebastian
in August, 1976, seeking a judgment of $700.00 plus compensation for
payments for taxes and insurance, and seeking enforcement of the
forfeiture clause. Sebastian admitted by her answer that she was in default
but asked the court not to enforce the forfeiture clause.

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 When a typical installment land contract is used as the means of
financing the purchase of property, legal title to the property remains in the
seller until the buyer has paid the entire contract price or some agreed-
upon portion thereof, at which time the seller tenders a deed to the buyer.
However, equitable title passes to the buyer when the contract is entered.
The seller holds nothing but the bare legal title, as security for the payment
of the purchase price.
There is no practical distinction between the land sale contract and a
purchase money mortgage, in which the seller conveys legal title to the
buyer but retains a lien on the property to secure payment. The significant
feature of each device is the seller’s financing the buyer’s purchase of the
property, using the property as collateral for the loan.
Where the purchaser of property has given a mortgage and
subsequently defaults on his payments, his entire interest in the property is
not forfeited. The mortgagor has the right to redeem the property by
paying the full debt plus interest and expenses incurred by the creditor due
to default. In order to cut off the mortgagor’s right to redeem, the
mortgagee must request a court to sell the property at public auction. From
the proceeds of the sale, the mortgagee recovers the amount owed him on
the mortgage, as well as the expenses of bringing suit; the mortgagor is
entitled to the balance, if any.
We are of the opinion that a rule treating the seller’s interest as a lien
will best protect the interests of both buyer and seller. Ordinarily, the seller
will receive the balance due on the contract, plus expenses, thus fulfilling
the expectations he had when he agreed to sell his land. In addition, the
buyer’s equity in the property will be protected.

Notes and Questions

1. Three approaches to installment land contracts. In addressing the
scope of consumer protection in alternative financing arrangements such
as installment land contracts, courts have developed a variety of
approaches. The first approach handles these questions in one fell swoop
by holding that installment land contracts are equivalent to mortgages and
therefore must be governed by the same rules. See, e.g., Prue v. Royer, 67
A.3d 895 (Vt. 2013) (discussing the growing trend of courts treating
contracts for deed as mortgages); see also Restatement (Third) of Property
(Mortgages) §3.4 (1997) (providing that a “contract for deed” — i.e., an
installment land contract — is a mortgage).
This gives buyers under installment land contracts the full range of
protections available to mortgagors, including an equity of redemption (the

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right to retain the property by paying the rest of the purchase price at or
before the foreclosure sale), the procedural protections of the foreclosure
statutes (including notice of intent to foreclose and perhaps a judicially
supervised public sale), and the right to recover any proceeds of the
foreclosure sale in excess of the unpaid debt.33 This approach, adopted by
the Kentucky court in Sebastian v. Floyd, effectively makes the protections
of mortgage foreclosure statutes nondisclaimable.
A second approach extends mortgage protections only to some
installment land contracts. Colorado, for example, has developed a test to
distinguish installment land contracts that must be treated like mortgages
from those that may be enforced according to their own terms. In
Grombone v. Krekel, 754 P.2d 777 (Colo. Ct. App. 1988), the court held
that trial courts have the discretion to make this determination based on a
range of factors, including “the amount of the vendee’s equity in the
property, the length of the default period, the willfulness of the default,
whether the vendee has made improvements, and whether the property has
been adequately maintained.” Id. at 779. If the buyer has made a large
down payment, occupied the property for a long time, and paid a
substantial portion of the purchase price, the court is likely to provide the
buyer with all the protections accorded a mortgagee, including a right to
redeem, a right to notice and a foreclosure sale, and a right to recover
proceeds from the foreclosure sale exceeding the unpaid debt. See also
Lewis v. Premium Investment Corp., 568 S.E.2d 361 (S.C. 2002); Bean v.
Walker, 464 N.Y.S.2d 895 (App. Div. 1983).
Finally, some states hold that the buyer has no right of redemption
under installment land contracts; thus, the seller has the right to get the
property back on the buyer’s default and to eject the buyer from the
property. The only question in these states is whether the amount of
payments already made by the buyer so exceeds the seller’s damages as to
constitute an unconscionable forfeiture or penalty. If it does, the buyer
may have a right to be reimbursed for part of the down payment. The West
Virginia Supreme Court of Appeals took this approach in Stonebraker v.
Zinn, 286 S.E.2d 911 (W. Va. 1982). In that case, the buyers had occupied
the property for a year and made a $1,500 down payment as well as 12
monthly payments of $189.09 each. The parties agreed that $189.09 was a
fair rental payment for the property, and the court found that allowing the
seller to retain the $1,500 down payment as well as the monthly payments
as liquidated damages was not excessive.
2. Comparing the interests of lenders and borrowers. California
Chief Justice Rose Bird has argued that all installment land contracts

1287
should be given the same protections granted to mortgages.

The predominant use of installment land sale contracts has been to finance
the purchase of housing by low-income families and individuals unable to
qualify for conventional mortgage financing or government loan guarantee
programs.
Providing installment contract vendees the same protections that are
afforded to mortgagors would eliminate some abusive practices of vendors,
who have exploited the lack of legal sophistication and limited capacity to
litigate of their low-income clients. Most important, defaulting vendees
would be able to avoid the loss of their homes by paying only the delinquent
amounts. Under the majority’s holding, a wilfully defaulting vendee may
avoid this fate only by paying the outstanding balance in full. This is an
unjustifiably harsh burden to place on the low-income and middle-income
families and individuals who will be most affected.

Petersen v. Hartell, 707 P.2d 232, 245-246 (Cal. 1985).

In the same case, Justice Stanley Mosk advocated granting the trial
court discretion to “weigh the equities of the case to determine the just
result”:

As the majority readily admit, the equities in the case at bar weigh heavily
against the vendees. “The Petersens’ monthly payments were erratic and
delinquent almost from the beginning even though the seller made clear her
need of the payments for her support. By April 1973 the Petersens had made
only 58 out of the 65 payments then due, and their first attempt to reinstate
the contract was not until 29 months later, when they tendered $250 out of
the $1,800 that was by then overdue and unpaid.”
As between the deliberately defaulting vendees and the elderly vendor
who desperately needed the modest payments on the contract for her very
survival, the equities clearly favor the latter.

Id. at 248. Similarly, the Indiana Supreme Court held in Skendzel v.

Marshall, 301 N.E.2d 641 (Ind. 1973), that the question whether an
installment land contract should be treated like a mortgage should depend
on case-by-case determinations of whether “forfeiture” of the buyer’s
accumulated equity in the property would be consistent with “generally
accepted principles of fairness and equity.” Id. at 646. The buyer who has
paid most of the purchase price “has acquired a substantial interest in the
property, which, if forfeited, would result in substantial injustice.” Id. Is
this argument circular? If the seller is entitled to keep the proceeds and
evict the buyer, then the buyer will not have “acquired a substantial
interest in the property.” The buyer will have “acquired” such an interest

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only if the courts strike down the forfeiture provision in the contract. What
then makes the forfeiture unjust?
Consider what the situation would look like if the buyer were treated
like a renter or tenant. If the monthly payment to the lender is near the fair
rental value of the property, isn’t the only difference between a renter and
a buyer the amount of the down payment? Or is there also a distinction in
the sense that the buyer is entitled to treat the property as her own,
renovating the property and making structural changes as she sees fit, and
thus develops expectations based on considering the property as her own?
Does the buyer have no right to develop a personal attachment to the
property given the seller’s right to end the agreement if the buyer defaults?
3. Low-income buyers. In the wake of the housing crisis, investors
have been purchasing portfolios of foreclosed homes and then using
installment land contracts to resell those homes. See Alexandra Stevenson
& Matthew Goldstein, Market for Fixer-Uppers Traps Low-Income
Buyers, N.Y. Times, Feb. 21, 2016, at A1. Advocates have argued that the
lack of uniform state protection has allowed this market to flourish, with
particularly significant consequences for minority purchasers. See
Jeremiah Battle et al., Toxic Transactions: How Installment Land
Contracts Once Again Threaten Communities of Color (National
Consumer Law Center 2016) (calling for a national regulatory regime that
would require independent inspections and third-party appraisals,
financing disclosures, standard-form contracts and recordation, protection
of purchaser rights in default, and other consumer protections).
Will regulation of installment land contracts make things better or
worse for low-income families who do not qualify for conventional
mortgages?

B. Equitable Mortgages

Koenig v. Van Reken

279 N.W.2d 590 (Mich. Ct. App. 1979)

VINCENT J. BRENNAN, Presiding Judge.
In 1970, plaintiff [Helen Koenig] owned a home in Oakland County
with a market value of $60,000 that was encumbered by three mortgages
totaling $25,933.26. The real estate taxes on plaintiff’s home had become
delinquent and foreclosure proceedings had begun on one of the
mortgages. Plaintiff was then approached by defendant, Stanley Van
Reken, who proposed that for a fee of 10 percent he would “service” the

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mortgages and pay the delinquent taxes. Subsequently, on June 16, 1970,
plaintiff and defendant Stanley Van Reken executed three documents that
form the basis of this action.
The first of these documents, entitled “AGREEMENT,” stated that
plaintiff desired to prevent the loss of her home and provided that
defendant Stanley Van Reken purchase the property, redeem it from tax
sale and mortgage foreclosure, and give plaintiff an exclusive right to
repurchase according to the terms of a lease-option agreement that was
also executed between the parties.
The second document was a warranty deed which conveyed the
property from plaintiff to defendants for a stated consideration of $28,600.
Plaintiff alleges that the deed was silent as to consideration when she
signed it, that the figure of $28,600 was added subsequently, and that she
never received any such consideration.
The third document provided that Stanley Van Reken was to lease the
premises to plaintiff for a 3-year period at a fixed monthly rent of $300.
Plaintiff was also to receive an exclusive option to repurchase the premises
during the term of the lease for a price of $32,318.79, with a down
payment of $3,500 and monthly payments of $300 which were to include
taxes, insurance, principal and interest.
At no time during the negotiations that led to the execution of these
documents was plaintiff represented by an attorney, and all three
documents were prepared by Stanley Van Reken.
The parties operated under the lease from June 16, 1970, to February,
1972, and during this time plaintiff made total payments of $5,800. In
February, 1972, plaintiff defaulted in a monthly rental payment. Plaintiff
was thereupon evicted from the home.
[Plaintiff sued to have the deed executed by her to be declared an
equitable mortgage.]
The court of equity protects the necessitous by looking through form to
the substance of the transaction. Although no set criterion has been
established, the controlling factor in determining whether a deed absolute
on its face should be deemed a mortgage is the intention of the parties.
Such intention may be gathered from the circumstances attending the
transaction including the conduct and relative economic positions of the
parties and the value of the property in relation to the price fixed in the
alleged sale. Under Michigan law, it is well settled that the adverse
financial condition of the grantor, coupled with the inadequacy of the
purchase price for the property, is sufficient to establish a deed absolute on
its face to be a mortgage. Ellis v. Wayne Real Estate Co., 97 N.W.2d 758
(Mich. 1959).

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 In Ellis, supra, plaintiffs initially sought a loan from defendant to save
their home from forfeiture. After hurried negotiations, the plaintiffs
executed a quitclaim deed to defendant and simultaneously entered into a
land contract under which the plaintiffs were to repurchase the property.
The defendant then satisfied a default and paid the delinquent taxes. In
noting the discrepancy between the price paid by the defendant and the
value of the property, the Court held that the transaction constituted a loan
by defendant secured by a mortgage on the property.
In taking the plaintiff’s well-pleaded facts in the present case as true,
there is a close parallel with Ellis, supra. Here the plaintiff, while in
financial distress, sought help from the defendants in saving her home
from foreclosure. Although plaintiff was not desirous of selling her home,
she entered into a transaction which conveyed her equity worth over
$30,000 for less than $4,000. While financial embarrassment of the grantor
and inadequacy of consideration do not provide an infallible test, they are
an indication that the parties did not consider the conveyance to be
absolute. We note that the lease-back arrangement entered into by the
parties effectively circumvented the right to redeem, which is designed to
protect purchasers such as plaintiff in times of financial crisis. In applying
these facts to the aforementioned case law, it could be found without
difficulty that the subject transaction constituted a mortgage to secure a
loan in the amount of defendants’ initial expenditure.

Notes and Questions

1. Transfer as a security interest. An equitable mortgage is declared
when a transfer of a deed was intended merely to provide security for a
loan rather than a sale of the property. The most common example is the
deed of trust, which generally purports to be a conveyance from the
borrower to a trustee, but actually only grants a security interest. See Bain
v. Metropolitan Mortgage Group, Inc., 285 P.3d 34, 38 (Wash. 2012). In
other situations, however, parties attempt to circumvent mortgage law by
entering into agreements that appear to convey property.
2. Recognizing equitable mortgages. What conduct is necessary to
turn what looks like a conveyance into a security arrangement? In Flack v.
McClure, 565 N.E.2d 131 (Ill. App. Ct. 1990), the court identified factors
to consider in determining whether an equitable mortgage should be
recognized.

Six factors [should] be considered by the trial judge to determine whether an

equitable mortgage exists. Those factors include whether a debt exists, the

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 relationship of the parties, whether legal assistance was available, the
sophistication and circumstances of each party, the adequacy of the
consideration and who retained possession of the property.

Id. at 136. Cf. Hudson v. Vandiver, 810 So. 2d 617 (Miss. Ct. App. 2002)
(transfer of title interpreted as intent to provide security for a promise to
pay contractors for services to be rendered). Accord, Bernstein v. New
Beginnings Trustee, L.L.C., 988 So. 2d 90 (Fla. Dist. Ct. App. 2008). The
court in Koenig v. Van Reken also relied on various factors in assessing
whether to recognize an equitable mortgage. But what, exactly, is the
ultimate standard to which the factors are relevant? Does the court in
Koenig find that the parties intended to create a security arrangement
rather than a sale, or is the intent of the parties irrelevant? What is the rule
of law promulgated by the court in Koenig?
In Johnson v. Cherry, 726 S.W.2d 4 (Tex. 1987), plaintiff Richard
Johnson purchased property for $125,000, with his grantor reserving a
vendor’s lien on the property. When Johnson and his wife were later
divorced, Johnson purchased his ex-wife’s community interest in the
property with a note promising to pay over time. Johnson encountered
difficulty paying all his debts, which totaled $120,000. He entered into a
series of transactions with defendants F.G. Cherry and the Texas State
Bank of Tatum whereby he gave a deed to the property to defendants, and
they gave him a one-year lease on the land with an option to repurchase it.
In return for the general warranty deed, Johnson received $120,000 from
Cherry, who assumed the $38,000 remaining balance on the note to
Johnson’s ex-wife. The lease provided for two semiannual payments of
$12,510 each; also, Johnson could exercise his option for $132,000 and
reassume the note to his ex-wife. When Johnson defaulted on his lease
payments, Johnson sued defendants to cancel the deed on the grounds that
it was a mortgage on his homestead prohibited by the Texas constitution.
In granting Johnson’s request, the Texas Supreme Court held that a
transfer of a deed will be treated as a mortgage when “the parties actually
intended the instrument as a mortgage.” Id. at 5. Concluding that the
evidence supported the jury’s finding that the parties intended the deed as
a mortgage, the court explained, id. at 7:

In addition to Johnson’s testimony regarding his intentions, the evidence was

that the repurchase price was exactly 10% more than the original price; the
land was worth almost twice as much as the original “sale” price; the lease
price equaled exactly 9% interest on the balance of the note to Johnson’s ex-
wife assumed by Cherry and 18% interest on the alleged purchase price;
Johnson was indebted to other creditors for approximately $119,000 of the

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 $120,000 he received from Cherry; Johnson was within one week of losing
the land entirely; and Johnson had told a real estate agent he was not
interested in listing his property for sale.

If the parties had signed a contract stating that the “transfer of this deed
is intended to be a sale and not a mortgage,” would the case have come out
any differently? Should it?

Problem
A bank acquires title to a house at a foreclosure sale. It wants to get
around all rules about mortgages, installment land contracts, and equitable
mortgages, so it adopts the simple device of asking mortgagors to waive
the protection of the mortgage statute. The bank sells the property to a
buyer for a purchase price of $250,000, subject to a financing arrangement
with the bank. The buyer makes a $25,000 down payment with the bank,
which lends the rest of the purchase price to the buyer. The buyer grants a
mortgage to the bank. The mortgage contract has a waiver clause:

Mortgagor agrees to waive the benefits of the mortgage statute. If Mortgagor

defaults on any payments due under this mortgage, Mortgagee has the right
to retake possession of the property without a foreclosure sale and to keep
any payments already made.

The state mortgage statute merely recites that “all mortgages shall be
subject to the provisions of this act.” It has no language specifically stating
whether the protections afforded by the statute are disclaimable or
waivable by the mortgagor. Should the mortgagor have the right to waive
the protections of the mortgage statute?

§5 THE RECORDING SYSTEM

§5.1 Recording Acts

A. Recording Act Fundamentals

The recording system is intended to provide buyers of real property

with the security of knowing that they will really own the property
interests they are buying and to let those with other interests in property,
such as a lien, understand who has priority when conflicts arise.
Purchasers can use the system to find out whether the person purporting to
own and sell the property indeed owns it and to ensure that neither the

1293
owner nor any of his predecessors in interest has conveyed to someone
else all or part of the property interests that the seller has contracted to sell
to the buyer. Lenders can also use the system to understand and give notice
to others of their security interest in the property.
Every state has a recording act, which provides for a central registry
at each locality — often at the county level of government — where
holders of real property interests can submit copies of deeds, mortgages,
leases, easements, general plans, condominium declarations, judgment
liens, and the like. Submitting a document to the registry is called
recording. Although many recording-act disputes involve competing
claims of outright ownership, the recording acts also help to establish the
respective priorities and rights of lienholders, tenants, and others having
interests in a given property.
The common law rule before the recording system was “first in time,
first in right.” This rule was based on the theory that the grantor could not
convey what she did not own; once the property interest had been
transferred to the first grantee, the grantor had nothing left to convey to the
subsequent grantee.
Recording acts change the common law rule by defining the
circumstances under which a party who has recorded his interest in the
proper registry of deeds will prevail over a party who did not properly
protect his interest by recording it. In general, a subsequent interest holder
who has no notice of a prior conveyance and who records his interest will
prevail over any prior unrecorded interest.
Recording acts define the property interests that may be recorded.
Many statutes, for example, provide for recording leases of longer than a
year. A variety of other interests may also be recorded, such as mortgages,
option agreements, wills, judgments in suits affecting property, or even a
lis pendens, which is a filing that provides notice of pending litigation. For
property interests not covered by the recording act, the common law rule
of “first in time, first in right” applies.
It is important to recognize that recording acts do not require that an
instrument be recorded to be legally valid. A deed, for example, is valid
against the grantor upon delivery with or without recording. When the
seller delivers the deed to the buyer, the buyer becomes the lawful owner
of the property — at least in the absence of conflicting claims by other
grantees. The seller cannot dispossess the buyer on the ground that the
seller’s deed (received from the seller’s grantor) was recorded but that the
grantee had not yet recorded her deed. Similarly, a month-to-month tenant
could not defend against an eviction proceeding brought by the new owner
on the ground that the new owner had not recorded her deed and therefore

1294
did not own the property.
The recording system will not protect the grantee against all risk. In
many places, the buyer may have to check other parts of the court system
to determine whether a lawsuit being brought affects ownership of the
property, a will being probated affects the title, or a divorce proceeding
being filed by the owners results in changes in property rights. Other
points to check are whether the owner has declared bankruptcy and
whether the tax authorities are planning to place a lien on the property to
collect unpaid property taxes. Finally, the recording system will not protect
a buyer against a claim of adverse possession; for this reason, the buyer
must investigate to determine whether any such claims may be in the
wings.
Recording systems are increasingly moving from paper to electronic
records, with a number of states having passed statutes that facilitate
electronic recording.34 New Jersey, for example, extensively revised its
recording act system in 2012 for just this reason. See Assembly Bill A-2565
P.L.2011, c.217; see also, e.g., Ariz. Rev. Stat. §11-487; Ark. Code §14-2-
301 et seq.; Wis. Stat. §706.25 et seq. Many recorder of deeds’ offices
have now made their records accessible on-line.

B. How to Conduct a Title Search

It is impossible for a buyer to find all the interests affecting a particular

parcel of land without referring to some kind of index. It also is impossible
for the system to work unless the buyer can limit his search to places
where conflicting deeds are likely to be found; otherwise, a search of the
hundreds of thousands of documents would be endless.
The simplest way to index and research the title is to file information
by tract. Given the mathematical precision with which physical
descriptions of the geographic bounds of each parcel of property can be
made, it is possible to create a tract system whereby the buyer can find, in
one place, all interests that purport to affect the title to that particular tract.
The problem is that this is not how the recording system started, and
converting to a tract system would be quite expensive. Most places do not
have a tract index.
The typical recording office uses a grantor-grantee index. Separate
files are kept for grantors and grantees. In the grantor index, all
instruments are listed both alphabetically and chronologically by the
grantor’s last name. In the grantee index, all instruments are listed both
alphabetically and chronologically by the grantee’s last name. A deed from
Johann Sebastian Bach to Wolfgang Amadeus Mozart would be indexed

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under the name “Bach” in the grantor index and the name “Mozart” in the
grantee index. Where paper records are still being used, the recording
office ordinarily compiles volumes that cover particular time periods. For
example, conveyances by grantors may be divided into one volume that
includes conveyances made between 1960 and 1970, a second volume for
the years 1970 to 1980, and so on. More recent conveyances may be
grouped by year, and very recent conveyances by month and by day. The
recent conveyances are later compiled in master volumes like those of the
older conveyances to simplify the search process by limiting the number of
places in which one must look.
The index describes the bare outlines of each transaction, including the
grantor and grantee, a description of the land, the type of interest
conveyed, the date recorded, and the book and page numbers where a copy
of the document can be found. The title searcher must then look at each
complete document.
Suppose you are planning to buy a house from J.S. Bach. You want to
find out if and how Bach obtained title to the property. You would
therefore start in the grantee index to find who his grantor was. You start
in the present in the grantee index and go backward until you find a deed
to Bach conveying the property in question. You find a reference to a deed
in 2007 from Frédéric Chopin. To find out how Chopin obtained his title,
you look backward in the grantee index from 2007 until you find a
conveyance to Chopin. You continue this process until you have gone back
far enough to assure yourself that the title will be good. The practice in
each locality differs on how far back to go. It may be enough to look
backward for 50 or 60 years, or until the beginning of the twentieth
century, or until a title can be traced to some sovereign. In most places, the
practice is not to go all the way back to the beginning of the recording
system but some lesser number of years. Marketable title acts may
describe a time period beyond which interests are lost if they are not re-
recorded. See §5.5, below. When you are done, you have a list of grantors
who are predecessors in interest of Bach.
Suppose you have gone back to 1964 to find a deed from Edward Elgar
to Antonín Dvořák. You now switch to the grantor index and go forward
in time under the name of each grantor you have found, starting on the
date that grantor acquired her interest and going forward until you find an
instrument conveying that interest to a subsequent grantee. The period for
each search starts when the grantor acquired her interest (the date of
execution of the first deed giving title to the grantor) and stops on the date
a new conveyance of that interest is recorded. You would thus start with
Dvořák and carry forward until the point the conveyance of Dvořák’s

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interest is recorded, and then to the next owner, and so forth. It is
important to note that the search in the grantor index starts at the date of
execution rather than at the date of recording. This is because the grantor
may have mortgaged the property or encumbered it after acquiring it (after
receiving the deed at the closing) but before recording her deed.

C. Types of Recording Acts

As mentioned, each state has its own recording statute. The wording of
the statute, as well as court interpretations of it, must be examined in detail
to determine how it will apply to a particular dispute. Generally, recording
acts are divided into three types: (1) race, (2) notice, and (3) race-notice.
Race statutes. Under a race statute, as between successive purchasers
of Blackacre, the person who records first prevails — she has won the race
to the registry. This is true even if the person who records first knows
about an earlier conveyance to someone else. These statutes exist for all
property only in two states, North Carolina, N.C. Gen. Stat. §47-18, and
Louisiana, La. Rev. Stat. §9.2721, and for certain interests, like mortgages
or mineral interests, in a handful more.35
O conveys Blackacre to A, who does not record. O subsequently
conveys Blackacre a second time to B. B knows of the earlier conveyance
to A. B records the deed from O to B. In a lawsuit between A and B, B
prevails.
An example of a race statute is N.C. Gen. Stat. §47-18:

1297
 (a) No (i) conveyance of land, or (ii) contract to convey, or (iii) option to
convey, or (iv) lease of land for more than three years shall be valid to pass
any property interest as against lien creditors or purchasers for a valuable
consideration from the donor, bargainor or lessor but from the time of
registration thereof in the county where the land lies, or if the land is located
in more than one county, then in each county where any portion of the land
lies to be effective as to the land in that county. Unless otherwise stated
either on the registered instrument or on a separate registered instrument duly
executed by the party whose priority interest is adversely affected, (i)
instruments registered in the office of the register of deeds shall have priority
based on the order of registration as determined by the time of registration.

Notice statutes. Under a notice statute, a subsequent purchaser

prevails over an earlier purchaser only if the subsequent purchaser did not
have notice of the earlier conveyance. Further, the notice statute protects
any purchaser without notice against prior unrecorded interests even if the
purchaser does not record first. These statutes are in place in 23 states. For
example:
O conveys Blackacre to A, who does not record. O then conveys
Blackacre to B. B has no knowledge of the earlier conveyance from O to A.
B prevails over A even though B does not record the deed from O to B. B
also prevails over A even if A later records her deed from O to A before B
records her deed from O to B.
An example of a notice statute is Iowa Code §558.41:

An instrument affecting real estate is of no validity against subsequent

purchasers for a valuable consideration, without notice, or against the state or
any of its political subdivisions during and after condemnation proceedings
against the real estate, unless the instrument is filed and recorded in the
county in which the real estate is located, as provided in this chapter.

See also Ariz. Rev. Stat. §§33-422, 33-412; Mass. Gen. Laws ch. 183, §4;
Fla. Stat. §695.01.
Race-notice statutes. Under a race-notice statute, in effect in 25 states
and D.C., a subsequent purchaser prevails over prior unrecorded interests
only if she (1) had no notice of the prior conveyance at the time she
acquired her interest and (2) records before the prior instrument is
recorded. For example:
O conveys Blackacre to A, who does not record. O then conveys
Blackacre to B. B has no knowledge of the earlier conveyance from O to A.
A records; then B records. A prevails over B because, even though B did

1298
not have notice of A’s deed, A recorded before B did.
An example of a race-notice statute is Ga. Code §44-2-2:

(b) Deeds, mortgages, and liens of all kinds which are required by law to
be recorded in the office of the clerk of the superior court and which are
against the interests of third parties who have acquired a transfer or lien
binding the same property and who are acting in good faith and without
notice shall take effect only from the time they are filed for record in the
clerk’s office.

See also Cal. Civ. Code §1107; Mich. Comp. Laws §565.29; Pa. Stat. tit.
21, §351; Wash. Rev. Code §65.08.070.

D. Who Qualifies as a Bona Fide Purchaser?

Recording acts generally protect bona fide purchasers. In notice and

race-notice jurisdictions, this requires that an interest holder purchases in
good faith without notice of a conflicting interest. We will consider notice
in the next section, but conflicts also often arise with respect to a second
requirement for bona fide purchaser status, which is that the interest holder
must have paid value for her interest. Courts generally agree that
something more than nominal value is required to be considered a
“purchaser,” although it need not be the property’s full market value.
Anderson v. Anderson, 435 N.W.2d 687 (N.D. 1987). This requirement of
payment for value excludes donees, heirs, and devisees from the
protections of the recording system. Thus, if a donor gives the same
property as a gift to two different people, the first donee wins under the
common law first-in-time rule.
But what about a purchaser who has only made a down payment, but
not yet paid the full purchase price when a conflicting interest is recorded?
Or a purchaser under an installment land contract who has paid half the
value of the property, but still owes the remaining half? Can they claim the
protection of the recording acts? The outcome partly depends on whether
the subsequent purchaser would ordinarily be expected to search the
records. An ordinary purchaser would normally search title prior to
closing, and courts will generally not accord purchaser status in the context
of executory contracts. However, a purchaser in a long-term installment
contract might not. Some courts afford subsequent purchasers partial
protection, giving them a claim against the prior purchaser but only for the
value they paid.
When parties other than actual purchasers seek to invoke the recording
acts to protect their priority, the question of value can be complicated. For

1299
example, parties who win a lawsuit are entitled to record the judgment as a
lien against the losing party’s property. If the losing party has actually
conveyed the property in an unrecorded transfer, can the judgment creditor
claim priority against the prior purchaser who failed to record, even though
winning a lawsuit is not paying value? Some recording acts explicitly
protect judgment creditors in this situation. See, e.g., N.J. Stat. §46:26A-
12(c). Where the recording act is silent, however, judgment credits are
generally not able to prevail, either because they are only entitled to a lien
against property that a defendant actually owns or because the recording
act is interpreted to exclude them from the definition of “purchaser.”
William B. Stoebuck & Dale A. Whitman, The Law of Property §11.10, at
878-879 (3d ed. 2000).

§5.2 Chain of Title Problems

Sabo v. Horvath

559 P.2d 1038 (Alaska 1976)

ROBERT BOOCHEVER, Chief Justice.
Grover C. Lowery occupied land in the Chitna Recording District on
October 10, 1964 for purposes of obtaining Federal patent. Lowery filed a
location notice on February 24, 1965, and made his application to purchase
on June 6, 1967 with the Bureau of Land Management (BLM). On March
7, 1968, the BLM field examiner’s report was filed which recommended
that patent issue to Lowery. On October 7, 1969, a request for survey was
made by the United States Government. On January 3, 1970, Lowery
issued a document entitled “Quitclaim Deed” to the Horvaths; Horvath
recorded the deed on January 5, 1970 in the Chitna Recording District.
Horvath testified that when he bought the land from Lowery, he knew
patent and title were still in the United States Government, but he did not
rerecord his interest after patent had passed to Lowery.
Following the sale to the Horvaths, further action was taken by Lowery
and the BLM pertaining to the application for patent and culminating in
issuance of the patent on August 10, 1973.
Almost immediately after the patent was issued, Lowery advertised the
land for sale in a newspaper. He then executed a second document also
entitled “quitclaim” to the Sabos on October 15, 1973. The Sabos duly
recorded this document on December 13, 1973.
Luther Moss, a representative of the BLM, testified to procedures
followed under the Alaska Homesite Law (43 U.S.C. §687a (1970)). After

1300
numerous steps, a plat is approved and the claimant notified that he should
direct publication of his claim. In this case, Lowery executed his
conveyance to the Horvaths after the BLM field report had recommended
patent.
The first question this court must consider is whether Lowery had an
interest to convey at the time of his transfer to the Horvaths.
[W]e hold that at the time Lowery executed the deed to the Horvaths
he had complied with the statute to a sufficient extent so as to have an
interest in the land which was capable of conveyance.
Since the Horvaths received a valid interest from Lowery, we must
now resolve the conflict between the Horvaths’ first recorded interest and
the Sabos’ later recorded interest.
The Sabos, like the Horvaths, received their interest in the property by
a quitclaim deed. They are asserting that their interest supersedes the
Horvaths under Alaska’s statutory recording system. Alaska Stat.
§34.15.290 provides that:

A conveyance of real property . . . is void as against a subsequent innocent

purchaser . . . for a valuable consideration of the property . . . whose
conveyance is first duly recorded. An unrecorded instrument is valid . . . as
against one who has actual notice of it.36

Initially, we must decide whether the Sabos, who received their interest
by means of a quitclaim deed, can ever be “innocent purchaser[s]” within
the meaning of Alaska Stat. §34.15.290. Since a “quitclaim” only transfers
the interest of the grantor, the question is whether a “quitclaim” deed itself
puts a purchaser on constructive notice. Although the authorities are in
conflict over this issue, the clear weight of authority is that a quitclaim
grantee can be protected by the recording system, assuming, of course, the
grantee purchased for valuable consideration and did not otherwise have
actual or constructive knowledge as defined by the recording laws. We
choose to follow the majority rule and hold that a quitclaim grantee is not
precluded from attaining the status of an “innocent purchaser.”
In this case, the Horvaths recorded their interest from Lowery prior to
the time the Sabos recorded their interest. Thus, the issue is whether the
Sabos are charged with constructive knowledge because of the Horvaths’
prior recordation. Horvath is correct in his assertion that in the usual case a
prior recorded deed serves as constructive notice pursuant to Alaska Stat.
§34.15.290, and thus precludes a subsequent recordation from taking
precedence. Here, however, the Sabos argue that because Horvath
recorded his deed prior to Lowery having obtained patent, they were not

1301
given constructive notice by the recording system. They contend that since
Horvaths’ recordation was outside the chain of title, the recording should
be regarded as a “wild deed.”
It is an axiom of hornbook law that a purchaser has notice only of
recorded instruments that are within his “chain of title.” If a grantor
(Lowery) transfers prior to obtaining title, and the grantee (Horvath)
records prior to title passing, a second grantee who diligently examines all
conveyances under the grantor’s name from the date that the grantor had
secured title would not discover the prior conveyance. The rule in most
jurisdictions which have adopted a grantor-grantee index system of
recording is that a “wild deed” does not serve as constructive notice to a
subsequent purchaser who duly records.
Alaska’s recording system utilizes a “grantor-grantee” index. Had
Sabo searched title under both grantor’s and grantee’s names but limited
his search to the chain of title subsequent to patent, he would not be
chargeable with discovery of the pre-patent transfer to Horvath.

Quick Review:
What type of recording act does Alaska have?

On one hand, we could require Sabo to check beyond the chain of title
to look for pretitle conveyances. While in this particular case the burden
may not have been great, as a general rule, requiring title checks beyond
the chain of title could add a significant burden as well as uncertainty to
real estate purchases. To a certain extent, requiring title searches of records
prior to the date of a grantor acquired title would thus defeat the purposes
of the recording system. The records as to each grantor in the chain of title
would theoretically have to be checked back to the later of the grantor’s
date of birth or the date when records were first retained.
On the other hand, we could require Horvath to rerecord his interest in
the land once title passes, that is, after patent had issued to Lowery. As a
general rule, rerecording an interest once title passes is less of a burden
than requiring property purchasers to check indefinitely beyond the chain
of title.
It is unfortunate that in this case due to Lowery’s double conveyances,
one or the other party to this suit must suffer an undeserved loss. We are
cognizant that in this case, the equities are closely balanced between the
parties to this appeal. Our decision, however, in addition to resolving the
litigants’ dispute, must delineate the requirements of Alaska’s recording

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laws.
Because we want to promote simplicity and certainty in title
transactions, we choose to follow the majority rule and hold that the
Horvaths’ deed, recorded outside the chain of title, does not give
constructive notice to the Sabos and is not “duly recorded” under the
Alaskan Recording Act, Alaska Stat. §34.15.290. Since the Sabos’ interest
is the first duly recorded interest and was recorded without actual or
constructive knowledge of the prior deed, we hold that the Sabos’ interest
must prevail.

Notes and Questions

1. Types of notice. In both notice and race-notice jurisdictions, only
subsequent purchasers without notice of the earlier conveyance can prevail
over the earlier grantee. Actual notice, where a party knows about an
earlier instrument, obviously violates this condition. But the import of the
recording system is that constructive notice will also deprive a subsequent
purchaser of protection. Constructive notice exists when the grantee, by
conducting a reasonable title search, would have discovered the earlier
conveyance. This holds true whether or not the grantee actually searched
the records.
Complications arise if a deed is recorded incorrectly or was not entitled
to be recorded in the first place. For example, if an instrument is required
to be witnessed before a notary public or court officer, recording an
instrument that lacks such an attestation may not give constructive notice
to subsequent interest holders. U.S. Bank Nat’l Ass’n v. Gordon, 709
S.E.2d 258, 261 (Ga. 2012). But cf. Regions Bank v. Deluca, 97 So. 3d 879
(Fla. App. Ct. 2012) (because errors in a mortgage’s property description
could be corrected by examining the entire document, the document still
imparted constructive notice).
Similarly, a clerical error in indexing the deed, which is important
because it is only through the index that a party may find certain interests,
may result in a finding that a later purchaser was not on constructive notice
of the prior conveyance. Greenpoint Mortgage Funding, Inc. v.
Schlossberg, 888 A.2d 297 (Md. 2005). Problems may also arise if a
subsequent conveyance occurs after the deed is filed with the registry
office but before it is indexed. Compare NYCTL 1998-1 Trust & the Bank
of N.Y. v. Ibrahiem, 15 Misc. 3d 294 (N.Y. Civ. Ct. 2007) (deed is
considered recorded when delivered to registry office), with Dyar v.
Martinez, 54 Cal. Rptr. 3d 907 (Ct. App. 2007) (unindexed lis pendens did
not impart constructive notice).

1303
 Another common problem involves misspelled names in documents. If
a purchaser is searching for records relating to J.S. Bach, and there is a
mortgage recorded under the name J.S. Back, will that document give
constructive notice? A doctrine known as idem sonans governs this
question and generally looks to whether similar names sound alike or
common usage otherwise associates them.
What about electronic recording systems, which are easier to search
than paper records? Should the standard for which instruments give
constructive notice then change? See First Citizens National Bank v.
Sherwood, 879 A.2d 178 (Pa. 2005) (finding constructive notice because
an electronic search would have revealed a mortgage improperly indexed
under the name of the beneficiary of a trust rather than the trustee); see
also William A. Reppy, Jr., Some Issues Raised by Alaska’s Recording
Act, 27 Alaska L. Rev. 195, 210 (2010) (arguing that because Alaska’s title
records have now been digitized and can be searched on-line, Sabo should
be overruled).
Inquiry notice is a kind of constructive notice. Under this theory,
notice will be imputed if the subsequent purchaser would have discovered
the conveyance had she acted reasonably to investigate facts at her
disposal. If the property is being occupied by someone other than the
grantor, for example, a purchaser is on inquiry notice that a prior claim
may be hanging around. Inquiry notice will also exist if a recorded
instrument refers to another property interest, such as a lease, a life estate,
a condominium declaration, or a general plan. Inquiry notice can even
arise from an oral statement made by the earlier interest holder. Swanson v.
Swanson, 796 N.W.2d 614 (N.D. 2011) (statement declaring a conflicting
property interest sufficient to put subsequent purchasers on notice that they
should at least investigate basis for the statement).
2. Estoppel by deed. Sabo v. Horvath concerns a dispute between two
grantees. What would have happened if the grantor, Lowery, had claimed
ownership of the property as against the first grantees, the Horvaths, when
the grantor finally received the patent from the government? The doctrine
of estoppel by deed would enable the grantees to prevail. Ackerman v.
Abbott, 978 A.2d 1250 (D.C. 2009). If a grantor purports to convey a
property interest she does not own to a grantee, and the grantor
subsequently comes to own the property interest by receiving the deed,
ownership is automatically vested in the grantee. Thus, if O purports to
convey property to A, but O does not own the property, A gets nothing; one
can convey only what one owns. However, if O later obtains title to the
property from B, the doctrine of estoppel by deed vests title immediately in

1304
A. O is estopped from asserting ownership rights as against A.37
3. Wild deeds. Sabo v. Horvath deals with a particular version of the
more general problem of deeds outside the chain of title, the linked
documents that make up a record of a property’s ownership. This problem
arises because it is impractical to require all buyers to search every one of
the hundreds of thousands of deeds in the entire recording index. To make
the search manageable, customary practice limits the search to the period
between the date the grantor obtained his deed and the date a deed out
from that grantor was recorded. Because it is sometimes possible that a
predecessor in interest made a conveyance outside that period — either
before or after — and because some buyers do not diligently record their
interest, it is possible that some deeds relating to the property in question
will not be found. Some deeds are recorded too early to appear in the chain
of title (before a grantor obtained title to the property); others are recorded
too late to be discovered (after a deed from that grantor was recorded).
a. Recorded too early. O conveys property to A that O does not
own. A records the deed. B, the true owner, conveys the property to O.
At this point, the property transfers automatically to A under the
doctrine of estoppel by deed. However, unbeknownst to A, O then
conveys title to X, a bona fide purchaser who has no knowledge of the
conveyance from O to A. The majority of states will handle the
situation just as the Alaska Supreme Court did. In these states, the first
purchaser, A, would prevail in a contest between herself and the
grantor, O. However, X, the second purchaser without notice of the
earlier conveyance to A, would prevail in a contest with the first
purchaser, A. This result obtains because X is required to search the
records only so far back as the date when her grantor, O, acquired her
interest; since O had purported to convey the interest to A before O
obtained her title from B, X would not be charged with notice of the
conveyance to A. This result, of course, protects the interests of the
second bona fide purchaser, X, at the expense of the earlier bona fide
purchaser, A, perhaps on the ground that A acted negligently in
purchasing property from someone who did not in fact possess the right
to convey it.
Some states require a more extended search on the part of the
subsequent grantee; in these states, the doctrine of estoppel by deed is
extended to apply to disputes not only between the grantor and the first
grantee but between the first grantee and subsequent grantees. Under
this theory, when the grantor gets the deed to the property already
conveyed to the first grantee, title automatically passes to the first

1305
 grantee, leaving the grantor nothing to convey to the subsequent
purchaser.
b. Recorded too late. O conveys to A, who does not record. A
conveys to B, who records. O then conveys to Z, a bona fide purchaser
without notice of the earlier conveyance from O to A. B then gets ahold
of the deed from O to A and records it. In a contest between B and Z, Z
would prevail because the deed from O to A was recorded too late.
When Z bought the property, the deed from A to B had already been
recorded, but since A had not yet recorded the deed from O to A, there
is no way that Z could have found it. Neither A nor B was in O’s chain
of title at the time Z purchased, so Z had no way to learn of the
conveyance to B.
Here is a second example. O conveys to A, who does not record. O
then conveys to X, who has notice of the earlier conveyance to A. X
records her deed; then A records her deed. X conveys to Z, who has no
notice of the earlier conveyance to A. In a contest between A and Z, Z
would prevail because the deed from O to A was recorded too late. Can
you see why?
4. Shelter doctrine. The shelter doctrine allows a bona fide purchaser
to convey property to a third party even if the third party is on notice of an
earlier conveyance. For example, O conveys to A, who does not record. O
then conveys to X, a bona fide purchaser without notice of the conveyance
to A; X records. Because X had no notice of the earlier conveyance to A,
and because X recorded first, X would prevail over A in either a notice
jurisdiction or a race-notice jurisdiction. X then wants to convey to C, but
C has notice of the earlier conveyance to from O to A. The shelter
doctrine allows X to convey the property to C, despite C’s knowledge of
the earlier conveyance. This doctrine allows bona fide purchasers to
convey title even if they subsequently find out, after they buy the property,
of the earlier conveyance. The bona fide purchaser who records first
obtains full rights in the property over the earlier buyer who did not record.
Any other rule would restrict the bona fide purchaser’s ability to transfer
the property.
5. Favored position of bona fide purchasers. In Matter of Edwards,
962 F.2d 641 (7th Cir. 1992), the bona fide purchaser of property at a
bankruptcy sale obtained title free and clear of a preexisting mortgage
because the debtor who declared bankruptcy gave the court an old address
for the mortgagee’s lawyer; the mortgagee had listed its correct address,
but the court clerk did not notice the discrepancy, so the mortgagee-lender
was not notified of the bankruptcy sale of the property. Judge Richard

1306
Posner commented on the policies behind the protection of bona fide
purchasers: “If purchasers at judicially approved sales of property of a
bankrupt estate, and their lenders, cannot rely on the deed that they receive
at the [bankruptcy] sale, it will be difficult to liquidate bankrupt estates at
positive prices.” Id. at 643. Yet Posner noted the unfairness of this
procedure to the innocent owner:

To take away a person’s property — and a lien is property — without

compensation or even notice is pretty shocking, but we have property rights
on both sides of the equation here, since [the mortgagee/lender] wants to take
away property that [the buyer at the bankruptcy sale] purchased and [the
buyer’s lender] financed, without compensating them for their loss.

Id. at 645. Does the disappointed mortgagee have any claim against the
debtor who listed the wrong address for the mortgagee?
6. Statutory interpretation. Why aren’t buyers on constructive notice
of any deeds recorded under the names of predecessors in interest? What
justifies limiting the required search to time periods associated with the
chain of title? Have the courts interpreted the meaning of “notice” in
recording statutes, or have they rewritten them by creating an exception for
situations not contemplated by the legislature? If you believe the courts
have created an exception, are the courts justified on the grounds that the
legislature could not have intended to require an unlimited search, or are
the courts practicing illegitimate judicial activism and ignoring the plain
language of the statute?

Problems
Determine how the following cases would be resolved in a jurisdiction
with (a) a race statute; (b) a notice statute; and (c) a race-notice statute:
1. O to A (A does not record). O to B (B has notice of the earlier
conveyance to A).
B records. A records.
B sues A for title.
2. O to A (A does not record). O to B (B has no actual notice of the
earlier conveyance to A).
B records.
A records.
B sues A for title.
3. O to A (A does not record). O to B (B has no actual notice of the

1307
earlier conveyance to A).
A records.
B records.
B sues A for title.
4. O to A (A does not record). A to B (B records).
O to Z (Z has no actual notice of deed from O to A; Z records).
B records deed from O to A.
B sues Z for title.
5. O to A (A does not record). O to X (X has notice of conveyance from
O to A).
X records.
A records.
X conveys to Z (Z has no actual notice of deed from O to A).
A sues X and Z for title.
6. O to A (A does not record). O to X (X has notice of conveyance from
O to A).
A records.
X records.
X conveys to Z (Z has no actual notice of deed from O to A).
A sues X and Z for title.
7. O to A (A does not record). O to X (X has no actual notice of
conveyance from O to A).
X records.
A records.
X conveys to C (C has notice of conveyance from O to A).
A sues C for title.

§5.3 Equitable Subrogation

Property owners may take out more than one mortgage on their
property. In such cases, the first mortgage has priority over later
mortgages, at least if the first mortgage is recorded or the second
mortgagee otherwise has notice of it. This means that if the borrower
defaults on payments and the property is sold through foreclosure, the
proceeds are paid to the first mortgagee; if there are assets left, they go to
pay off the second mortgage, and so on down the priority list. But what
happens if a borrower refinances a particular loan? In Countrywide Home
Loans, Inc. v. First National Bank of Steamboat Springs, 144 P.3d 1224
(Wyo. 2006), an owner took out a third mortgage for the purpose of paying
off the first mortgage. When the borrower defaulted on the second

1308
mortgage, the court had to determine whether the second mortgagee or the
third mortgagee had priority; who would get paid first if the foreclosure
sale did not yield enough proceeds to pay off both mortgages? The court
applied the recording act principle of “first in time, first in right.” Since the
third mortgage was not only given after the second mortgage, but also
recorded afterward (with notice of the second mortgage), the court held
that the second mortgagee should be paid off first.
The opposite result was reached in Columbia Community Bank v.
Newman Park, LLC, 304 P.3d 472 (Wash. 2013), because the court applied
the doctrine of equitable subrogation. Under that doctrine, someone who
assumes the rights or obligations of another steps into their shoes and
assumes whatever rights or obligations they had to the extent necessary to
prevent unjust enrichment. Because second mortgagees know that their
mortgages are subordinate to first mortgages, they cannot not complain if
the identity of the first mortgagee changes by assignment. If the
refinancing of the loan and the assignment of the mortgagee’s rights to a
third party would mean that the second mortgage would move up and have
priority over the first mortgagee, this would amount to a windfall neither
earned nor deserved by the second mortgage and would constitute unjust
enrichment. The Restatement (Third) of Property (Mortgages) §7.6 (1997)
adopts this position on the ground that it serves the interests of
homeowners by making refinancing cheaper and more widely available
and does not hurt the interests of anyone else; the Restatement found it not
to conflict with the spirit (if not the letter) of the state recording statute.

§5.4 Fraud and Forgery

Brock v. Yale Mortgage Corporation

700 S.E.2d 583 (Ga. 2010)

CAROL W. HUNSTEIN, Chief Justice.
Appellant Jerry Brock (“Brock”) commenced this action against his
ex-wife, Joyce Brock (“Joyce”), and appellee Yale Mortgage Corporation
(“Yale”) to, among other things, quiet title in the Suwanee residence he
and Joyce once shared (the “property”); set aside a forged quitclaim deed
purporting to transfer Brock’s interest in the property to Joyce; and set
aside a subsequent deed to secure debt Joyce executed in Yale’s favor or
limit the deed to a one-half undivided interest in the property.
The Brocks purchased the property jointly in 1987, financing the
transaction with a loan from First Railroad Mortgage Company. In

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connection with the loan, the Brocks executed a security deed and
promissory note in the amount of $56,000 in the lender’s favor. The
Brocks did not have a joint bank account. Brock maintained a checking
account and gave his wife money each month to make the loan payment,
but she did not always use the funds for that purpose. As a result, [the
Brocks’ loan went into default in 1996, but Joyce] borrowed money from a
friend to bring the loan current and stop the foreclosure process. In August
2000, Joyce received a second notice of foreclosure sale [but she worked
out a payment plan with the lender.]
In January 2001, Joyce received a third notice of foreclosure sale after
defaulting under the payment plan. Once again, Joyce did not inform
Brock of the foreclosure sale notice, but instead contacted Jerri Browning
of mortgage broker Capital Lending Group (“Capital”), about obtaining a
new loan. Browning assisted Joyce in procuring a loan from Yale.
Browning advised Joyce that in order to secure a loan in her name only,
Brock would need to convey his interest in the property to her. At
Browning’s suggestion, Joyce requested a blank quitclaim deed from
Yale’s closing attorney, who faxed the deed to her. At the February 2001
loan closing, Joyce presented an executed, unrecorded quitclaim deed by
which Brock purportedly transferred his interest in the property to her.
Yale does not dispute that Brock’s signature on the quitclaim deed is
forged. Yale loaned Joyce $60,000, of which $15,460 was used to satisfy
the Brocks’ [original mortgage]. Joyce received $38,085.44 in cash at
closing. Joyce executed a promissory note and deed to secure debt in
Yale’s favor.
In May 2004, Brock discovered that his wife had spent over $200,000
from his checking account without his knowledge. He filed for divorce
shortly thereafter. Around the same time, Brock learned about the 2001
foreclosure proceedings, the forged quitclaim deed, and the Yale loan.
According to Brock, he called Yale after learning of the Yale loan, but the
representative he spoke with told him she did not have to speak with him
and terminated the call. In August 2004, the Brocks executed a settlement
agreement in their divorce proceedings in which Joyce transferred “any
and all of her rights, title and interest [in the property], whether legal or
equitable” to her husband. In January 2005, Brock commenced this action.
[Georgia Code §23-3-40] provides that a deed may be cancelled on
grounds of forgery. If the forged quitclaim deed is set aside here, however,
that would not invalidate the subsequent security deed in its entirety. One
holding property with another person as tenants in common cannot convey
or affect that person’s interest without his or her consent. Yet, a tenant in
common may encumber or convey his or her own interest in property

1310
without the consent of other cotenants. Thus, if a tenant in common
purports to convey an interest in the entire property, the deed will affect
his or her interest although non-consenting cotenants will not be bound. It
is undisputed that the Brocks acquired the property as tenants in common
under a 1987 warranty deed transferring the property to both of them as
grantees. Accordingly, the security deed under which Joyce purported to
convey legal title to the entire property to Yale, at a minimum, effectively
vested Yale with a security interest in the one-half undivided interest in the
property Joyce indisputably held and was free to convey.
As a general rule, “[a] bona fide purchaser for value is protected
against outstanding interests in land of which the purchaser has no notice.”
Farris v. Nationsbanc Mortg. Corp., 493 S.E.2d 143, 145 (1997); [Georgia
Code §§23-1-19, 23-1-20]. We have long held that “[a] grantee in a
security deed who acts in good faith stands in the attitude of a bona fide
purchaser, and is entitled to the same protection.” Roop Grocery Co. v.
Gentry, 25 S.E.2d 705, 711 (1943). But we have also long recognized that
a forged deed is a nullity and vests no title in a grantee. As such, even a
bona fide purchaser for value without notice of a forgery cannot acquire
good title from a grantee in a forged deed, or those holding under such a
grantee, because the grantee has no title to convey. [Accordingly,] Yale
would not acquire a valid security interest in the entire property simply by
proving its status as a bona fide purchaser for value.
Under Georgia law, a forged signature is nonetheless binding if ratified
by the person whose name was signed. “A ratification may be express or
implied from the acts or silence of the principal.” [Georgia Code] §10-6-
52. Whether ratification occurs is usually a fact question for the jury.
Yale argues, and the trial court apparently agreed, that Brock ratified
“the subject loan agreement” under the divorce settlement agreement. The
correct focus of the analysis, however, is whether Brock ratified the forged
quitclaim deed such that his wife’s security deed effectively conveyed a
security interest in the entire property to Yale. The ratification doctrine
does not apply to the loan agreement or security deed because Joyce did
not purport to enter into them in Brock’s name or under authority from
him.
Yale principally relies on the following language in the settlement
agreement, which appears immediately after Joyce’s agreement to transfer
her interest in the property to him:

The parties acknowledge that [Joyce] has incurred a $50,000 liability on the
property. The parties will seek to have said debt forgiven. If the parties are
unsuccessful in having the debt forgiven, then [Joyce] shall be responsible

1311
 for the repayment of said debt. [Joyce] shall further indemnify and hold
[Brock] harmless from any and all liability, loss, damage, claim, demand,
cost or judgment, including reasonable attorney’s fees, arising out of
[Joyce’s] failure to pay said debt.

In acknowledging that Joyce incurred a “liability on the property,” the

settlement agreement appears to assume the existence of a valid
encumbrance on the property but does not specify its nature. Significantly,
the settlement agreement does not clarify whether the parties believed that
the Yale debt encumbered the entire property or only Joyce’s interest. To
the extent that Brock merely acknowledged that his wife encumbered her
share of the property, that acknowledgment would not evidence an election
to treat the forged quitclaim deed as valid. See Restatement (Third) of
Agency §4.01 cmt. b (2006) (“The act of ratification consists of an
externally observable manifestation of assent to be bound by the prior act
of another person.”). Further, if Brock believed that the property interest
he was accepting from his wife was encumbered, he might have wanted to
clarify that he was not personally liable for the debt and to bargain for
protection from any loss he might incur as the result of the debt. Given the
ambiguity in the settlement agreement arising from the phrase “liability on
the property,” a factual issue exists regarding the intention of the parties,
which should be determined in light of all the relevant evidence.
The trial court also concluded that ratification occurred by virtue of the
fact that a portion of the Yale loan proceeds paid off the balance of
$15,460 on the [original] note. Ratification occurs if a principal, with full
knowledge of all the material facts, accepts the benefits of an unauthorized
act, or retains such benefits after discovering the material facts. For
example, in [Ferguson v. Golf Course Consultants, 252 S.E.2d 907 (Ga.
1979),] we held that the plaintiff ratified and could not set aside a warranty
deed to which his business partner signed the plaintiff’s name without the
plaintiff’s knowledge or authority when the plaintiff knowingly received
and spent proceeds the partner earned from the conveyance. In concluding
that “[the plaintiff] cannot accept the proceeds of the sale, keep them, use
them, decline to tender them back, and then expect a court of equity to set
aside the deed from which he derived a profit,” id. [at 908], we relied, inter
alia, on prior precedent that a grantor seeking to cancel a deed in equity
must first restore or tender to the grantee any consideration received under
the deed.
Here, Brock received nothing of value under the forged quitclaim deed.
To the extent he allegedly benefitted incidentally from the payoff of the
prior loan in a transaction “once removed” from the unauthorized forged

1312
quitclaim deed, he was not required to tender such benefit to Yale as a
precondition to equitable relief or to avoid ratification.
For the reasons set forth above, we affirm in part, reverse in part, and
remand for proceedings not inconsistent with this opinion.

McCoy v. Love

382 So. 2d 647 (Fla. 1980)

JOSEPH A. BOYD, JR., Justice.
Mary V. Nowling Elliott, now deceased, brought an action seeking the
cancellation of a deed. The trial court found that Mrs. Elliott, a simple,
elderly woman who could neither read nor write, owned an undivided one-
fifth interest in the minerals underlying a seventy-five acre tract of land. In
January 1972 B.G. Russell offered to buy her entire interest, but she
refused. She orally agreed to sell Mr. Russell two of the thirteen to fifteen
mineral acres she owned for $3300.00. The trial court found further:
Defendant Russell prepared the mineral deed, and instead of the two acres
of minerals agreed upon, fraudulently substituted the clause: “one-fifth
(1/5) interest in and to all the oil, gas, and other minerals” and then
inserted the legal description of the 75 acres. Obviously, one-fifth of 75
acres is 15 acres, a deal that the Plaintiff had consistently refused to make.
Mrs. Elliott lived with her daughter, who could read, write, and
understand simple things. The daughter looked over the instrument Russell
had prepared. Although she did not understand the deed, she advised Mrs.
Elliott that she guessed it was all right.
Several days later, Russell contacted Mrs. Elliott and told her that he
had made a mistake in drawing up the deed. He offered to pay her $15,000
for the interest that had been conveyed. She refused and insisted on a
reconveyance of that portion of the interest which she had not intended to
sell. “[O]n February 16, 1972, Russell and his wife purported to reconvey
to Plaintiff the thirteen seventy-fifths (13/75ths) interest of which she had
been defrauded.” On February 11, 1972, however, Russell conveyed a
substantial portion of the same mineral rights to C.P. McClelland, who
later conveyed to respondents Messrs. Love, Harris, and Carpenter. Mrs.
Elliott remained ignorant of the Russell-McClelland and subsequent
transactions until October 1973 when she wanted to sell more of her
mineral rights and a title search revealed them. She sued for cancellation
of the deed.
A bona fide purchaser has the right to rely on the record title of his
grantor, but this protection extends only to those purchasing a legal title.
The recording of a void or forged deed is legally insufficient to create a

1313
legal title, and affords no protection to those claiming under it.
The trial court’s findings of fact that the grantee committed fraud and
that the grantor was not negligent do not compel the conclusion that there
was such an alteration of documents as to be the equivalent of a forgery.
The grantor knew that she was executing and delivering a deed of mineral
rights. The law charged her with the responsibility of informing herself as
to the legal effect of the document she was signing.
Where all the essential legal requisites of a deed are present, it conveys
legal title. Fraud in the inducement renders such a legally effective deed
voidable in equity. We hold that the district court was correct in holding
that the deed was merely voidable, and that it conveyed a legal title to the
grantee.
Because of its holding that the deed was void, the trial court granted
summary judgment in favor of the plaintiff. Therefore there were no
findings of fact on the issue of the good faith of the purchasers from
McClelland. While the district court was correct in holding the deed
voidable rather than void, there was no basis for it to conclude from the
record that the defendants were bona fide purchasers. The case should be
remanded for trial of this factual issue.

Notes and Questions

1. Void or voidable? When a deed has been obtained by fraud or
forgery, it is classified as either void or voidable. If no further conveyances
are made, a court will set aside the deed on the true owner’s request. The
difficult issue is determining what happens if the property has been
conveyed to a bona fide purchaser, one who paid value and had no notice
of the fraud or forgery. If the deed is void, then it conveys no title to the
grantee and the grantee has no power to convey title to another; the bona
fide purchaser is therefore not protected. If, however, the deed is merely
voidable by the true owner, who was the victim of the foul play, then a
subsequent bona fide purchaser will be able to obtain good title. In that
case, the victim’s sole remedy will be a suit for damages for fraud or
conversion against the wrongdoer.
2. Forgery. Forged deeds are absolutely void and therefore transfer no
interest to the grantee; nor can they be the basis of a transfer from the
grantee to a subsequent bona fide purchaser even though that purchaser
has no knowledge of the forgery. Thus, a bona fide purchaser who buys in
reliance on the record title, which appears good, will obtain nothing. In re
Sutter, 665 F.3d 722, 728 (6th Cir. 2012); Special Property VI v. Woodruff,
730 N.W.2d 753, 756 (Mich. Ct. App. 2007); First National Bank in

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Albuquerque v. Enriquez, 634 P.2d 1266, 1268 (N.M. 1981). This
universally recognized rule appears to conflict with the policies underlying
the recording system, which is intended to give a bona fide purchaser
assurance that she receives what she pays for and that the seller has a right
to convey the property. Why do you suppose courts refuse to protect bona
fide purchasers from forged deeds?
In Brock v. Yale Mortgage Corp., the court also considered whether
Jerry Brock had ratified the forged deed. Ratification, as well as the
equitable defenses of waiver and estoppel, can validate a void deed;
ratification generally involves a party knowingly accepting the action of
the forger and indicating intent to adopt the otherwise unauthorized deed.
See Erier v. Creative Finance & Investments, L.L.C., 203 P.3d 744, 750-
752 (Mont. 2009).
3. Fraud. In contrast to forged deeds, deeds obtained through fraud are
generally voidable rather than void. They are voidable by the defrauded
victim — the one who was fraudulently induced to transfer the property.
Once the property passes to a bona fide purchaser without notice of the
fraud, however, the conveyance can no longer be rescinded. Fallon v.
Triangle Management, 215 Cal. Rptr. 748 (Ct. App. 1985). The reason for
this distinction has been explained by a Maryland court as follows:

A deed obtained through fraud, deceit or trickery is voidable as between

the parties thereto, but not as to a bona fide purchaser. A forged deed, on the
other hand, is void ab initio.
[A] forger can pass no better title than he has. Consequently, there can be
no bona fide holder of title under a forged deed. A forged deed, unlike one
procured by fraud, deceit or trickery is void from its inception. The
distinction between a deed obtained by fraud and one that has been forged is
readily apparent. In a fraudulent deed an innocent purchaser is protected
because the fraud practiced upon the signatory to such a deed is brought into
play, at least in part, by some act or omission on the part of the person upon
whom the fraud is perpetrated. He has helped in some degree to set into
motion the very fraud about which he later complains. A forged deed, on the
other hand, does not necessarily involve any action on the part of the person
against whom the forgery is committed.

Harding v. Ja Laur Corp., 315 A.2d 132 (Md. Ct. Spec. App. 1974).
Courts seem to suggest that if the grantor has negligently participated in
creating the problem, she is estopped from claiming the property from a
bona fide purchaser.
Because of the fraud/forgery distinction, the courts have often had to
contend with behavior that could be described as either forgery or fraud.

1315
For example, in Harding v. Ja Laur, supra, plaintiff Lucille M. Harding
claimed that defendant Ja Laur induced her to sign a blank page that she
was told would be used merely to straighten out a boundary line but that
was later affixed to a deed transferring a small portion of land that she
owned. Defendant Ja Laur had wanted the land because it was contiguous
to land it owned and was extremely valuable because it provided access to
that land. On one hand, the court could have held that the case involved
fraud rather than forgery because Ms. Harding had been induced to sign on
the basis of a false impression of the document. On the other hand, the
court could characterize the affixing of the signature to another legal
document as a forgery since it involved an alteration of her signature, id. at
135-136:

So that if a person has two deeds presented to him, and he thinks he is

signing one but in actuality, because of fraud, deceit or trickery he signs the
other, a bona fide purchaser, without notice, is protected. On the other hand,
if a person is presented with a deed, and he signs that deed but the deed is
thereafter altered e.g. through a change in the description or affixing the
signature page to another deed, that is forgery and a subsequent purchaser
takes no title.

Given the possible difficulties in distinguishing fraud from forgery in

some cases, does the distinction make sense?

§5.5 Marketable Title Acts and Other Ways to Clear Title

Several other statutory regimes operate in conjunction with the
recording acts to determine the state of title for any given property.
Statutes of limitation and adverse possession are a common way in which
disputes over title are resolved, at least where physical possession is an
issue. See Chapter 5, §1.1. This makes understanding the precise state of
title from the public record more complicated.
A seemingly more bright-line approach can be found in marketable
title acts, which exist in 18 states. 11 Thompson on Real Property,
Thomas Editions §92.06. These acts try to solve the problem of defining
how far back one must search in the grantor-grantee index by limiting
searches to a reasonable period, often 30 to 40 years. When a person has a
record title for the designated period of time, all prior claims or interests
are extinguished. To preserve prior claims, owners must re-record their
interest or file a notice of claim every 30 years or so after the recording of
their initial deed. Some property interests are exempt from this
requirement, including easements that are observable by physical

1316
inspection and mineral rights, federal and state interests, and, in some
states, remainders, reversions, rights of entry, possibilities of reverter, and
restrictive covenants. These various exceptions have the effect of reducing
the utility of the marketable title acts as a method of reducing the cost of
searching title, but serve other interests.38

§5.6 Title Companies and the Recording System

Originally, lawyers conducted the title searches required to determine
the state of a property’s title, either for a conveyance or for establishing a
lender’s lien priority. In some areas, this is still the case. In many places,
however, title insurance companies have emerged to fulfill this function.
Most lenders require the purchaser to buy title insurance as a condition for
getting a mortgage loan. Even when insurance is not required, many
purchasers will obtain it to protect their interests. It has therefore become
standard practice for title companies to perform title searches.
Title companies can be liable for negligently performing title searches,
independent of any claims under a title insurance policy, although many
courts still refuse to identify such a duty. Compare, e.g., 100 Investment
LP v. Columbia Town Center Title Co., 60 A.3d 1 (Md. 2013) (title
companies owed a duty of care to their customer in preparing a title
commitment) with Walker Rogge, Inc. v. Chelsea Title & Guaranty Co.,
562 A.2d 208 (N.J. 1989) (limiting a title company’s liability to the
insurance policy and barring tort liability for negligence in searching
records).
A title company will typically issue a title commitment, also known as
a title binder, which indicates that the company will insure a given
beneficiary under specified conditions, such as certain affidavits being
provided or liens being removed. The title commitment also typically
contains detailed information about the state of title, including
encumbrances and defects. Title companies generally issue the actual title
policy after closing. Title insurance policies provided to owners explain
that the company promises, in return for a premium, to insure the
purchaser against losses occasioned by defects in title to the property,
defining the kinds of defects they cover and specifying exceptions to
coverage. Similarly, lender policies insure a specified lien priority. The
insurance company may also promise to pay the costs of defending the title
through litigation.
Disputes may arise between a title insurance companies and the holder
of the insurance over the interpretation of the insurance contract. These
disputes involve issues such as the kinds of defects in title that are covered

1317
by the contract and the nature of exclusions and exceptions. See, e.g., Cox
v. Commonwealth Land Title Insurance Co., 59 A.3d 1280 (Me. 2013);
Hart v. Ticor Title Insurance Co., 272 P.3d 1215 (Haw. 2012). They can
also involve an insurer’s obligation to defend the insured against lawsuits
based on matters covered by title insurance. See, e.g., Deutsche Bank
National Association v. First American Title Insurance Co., 465 Mass. 741
(2013) (title insurer not obligated to defend lender against claim seeking to
have a note and mortgage rescinded because of predatory lending).

§5.7 Title Registration

Some jurisdictions have partially adopted a title registration system,
or “Torrens system,” named after Sir Robert Torrens, an Irish immigrant in
Australia who established the first registration system there in 1858. It has
never caught on broadly in the United States, and is available only in ten
states. 14-83 Powell on Real Property §83.01[3]. An owner who wishes to
register his land must file a petition for a judicial or quasi-judicial
proceeding that is similar to an action to quiet title. Notice must be given
to all persons having any interest in the land. The result of the adjudication
is a certificate of registration or title. The official certificate of title states
the identity of the property owner and includes descriptions of all
encumbrances (easements, covenants, liens, mortgages, leases, and the
like) affecting the title. The certificate is conclusive as to the title and is
filed in the registrar’s office. If an owner transfers his land, the deed must
be brought to the registry and a new certificate issued. A title examiner for
a purchaser need only examine the current certificate of title and the
documents referred to in the list of encumbrances on the certificate.
Although this system simplifies title problems immensely, it is
expensive to institute. Either the state would have to pay for a judicial
proceeding to produce a certificate of title for every parcel in the state or
the individual owner would have to bear the cost, which may amount to
hundreds of dollars. Because the states that have adopted it have allowed
owners to register their land on a voluntary basis, most land is still
unregistered and governed by the old grantor-grantee record system.
In addition, some factors militate against the absolute conclusiveness
that is supposed to attach to the title. What happens, for example, if it turns
out that an earlier deed was forged? If the current certificate of title is
absolutely conclusive — if it cannot be challenged — then an innocent
person may lose the property because of the forgery. Note, however, that
forgeries are rare because the “registry will not issue a new certificate in
the ordinary course of business unless the old owner’s duplicate is

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presented for cancellation. In addition, the registries in some states
maintain files of signature cards against which purported conveyances are
checked.” William B. Stoebuck & Dale A. Whitman, The Law of Property
§11.15, at 928 n.20 (3d ed. 2000).

1. Some form real estate contracts include an “attorney approval clause,” giving
the parties a specified time, such as three days, to consult with an attorney after
signing the document and allowing the parties to withdraw if they wish. Alice N.
Noble-Allgire, Attorney Approval Clauses in Residential Real Estate Contracts —
Is Half a Loaf Better Than None?, 48 Kan. L. Rev. 339 (2000).
2. To cite a somewhat esoteric example, an executive order issued shortly after
September 11, 2001 prohibits anyone in the United States from participating in
transfers of property owned by foreign persons who “have committed, or who pose
a significant risk of committing, acts of terrorism that threaten the security of U.S.
nationals or the national security, foreign policy, or economy of the U.S.” Exec.
Order No. 13,224, 66 Fed. Reg. 49,079 (Sept. 23, 2001). Real estate lawyers must
accordingly check a government watch list to ensure they do not help listed
persons engage in real estate transactions. Many real estate lawyers now include
clauses in purchase and sale agreements requiring buyers and sellers to warrant that
they are not on the watch list, they are not entities prohibited from doing business
under antiterrorism laws, and that they will not do business with anyone who is so
prohibited. See Nora Lockwood Tooher, Real Estate Lawyers Adding “Anti-
Terrorism” Clauses to Contracts and Leases, Lawyers USA, Aug. 28, 2006, at 5.
3. In some transactions, particularly in commercial real estate, the parties may
mark the general terms of an agreement through a term sheet or similar informal
document. When one party decides not to complete the transaction, controversies
sometimes arise as to whether these documents constitute a binding contract that
meets the Statute of Frauds. See, e.g., Triple A Supplies, Inc. v. WPA Acquisition
Corp., 95 A.D.3d 1301 (N.Y. App. Div. 2012).
4. As with brokers, title companies involved in aspects of residential real estate
closings have been challenged on the ground that such activities constitute the
unauthorized practice of law. See Real Estate Bar Association for Massachusetts,
Inc. v. National Real Estate Information Services, 946 N.E.2d 665 (Mass. 2011)
(finding that ordering title abstracts, preparing closing statements, reviewing
documents for valid execution, delivering documents for recording, issuing title
insurance, and other services do not constitute the practice of law; drafting deeds
and interpreting the state of title do).
5. Comments a and b to §129, read (in part):

a. This section restates what is widely known as the “part performance

doctrine.” Part performance is not an accurate designation of such acts as
taking possession and making improvements when the contract does not
provide for such acts, but such acts regularly bring the doctrine into play.

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 The doctrine is contrary to the words of the Statute of Frauds, but it was
established by English courts of equity soon after the enactment of the
Statute. Payment of purchase-money, without more, was once thought
sufficient to justify specific enforcement, but a contrary view now prevails,
since in such cases restitution is an adequate remedy. Enforcement has been
justified on the ground that repudiation after “part performance” amounts to
a “virtual fraud.” A more accurate statement is that courts with equitable
powers are vested by tradition with what in substance is a dispensing power
based on the promisee’s reliance, a discretion to be exercised with caution in
the light of all the circumstances [emphasis supplied].
b. Two distinct elements enter into the application of the rule of this
Section: first, the extent to which the evidentiary function of the statutory
formalities is fulfilled by the conduct of the parties; second, the reliance of
the promisee, providing a compelling substantive basis for relief in addition
to the expectations created by the promise.

6. Comment d of Restatement (Second) of Contracts, §129, reads[:]

d. Where specific enforcement is rested on a transfer of possession plus

either part payment of the price or the making of improvements, it is
commonly said that the action taken by the purchaser must be unequivocally
referable to the oral agreement. But this requirement is not insisted on if the
making of the promise is admitted or is clearly proved. The promisee must
act in reasonable reliance on the promise, before the promisor has
repudiated it, and the action must be such that the remedy of restitution is
inadequate. If these requirements are met, neither taking of possession nor
payment of money nor the making of improvements is essential [emphasis
supplied].

7. William B. Stoebuck & Dale A. Whitman, The Law of Property §11.2, at 821-
822 (3d ed. 2000). The major north-south lines are called Principal Meridians, and
the major east-west lines are called Base Lines. Parallel to the Principal Meridians
at 6-mile intervals are north-south lines that divide the land into “Ranges.” Parallel
to the base lines are east-west lines that divide the land into “Townships.” This
system creates 6-mile squares also referred to as “Townships.” Each Township is
divided into 36 “sections.” Id. §11.2, at 774-775.
8. Another type of home lending is called a reverse mortgage loan, and is
generally available only to elderly borrowers. In a reverse mortgage, a homeowner
takes out a loan using the value of her house as collateral, but is not required to
repay the loan until she moves or passes away. This can be a way to generate funds
for older homeowners for medical expenses or even daily expenses, but can also be
risky because borrowers are still required to have enough resources to pay property
taxes and insurance on their homes. See Jessica Silver-Greenberg, A Risky Lifeline
for the Elderly Is Costing Some Their Homes, N.Y. Times, Oct. 14, 2012, at A-1.

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 9. Many areas of mortgage regulation implicate both federal and state law.
Where this creates a conflict, federal law can preempt state law, which can restrict
the ability of the states to enforce consumer protection laws. The Dodd-Frank Act,
however, made clear that state laws of general applicability bind national banks,
overruling prior preemption doctrine. See Mississippi Department of Revenue v.
Pikco Financial, Inc., 97 So. 3d 1203, 1209 n.7 (Miss. 2012) (noting that the
Dodd-Frank Wall Street Reform and Consumer Protection Act, 12 U.S.C. §25b,
effectively overruled the Supreme Court’s decision in Watters v. Wachovia Bank,
N.A., 550 U.S. 1 (2007), which had held that state registration and inspection
authority had been preempted for federally chartered mortgage lenders and state-
chartered subsidiaries).
10. For a long time, people argued about whether or not securities issued by the
GSEs had the implicit backing of the federal government, but in 2008, early in the
subprime crisis, the federal government placed Fannie Mae and Freddie Mac into
federal conservatorship, effectively resolving the question.
11. Instead of going to banks to apply for mortgages, prospective home buyers
also increasingly sought assistance from mortgage brokers to help find mortgages
and compare rates and terms among various mortgages offered by different
institutions. These brokers had incentives to induce buyers to obtain higher-cost
loans because the brokers got higher fees that way. Similarly, mortgage brokers
had incentives to induce homeowners to refinance their mortgages, even if there
were no economic benefits to the homeowners, because brokers received fees for
every refinancing.
12. Some commentators argue that the subprime crisis can be attributed to
incentives under the Community Reinvestment Act (CRA) to serve low-income
communities and individuals. Likewise, commentators point to the obligations that
the federal government has placed on Fannie Mae and Freddie Mac since 1992 to
serve low-income borrowers. These affordable housing mandates, the argument
goes, distorted the market and induced lenders into taking unreasonable risks in
their underwriting. See, e.g., Raghuram Rajan, Bankers Have Been Sold Short by
Market Distortions, Financial Times (June 2, 2010). There are several problems
with this argument. First, there is a question of timing. The CRA was passed in
1977 and existed for nearly three decades before the subprime crisis. Similarly,
Fannie Mae and Freddie Mac were very late to the subprime mortgage market,
entering only in the immediate run-up to the crisis to compete with so-called
private-label lenders. And the majority of subprime loans were made by lenders
who were either not subject to supervision under the CRA, or subject to relatively
little oversight. See Prepared Testimony of Michael S. Barr, Committee on
Financial Services, U.S. House of Representatives, The Community Reinvestment
Act: Thirty Years of Accomplishments, But Challenges Remain, Feb. 13, 2008, at 4
(“More than half of subprime loans were made by independent mortgage
companies not subject to comprehensive federal supervision; another 30 percent of
such originations were made by affiliates of banks or thrifts, which are not subject
to routine examination or supervision.”). Finally, careful empirical studies have
found that the CRA and the GSE affordable housing mandates had no effect on

1321
subprime lending volumes, loan pricing, or default rates. See, e.g., Rubén
Hernández-Murillo et al., Did Affordable Housing Legislation Contribute to the
Subprime Securities Boom?, Federal Reserve Working Paper 2012-005B (Aug.
2012).
13. “Subprime” loans are loans made to borrowers who generally would not
qualify for traditional loans offered at the generally prevailing rate of interest for
conventional mortgages.
14. The variable rate was based on the six month London Interbank Offered Rate
(LIBOR), a market interest rate, plus a fixed margin (referred to as a “rate add”) to
reflect the risk of the loan. For example, the variable rate might be expressed as
“LIBOR plus 5,” meaning the LIBOR interest rate increased by an additional five
percentage points as the rate add.
15. The “fully indexed” rate refers to the interest rate that represents the LIBOR
rate at the time of the loan’s inception plus the rate add specified in the loan
documents. The judge noted that calculation of the debt-to-income ratio based on
the fully indexed rate generally yields a ratio that exceeds fifty per cent.
16. 38.4 percent of all Fremont’s loans were stated income loans without income
documentation required. In addition, 12.2 per cent of Fremont’s loans offered the
borrower lower monthly payments based on a forty-year amortization schedule,
with a balloon payment required at the end of thirty years; the usual amortization
schedule was based on a thirty-year period.
17. The judge’s prognosis of doom followed from the fact that the interest
payments required when the introductory rate period ended and the fully indexed
rate came into play would be significantly greater than the payments called for
under the introductory rate (so-called “payment shock”). As a result, the
borrower’s debt-to-income ratio would necessarily increase, probably and
foreseeably beyond the borrower’s breaking point.
18. State agencies regulating mortgage lending by banks such as Fremont and
other lenders include the Massachusetts Division of Banks, and Federal agencies
include the Office of the Comptroller of the Currency (OCC), the Board of
Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation (FDIC), and the Office of Thrift Supervision.
19. “Unsafe and unsound” refers to practices that carry too high a risk of
financial harm to the lending institution, rather than to the consumer. Not all
conduct that is institutionally unsafe and unsound is harmful to borrowers.
However, when the lending institution’s practices are deemed unsafe and unsound
because they create too high a risk of default and foreclosure, the borrower, as the
counterparty to the loan, obviously faces the same risk. Accordingly, such lending
practices may indicate unfairness under Mass. Gen. Laws ch. 93A. Cf. Consumer
Affairs and Business Regulation Massachusetts Division of Banks, Subprime
Lending (Dec. 10, 1997) (warning of both safety and soundness, and consumer
protection, risks from subprime lending); OCC, Guidelines for National Banks to
Guard Against Predatory and Abusive Lending Practices, AL 2003-2 at 1 (Feb. 21,
2003) (“even where the particular attributes of a loan are not subject to a specific

1322
prohibition, loans reflecting abusive practices nevertheless can involve unfair and
deceptive conduct and present significant safety and soundness, reputation, and
other risks to national banks”).
20. One significant proposal that emerged early in the subprime crisis would
have allowed homeowners to restructure mortgages in bankruptcy. Currently,
home mortgage loans are not dischargeable in bankruptcy, unlike most other
consumer debt. See 11 U.S.C. §1322(b)(2) (debtors may “modify the rights of
holders of secured claims, other than a claim secured only by a security interest in
real property that is the debtor’s principal residence”). Reform of bankruptcy law
would have enabled borrowers to reduce or eliminate their mortgage debt in
bankruptcy in order to start over. However, this proposal has not become law.
21. Approximately ten jurisdictions retain this title theory of mortgages for
some or all financing arrangements: Alabama, Connecticut, District of Columbia,
Georgia, Maine, Massachusetts, New Hampshire, Pennsylvania, Rhode Island, and
Tennessee. Restatement (Third) of Property (Mortgages) §4.1, Note on Mortgage
Theories Followed by American Jurisdictions (1997). The number is approximate
because some states are less than clear about their approach. Most states subscribe
to the lien theory, under which the borrower retains title to the property and the
lender has merely a lien on the property. A few (like Maryland) adopt an
intermediate theory, whereby the mortgagor has title until default occurs, at
which point legal title passes to the mortgagee. With minor exceptions, no practical
difference remains between the title theory and the lien theory in terms of the legal
rights of the parties. Restatement (Third) of Property (Mortgages) §4.1 cmt. a.
22. About 30 states and the District of Columbia allow nonjudicial foreclosure,
and in about two-thirds of those jurisdictions, it is the primary method of
foreclosure. Grant S. Nelson & Dale A. Whitman, Real Estate Finance Law §7.12,
at 605 n.259 (6th ed. 2014).
23. This statutory redemption right, which is available in about half the states,
see 4-37 Powell on Real Property §37.46, should not be confused with the equity
of redemption, which is the mortgagor’s right to pay off the rest of the debt before
foreclosure and redeem the property.
24. Restatement (Third) of Property (Mortgages) §8.3 cmt. b, at 584, 593
(1997).
25. Id. at 584; see also BFP v. Resolution Trust Corp., 511 U.S. 531, 537-38
(1994) (“The market value of . . . a piece of property is the price which it might be
expected to bring if offered for sale in a fair market; not the price which might be
obtained on a sale at public auction or a sale forced by the necessities of the owner,
but such a price as would be fixed by negotiation and mutual agreement, after
ample time to find a purchaser, as between a vendor who is willing (but not
compelled) to sell and a purchaser who desires to buy but is not compelled to take
the particular . . . piece of property.”) (citing Black’s Law Dictionary 971 (6th ed.
1990)).
26. Armstrong v. Csurilla, 817 P.2d 1221, 1234-35 (1991).
27. Restatement §8.3 cmt. b, at 584.

1323
 28. [Id. §8.3, at 587.]
29. Our conclusion should not be read as implying that the gross inadequacy of
the sale price alone would not be a sufficient ground to set aside the sale. It is not
necessary to reach that question in this case because of the additional flaw in the
sale process.
30. A number of states that provide for a statutory right of redemption after
foreclosure extend that right to junior lienholders.
31. Courts can also order one loan priority subordinated to another in some
circumstances to avoid unjust enrichment. See §5.3, below.
32. Certain senior interests, such as judgment liens, can be discharged in
foreclosure, but generally not a validly recorded mortgage. Eastern Savings Bank,
FSB v. CACH, LLC, 55 A.3d 344 (Del. 2012).
33. It is often unclear whether the courts are interpreting the mortgage
foreclosure statute to apply to all land financing arrangements (thus holding that
the legislature intended to regulate installment land contracts by its passage of the
mortgage foreclosure statute) or whether the courts are changing common law
rules to cohere with the policy judgments underlying the legislation addressed to
mortgages.
34. In 2004, the Uniform Law Commissioners promulgated the Uniform Real
Property Electronic Recording Act (URPERA). URPERA validates electronically
signed documents, applying the principals of E-SIGN and the UETA, see §2.2,
above, to the requirements for recording. It also establishes an oversight board to
set statewide standards for electronic recording practices.
35. Arkansas, Delaware, and Pennsylvania have pure race rules for mortgages.
See Ark. Code §18-40-102; 25 Del. C. §2106; Pa. Stat. tit. 42 §8141. Ohio has a
pure race statute for mortgages and oil and gas leases. Ohio Rev. Code §5301.23.
There is some authority to suggest that North Carolina has modified the effect of
its pure race statute by judicial interpretation. 11 Thompson on Real Property,
Thomas Editions §92.08(a) n.283 (citing North Carolina cases that require
purchasers to have no notice to invoke the recording act).
36. Alaska Stat. §34.15.290 is now Alaska Stat. §40.17.080. — EDS.
37. This situation is analogous, but not identical, to the situation that obtained in
Sabo. It is analogous only because the court concluded in Sabo that the grantor,
Lowery, had undertaken sufficient acts under the federal statute to be considered
the owner of the property conveyed to the first purchaser.
38. Unlike the recording acts, a root of title under a marketable title act may be
based on a wild deed or even a forged deed. That is because marketable title acts
validate a root of title that is recorded within the relevant period where this is a
conflict with a recorded interest that is outside the period, regardless of a prior
defect in the chain. See Marshall v. Hollywood, Inc., 236 So. 2d 114 (Fla. 1970).

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CHAPTER 13

Fair Housing Law

§1 INTRODUCTION TO FAIR HOUSING

§1.1 Sources of Fair Housing Law
The federal Fair Housing Act, Title VIII of the Civil Rights Act of
1968, 42 U.S.C. §3601 et seq., was the last plank in a series of civil rights
statutes enacted in the 1960s, and secured passage at President Lyndon
Johnson’s urging a week after the assassination of Martin Luther King, Jr.
The act originally prohibited discrimination on the basis of race, color,
national origin, and religion. Congress added sex to the list of protected
categories in 1974 and added handicap (disability) and familial status
(which covers children under the age of 18 living with parents or legal
custodians as well as pregnant women) in 1988.1
The Fair Housing Act prohibits discrimination in the sale or rental of
housing and in a wide variety of other housing-related contexts. For
example, the act covers discrimination in residential finance as well as
activities by real estate brokers and appraisers. Id. §3605. The act also
applies to land use regulation, and constitutional protections relating to
takings, due process, equal protection, the free exercise of religion, and
free speech are also important constraints in this context. See Chapter 7,
§6; Chapter 14; Chapter 15. Several other federal statutes also prohibit
discrimination in important aspects of the real estate market, including the
Civil Rights Act of 1866, 42 U.S.C. §§1981-1982; Title VI of the Civil
Rights Act of 1964, 42 U.S.C. §2000d et seq.; §504 of the Rehabilitation
Act of 1973, 29 U.S.C. §794; and the Equal Credit Opportunity Act, 15
U.S.C. §§1691-1691f, all of which we will touch on in this chapter.
Almost every state and many local governments have some kind of fair
housing law. Such laws often regulate more types of discrimination than
are covered by federal fair housing law. For example, many state laws
prohibit discrimination on the basis of marital status, age, or source of
income, while an increasing number of state and local laws prohibit
discrimination because of sexual orientation. In addition, state and local

1325
laws may apply to housing that is exempt from the federal Fair Housing
Act, such as owner-occupied three-unit buildings or claims that are barred
by the federal statute of limitations but timely under state or local law.
Finally, as we shall see, courts also respond to discrimination in housing
through the traditional tools of equity.

§1.2 The Fair Housing Act

Fair Housing Act

42 U.S.C. §§3601-3605, 3607, 3613, 3617, 3631

§3601. Declaration of policy

It is the policy of the United States to provide, within constitutional
limitations, for fair housing throughout the United States.

§3602. Definitions
(b) “Dwelling” means any building, structure, or portion thereof which
is occupied as, or designed or intended for occupancy as, a residence by
one or more families, and any vacant land which is offered for sale or lease
for the construction or location thereon of any such building, structure, or
portion thereof.
(c) “Family” includes a single individual.
(e) “To rent” includes to lease, to sublease, to let and otherwise to
grant for a consideration the right to occupy premises not owned by the
occupant.
(h) “Handicap” means, with respect to a person —
(1) a physical or mental impairment which substantially limits one
or more of such person’s major life activities,
(2) a record of having such an impairment, or
(3) being regarded as having such an impairment, but such term
does not include current, illegal use of or addiction to a controlled
substance as defined in section 802 of Title 21.
(i) “Aggrieved person” includes any person who —
(1) claims to have been injured by a discriminatory housing
practice; or
(2) believes that such person will be injured by a discriminatory
housing practice that is about to occur.
(k) “Familial status” means one or more individuals (who have not
attained the age of 18 years) being domiciled with —
(1) a parent or another person having legal custody of such

1326
 individual or individuals; or
(2) the designee of such parent or other person having such
custody, with the written permission of such parent or other person.
The protections against discrimination on the basis of familial status
shall apply to any person who is pregnant or is in the process of securing
legal custody of any individual who has not attained the age of 18 years.

§3603. Effective dates of certain prohibitions

(b) Exemptions

Nothing in section 3604 of this title (other than subsection (c)) shall
apply to —
(1) any single-family house sold or rented by an owner: Provided, That
such private individual owner does not own more than three such single-
family houses at any one time: Provided further, That after December 31,
1969, the sale or rental of any such single-family house shall be excepted
from the application of this subchapter only if such house is sold or rented
(A) without the use in any manner of the sales or rental facilities or the
sales or rental services of any real estate broker, agent, or salesman, or of
such facilities or services of any person in the business of selling or renting
dwellings, or of any employee or agent of any such broker, agent,
salesman, or person and (B) without the publication, posting or mailing,
after notice, of any advertisement or written notice in violation of section
3604(c) of this title, or
(2) rooms or units in dwellings containing living quarters occupied or
intended to be occupied by no more than four families living
independently of each other, if the owner actually maintains and occupies
one of such living quarters as his residence.

§3604. Discrimination in sale or rental of housing and other

prohibited practices
As made applicable by section 3603 of this title and except as
exempted by sections 3603(b) and 3607 of this title, it shall be unlawful —
(a) To refuse to sell or rent after the making of a bona fide offer, or to
refuse to negotiate for the sale or rental of, or otherwise make unavailable
or deny, a dwelling to any person because of race, color, religion, sex,
familial status, or national origin.
(b) To discriminate against any person in the terms, conditions, or
privileges of sale or rental of a dwelling, or in the provision of services or
facilities in connection therewith, because of race, color, religion, sex,

1327
familial status, or national origin.
(c) To make, print, or publish, or cause to be made, printed, or
published any notice, statement, or advertisement, with respect to the sale
or rental of a dwelling that indicates any preference, limitation, or
discrimination based on race, color, religion, sex, handicap, familial status,
or national origin, or an intention to make any such preference, limitation,
or discrimination.
(d) To represent to any person because of race, color, religion, sex,
handicap, familial status, or national origin that any dwelling is not
available for inspection, sale, or rental when such dwelling is in fact so
available.
(e) For profit, to induce, or attempt to induce any person to sell or rent
any dwelling by representations regarding the entry or prospective entry
into the neighborhood of a person or persons of a particular race, color,
religion, sex, handicap, familial status, or national origin.
(f)(1) To discriminate in the sale or rental, or to otherwise make
unavailable or deny, a dwelling to any buyer or renter because of a
handicap of —
(A) that buyer or renter;
(B) a person residing in or intending to reside in that dwelling
after it is so sold, rented, or made available; or
(C) any person associated with that buyer or renter.
(2) To discriminate against any person in the terms, conditions, or
privileges of sale or rental of a dwelling, or in the provision of services
or facilities in connection with such dwelling, because of a handicap of
—
(A) that buyer or renter;
(B) a person residing in or intending to reside in that dwelling
after it is so sold, rented, or made available; or
(C) any person associated with that person.
(3) For purposes of this subsection, discrimination includes —
(A) a refusal to permit, at the expense of the handicapped
person, reasonable modifications of existing premises occupied or
to be occupied by such person if such modifications may be
necessary to afford such person full enjoyment of the premises
except that, in the case of a rental, the landlord may where it is
reasonable to do so condition permission for a modification on the
renter agreeing to restore the interior of the premises to the
condition that existed before the modification, reasonable wear and
tear excepted;
(B) a refusal to make reasonable accommodations in rules,

1328
 policies, practices, or services, when such accommodations may be
necessary to afford such person equal opportunity to use and enjoy
a dwelling; or
(C) in connection with the design and construction of covered
multifamily dwellings for first occupancy after the date that is 30
months after September 13, 1988, a failure to design and construct
those dwellings in such a manner that —
(i) the public use and common use portions of such
dwellings are readily accessible to and usable by handicapped
persons;
(ii) all the doors designed to allow passage into and within
all premises within such dwellings are sufficiently wide to
allow passage by handicapped persons in wheelchairs; and
(iii) all premises within such dwellings contain the
following features of adaptive design:
(I) an accessible route into and through the dwelling;
(II) light switches, electrical outlets, thermostats, and
other environmental controls in accessible locations;
(III) reinforcements in bathroom walls to allow later
installation of grab bars; and
(IV) usable kitchens and bathrooms such that an
individual in a wheelchair can maneuver about the space.
(7) As used in this subsection, the term “covered multifamily
dwellings” means —
(A) buildings consisting of 4 or more units if such buildings
have one or more elevators; and
(B) ground floor units in other buildings consisting of 4 or more
units.

§3605. Discrimination in residential real estate-related transactions

(a) In general. It shall be unlawful for any person or other entity whose
business includes engaging in residential real estate-related transactions to
discriminate against any person in making available such a transaction, or
in the terms or conditions of such a transaction, because of race, color,
religion, sex, handicap, familial status, or national origin.
(b) Definition. As used in this section, the term “residential real estate-
related transaction” means any of the following:
(1) The making or purchasing of loans or providing other financial
assistance —
(A) for purchasing, constructing, improving, repairing, or
maintaining a dwelling; or

1329
 (B) secured by residential real estate.
(2) The selling, brokering, or appraising of residential real
property.

§3607. Exemption

(a) Religious organizations and private clubs

Nothing in this title shall prohibit a religious organization, association,

or society, or any nonprofit institution or organization operated, supervised
or controlled by or in conjunction with a religious organization,
association, or society, from limiting the sale, rental or occupancy of
dwellings which it owns or operates for other than a commercial purpose
to persons of the same religion, or from giving preference to such persons,
unless membership in such religion is restricted on account of race, color,
or national origin. Nor shall anything in this subchapter prohibit a private
club not in fact open to the public, which as an incident to its primary
purpose or purposes provides lodgings which it owns or operates for other
than a commercial purpose, from limiting the rental or occupancy of such
lodgings to its members or from giving preference to its members.

(b) Numbers of occupants; housing for older persons; persons

convicted of making or distributing controlled substances

(1) Nothing in this subchapter limits the applicability of any reasonable

local, State, or Federal restrictions regarding the maximum number of
occupants permitted to occupy a dwelling. Nor does any provision in this
title regarding familial status apply with respect to housing for older
persons.
(2) As used in this section, “housing for older persons” means housing
—
(A) provided under any State or Federal program that the Secretary
determines is specifically designed and operated to assist elderly
persons (as defined in the State or Federal program); or
(B) intended for, and solely occupied by, persons 62 years of age or
older; or
(C) intended and operated for occupancy by persons 55 years of age or
older, and —
(i) at least 80 percent of the occupied units are occupied by at
least one person who is 55 years of age or older;
(ii) the housing facility or community publishes and adheres to

1330
 policies and procedures that demonstrate the intent required under
this subparagraph; and
(iii) the housing facility or community complies with rules
issued by the Secretary for verification of occupancy, which shall
—
(I) provide for verification by reliable surveys and
affidavits; and
(II) include examples of the types of policies and
procedures relevant to a determination of compliance with the
requirement of clause (ii). Such surveys and affidavits shall be
admissible in administrative and judicial proceedings for the
purposes of such verification.
(3) Housing shall not fail to meet the requirements for housing for
older persons by reason of:
(A) persons residing in such housing as of the date of enactment of
this Act who do not meet the age requirements of subsections (2)(B) or
(C): provided, That new occupants of such housing meet the age
requirements of subsections (2)(B) or (C); or
(B) unoccupied units: provided, That such units are reserved for
occupancy by persons who meet the age requirements of subsections
(2)(B) or (C).
(4) Nothing in this subchapter prohibits conduct against a person
because such person has been convicted by any court of competent
jurisdiction of the illegal manufacture or distribution of a controlled
substance as defined in section 802 of Title 21.
(5)(A) A person shall not be held personally liable for monetary
damages for a violation of this title if such person reasonably relied, in
good faith, on the application of the exemption under this subsection
relating to housing for older persons.
(B) For the purposes of this paragraph, a person may only show
good faith reliance on the application of the exemption by showing that
—
(i) such person has no actual knowledge that the facility or
community is not, or will not be, eligible for such exemption; and
(ii) the facility or community has stated formally, in writing,
that the facility or community complies with the requirements for
such exemption.

§3613. Enforcement by private persons

(a) Civil action

1331
 (1)(A) An aggrieved person may commence a civil action in an
appropriate United States district court or State court not later than 2 years
after the occurrence or the termination of an alleged discriminatory
housing practice to obtain appropriate relief with respect to such
discriminatory housing practice or breach.

(b) Appointment of attorney by court

Upon application by a person alleging a discriminatory housing

practice or a person against whom such a practice is alleged, the court may
—
(1) appoint an attorney for such person; or
(2) authorize the commencement or continuation of a civil action under
subsection (a) of this section without the payment of fees, costs, or
security, if in the opinion of the court such person is financially unable to
bear the costs of such action.

(c) Relief which may be granted

(1) In a civil action under subsection (a) of this section, if the court
finds that a discriminatory housing practice has occurred or is about to
occur, the court may award to the plaintiff actual and punitive damages,
and may grant as relief, as the court deems appropriate, any permanent or
temporary injunction, temporary restraining order, or other order
(including an order enjoining the defendant from engaging in such practice
or ordering such affirmative action as may be appropriate).
(2) In a civil action under subsection (a) of this section, the court, in its
discretion, may allow the prevailing party, other than the United States, a
reasonable attorney’s fee and costs.

§3617. Interference, coercion, or intimidation; enforcement by civil

action
It shall be unlawful to coerce, intimidate, threaten, or interfere with any
person in the exercise or enjoyment of, or on account of his having
exercised or enjoyed, or on account of his having aided or encouraged any
other person in the exercise or enjoyment of, any right granted or protected
by section 3603, 3604, 3605, or 3606 of this title.

§3631. Violations; penalties

Whoever, whether or not acting under color of law, by force or threat
of force willfully injures, intimidates or interferes with, or attempts to

1332
injure, intimidate or interfere with —
(a) any person because of his race, color, religion, sex, handicap (as
such term is defined in section 3602 of this title), familial status (as such
term is defined in section 3602 of this title), or national origin and because
he is or has been selling, purchasing, renting, financing, occupying, or
contracting or negotiating for the sale, purchase, rental, financing or
occupation of any dwelling, or applying for or participating in any service,
organization, or facility relating to the business of selling or renting
dwellings; or
(b) any person because he is or has been, or in order to intimidate such
person or any other person or any class of persons from —
(1) participating, without discrimination on account of race, color,
religion, sex, handicap (as such term is defined in section 3602 of this
title), familial status (as such term is defined in section 3602 of this
title), or national origin, in any of the activities, services, organizations
or facilities described in subsection (a) of this section; or
(2) affording another person or class of persons opportunity or
protection so to participate; or
(c) any citizen because he is or has been, or in order to discourage such
citizen or any other citizen from lawfully aiding or encouraging other
persons to participate, without discrimination on account of race, color,
religion, sex, handicap (as such term is defined in section 3602 of this
title), familial status (as such term is defined in section 3602 of this title),
or national origin, in any of the activities, services, organizations or
facilities described in subsection (a) of this section, or participating
lawfully in speech or peaceful assembly opposing any denial of the
opportunity to so participate — shall be fined under Title 18 or imprisoned
not more than one year, or both; and if bodily injury results from the acts
committed in violation of this section or if such acts include the use,
attempted use, or threatened use of a dangerous weapon, explosives, or fire
shall be fined under Title 18 or imprisoned not more than ten years, or
both; and if death results from the acts committed in violation of this
section or if such acts include kidnapping or an attempt to kidnap,
aggravated sexual abuse or an attempt to commit aggravated sexual abuse,
or an attempt to kill, shall be fined under Title 18 or imprisoned for any
term of years or for life, or both.

§1.3 Advertising and the Reach of the Fair Housing Act

Fair Housing Council of San Fernando Valley v.

Roommate.com, LLC

1333
 666 F.3d 1216 (9th Cir. 2012)
ALEX KOZINSKI, Chief Judge:
There’s no place like home. In the privacy of your own home, you can
take off your coat, kick off your shoes, let your guard down and be
completely yourself. While we usually share our homes only with friends
and family, sometimes we need to take in a stranger to help pay the rent.
When that happens, can the government limit whom we choose?
Specifically, do the anti-discrimination provisions of the Fair Housing Act
(“FHA”) extend to the selection of roommates?

Facts
Roommate.com, LLC (“Roommate”) operates an internet-based
business that helps roommates find each other. Roommate’s website
receives over 40,000 visits a day and roughly a million new postings for
roommates are created each year. When users sign up, they must create a
profile by answering a series of questions about their sex, sexual
orientation and whether children will be living with them. An open-ended
“Additional Comments” section lets users include information not
prompted by the questionnaire. Users are asked to list their preferences for
roommate characteristics, including sex, sexual orientation and familial
status. Based on the profiles and preferences, Roommate matches users
and provides them a list of housing-seekers or available rooms meeting
their criteria. Users can also search available listings based on roommate
characteristics, including sex, sexual orientation and familial status.
The Fair Housing Councils of San Fernando Valley and San Diego
(“FHCs”) sued Roommate in federal court, alleging that the website’s
questions requiring disclosure of sex, sexual orientation and familial
status, and its sorting, steering and matching of users based on those
characteristics, violate the Fair Housing Act, 42 U.S.C. §3601 et seq., and
the California Fair Employment and Housing Act (“FEHA”), Cal. Gov’t
Code §12955. [T]he district court held that Roommate’s prompting of
discriminatory preferences from users, matching users based on that
information and publishing these preferences violated the FHA and FEHA,
and enjoined Roommate from those activities. Roommate appeals the grant
of summary judgment and permanent injunction.
If the FHA extends to shared living situations, it’s quite clear that what
Roommate does amounts to a violation. The pivotal question is whether
the FHA applies to roommates.

1334
 The FHA prohibits discrimination on the basis of “race, color, religion,
sex, familial status, or national origin” in the “sale or rental of a dwelling.”
42 U.S.C. §3604(b) (emphasis added). The FHA also makes it illegal to

make, print, or publish, or cause to be made, printed, or published any notice,

statement, or advertisement, with respect to the sale or rental of a dwelling
that indicates any preference, limitation, or discrimination based on race,
color, religion, sex, handicap, familial status, or national origin, or an
intention to make any such preference, limitation, or discrimination.

Id. §3604(c) (emphasis added). The reach of the statute turns on the
meaning of “dwelling.”
The FHA defines “dwelling” as “any building, structure, or portion
thereof which is occupied as, or designed or intended for occupancy as, a
residence by one or more families.” Id. §3602(b). A dwelling is thus a
living unit designed or intended for occupancy by a family, meaning that it
ordinarily has the elements generally associated with a family residence:
sleeping spaces, bathroom and kitchen facilities, and common areas, such
as living rooms, dens and hallways.
It would be difficult, though not impossible, to divide a single-family
house or apartment into separate “dwellings” for purposes of the statute. Is
a “dwelling” a bedroom plus a right to access common areas? What if
roommates share a bedroom? Could a “dwelling” be a bottom bunk and
half an armoire? It makes practical sense to interpret “dwelling” as an
independent living unit and stop the FHA at the front door.
There’s no indication that Congress intended to interfere with personal
relationships inside the home. Congress wanted to address the problem of
landlords discriminating in the sale and rental of housing, which deprived
protected classes of housing opportunities. But a business transaction
between a tenant and landlord is quite different from an arrangement
between two people sharing the same living space. We seriously doubt
Congress meant the FHA to apply to the latter. Consider, for example, the
FHA’s prohibition against sex discrimination. Could Congress, in the
1960s, really have meant that women must accept men as roommates?
Telling women they may not lawfully exclude men from the list of
acceptable roommates would be controversial today; it would have been
scandalous in the 1960s.
While it’s possible to read dwelling to mean sub-parts of a home or an
apartment, doing so leads to awkward results. And applying the FHA to
the selection of roommates almost certainly leads to results that defy
mores prevalent when the statute was passed. Nonetheless, this

1335
interpretation is not wholly implausible and we would normally consider
adopting it, given that the FHA is a remedial statute that we construe
broadly. Therefore, we turn to constitutional concerns, which provide
strong countervailing considerations.

II
The Supreme Court has recognized that “the freedom to enter into and
carry on certain intimate or private relationships is a fundamental element
of liberty protected by the Bill of Rights.” Bd. of Dirs. of Rotary Int’l v.
Rotary Club of Duarte, 481 U.S. 537, 545 (1987). “[C]hoices to enter into
and maintain certain intimate human relationships must be secured against
undue intrusion by the State because of the role of such relationships in
safeguarding the individual freedom that is central to our constitutional
scheme.” Roberts v. U.S. Jaycees, 468 U.S. 609, 617-18 (1984). Courts
have extended the right of intimate association to marriage, child bearing,
child rearing and cohabitation with relatives. Id. While the right protects
only “highly personal relationships,” IDK, Inc. v. Clark Cnty., 836 F.2d
1185, 1193 (9th Cir. 1988) (quoting Roberts, 468 U.S. at 618), the right
isn’t restricted exclusively to family, Bd. of Dirs. of Rotary Int’l, 481 U.S.
at 545. The right to association also implies a right not to associate.
Roberts, 428 U.S. at 623.
To determine whether a particular relationship is protected by the right
to intimate association we look to “size, purpose, selectivity, and whether
others are excluded from critical aspects of the relationship.” Bd. of Dirs.
of Rotary Int’l, 481 U.S. at 546. The roommate relationship easily
qualifies: People generally have very few roommates; they are selective in
choosing roommates; and non-roommates are excluded from the critical
aspects of the relationship, such as using the living spaces. Aside from
immediate family or a romantic partner, it’s hard to imagine a relationship
more intimate than that between roommates, who share living rooms,
dining rooms, kitchens, bathrooms, even bedrooms.
Because of a roommate’s unfettered access to the home, choosing a
roommate implicates significant privacy and safety considerations. The
home is the center of our private lives. Roommates note our comings and
goings, observe whom we bring back at night, hear what songs we sing in
the shower, see us in various stages of undress and learn intimate details
most of us prefer to keep private. Roommates also have access to our
physical belongings and to our person. As the Supreme Court recognized,
“[w]e are at our most vulnerable when we are asleep because we cannot
monitor our own safety or the security of our belongings.” Minnesota v.

1336
Olson, 495 U.S. 91, 99 (1990). Taking on a roommate means giving him
full access to the space where we are most vulnerable.
Equally important, we are fully exposed to a roommate’s belongings,
activities, habits, proclivities and way of life. This could include matter we
find offensive (pornography, religious materials, political propaganda);
dangerous (tobacco, drugs, firearms); annoying (jazz, perfume, frequent
overnight visitors, furry pets); habits that are incompatible with our
lifestyle (early risers, messy cooks, bathroom hogs, clothing borrowers).
When you invite others to share your living quarters, you risk becoming a
suspect in whatever illegal activities they engage in.
Government regulation of an individual’s ability to pick a roommate
thus intrudes into the home, which “is entitled to special protection as the
center of the private lives of our people.” Minnesota v. Carter, 525 U.S.
83, 99 (1998) (Kennedy, J., concurring). “Liberty protects the person from
unwarranted government intrusions into a dwelling or other private places.
In our tradition the State is not omnipresent in the home.” Lawrence v.
Texas, 539 U.S. 558, 562 (2003). Holding that the FHA applies inside a
home or apartment would allow the government to restrict our ability to
choose roommates compatible with our lifestyles. This would be a serious
invasion of privacy, autonomy and security.
For example, women will often look for female roommates because of
modesty or security concerns. As roommates often share bathrooms and
common areas, a girl may not want to walk around in her towel in front of
a boy. She might also worry about unwanted sexual advances or becoming
romantically involved with someone she must count on to pay the rent.
An orthodox Jew may want a roommate with similar beliefs and
dietary restrictions, so he won’t have to worry about finding honey-baked
ham in the refrigerator next to the potato latkes. Non-Jewish roommates
may not understand or faithfully follow all of the culinary rules, like the
use of different silverware for dairy and meat products, or the prohibition
against warming non-kosher food in a kosher microwave. Taking away the
ability to choose roommates with similar dietary restrictions and religious
convictions will substantially burden the observant Jew’s ability to live his
life and practice his religion faithfully. The same is true of individuals of
other faiths that call for dietary restrictions or rituals inside the home.
The U.S. Department of Housing and Urban Development has
dismissed a complaint against a young woman for advertising, “I am
looking for a female christian roommate,” on her church bulletin board. In
its Determination of No Reasonable Cause, HUD explained that “in light
of the facts provided and after assessing the unique context of the
advertisement and the roommate relationship involved . . . the Department

1337
defers to Constitutional considerations in reaching its conclusions.” Fair
Hous. Ctr. of W. Mich. v. Tricia, No. 05-10-1738-8 (Oct. 28, 2010)
(Determination of No Reasonable Cause).
It’s a “well-established principle that statutes will be interpreted to
avoid constitutional difficulties.” Frisby v. Schultz, 487 U.S. 474, 483
(1988). “[W]here an otherwise acceptable construction of a statute would
raise serious constitutional problems, the Court will construe the statute to
avoid such problems unless such construction is plainly contrary to the
intent of Congress.” Pub. Citizen v. U.S. Dep’t of Justice, 491 U.S. 440,
466 (1989) (internal quotation marks omitted). Because the FHA can
reasonably be read either to include or exclude shared living arrangements,
we can and must choose the construction that avoids raising constitutional
concerns. Reading “dwelling” to mean an independent housing unit is a
fair interpretation of the text and consistent with congressional intent.
Because the construction of “dwelling” to include shared living units raises
substantial constitutional concerns, we adopt the narrower construction
that excludes roommate selection from the reach of the FHA.

III
Because we find that the FHA doesn’t apply to the sharing of living
units, it follows that it’s not unlawful to discriminate in selecting a
roommate. As the underlying conduct is not unlawful, Roommate’s
facilitation of discriminatory roommate searches does not violate the FHA.

Notes and Questions

1. What did Congress mean by “dwelling”? The U.S. Department of
Housing and Urban Development (HUD), the agency Congress tasked
with interpreting the Fair Housing Act, has long taken the position that it
does not violate the advertising provision of the act, 42 U.S.C. §3604(c), to
express a preference with regard to sex if one is not advertising for a
“separate unit.” HUD apparently continues to believe that expressed
preferences will violate §3604(c) if based on other categories such as race,
religion, national origin, disability, or familial status. Memorandum from
Roberta Achtenberg, Assistant Secy. for Fair Hous. & Equal Opportunity,
U.S. Dept. of Hous. & Urban Dev., to Fair Hous. & Equal Opportunity
Dirs. & Staff (Jan. 9, 1995), available at
https://portal.hud.gov/hudportal/documents/huddoc?id=DOC_11870.pdf.
The Ninth Circuit in Roommate.com went further, holding that the
statute does not apply at all to roommate situations because of the statute’s
definition of the term “dwelling.” Do you find Chief Judge Kozinski’s

1338
reasoning persuasive? The court does not address the portion of the
statutory definition of dwelling that applies the act to “any . . . portion” of
a building. Does the opinion make that language irrelevant?
In the portion of the Roommate.com decision addressing constitutional
avoidance, the two examples that Chief Judge Kozinski gave involve
gender and religion. Would the same concerns hold if someone refused to
accept a paying roommate — as a tenant, subtenant, or co-tenant —
because of that person’s race? Does the text of the Fair Housing Act
provide any reason to distinguish race from other protected categories?
Other types of living arrangements have also raised questions about the
scope of the term “dwelling” in the Fair Housing Act. In Lakeside Resort
Enterprises, LP v. Board of Supervisors of Palmyra Township, 455 F.3d
154 (3d Cir. 2006), the court considered whether a drug- and alcohol-
treatment facility constituted a “dwelling” subject to the act. Citing the
reference to a dwelling as including a place “intended for occupancy as . . .
a residence,” §3602(b), the court concluded that the issue turns on
“whether the facility is intended or designed for occupants who intend to
remain” there for “any significant period of time,” and would view the
residence “as a place to return to.” 455 F.3d at 158. Although the residents
would on average stay only for slightly more than two weeks, because the
facility was intended for longer stays, and the residents treated it like a
home, the court found that the act applied. Id. at 160. Similar controversies
have arisen over homeless shelters. Compare Intermountain Fair Housing
Council v. Boise Rescue Mission Ministries, 717 F. Supp. 2d 1101 (D.
Idaho 2010) (homeless shelter not a “dwelling” under §3602(b)), with
Boykin v. Gray, 895 F. Supp. 2d 199 (D.D.C. 2012) (homeless shelter is
covered by the act).
What indications are there in the text of the statute about how broadly
or narrowly Congress intended the term “dwelling” to be interpreted? If a
constitutionally based right of intimate association is one reason to read
“dwelling” narrowly, as the court in Roommate.com found, what
associational interests might suggest a broader reading of the Fair
Housing Act?
2. Intimate association and free speech. The FHA includes a number
of exemptions, including for “rooms or units in dwellings containing living
quarters occupied or intended to be occupied by no more than four families
living independently of each other, if the owner actually maintains and
occupies one of such living quarters as his residence.” §3603(b)(2). This
exemption, however, does not apply to §3604(c)’s restrictions on
discriminatory advertisements and other statements. As a result, §3604(c)

1339
has a broader application than the remaining substantive prohibitions in
§3604.
In Chicago Lawyers’ Committee for Civil Rights Under the Law, Inc.
v. Craigslist, Inc., 519 F.3d 666 (7th Cir. 2008), Judge Easterbrook noted
that many people who advertise housing for sale or rent qualify for the
exemptions in §3603(b). To Judge Easterbrook, the fact that §3604(c)
continues to apply independently to create liability in these circumstances
raises free speech concerns. Id. at 668 (“[A]ny rule that forbids truthful
advertising of a transaction that would be substantively lawful encounters
serious problems under the first amendment”). Compare, e.g., United
States v. Space Hunters, Inc., 429 F.3d 416, 425 (2d Cir. 2005) (finding
housing information provider’s statements that violated §3604(c) to be
commercial speech not protected by the first amendment).
Why do you think the Fair Housing Act covers a broader scope of
communications in §3604(c) than its direct provisions on sale or rental of
housing? Do you agree with Judge Easterbrook that the act’s regulation of
discriminatory speech as an independent basis for liability presents a
conflict with the first amendment? See generally Robert G. Schwemm,
Discriminatory Housing Statements and Section 3604(c): A New Look at
the Fair Housing Act’s Most Intriguing Provision, 29 Fordham Urb. L.J.
187 (2001).
3. The FHA and on-line advertising. In many parts of the country,
housing transactions are increasingly advertised on the Internet. These on-
line advertisements, just as with statements posted on physical bulletin
boards, are generally covered by §3604(c), even if the underlying
transaction falls within the FHA’s exemption in §3603(b). A review of
roughly 10,000 Craigslist postings in 10 cities found that “a significant
number of on-line housing ads — roughly several hundred on any given
day — violate [§3604(c)].” Rigel C. Oliveri, Discriminatory Housing
Advertisements On-Line: Lessons from Craigslist, 43 Ind. L. Rev. 1125,
1127-1128 (2010). This study found that the vast majority of the postings
were for roommates, and expressed preferences on the basis of familial
status. Does Roommate.com change this conclusion?
If a newspaper prints a discriminatory advertisement from a third
party, the paper is potentially liable under §3604(c). For on-line
advertising, however, the Communications Decency Act of 1996 (CDA),
47 U.S.C. §230(c)(1), states that “[n]o provider or user of an interactive
computer service shall be treated as the publisher or speaker of any
information provided by another information content provider.” Thus,
Craigslist was not liable under §3604(c) for discriminatory roommate

1340
advertisements posted on its web site. Chicago Lawyers’ Committee,
supra. The CDA’s exemption does not to apply where an on-line service
provider is itself “responsible, in whole or in part for the creation or
development” of the discriminatory information, 47 U.S.C. §230(f)(3). In
an earlier round of the Roommate.com case, the company was found not to
come within this exception when it created questionnaires that asked users
to identify themselves by sex, sexual orientation, and marital status and to
express their preferences in those categories. Fair Housing Council of San
Fernando Valley v. Roommates.com, L.L.C., 521 F.3d 1157 (9th Cir.
2008). Moreover, the company used that information to create profiles that
provided the users’ relevant information and preferences, and it channeled
searches and sent e-mails based on the discriminatory preferences its forms
had elicited. Id.
4. Subtle signaling. Advertisements that limit housing to whites
clearly violate §3604(c). Can a housing provider indirectly demonstrate an
interest in customers of a certain race or other protected class?
In Ragin v. New York Times Co., 923 F.2d 995 (2d Cir. 1991), the
court held that a newspaper’s practice of publishing real estate
advertisements almost always showing white models in a city with a
significant population of African Americans and other minorities might
violate the Fair Housing Act by showing a discriminatory preference. The
district court held that the ultimate issue for the fact finder was whether
“[t]o an ordinary reader the natural interpretation of the advertisements
published [in the newspaper] is that they indicate a racial preference in the
acceptance of tenants.” In affirming the lower court’s opinion, the Second
Circuit explained, in an opinion by Judge Ralph Winter:

Section 3604 (c) states in pertinent part that it is unlawful: “To . . . publish
. . . any . . . advertisement, with respect to the sale or rental of a dwelling that
indicates any preference . . . based on race.” Beginning our analysis with the
statutory language, the first critical word is the verb “indicates.” Giving that
word its common meaning, we read the statute to be violated if an ad for
housing suggests to an ordinary reader that a particular race is preferred or
dispreferred for the housing in question. Moreover, the statute prohibits all
ads that indicate a racial preference to an ordinary reader whatever the
advertiser’s intent.
The next question is whether and in what circumstances the use of models
may convey an illegal racial message. Advertising is a make-up-your-own
world in which one builds an image from scratch, selecting those portrayals
that will attract targeted consumers and discarding those that will put them
off. Locale, setting, actions portrayed, weather, height, weight, gender, hair
color, dress, race and numerous other factors are varied as needed to convey

1341
 the message intended. A soft-drink manufacturer seeking to envelop its
product in an aura of good will and harmony may portray a group of persons
of widely varying nationalities and races singing a cheerful tune on a
mountaintop. A chain of fast-food retailers may use models of the principal
races found in urban areas where its stores are located. Similarly, a housing
complex may decide that the use of models of one race alone will maximize
the number of potential consumers who respond, even though it may also
discourage consumers of other races.
In advertising, a conscious racial decision regarding models thus seems
almost inevitable. All the statute requires is that in this make-up-your-own
world the creator of an ad not make choices among models that create a
suggestion of a racial preference. The deliberate inclusion of a black model
where necessary to avoid such a message seems to us a far cry from the
alleged practices that are at the core of the debate over quotas. If race-
conscious decisions are inevitable in the make-up-your-own world of
advertising, a statutory interpretation that may lead to some race-conscious
decisionmaking to avoid indicating a racial preference is hardly a danger to
be averted at all costs.

Id. at 999-1001.
Professor Lior Strahilevitz has argued that as direct statements of
discrimination have become less common, housing providers have turned
to other methods to signal racial preferences. Strahilevitz argues that
providers, thwarted by civil rights laws, have developed the strategy of
providing unnecessary amenities not because they are what people actually
want, but rather because they send messages to prospective residents. He
cites the example of golf courses as a particularly racially polarizing
amenity that signals exclusion. See Lior Jacob Strahilevitz, Exclusionary
Amenities in Residential Communities, 92 Va. L. Rev. 437 (2006). How
should fair housing advocates respond to this kind of subtle signaling?
How, if at all, should the law address it?
5. Other prohibited communications. The Fair Housing Act
regulates other communications related to housing. For example, the act
makes it unlawful to misrepresent the availability of housing. 42 U.S.C.
§3604(d). It likewise prohibits inducing or attempting to induce people to
sell or rent “by representations regarding the entry or prospective entry
into the neighborhood” of people of a particular protected category. Id.
§3604(e). This latter provision was passed to remedy the practice of
“blockbusting,” where brokers would try to convince white residents to
sell by invoking fears about neighborhood integration.

Problems

1342
 1. You are the lawyer for a newspaper that runs housing
advertisements, some of which include pictures. Your client is worried
about cases holding publishers liable for publishing advertisements with
only white models. Does every advertisement have to include models of
different races? Formulate a general policy for the newspaper on how to
handle this issue to avoid violating the Fair Housing Act.
2. Two men post an advertisement seeking a third roommate who will
sign the lease (upon the landlord’s approval). While interviewing potential
roommates, they tell a recent immigrant from Mexico who applies that
they do not want to live with him because of where he comes from. Are
they entitled to the exemption in §3603(b)(2)?
3. An owner places an advertisement in the newspaper stating:
“Shopping center in white community looking for tenants.” Has the owner
violated the Fair Housing Act?
4. Does §3604(c) apply to a Facebook posting for a roommate? A real
estate broker’s Twitter feed? What else might you need to know to answer
this question?
5. In Roommate.com, Judge Kozinski discusses reasons for allowing
roommates to discriminate on the basis of sex or religion. Does banning
advertising of those preferences constitute as grave an intrusion on the
roommates’ freedom of association as banning advertising on the basis of
race, national origin, disability, or familial status?

§2 INTENTIONAL DISCRIMINATION OR
DISPARATE TREATMENT
§2.1 Discrimination on the Basis of Race

Asbury v. Brougham

866 F.2d 1276 (10th Cir. 1989)

Map: 7329 Troup Avenue, Kansas

City, Kansas

1343
JAMES A. PARKER, District Judge.
Plaintiff Rosalyn Asbury brought suit under 42 U.S.C. §19822 and the
Fair Housing Act, 42 U.S.C. §3601 et seq. (FHA), claiming that the
defendants refused to rent or to allow her to inspect or negotiate for the
rental of an apartment or townhouse at Brougham Estates in Kansas City.
Defendants Leo Brougham, individually and doing business as Brougham
Estates and Brougham Management Company, and Wanda Chauvin, his
employee, appeal a jury verdict awarding Asbury compensatory damages
of $7,500 against them upon a finding that the defendants discriminated
against her on the basis of race and/or sex. Leo Brougham appeals from
the jury verdict awarding punitive damages in the amount of $50,000
solely against him.

I. Sufficiency of Evidence Supporting a Finding of Racial Discrimination

in Violation of §1982 and FHA
42 U.S.C. §1982 and the FHA both prohibit discrimination on the basis
of race. In order to prevail on a claim made under these statutes, plaintiff
must prove a discriminatory intent. A violation occurs when race is a
factor in a decision to deny a minority applicant the opportunity to rent or
negotiate for a rental, but race need not be the only factor in the decision.
In addition, §3604(d) of the FHA specifically prohibits dissemination of
false information about the availability of housing because of a person’s
race. Accordingly, failure to provide a minority applicant with the same
information about availability of a rental unit or the terms and conditions
for rental as is provided to white “testers,” results in false information
being provided and is cognizable as an injury under the FHA.

A. Asbury’s Prima Facie Case Under §1982 and FHA

The three-part burden of proof analysis established in McDonnell
Douglas Corp. v. Green, 411 U.S. 792 (1973), a Title VII employment
discrimination case, has been widely applied to FHA and §1982 claims.
Under the McDonnell Douglas analysis, plaintiff first must come forward
with proof of a prima facie case of discrimination. Second, if plaintiff
proves a prima facie case, the burden shifts to defendants to produce
evidence that the refusal to rent or negotiate for a rental was motivated by
legitimate, non-racial considerations. Third, once defendants by evidence
articulate non-discriminatory reasons, the burden shifts back to plaintiff to
show that the proffered reasons were pretextual.
The proof necessary to establish a prima facie case under the FHA also
establishes a prima facie case of racial discrimination under §1982. In

1344
order to establish her prima facie case, plaintiff had to prove that:

(1) she is a member of a racial minority;

(2) she applied for and was qualified to rent an apartment or townhouse
in Brougham Estates;
(3) she was denied the opportunity to rent or to inspect or negotiate for
the rental of a townhouse or apartment; and
(4) the housing opportunity remained available.

A review of the evidence in this case shows that plaintiff established

her prima facie case. Defendants stipulated that Asbury is black. Plaintiff
testified that on February 23, 1984, she went to Brougham Estates with her
daughter to obtain rental housing. At the rental office at Brougham Estates,
Asbury encountered Wanda Chauvin, the manager, and explained to
Chauvin that she was being transferred to Kansas City and needed to rent
housing. Asbury told Chauvin that she needed to secure housing by the
middle of March or the beginning of April. In response, Chauvin said there
were no vacancies, but told Asbury she could call back at a later time to
check on availability. Chauvin provided no information concerning
availability of rental units that would assist Asbury in her efforts to rent an
apartment or townhouse at Brougham Estates. Asbury asked for the
opportunity to fill out an application, but Chauvin did not give her an
application, again stating that there were no vacancies and that she kept no
waiting list. Asbury also requested floor plans or the opportunity to view a
model unit, and Chauvin refused. Instead, Chauvin suggested Asbury
inquire at the Westminister Apartments, an apartment complex housing
mostly black families. Although Chauvin did not ask Asbury about her
qualifications, plaintiff was employed with the Federal Aviation Authority
at a salary of $37,599. Based on her salary, defendants concede that
Asbury would likely be qualified to rent an apartment or townhouse at
Brougham Estates.
Although there was a conflict in the evidence as to the availability of
housing at the time Asbury attempted to inspect and negotiate for rental,
there was abundant evidence from which the jury could find that housing
was available. Defendants testified that families with a child are housed
exclusively in the townhouses at Brougham Estates, and that there were no
townhouses available on the date Asbury inquired. Asbury introduced
evidence suggesting that both apartments and townhouses were available
and, in addition, that exceptions previously had been created to allow
children to reside in the apartments.

1345
 On February 24, 1984, the day after Asbury inquired about renting,
Asbury’s sister-in-law, Linda Robinson, who is white, called to inquire
about the availability of two-bedroom apartments. The woman who
answered the telephone identified herself as “Wanda” and invited
Robinson to come to Brougham Estates to view the apartments. The
following day, February 25, 1984, Robinson went to the rental office at
Brougham Estates and met with Wanda Chauvin. Chauvin provided
Robinson with floor plans of available one- and two-bedroom apartments
at Brougham Estates. Robinson specifically asked Chauvin about rental to
families with children, and Chauvin did not tell Robinson that children
were restricted to the townhouse units. Robinson accompanied Chauvin to
inspect a model unit and several available two-bedroom apartments. Upon
inquiry by Robinson, Chauvin indicated that the apartments were available
immediately and offered to hold an apartment for her until the next week.
Asbury also provided evidence indicating that townhouses were
available for rent. On February 1, 1984, Daniel McMenay, a white male,
notified Brougham Estates that he intended to vacate his townhouse. On
April 4, 1984, Brougham Estates rented the townhouse vacated by
McMenay to John Shuminski, a white male. On March 10, 1984, Randall
Hockett, a white male, also rented a townhouse at Brougham Estates. In
addition, Asbury provided computer data sheets generated by Brougham
Estates which indicated that a third townhouse was unoccupied at the time
of her inquiry on February 23, 1984 and remained vacant as of April 10,
1984. There was also evidence that a building which included townhouse
units had been closed for the winter but would be available for rent
beginning in the spring. On February 22, 1984, one day prior to Asbury’s
inquiry into vacancies, James Vance, a white male, paid a deposit for a
townhouse which he occupied when the building opened on April 10,
1984. Since Asbury testified that she told Chauvin she did not need to
occupy a rental unit until the beginning of April, the jury could have
concluded that at least one of the townhouses which was subsequently
rented to the white males was available at the time Asbury inquired.
Although defendants took the position at trial that the townhouses were
closed or out of order for repair and therefore not available to rent, the jury
was free to accept the evidence of availability presented by the plaintiff.
Since Asbury met her burden of proving a prima facie case of racial
discrimination, the burden shifted to defendants to prove a legitimate, non-
discriminatory reason for denial of housing.

B. Failure of Proof of Legitimate, Non-Discriminatory Reason for

Rejection

1346
 Defendants claimed their legitimate, non-discriminatory reasons for
rejecting Asbury arose out of the policies at Brougham Estates that
families with one child could rent townhouses but not apartments, and that
families with more than one child were not permitted to move into
Brougham Estates. Defendants further argued that they made no
exceptions to these rules. Defendants contended that in accordance with
these rental policies, no appropriate housing was available for Asbury
when she inquired. However, plaintiff introduced evidence indicating that
exceptions to these rules had been made on several occasions; families
with children had rented apartments, and families with more than one child
had been permitted to move into Brougham Estates. Asbury was not
provided information about the terms and conditions that gave rise to an
exception to the policy concerning children being restricted to the
townhouses. The jury could therefore find that defendants’ reasons for
denying Asbury the opportunity to negotiate for rental were not legitimate
and non-discriminatory.
Defendants also argue that evidence of a high percentage of minority
occupancy in Brougham Estates conclusively rebuts the claim of
intentional racial discrimination. Although such statistical data is relevant
to rebutting a claim of discrimination, statistical data is not dispositive of a
claim of intentional discrimination. Moreover, there was other evidence
from which the jury could have determined that race was a motivating
factor in defendants’ decision to refuse to negotiate with Asbury for a
rental unit.

II. Sufficiency of Evidence Supporting Punitive Damages Award

Defendant Brougham contends that there was insufficient evidence
supporting the jury’s award of punitive damages against him because he
never met or dealt with the plaintiff, the actions of Chauvin should not be
attributed to him, and he did not promulgate any discriminatory policies or
procedures.
Punitive damages may be awarded against a defendant “when the
defendant’s conduct is shown to be motivated by evil motive or intent, or
when it involves reckless or callous indifference to the federally protected
rights of others.” Smith v. Wade, 461 U.S. 30, 56 (1983). The jury has
discretion to award punitive damages to punish outrageous conduct on the
part of a defendant and to deter similar conduct in the future.
Plaintiff advanced two theories supporting Brougham’s liability for
punitive damages: (1) Brougham’s own discriminatory conduct in
establishing rental policies, procedures and rules; and (2) his authorization

1347
or ratification of discriminatory conduct by Chauvin, his employee. We
find sufficient evidence to establish liability under either theory.
In this case, Asbury presented evidence that Leo Brougham was the
managing partner of Brougham Estates and Brougham Management
Company. Brougham established all policies, rules and rental procedures
for Brougham Estates. Chauvin worked for Brougham who instructed her
about the rental policies and procedures. Among the policies and
procedures implemented by Brougham were the requirements that Chauvin
routinely and untruthfully tell people over the phone that there were no
vacancies, whether or not vacancies existed, but that Chauvin then
encourage the individuals to come in, inspect the premises and discuss
upcoming vacancies. Brougham established the requirement of visual
observation of a prospective tenant. Although a policy that prospective
tenants must be visually scrutinized is not necessarily improper, under the
circumstances of this case, the jury could have inferred that the policy
operated to screen prospective tenants on the basis of race and that, at a
minimum, Brougham was callously indifferent to this result of his policy.
Indeed, this policy had given rise to several administrative complaints by
single black females prior to Asbury’s inquiry about a vacancy. Brougham
was aware of previous claims of discriminatory practices in the rental of
units at Brougham Estates.
Another policy established by Brougham was that a family with a child
could occupy only a townhouse. Chauvin was advised of this policy.
Brougham testified that he made no exceptions to the policy, and he
testified specifically that no tenant or prospective tenant with a child could
obtain permission to be excepted from the rule. Plaintiff, however,
produced evidence that exceptions had been created on occasion. Those
exceptions had been authorized by Brougham and had been made on an
individual basis. From the evidence presented, the jury could have
determined that the policies established and implemented by defendant
Brougham directly fostered the discrimination which Asbury experienced,
that Brougham should have been aware that this might occur, and that
Brougham was recklessly or callously indifferent to it happening.
Plaintiff also offered evidence tending to prove that Brougham ratified
Chauvin’s actions. [After investigating, Brougham] determined [that]
Asbury had only one child and therefore fit within the residential policies
of Brougham Estates. Furthermore, the jury could have drawn the
inference that Brougham’s failure to apologize or otherwise remedy the
situation, after personally investigating Asbury’s claim of discrimination at
Brougham Estates, was an acceptance and ratification of Chauvin’s
treatment of Asbury.

1348
 Having reviewed the record in this case, we find that there was
substantial evidence supporting and a reasonable basis for the jury’s
verdict awarding both compensatory and punitive damages, and we affirm
the district court’s decision to deny defendants’ motion for a new trial.

Notes and Questions

1. Who is liable and standards of liability. Although Asbury states
that plaintiffs must prove discriminatory intent under the Fair Housing
Act, the Supreme Court recently confirmed, as had the U.S. Department of
Housing and Urban Development (HUD), that plaintiffs may also raise
claims that assert a disparate impact on the basis of a protected category.
See Texas Department of Housing & Community Affairs v. Inclusive
Communities Project, Inc., 135 S. Ct. 2507 (2015); see generally 24
C.F.R. §§100.1-100.500 (HUD’s FHA regulations). Disparate treatment
claims involve intentionally treating members of the protected class
differently from others so as to deny particular persons housing
opportunities. Disparate impact claims allege that a defendant’s actions
have a disproportionate, exclusionary effect on members of a protected
group that is not justified by legitimate government or business objectives.
We will consider the standards that govern disparate impact claims in §3,
below.
In disparate treatment cases, if a plaintiff can demonstrate to the finder
of fact sufficient direct evidence of discriminatory intent, such as a
statement by a defendant expressing racial animus in the context of a
housing decision, then the court need not engage in the three-part
framework that Asbury described. See, e.g., Lindsay v. Yates, 498 F.3d
434, 440 n.7 (6th Cir. 2007). These kinds of cases are relatively
uncommon, however, so most disparate treatment claims must rely on
circumstantial evidence.
For such discriminatory intent claims, Asbury describes the traditional
elements of a prima facie case under the Fair Housing Act.3 If the plaintiff
can produce evidence of the various elements of the prima facie case, the
burden shifts to the defendant to show a nondiscriminatory reason for the
differential treatment. If the defendant fails to assert any such justification
and the fact finder is persuaded that the plaintiff has proven the prima
facie case, the plaintiff is likely to prevail. If the defendant articulates and
produces evidence of nondiscriminatory reasons for its actions, the
plaintiff must then show that those reasons are pretextual. If the plaintiff
does so, the jury may (but is not required) to conclude that the real reason
for the denial was discriminatory. What reasons did defendant articulate in

1349
Asbury? Are they legitimate under the current statute as amended in 1988?
How did the plaintiff attempt to show that the proffered reasons were not
legitimate and non-discriminatory?
As Asbury demonstrates, employers are generally vicariously liable for
the acts of their employees; thus landlords or real estate brokerage firms
may be liable if their agents engage in discriminatory conduct. See Holley
v. Crank, 400 F.3d 667, 674-675 (9th Cir. 2004). However, officers of
corporations are not generally personally liable unless they acted as an
employee or agent of the corporation to direct or approve those
discriminatory practices. Meyer v. Holley, 537 U.S. 280 (2003).

ELEMENTS

For disparate treatment cases without direct evidence and disparate impact cases,
courts often follow a three-part framework, although the specific details at each
stage vary depending on the nature of the claim: Generally, a claimant must first
establish a prima facie case. If so, the party charged with discriminating has the
opportunity to demonstrate legitimate nondiscriminatory reasons for her
action. Finally, the claimant has the opportunity to show that those reasons are
merely a pretext.

2. Remedies. Under the Fair Housing Act, aggrieved persons may file
a lawsuit in federal court for injunctive relief and for compensatory and
punitive damages, 42 U.S.C. §3613. Originally, there had been a $1,000
limit on punitive damages, but this cap was eliminated by the Fair
Housing Amendments Act of 1988, which also extended the statute of
limitations from six months to two years.
Aggrieved persons may choose instead to file a complaint with HUD,
which has the power to investigate and mediate the dispute, as well as to
hear and adjudicate the complaint. If HUD has certified a state agency as
competent to adjudicate fair housing disputes, HUD will often refer the
complaint to that state agency rather than handle the complaint itself. See
§3610(f). If HUD itself investigates the complaint and finds reasonable
cause to believe a violation of the law has been committed, it must issue a
“charge” on behalf of the aggrieved person, explaining “the facts upon
which the Secretary has found reasonable cause to believe that a
discriminatory housing practice has occurred.” §3610.
When a charge is filed, either the complainant or the respondent may

1350
elect to have the complaint heard in federal court rather than in an
administrative proceeding held by HUD through an administrative law
judge (ALJ). See §3612(a). If this option is chosen, HUD will authorize
the United States Attorney General to file the lawsuit in federal district
court, which is entitled to grant both compensatory and punitive damages,
as well as injunctive relief. See §3612(o). If no party elects to go to federal
court, HUD will conduct a hearing if the complainant so desires. See
§3612(b). The ALJ is empowered to issue injunctive relief as well as
assess damages ranging from $10,000 to $50,000 based on the timing and
number of prior offenses. See §3610(g)(3). Either the plaintiff or the
defendant may appeal the ALJ’s finding to federal court. See §3612(i).
In addition to the foregoing, the Attorney General is empowered to
bring lawsuits against persons who have engaged in a “pattern or practice
of resistance to the full enjoyment of any rights” granted by the act under
§3614.
Are the remedies provided by the FHA adequate? Professor Robert
Schwemm, one of the leading authorities on fair housing law, notes that
racial discrimination by landlords “remains at alarmingly high levels.”
Robert G. Schwemm, Why Do Landlords Still Discriminate (and What
Can Be Done About It)?, 40 J. Marshall L. Rev. 455, 509 (2007). See also
Margery Austin Turner et al., U.S. Dept. of Hous. & Urban Dev., Housing
Discrimination Against Racial and Ethnic Minorities (2013) (national
discrimination study indicates that although overall discrimination against
minorities has declined compared to similar studies over four decades,
subtle discrimination persists, particularly in terms of the number of units
shown to minority renters and home buyers). Many discrimination victims
fail to report violations or pursue claims. Moreover, the delay and expense
of litigation seriously undermine the deterrent value of the FHA.
In addition, a “large amount of rental discrimination against racial
minorities may be the result of unconscious bias by landlords who do not
see themselves as prejudiced. To change this behavior will require efforts
beyond simply more rigorous enforcement of the FHA’s intent-based
nondiscrimination commands.” Id. Research by cognitive psychologists
has shown that many people are influenced by unconscious racial bias. See
Michelle Wilde Anderson & Victoria C. Plaut, Property Law: Implicit
Bias and the Resilience of Spatial Colorlines, in Implicit Racial Bias
Across the Law (2012); Charles R. Lawrence III, The Id, the Ego, and
Equal Protection: Reckoning with Unconscious Racism, 39 Stan. L. Rev.
317 (1987). See also Jerry Kang & Mahzarin R. Banaji, Fair Measures: A
Behavioral Realist Revision of “Affirmative Action,” 94 Cal. L. Rev. 1063,
1066 (2006) (arguing that the presence of implicit bias creates

1351
discrimination by causing merit to be mismeasured). What avenues might
work to solve the problems of explicit and implicit racial bias?
3. The Civil Rights Act of 1866. Asbury involved claims under both
the Fair Housing Act and §1982. Section 1 of the Civil Rights Act of 1866,
passed pursuant to the thirteenth amendment and reenacted in 1870 after
passage of the fourteenth amendment, provides that “[a]ll citizens of the
United States shall have the same right, in every State and Territory, as is
enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and
convey real and personal property.” 42 U.S.C. §1982. For more than a
century, §1982 was interpreted as prohibiting states from passing statutes
that deprived African Americans of the capacity to buy or lease real
property. The act was interpreted, however, not to encompass
discrimination by private housing providers unless mandated by state
legislation. This situation changed in 1968 with Jones v. Alfred Mayer Co.,
392 U.S. 409 (1968), where the Supreme Court held that §1982 applied to
private acts of discrimination as well as to discriminatory state action.
Today almost all cases brought under the Fair Housing Act also allege a
violation of §1982.4
4. Standing. Who has standing to bring a lawsuit under the Fair
Housing Act? Those who are denied housing opportunities in violation of
the act clearly may sue to vindicate their rights. It is also clear that the
statute protects whites who are denied housing because of their association
with minorities, Littlefield v. Mack, 750 F. Supp. 1395 (N.D. Ill. 1990)
(white plaintiff was evicted from her apartment and harassed by defendant
landlord because her boyfriend was African American and because they
had a child), as well as minorities who are even visiting non-minority
renters, see Lane v. Cole, 88 F. Supp. 2d 402, 406 (E.D. Pa. 2000) (black
invitee who is excluded or coerced into leaving an apartment rented by a
white tenant has standing). White persons are also entitled to bring an
action against a realtor who engaged in racial steering on the ground that
they have been denied the “right to the important social, professional,
business and economic, political and aesthetic benefits of interracial
associations that arise from living in integrated communities free from
discriminatory housing practices.” Havens Realty Corp. v. Coleman, 455
U.S. at 376-377. The Supreme Court also held in Havens that testers have
standing to bring claims in federal court under the Fair Housing Act
against realtors and sellers who have engaged in racial discrimination.
Finally, the Court held that an organization devoted to promoting equal
access to housing could bring a lawsuit against a realtor who engaged in
steering if it could demonstrate that the defendant’s steering practices

1352
caused the organization to devote extra resources to identify available
housing and counteract the defendant’s steering practices. Id. at 379.
5. Racial steering and discriminatory search. Many cases brought
under the Fair Housing Act concern claims against realtors who have
engaged in “racial steering.” This practice involves showing minority
customers housing in certain areas and white customers housing in other
areas. It also involves not telling minority customers about the availability
of housing in certain areas. Such practices violate the act by “otherwise
mak[ing] unavailable” housing because of race, United States v. Mitchell,
580 F.2d 789, 791-792 (5th Cir. 1978), and violate the express prohibition
against discrimination in “real estate-related transactions” in 42 U.S.C.
§3605, which prohibits discrimination by real estate brokers. Steering may
also fall afoul of the act’s prohibition against “mak[ing] . . . any statement .
. . with respect to the sale and rental of a dwelling that indicates any
preference, limitation, or discrimination” on the basis of a protected class,
42 U.S.C. §3604(c), a prohibition that includes oral statements.
What about the preferences of people actually seeking housing? It has
traditionally been assumed that while the Fair Housing Act addresses
efforts by realtors to steer home buyers and renters, and clearly prohibits
discrimination in refusing to sell or rent, the act does not address the
discriminatory preferences of people choosing where to live. As Professor
Lee Anne Fennell has argued, however, allowing people unfettered choice
in where to seek housing can shape the communities — and thus the
housing choices — available to everyone else. See Lee Anne Fennell,
Searching for Fair Housing, 97 B.U. L. Rev. (forthcoming 2017).
Professor Fennell contends that even if the Fair Housing Act cannot be
read to address discrimination on the part of those seeking homes, §1982
applies to both sides of a housing transaction and thus should be
interpreted to cover such discrimination, at least when it involves race. Id.
Part III.A.
6. Testers. Gathering evidence of FHA violations often involves the
use of “testers.” Testers are “individuals who, without an intent to rent or
purchase a home or apartment, pose as renters or purchasers for the
purpose of collecting evidence of unlawful steering practices.” Havens
Realty Corp. v. Coleman, 455 U.S. 363, 373 (1982). Testing is done, for
example, by using one or more persons to pose as a potential buyer in
seeking assistance from a realtor. The plaintiff in Asbury used a form of
testing when her sister-in-law approached the defendant landlord and
asked for housing in the same complex in which the plaintiff had been
denied housing. Testers may approach a realtor who has told an African

1353
American customer that no housing is available in a certain area; if the
realtor shows houses in that area to the white buyer that were not shown to
the African American buyer, it may be possible to draw an inference that
the realtor was discriminating against the initial buyer on account of her
race. Similarly, a white tester may approach a seller to see whether the
seller offers different terms than were offered to a prior potential African
American purchaser.
7. Unlawful harassment and retaliation. Section 3617 of the Fair
Housing Act makes it “unlawful to coerce, intimidate, threaten, or interfere
with any person in the exercise or enjoyment of” any “right granted or
protected” by the act. Harassment and retaliation claims brought under this
provision “account for a significant portion of all FHA claims.” Robert G.
Schwemm, Neighbor-on-Neighbor Harassment: Does the Fair Housing
Act Make a Federal Case Out of It?, 61 Case West. Res. L. Rev. 865, 865-
866 (2011). Such claims can also give rise to criminal liability. See id. at
866 n.11 (citing United States v. Jackson, No. 3:10-CR-00120-KLH (W.D.
La. 2010), where a defendant pled guilty to an FHA violation after placing
a hangman’s noose in a home’s carport).
Many cases under §3617 involve harassment or intimidation by
neighbors. For a period of time, the Seventh Circuit took a narrow view of
§3617 (and the FHA’s primary protection under §3604), following Judge
Posner’s opinion in Halprin v. Prairie Single Family Homes of Dearborn
Park Association, 388 F.3d 327 (7th Cir. 2004), on the theory that the act
applies to people seeking housing, not activity that occurs after acquisition.
Five years later, however, the Seventh Circuit reversed course in Bloch v.
Frischholz, 587 F.3d 771 (7th Cir. 2009) (en banc), holding that §3617
applies to interference with rights protected by the act even after someone
has obtained housing. For a discussion of neighbor harassment and the role
it plays in perpetuating residential segregation, see Jeannine Bell, Hate Thy
Neighbor: Move-in Violence and the Persistence of Residential
Segregation in American Housing (2013).

Problem
A landlord who owns and lives in a two-story house rents the second
floor as a separate apartment. She refuses to rent to an African American
family. Does the family have a claim against the landlord under §1982 or
is the landlord entitled to discriminate under §3603(b)(2)? What arguments
can you make on both sides of this question? See Morris v. Cizek, 503 F.2d
1303 (7th Cir. 1974); Gonzalez v. Rakkas, 1995 WL 451034 (E.D.N.Y.
1995) (§1982 claim available).

1354
 §2.2 Integration and Nondiscrimination

MHANY Management v. County of Nassau

819 F.3d 581 (2d Cir. 2016)

ROSEMARY S. POOLER, Circuit Judge:
The Village of Garden City is a municipal corporation organized under
the laws of the State of New York and located in Nassau County. As of the
year 2000, individuals of Hispanic or African-American ethnicity
comprised 20.3% of Nassau County’s population. However, these minority
groups comprised a disproportionate share of the County’s low-income
population. While constituting 14.8% of all households in Nassau County,
African-Americans and Hispanics represented 53.1% of the County’s
“very low” income, non-elderly renter households. In addition, African-
Americans made up 88% of the County’s waiting list for Section 8 housing
[vouchers to fund] rental payments for qualifying low-income tenants in
privately-owned buildings.
Garden City’s African-American and Hispanic population in the year
2000 was 4.1%. However, excluding the 61% of the minority population
representing students living in dormitories, Garden City’s minority
population was only 2.6%. [S]everal of the communities surrounding
Garden City are “majority-minority,” communities in which minorities
make up a majority of the population.
Although the lack of affordable housing has long been a problem for
Nassau County, Garden City contains no affordable housing.5 Indeed, in
the past, Garden City and its residents have resisted the introduction of
affordable housing into the community.
In 2002, Nassau County[, facing] a budget and infrastructure crisis[,]
proposed to sell [a parcel of land containing] the former Nassau County
Social Services Building, the parking lots for the Nassau County Supreme
Court, a garage, an ancillary building, and additional parking facilities.
The Social Services Site consists of two segments: (1) 21.44 acres located
on the eastern side of County Seat Drive, the site of the former Social
Services building and parking facilities; and (2) an additional 3.03 acres
located on the western side of County Seat Drive, on which a County-
owned building and a parking garage are located.
Nassau County planned to sell the Social Services Site to a private
developer, hoping to receive at least $30 million for the property. In June
2002, at the County’s request, Garden City began the process of rezoning
the Social Services Site. This process was managed by the Garden City

1355
Board of Trustees, the elected body which governs Village affairs. In
response to the County’s request, the Board of Trustees created a sub-
committee [the P-Zone Committee] charged with retaining a planner and
reviewing zoning options for the Social Services Site. Garden City also
retained the planning firm of Buckhurst Fish and Jacquemart (“BFJ”) to
provide a recommendation with regard to the rezoning of the Social
Services Site.
On April 29, 2003, BFJ proposed applying “multi-family residential
group” or “R-M” zoning controls to this property. R-M zoning would have
allowed for the construction of up to 311 residential apartment units on the
Site, or 75 single-family homes. BFJ reiterated the proposed R-M zoning
in a May 2003 report to the P-Zone Committee, stating that the rezoning
would “be likely to generate a net tax benefit to the Village.”
On May 29, 2003, BFJ gave a PowerPoint presentation of its May
2003 report at a public forum. At the forum, designed to solicit public
input on the proposal, several residents expressed concern about the
impact of 311 residential units on traffic and schools. In response to these
citizen concerns, BFJ analyzed these issues further. In July 2003, BFJ
issued a revised version of its study, which reiterated the proposal for R-M
zoning. BFJ emphasized again that its proposal “would be careful of not
overwhelming the neighborhoods with any significant adverse
environmental impacts, particularly traffic, visual effects, or burdens on
public facilities.” Upon review of the report, the P-Zone Committee
adopted BFJ’s recommendation for R-M zoning for the approval of the
Board of Trustees.
On November 20, 2003, the Garden City Village Board of Trustees
unanimously accepted the P-Zone Committee’s recommendation for the
rezoning. Having endorsed the proposed rezoning, the Board of Trustees
moved Local Law 1-2004 to a public hearing. On January 20, 2004, the
Eastern Property Owners’ Association held a meeting at which Trustee
[Peter] Bee discussed BFJ’s recommendation for the Social Services Site,
[reiterating] that because relatively few schoolchildren resided in existing
multi-family housing in Garden City, BFJ and the Board had reasonably
predicted that multi-family housing would have less of an impact on
schools than single-family housing. [A] majority of the residents “who
asked questions or made comments” at the meeting supported restricting
the rezoning of the Site to single-family homes. “Residents want[ed] to
preserve the single-family character of the Village.”
On February 5, 2004, the Village held [another] public hearing on the
proposed rezoning. Residents indicated their opposition to multi-family
housing and their preference for single-family homes. One resident

1356
emphasized that the proposed multi-family development was not “in the
flavor and character of what Garden City is now. Garden City started as a
neighborhood of single family homes and it should remain as such.”
Others stated, to applause from the audience, that “[w]e’re not against
residential, we’re against multi-level residential.” One resident expressed
concern about the possibility of “four people or ten people in an apartment
and nobody is going to know that.” [Another resident said]: “We left a
community in Queens County that started off similar, single family homes,
two family homes, town houses that became — six story units. It was
originally for the elderly, people who were looking to downsize. It started
off that way. Right now you’ve got full families living in one bedroom
townhouses, two bedroom co-ops, the school is overburdened and
overcrowded.”
In response to public pressure, BFJ and Garden City began modifying
the rezoning proposal. By a memorandum to the Board dated May 4, 2004,
BFJ scrapped the proposed R-M zoning entirely. Instead, BFJ proposed
rezoning the vast majority of the Social Services Site “Residential-
Townhouse” (“R-T”), an entirely new zoning classification. The May 2004
proposal only preserved R-M zoning on the 3.03 acres of the Social
Services Site west of County Seat Drive, and only by special permit. Thus,
the development of multi-family housing would be restricted to less than
15% of the Social Services Site, and only by permit.
Whereas the previous proposed rezoning took more than a year to
come before the Board, the shift to R-T zoning moved rapidly through the
Village’s government. BFJ issued a final [Environmental Assessment
Form] (EAF) for R-T rezoning in May 2004. Even though BFJ officials
testified that a switch from R-M zoning to R-T zoning was a significant
change, no draft EAF was ever issued for the R-T rezoning. In addition,
the shift from the P-Zone to R-T zoning moved to a public hearing on May
20, 2004. The Trustees further stated at this meeting that they hoped to
have a final vote on the rezoning as soon as June 3, 2004, and that the bill
had already been referred to the Nassau County Planning Commission. At
this meeting, a member of the Garden City community thanked the Board
of Trustees for responding to the concerns of residents:

[M]y husband works twelve hour, fourteen hour days so that we can live
here. We didn’t inherit any money from anyone. We weren’t given anything.
We didn’t expect anything from anyone. We worked very hard to live in
Garden City because [of] what it is. And I feel like very slowly it’s creeping
away by the building that is going on. . . . [A]nd I just think to all of you, just
keep, be strong, like, just keep Garden City what it is. That is why people

1357
 want to come here. You know, it’s just a beautiful, beautiful town, people
would like to live here, but I just think, just think of the people who live here,
why you yourselves moved here. You don’t move here to live near
apartments. You don’t move here so that when you turn your corner there’s
another high-rise.

On June 3, 2004, Garden City Board of Trustees unanimously adopted

the Local Law No. 2-2004 and the Social Services Site was rezoned R-T.
The following month, Nassau County issued a Request for Proposals
(“RFP”) concerning the Social Services Site under the R-T zoning
designation. The RFP stated that the County would not consider bids of
less than $30 million.
Plaintiffs were unable to submit a bid meeting the specifications of the
RFP. Ismene Speliotis, Executive Director of NYAHC/MHANY, analyzed
the R-T zoning and concluded that it was not financially feasible to build
affordable housing under R-T zoning restrictions at any acquisition price.
The County ultimately awarded the contract to develop the Social Services
Site to Fairhaven Properties, Inc. (“Fairhaven”), a developer of single-
family homes, for $56.5 million, the highest bid. Fairhaven proposed the
development of 87 single-family detached homes, and did not include any
townhouses.
After the contract was awarded to Fairhaven, NYAHC prepared four
proposals, or “pro formas,” for development at the Social Services Site
under the R-M zoning designation, with the percentage of affordable
and/or Section 8 housing units of the 311 total rental units ranging from
15% to 25%. Plaintiffs’ expert Nancy McArdle evaluated each proposal in
conjunction with the racial/ethnic distribution of the available pool of
renters and determined that, had NYAHC been able to build housing under
any of the four proposals in accordance with the rejected R-M zoning
designation, the pool of renters likely to occupy all units, including
market-rate, affordable, and Section 8 units, would have likely been
between 18% and 32% minority, with minority households numbering
between 56 and 101. Under the proposal predicting 18% minority
population, NYAHC would have been able to bid $56.1 million for the
Social Services Site.
McArdle further analyzed the likely racial composition of the pool of
homeowners who could afford to purchase single-family units potentially
developed by Fairhaven. She determined that between three and six
minority households could afford such a purchase. Thus, while the
NYAHC proposals would likely increase racial diversity in Garden City,
McArdle testified, the Fairhaven proposal would likely leave the racial

1358
composition of Garden City “unchanged.”

Discussion
Section 804(a) of the Fair Housing Act, also known as Title VIII of the
Civil Rights Act of 1968, makes it unlawful “[t]o refuse to sell or rent . . .
or otherwise make unavailable or deny, a dwelling to any person because
of race, color, . . . or national origin.” 42 U.S.C. §3604(a). “The phrase
‘otherwise make unavailable’ has been interpreted to reach a wide variety
of discriminatory housing practices, including discriminatory zoning
restrictions,” LeBlanc-Sternberg v. Fletcher, 67 F.3d 412, 424 (2d Cir.
1995), and its “results-oriented language counsels in favor of recognizing
disparate-impact liability,” Tex. Dep’t of Hous. & Cmty. Affairs v.
Inclusive Communities Project, Inc., 135 S. Ct. 2507, 2518 (2015). For this
reason Sections 804(a) and 805(a) of the FHA provide for both
discriminatory intent and disparate-impact liability.

Disparate Treatment
The district court concluded that Garden City’s decision to abandon R-
M zoning in favor of R-T zoning was made with discriminatory intent.
“The Supreme Court has long held, in a variety of circumstances, that a
governmental body may not escape liability under the Equal Protection
Clause merely because its discriminatory action was undertaken in
response to the desires of a majority of its citizens.” United States v.
Yonkers Bd. of Educ. (Yonkers I), 837 F.2d 1181, 1224 (2d Cir. 1987); see
also Palmore v. Sidoti, 466 U.S. 429, 433 (1984) (“Private biases may be
outside the reach of the law, but the law cannot, directly or indirectly, give
them effect.”). We find no clear error in the district court’s determination
that Garden City’s decision to abandon R-M zoning was a knowing
response to the vocal and racially influenced opposition among Garden
City’s citizenry.

Plaintiffs’ Prima Facie Case

A plaintiff can establish a prima facie case of disparate treatment “by
showing that animus against the protected group was a significant factor in
the position taken by the municipal decision-makers themselves or by
those to whom the decision-makers were knowingly responsive.” [T]he
district court premised its finding of racial discrimination primarily on two
factors: (1) “the considerable impact that [the Village’s] zoning decision
had on minorities in that community”; and (2) “the sequence of events
involved in the Board’s decision to adopt R-T zoning instead of R-M

1359
zoning after it received public opposition to the prospect of affordable
housing in Garden City.”
The district court first noted statistical evidence that the original R-M
proposal would have created a pool of potential renters with a significantly
larger percentage of minority households than the pool of potential renters
for the zoning proposal ultimately adopted as law by Garden City.
However, in making its finding of discrimination, the district court relied
primarily on the sequence of events leading up to the implementation of R-
T zoning. The court first noted that Garden City officials and BFJ were
initially enthusiastic about R-M zoning. BFJ’s proposal permitted the
development of up to 311 multi-family units, and Trustee Bee expressed
the opinion at a January 20, 2004 meeting that “Garden City
demographically has a need for multi-family housing,” and that “he would
keep an open mind but he still felt the recommended zoning change were
appropriate.”
However, the district court concluded that BFJ and the Board abruptly
reversed course in response to vocal citizen opposition to the possibility of
multi-family housing, including complaints that affordable housing with
undesirable residents could be built under this zoning. The district court
focused on the suddenness of this change. Although the P-Zone
Committee had consistently recommended R-M zoning for eighteen
months, R-T zoning went from proposal to enactment in a matter of weeks.
Although now recognizing the oddness and abruptness of this sequence
of events, Garden City argues that these facts should not raise any
suspicion. The Village contends that because BFJ, the Village Trustees,
and Village residents had discussed the zoning of the Site for more than a
year, there was no need to spend additional time discussing the same
issues once they settled on a preferable lower-density approach. While the
adoption of R-T zoning may seem rushed, and appear to be an abrupt
change from Garden City’s prior consistent course of conduct, according
to Garden City, this was actually just efficient local government. While
this may be one reasonable interpretation of the facts, the district court was
nevertheless entitled to draw the contrary inference that the abandonment
of R-M zoning was an abrupt change and that the “not nearly as
deliberative” adoption of R-T zoning was suspect.
In considering the sequence of events leading up to the adoption of R-
T zoning, the district court also focused closely on the nature of the citizen
complaints regarding R-M zoning. Citizens expressed concerns about R-M
zoning changing Garden City’s “character” and “flavor.” In addition,
contrary to Garden City’s contentions that any references to affordable
housing were isolated, citizens repeatedly and forcefully expressed

1360
concern that R-M zoning would be used to introduce affordable housing
and associated undesirable elements into their community. Residents
expressed concerns about development that would lead to “sanitation [that]
is overrun,” “full families living in one bedroom townhouses, two
bedroom co-ops” and “four people or ten people in an apartment.” Other
residents requested that officials “guarantee” that the housing would be
“upscale” because of concerns “about a huge amount of apartments that
come and depress the market for any co-op owner in this Village.”
The district court also noted Garden City residents’ concerns about
[the] possibility of creating “affordable housing,” specifically discussing a
flyer warning that property values might decrease if apartments were built
on the Site and that such apartments might be required to include
affordable housing under legislation pending in the State legislature.
Viewing this opposition in light of (1) the racial makeup of Garden
City, (2) the lack of affordable housing in Garden City, and (3) the likely
number of minorities that would have lived in affordable housing at the
Social Services Site, the district court concluded that Garden City
officials’ abrupt change of course was a capitulation to citizen fears of
affordable housing, which reflected race-based animus.
We find no clear error in the district court’s determination. The tenor
of the discussion at public hearings and in the flyer circulated throughout
the community shows that citizen opposition, though not overtly race-
based, was directed at a potential influx of poor, minority residents.
Although no one used explicitly racial language at the Garden City public
hearing, Garden City residents expressed concern that R-M zoning would
change the “flavor” and “character” of Garden City. Expressing concerns
about the sort of residents who might occupy an eventual complex, one
resident feared that the proposed development “could have four people or
ten people in an apartment and nobody is going to know that.” And
citizens at the public hearing were “yelling” at [the County Executive.]
[O]ne resident explained that he had left Queens because apartment
buildings originally intended for the elderly resulted in “full families living
in one bedroom townhouses, two bedroom co-ops, the school is
overburdened and overcrowded. You can’t park your car. The sanitation is
overrun.” Another resident stated that she had left Brooklyn to avoid
exactly the sort of development potentially available for the Social
Services Site.
The district court concluded that, in light of the racial makeup of
Garden City and the likely number of members of racial minorities that
residents believed would have lived in affordable housing at the Social
Services Site, these comments were code words for racial animus.

1361
 Empirical evidence supports the reasonableness of the district court’s
conclusion. Indeed, “research suggests that people believe that the
majority of public housing residents are people of color, specifically,
African American.” Garden City residents expressed concerns about their
community becoming like communities with majority-minority
populations, such as Brooklyn and Queens. Moreover, “a series of studies
have shown that when Whites are asked why they would not want to live
near African-Americans (no income level is indicated in the question),
common responses relate to the fear of property value decline, increasing
crime, decreasing community quality (e.g. physical decay of housing, trash
in neighborhood, and unkempt lawns) and increasing violence.”
Repeatedly expressing concerns that R-M zoning would lead to a decline
in their property values as well as reduced quality of life in their
community, Garden City residents urged the Board of Trustees to “keep
Garden City what it is” and to “think of the people who live here.”
Considering these statements in context, we find that the district court’s
conclusion that citizen opposition to R-M zoning utilized code words to
communicate their race-based animus to Garden City officials was not
clearly erroneous.

Discrimination Vel Non

Once a plaintiff presents a prima facie case of discrimination, the
burden shifts to the defendant to proffer a legitimate, non-discriminatory
reason for its actions. Here, the district court found that Garden City met
its minimal burden of production on this issue, as Garden City contended
that R-T zoning was adopted instead of R-M zoning because of concerns
regarding traffic and school crowding, and because R-T zoning would
facilitate the development of townhouses as a residential form.
If a defendant meets its burden of production, the sole remaining issue
is discrimination vel non. The plaintiffs must prove that the defendants
intentionally discriminated against them on a prohibited ground. Here the
district court concluded that the shift in zoning had been motivated, at least
in part, by discriminatory animus. It then [assessed] whether Garden City
would have taken the same action solely on the basis of its purported
legitimate reasons for rezoning. Reviewing these alternative rationales, the
district court concluded that even accepting these legitimate reasons,
Garden City would not have adopted R-T zoning in the absence of
discriminatory animus.
With respect to traffic, Garden City argues that its zoning expert
testified that R-T zoning, as compared to R-M zoning, would potentially

1362
reduce traffic concerns. While the district court recognized this evidence, it
also noted that traffic concerns became important to Garden City officials
only after the increase in public opposition to affordable housing. In
addition, the district court noted other record evidence suggesting any
decrease in traffic between R-M and R-T zoning was de minimis. The
district court thus did not err in questioning whether such concerns were
sufficiently strong to cancel out any discriminatory animus.6

Notes and Questions

1. Integration as a goal of the Fair Housing Act and the persistence
of segregation. One goal of proponents of the Fair Housing Act was to
achieve “truly integrated and balanced living patterns,” 114 Cong. Rec.
3422 (1968) (statement of Senator Mondale), at a time of increasing
concern about racial segregation. The act expressed this goal not only
through its nondiscrimination provisions, but also through a broad mandate
to federal agencies, and more importantly the state and local governments
that the federal government funds through its programs, to take affirmative
steps to respond to the legacy of segregation. 42 U.S.C. §3608(e)(5) (HUD
must administer its programs and activities “in a manner affirmatively to
further the policies of [the Fair Housing Act]”); §3608(d) (same for other
federal agencies); U.S. Dept. of Hous. & Urban Dev., Fair Housing
Planning Guide, Vol. 1, at 1-1 to 1-3 (describing planning tools to
implement the “affirmatively furthering” obligation to foster inclusive
communities). For an excellent discussion of these mandates and similar
obligations in other civil rights statutes, see Olatunde C.A. Johnson,
Beyond the Private Attorney General: Equality Directives in American
Law, 87 N.Y.U. L. Rev. 1339 (2012); see also Thomas Silverstein, State
Land Use Regulation in the Era of Affirmatively Furthering Fair Housing,
24 J. Affordable Housing & Community. Dev. L. 305 (2015).7 Although
there are some signs of progress in long-term trends, see Edward Glaeser
& Jacob Vigdor, The End of the Segregated Century: Racial Separation in
American Neighborhoods 1890-2010 (2012) (noting that African
American segregation declined in the nation’s 85 largest metropolitan
areas in the first decade of the twenty-first century and that in all but one
of the 658 housing markets tracked by the Census Bureau, average
segregation is below 1970 levels), segregation on the basis of race remains
a persistent challenge in many of the nation’s communities, see Douglas S.
Massey, The Legacy of the 1968 Fair Housing Act, 30 Sociological Forum
571, 578-582 (2015) (highlighting, among other findings, the uneven
nature of progress in African American integration, the persistence of

1363
hypersegregation, and the increase in segregation for Hispanics).
2. Integration versus nondiscrimination and the distinction
between “intent” and “motive.” The Fair Housing Act’s prohibition on
intentional discrimination can conflict with its integration mandate, as was
made clear in United States v. Starrett City Associates, 840 F.2d 1096 (2d
Cir. 1988). The case involved efforts by the owners of a nearly 6,000-unit
apartment complex in Brooklyn, New York, to maintain a racially
integrated community. Faced with difficulties in attracting a diverse pool
of apartment seekers, the owners adopted a tenant screening process that
had preserved a community balance of roughly 64 percent white, 22
percent black, and 8 percent Hispanic tenants for more than a decade
starting in the mid-1970s. The process sorted qualified applicants by race
and then selected tenants from this pool to match the race of tenants
leaving when vacancies opened. The owners defended the quota system on
the argument that the matching was “not motivated by racial animus” and
was necessary to “achieve and maintain integration,” citing expert opinion
that white tenants tend to leave communities when the minority population
reaches roughly 10 percent to 20 percent. The owners further cited
legislative history that suggested that Congress was primarily concerned
with segregation, and saw the antidiscrimination provisions of the Fair
Housing Act as means to that end. The Second Circuit rejected these
arguments, holding that the act prohibits discriminatory housing practices
regardless of motivation and that when the act’s antidiscrimination and
integration imperatives clash, the former prevails.
A dissenting opinion in Starrett City cited Dr. Kenneth Clark to
support the idea of allowing racial quotas to prevent “tipping” and thereby
to promote the development of integrated communities. Dr. Clark’s
testimony provided the factual basis for the ruling in Brown v. Board of
Education, 347 U.S. 483 (1954), which focused on the psychological harm
that segregated schools inflicted on African American children. Another
noted scholar, Professor Derrick Bell, has criticized the use of such quotas.
Bell notes that it is wrong for African American citizens to be denied
housing they would otherwise get simply because of white prejudice. In
effect, when an exclusionary quota is used to prevent tipping, the number
of housing units available to African Americans is measured by the extent
of white prejudice in the housing complex; the more prejudice, the lower
the tipping level and the fewer the units available to African American
purchasers or renters. Bell argues that “[a] so-called benign housing quota
seems invidious to the blacks excluded by its operation. They are no less
victims of housing bias than are those excluded from neighborhoods by

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restrictive covenants.” Derrick Bell, And We Are Not Saved: The Elusive
Quest for Racial Justice 153 (1989).

Problems
1. Your client is a real estate broker with the following questions.
a. The broker tells you that, although she has no illegitimate racial
animus, her customers do. If she shows potential buyers houses that she
knows sellers will refuse to sell to them because of the buyer’s race or
ethnicity, she is wasting her time. Her competitors do not do this, and it
simply costs too much to pursue sales that are not going to happen. If
the owners who engage her services ask her not to show their houses to
members of a particular race, and she complies with this request, has
she violated the Fair Housing Act?
b. A buyer expresses a preference for living in an area that is
predominantly white and asks the broker to explain the local racial
balance in different neighborhoods. Can the broker answer this
question?
c. A buyer wants to live in an “integrated” community. Can the
broker give the buyer information about which neighborhoods are
“integrated”? See Hannah v. Sibcy Cline Realtors, 769 N.E.2d 876
(Ohio Ct. App. 2001) (broker has no duty to answer questions about
the racial makeup of a community when a mother wanted to live in a
racially integrated community so that her children would not be the
only African American children in the school, noting that some courts
have held that a broker who answers such a question may be liable for
unlawful racial steering, while other courts have held that a broker has
not engaged in steering when the racial information is provided in
response to a buyer’s question). But cf. Village of Bellwood v. Dwivedi,
895 F.2d 1521, 1529-1531 (7th Cir. 1990) (“The statute does not
require a broker to endeavor to make his customers better people by
withholding information that they request about the racial composition
of the communities in which the broker sells houses. It does not impose
liability for failing to promote integration, or for failing to coordinate
individual integrative acts that have an aggregate resegregative effect.
If the broker treats all his customers the same, regardless of race, he is
not liable.”).
2. Can a landlord in an area dominated by African Americans actively
seek white tenants to move into the complex as a means of promoting
integration?

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 §2.3 Sex Discrimination: Sexual Harassment

Quigley v. Winter

598 F.3d 938 (8th Cir. 2010)

WILLIAM JAY RILEY, Circuit Judge.
[Dale] Winter owned more than twenty rental homes in Sioux City,
Iowa. Many of Winter’s tenants were low-income women who received
Section 8 housing vouchers (housing vouchers) from the Sioux City
Housing Authority (SCHA) to help pay their rent. In 2000, [Jaymie]
Quigley, along with her then-husband and her four children, rented a home
from Winter. Quigley used a housing voucher to pay her rent.
In 2002, Quigley informed Winter she was eligible to move into a
larger home. Winter drove Quigley in his car to one of Winter’s other
properties. Quigley inspected the property, and when she returned to the
car, Winter rubbed his hand down Quigley’s arm and said, “[W]ell, how
do you like it?” Quigley recalled this incident made her feel “[s]cared” and
“yucky.” Quigley, her boyfriend, and her children moved into a different
rental property owned by Winter, using a housing voucher to pay the rent.
In 2004, Quigley’s boyfriend moved to Louisiana to visit his ill father.
After Quigley’s boyfriend moved out of the house, Winter behaved
inappropriately toward Quigley on several other occasions. First, Quigley
learned from a neighbor that Winter had been inside Quigley’s house
without prior notice when Quigley was not at home. When Quigley went
to her bedroom, she noticed her housecoat, which had been hanging on the
back of the bedroom door when she left, was now lying on her bed.
Quigley confronted Winter about entering the home without giving prior
notice, and Winter claimed he had to replace the screen on Quigley’s
bedroom window. Quigley’s screen was not damaged and had not been
replaced.
One evening, Winter came to inspect Quigley’s house while she was
making dinner for her children. On that occasion, Winter stood very close
to Quigley and rubbed his genital area. Another time, Winter came to
Quigley’s house for an inspection at 9:30 or 10:00 in the evening without
giving Quigley prior notice. Quigley’s fourteen year-old sister was staying
the night with her, and they were in their pajamas getting ready for bed.
While conducting his inspection, Winter followed Quigley and her sister
into a bedroom and then a bathroom, which made them feel
uncomfortable. Quigley and her sister were watching television, and
Winter lay down on Quigley’s sectional couch after he completed the

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inspection. Winter stayed on the couch for five or ten minutes until
Quigley said, “Hey, Dale, we’re going to bed.” Quigley had to tell Winter
to leave “at least three times” before he left. Quigley also reported
receiving phone calls from Winter at inappropriate times, sometimes as
late as 2:30 or 3:00 in the morning. Winter sounded intoxicated when he
called, and the phone calls made Quigley feel scared and worried about
protecting her children and younger sister.
Quigley wanted to move out of the house because of Winter’s conduct,
but she would have lost her housing voucher if she broke the lease.
Quigley met with her SCHA worker and reported Winter’s inappropriate
actions. Quigley asked if she could change the locks on her rental home,
but the housing worker told her she could not change the locks unless she
gave Winter a key. The housing worker told Quigley she could get out of
the lease without losing her housing voucher if Winter agreed to rescind
the lease. When Quigley asked Winter to release her from the lease,
Winter refused. Thereafter, Quigley changed the locks on her door without
giving Winter a key.
About a month and a half before Quigley’s lease ended, Winter
showed up at her house while Quigley, her sister, and Quigley’s friend
were outside lying in the sun. Quigley approached Winter’s vehicle and
inquired whether she would be getting her deposit back. Winter fluttered
his hand against Quigley’s stomach and said, “My eagle eyes have not
seen everything yet.” Winter followed Quigley to the porch. Quigley
observed Winter staring at Quigley’s sister’s chest. Quigley’s sister was
wearing shorts and a sport bra, so Quigley told her sister to “go get
something on.” Winter said to Quigley’s sister, “You’re really mature.
How old are you?” When Quigley said her sister was “only 14,” Winter
said, “Well, she looks a lot more mature than you.” Quigley’s friend went
to her car to get a cigarette, and Winter noticed the friend had a scar on her
back. Winter traced the scar with his finger, without consent, pulling the
friend’s pants downward to see where the scar ended. Quigley moved out
of the rental home, and Winter did not return her deposit.
Quigley filed a complaint with the Sioux City Human Rights
Commission (SCHRC). The investigator who handled Quigley’s complaint
testified other single, female tenants of Winter’s who were receiving
housing assistance, corroborated Quigley’s claims.
In June 2006, Quigley filed a complaint against Winter in the district
court, alleging sexual harassment; sex discrimination; and coercion,
intimidation, threats, and interference with Quigley’s rights, in violation of
the [Fair Housing Act] and the [Iowa Civil Rights Act]. Quigley also
asserted a breach of contract claim against Winter based upon Winter’s

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failure to return Quigley’s deposit. Winter brought a breach of contract
counterclaim against Quigley, insisting Quigley owed him unpaid rent and
failed to leave the rental home “in a clean and satisfactory condition.” The
jury found in favor of Quigley, and against Winter, on Winter’s
counterclaim and each of Quigley’s claims, and awarded Quigley
$13,685.00 in compensatory damages for the housing claims, $400.00 for
Quigley’s breach of contract claim, and $250,000.00 in punitive damages.
Following a hearing on [subsequent] motions, the district court entered an
order reducing the award of punitive damages from $250,000.00 to
$20,527.50.

Hostile Housing Environment Created by Sexual Harassment

As a preliminary matter, Winter questions whether a claim for hostile
housing environment created by sexual harassment is actionable under the
FHA. We conclude it is. See Neudecker v. Boisclair Corp., 351 F.3d 361,
364 (8th Cir. 2003) (recognizing a cause of action under the FHA for
hostile housing environment created by disability harassment and citing,
with approval, cases from other jurisdictions recognizing an FHA claim
for hostile housing environment created by sexual harassment); see also
DiCenso v. Cisneros, 96 F.3d 1004, 1008 (7th Cir. 1996) (recognizing an
FHA claim for hostile housing environment created by sexual harassment);
Honce v. Vigil, 1 F.3d 1085, 1089-90 (10th Cir. 1993) (same).
Next, Winter insists there was insufficient evidence to support the
jury’s verdict in favor of Quigley on her hostile housing environment
created by sexual harassment claim. In this case, there was sufficient
evidence to support a hostile housing environment claim if a reasonable
jury could find Quigley proved by a preponderance of the evidence Winter
subjected her to unwelcome sexual harassment, and the harassment was
sufficiently severe or pervasive so as to interfere with or deprive Quigley
of her right to use or enjoy her home. See DiCenso, 96 F.3d at 1008
(“Applied to the housing context, a claim [of hostile housing environment
caused by sexual harassment] is actionable ‘when the offensive behavior
unreasonably interferes with use and enjoyment of the premises.’ ”
(quoting Honce, 1 F.3d at 1090) (“The harassment must be sufficiently
severe or pervasive to alter the conditions of the housing arrangement.”)).
Winter denies he subjected Quigley to sexual advances or requests for
sexual favors, and, alternatively, any sexual harassment Quigley
experienced was not sufficiently severe or pervasive to support the jury’s
verdict. Viewing the evidence in the light most favorable to Quigley, we
conclude Quigley presented sufficient evidence of numerous unwanted

1368
interactions of a sexual nature that interfered with Quigley’s use and
enjoyment of her home. Quigley testified Winter subjected her to
unwanted touching on two occasions, made sexually suggestive comments,
rubbed his genitals in front of her, placed several middle of the night
phone calls to her home, made repeated unannounced visits, and, on one
occasion, while Winter lay on Quigley’s couch, had to be told to leave her
home at least three times before he complied. We emphasize that Winter
subjected Quigley to these unwanted interactions in her own home, a place
where Quigley was entitled to feel safe and secure and need not flee,
which makes Winter’s conduct even more egregious.

“Quid Pro Quo” Sexual Harassment

Winter next contends the district court erred in denying his motion for
judgment as a matter of law on Quigley’s “quid pro quo” sexual
harassment claim. “ ‘Quid pro quo’ harassment occurs when housing
benefits are explicitly or implicitly conditioned on sexual favors.” Honce,
1 F.3d at 1089; cf. Ogden v. Wax Works, Inc., 214 F.3d 999, 1006 n.8 (8th
Cir. 2000) (“To prevail on her [employment discrimination] quid pro quo
claim, [plaintiff] needed to prove (1) she was a member of a protected
class; (2) she was subjected to unwelcome harassment in the form of
sexual advances or requests for sexual favors; (3) the harassment was
based on sex; and (4) her submission to the unwelcome advances was an
express or implied condition for receiving job benefits or her refusal to
submit resulted in a tangible job detriment.” (citation omitted)).
While the evidence of “quid pro quo” harassment was not
overwhelming, after viewing the evidence in the light most favorable to
Quigley, we conclude there was sufficient evidence to support the jury’s
verdict. Specifically, when Quigley inquired about the likelihood of
receiving her deposit back from Winter, Winter fluttered his hand against
Quigley’s stomach and said, “My eagle eyes have not seen everything
yet.” The jury could reasonably infer Winter was telling Quigley the return
of her deposit was conditioned upon Winter seeing more of Quigley’s
body or even receiving a sexual favor, which would amount to “quid pro
quo” sexual harassment. We will not disturb the jury’s verdict.

Coercion, Intimidation, or Interference with Housing Rights

Winter maintains the district court should not have denied Winter’s
post-trial motion on Quigley’s coercion, intimidation, and interference
claim under 42 U.S.C. §3617. Winter contends Quigley’s claim was
“essentially a retaliation claim” and Quigley failed to prove retaliation.

1369
 24 C.F.R. §100.400 gives the following examples of conduct
prohibited by 42 U.S.C. §3617:

(1) Coercing a person, either orally, in writing, or by other means, to deny

or limit the benefits provided that person in connection with the sale or rental
of a dwelling . . . because of . . . sex. . . .
(2) Threatening, intimidating or interfering with persons in their
enjoyment of a dwelling because of the . . . sex . . . of such persons, or of
visitors or associates of such persons.
...
(5) Retaliating against any person because that person has made a
complaint, testified, assisted, or participated in any manner in a proceeding
under the Fair Housing Act.

In arguing there was insufficient evidence to support the jury’s verdict,

Winter focuses solely on the retaliation aspect of 42 U.S.C. §3617. As
Quigley points out, retaliation is only one form of conduct prohibited
under §3617. Viewing the evidence in the light most favorable to Quigley,
we conclude there was more than sufficient evidence of coercion,
intimidation, and interference with Quigley’s enjoyment of her housing
rights, other than retaliation, to support the jury’s verdict.

Punitive Damages
We first address Winter’s contention that the district court erred in
allowing the jury to consider punitive damages. “The [FHA] provides for
the recovery of punitive damages by victims of discriminatory housing
practices.” Badami v. Flood, 214 F.3d 994, 997 (8th Cir. 2000) (citing 42
U.S.C. §3613(c)(1) (1994)). We apply the same standard for punitive
damages in [FHA] cases as we do in employment discrimination and 42
U.S.C. §1983 civil rights cases. “Punitive damages are appropriate in a
federal civil rights action ‘when the defendant’s conduct is shown to be
motivated by evil motive or intent, or when it involves reckless or callous
indifference to the federally protected rights of others.’ ” Id. at 997.
The district court determined Quigley had presented sufficient
evidence to justify instructing the jury on punitive damages, because
Winter admitted at trial he knew sexual harassment was unlawful, he had
been a landlord for many years and managed many properties, he had
worked with various governmental agencies to provide subsidized
housing, and his lease agreement with Quigley stated he, as the landlord,
was not to discriminate on the basis of sex. We agree with the district
court. The district court did not err in submitting punitive damages for the

1370
jury’s consideration.
The jury found Quigley was entitled to punitive damages in the amount
of $250,000.00, and the district court entered judgment. Winter then filed a
motion to amend the judgment to reduce the punitive damages award. The
district court noted the punitive damages award was more than eighteen
times the compensatory damages award ($13,685.00) and found the award
was excessive and did not comport with due process. The district court
reduced the award to $20,527.50, which amounted to one and a half times
the compensatory damages award, “for the simple reason that [Winter’s]
conduct . . . can be considered only as to what he said and did directly to
[Quigley].”
Quigley challenges the district court’s analysis, arguing the jury’s
punitive damages award complied with due process and the original award
should be reinstated. To assess the reasonableness or excessiveness of a
punitive damages award, we consider: (1) “the degree of reprehensibility
of the defendant’s conduct,” (2) the ratio between punitive damages and
actual harm (compensatory damages), and (3) “the civil or criminal
penalties that could be imposed for comparable misconduct.” BMW of N.
Am., Inc. v. Gore, 517 U.S. 559, 575, 580-81 (1996).
Winter’s conduct was reprehensible. Quigley lived alone with small
children at the time of Winter’s harassment, and she had few, if any,
alternative housing options. Quigley’s financial vulnerability was
evidenced by her need for Section 8 housing vouchers. Winter held a
certain level of power over Quigley and her family. Winter repeatedly
subjected Quigley to inappropriate conduct during Quigley’s tenancy, and
Winter’s conduct was unquestionably intentional and more than churlish.
Most significant, Winter’s conduct intruded upon Quigley’s sense of
security in her own home. However, as we explain below, we do not
believe the degree of reprehensibility of Winter’s conduct justifies the
jury’s large punitive damages award.
Recognizing we are not bound by a rigid mathematical formula, we
nevertheless, are persuaded a single-digit multiplier is appropriate in the
present case. We take our guidance from the Supreme Court’s assessment
of single-digit multipliers. Quigley was awarded $13,685.00 in
compensatory damages, which is not a nominal amount. We find the
circumstances of this case and due process do not justify a punitive
damages award eighteen times greater than the compensatory damages
and, agreeing with the district court, conclude the jury’s punitive damage
award was excessive.
We turn then to the final Gore factor, a comparison between the
punitive damages award and the civil and criminal penalties available for

1371
comparable misconduct. “[A] reviewing court engaged in determining
whether an award of punitive damages is excessive should ‘accord
“substantial deference” to legislative judgments concerning appropriate
sanctions for the conduct at issue.’ ” Gore, 517 U.S. at 583. Quigley points
out 42 U.S.C. §3614 permits the Attorney General to commence a civil
action against “any person . . . engaged in a pattern or practice of
resistance to the full enjoyment of any of the rights granted by the [FHA].”
Section 3614(d)(1)(C), as adjusted by the Inflation Adjustment Act of 1990,
Pub. L. No. 101-410, §5(a)(4), 104 Stat. 891, and 29 C.F.R. §85.3(b)(3),
states a court may grant relief for a first violation in an amount not
exceeding $55,000.
While we agree with the district court that the jury’s punitive damage
award was excessive, we disagree with the district court’s assessment that
$20,527.50, which is one and a half times the compensatory award,
sufficiently reflects the reprehensibility of Winter’s conduct. We conclude
an appropriate punitive damages award in this case is $54,750. This
amount is four times greater than Quigley’s compensatory damages
($13,685.00), which we find is an appropriate ratio under the
circumstances of this case. This amount comports with due process, while
achieving the statutory and regulatory goals of retribution and deterrence.

Notes and Questions

1. Sex discrimination by a landlord. Although the Fair Housing Act
does not expressly define sexual harassment as sex discrimination, Quigley
illustrates how courts have reached that conclusion nonetheless. See also
Williams v. Poretsky Management, Inc., 955 F. Supp. 490 (D. Md. 1996)
(sexual harassment of tenant by building superintendent violates Fair
Housing Act). Cf. Meritor Savings Bank, FSB v. Vinson, 477 U.S. 57
(1986) (interpreting Title VII of the Civil Rights Act of 1964 to define
sexual harassment as sex discrimination in the employment context). Some
state laws, by contrast, explicitly define sexual harassment as a form of sex
discrimination. See Edouard v. Kozubal, No. 98-BPR-0957, 2002 WL
977225 (MCAD) (Mass. Commn. Against Discrimination, 2002) (applying
Mass. Gen. Laws ch. 151B §1(18)).
2. How severe must the harassment be? In DiCenso v. Cisneros, 96
F.3d 1004 (7th Cir. 1996), when the landlord came to the tenant’s
apartment to collect the rent he caressed her arm and back, and said that if
she could not pay the rent, she could “take care of it in other ways”; when
she slammed the door in his face, he called her a “bitch” and a “whore.”
The Seventh Circuit noted that employment discrimination cases had

1372
recognized sex discrimination in the context of a “hostile environment”
and that those cases required the employer’s conduct to be “sufficiently
severe or pervasive to alter the conditions of the victim’s employment,” id.
at 1008 (quoting Harris v. Forklift Systems, Inc., 510 U.S. 16, 21 (1993)),
and that this one incident did not rise to that level. Do you agree? See
Michele Adams, Knowing Your Place: Theorizing Sexual Harassment at
Home, 40 Ariz. L. Rev. 17 (1998) (arguing that housing discrimination
should be subject to different standards than employment discrimination
because of the importance of the home as a safe place).
Would the plaintiff in DiCenso have a remedy under §3604(c)? See
Robert G. Schwemm & Rigel C. Oliveri, A New Look at Sexual
Harassment Under the Fair Housing Act: The Forgotten Role of §3604(c),
2002 Wis. L. Rev. 771, 814-815 (arguing in the affirmative).
3. Domestic violence and the Fair Housing Act. Victims of domestic
violence can subsequently suffer housing discrimination as a result. For
example, landlords sometimes evict survivors of domestic violence under
“zero-tolerance” policies that mandate eviction for criminal activity or
because of complaints by other tenants. See Lenora M. Lapidus, Doubly
Victimized: Housing Discrimination Against Victims of Domestic Violence,
11 J. Gender, Soc. Poly. & L. 377 (2003). A handful of cases have
addressed whether such evictions constitute discrimination on the basis of
sex under the Fair Housing Act, given that the overwhelming majority of
victims of domestic violence are women. For example, in Bouley v. Young-
Sabourin, 394 F. Supp. 2d 675 (D. Vt. 2005), a woman had called the
police after her husband attacked her in the apartment they had rented with
their two children upstairs from their landlord. The woman obtained a
restraining order against her husband, who eventually pled guilty to
criminal charges related to the incident. Three days after the assault, the
landlord visited the woman, attempting to resolve the dispute, and
allegedly sought to engage in a discussion of religion. The victim got upset
and the landlord left. Later that day, the landlord served the victim with a
notice of eviction, citing a provision of the lease that provided that the
tenant “will not use or allow said premises or any part thereof to be used
for unlawful purposes, in any noisy, boisterous or any other manner
offensive to any other occupant of the building.” Ruling on cross-motions
for summary judgment, the court held that the victim had presented a
prima facie case of sex discrimination (and discrimination on the basis of
religion) under the Fair Housing Act.
Title VI of the Violence Against Women Reauthorization Act of 2013,
Pub. L. No. 113-4, 127 Stat. 54 (Mar. 7, 2013), reauthorized provisions of

1373
the former Violence Against Women Act, 42 U.S.C. §14043e et seq., that,
since 2005, had provided victims of domestic violence with some
protection from eviction. The 2013 Reauthorization Act expanded these
protections to include a much wider range of federally subsidized housing
programs than the earlier 2005 version.
4. Sexual orientation. It is quite clear that a landlord commits race
discrimination if she refuses to rent to a white female tenant because that
tenant’s boyfriend is African American. By analogy, it appears clear that a
refusal to rent to someone who is gay commits sex discrimination because
the denial is based on the sex of the persons to whom the prospective
tenant is attracted or has a relationship. In addition, such a landlord is
engaged in a form of sex stereotyping by assuming that tenants should
have sexual partners only of the opposite sex. See Price Waterhouse v.
Hopkins, 490 U.S. 228 (1989) (sex discrimination in employment when
employer engaged in sex stereotyping by not giving partnership to a
woman who was deemed “too masculine”). However, no court has held
that discrimination in the housing market on the basis of sexual orientation
constitutes sex discrimination, partly because only about 20 states have
statutes expressly prohibiting discrimination in public accommodations or
housing on the basis of sexual orientation, see §2.5, below, and the courts
have interpreted the antidiscrimination laws not to show evidence of a
legislative intent to prohibit discrimination based on sexual orientation.
5. Enforcement and attorneys’ fees. Courts may award attorneys’
fees to the prevailing party in an FHA action. See 42 U.S.C. §3613(c).
Courts usually apply the “lodestar” approach to determining attorneys’
fees, which calculates the entitlement based on a determination of hours
reasonably expended and reasonable hourly rates. Can you see why
attorneys’ fee questions are particularly important in cases like Quigley?

Problems
1. If a landlord excludes single males while renting to single females
and married couples, has he engaged in prohibited sex discrimination?
2. If a landlord decides not to count alimony and child support in
determining whether divorced women are qualified to rent, has the
landlord engaged in prohibited sex discrimination?
3. An owner of a house lives in the first-floor apartment and rents the
top floor as a separate apartment. The owner sexually harasses the tenant,
engaging in the same kind of outrageous conduct as the landlord in
Quigley v. Winter. What legal rights does the tenant have?

1374
 4. A gay male couple wishes to rent an apartment, and the landlord
refuses because of their sexual orientation. The landlord rents other
apartments to unmarried heterosexual couples. One of the two men sues
the landlord under the Fair Housing Act, claiming that the landlord
discriminated against him “because of sex,” arguing that if he had been a
woman, the landlord would have rented the apartment to the couple. Does
the landlord’s conduct constitute sex discrimination?

§2.4 Discrimination Based on Familial Status

Human Rights Commission v. LaBrie, Inc.

668 A.2d 659 (Vt. 1995)

Map: 4102 VT Route 14,

Williamstown,
Vermont

FREDERIC W. ALLEN, Chief Justice.

Defendants LaBrie, Inc., Linda LaBrie and Ernest LaBrie appeal from
superior court orders, which held that defendants committed unfair
housing practices by discriminating against persons with minor children in
violation of Vt. Stat. tit. 9 §4503(a). Defendants claim that the court’s
findings on disparate-treatment discrimination are clearly erroneous
because the evidence did not show any intent to discriminate, [and] the
court committed plain error by holding Ernest LaBrie personally liable for
unfair housing practices. We affirm.
On May 1, 1981, Linda and Ernest LaBrie purchased Limehurst
Mobile Home Park. The Park consists of thirty-three mobile home lots.
Most of the residents own their own mobile homes and rent only the lot.
LaBrie, Inc. purchased the Park from Ernest and Linda LaBrie on October
30, 1987. Ernest and Linda LaBrie are the sole corporate officers and
shareholders of LaBrie, Inc. Ernest LaBrie is the president, and Linda
LaBrie is the vice-president and treasurer. The office of LaBrie, Inc. is in
their home. The Park is managed primarily by Linda, who is responsible
for renting units, collecting rent, and making all general management
decisions. She also sets policies, rules, and lease terms, and approves
residents for tenancy. Ernest is primarily responsible for maintenance

1375
under the direction of Linda but is aware of the decisions made by Linda.
When the LaBries purchased the Park, the lease term on occupancy
stated “that only one family shall occupy a mobile home on a permanent
basis.” In 1982, the LaBries changed the occupancy provision to:

Lessees, who have entered into a lease agreement after April 1, 1982, shall
not be permitted to have children under the age of 18 years reside in their
mobile home unit. Lessee hereby agrees that lessee shall terminate this lease
and vacate the premises prior to having said children reside in their mobile
home. (Emphasis added.)

In July 1988, the occupancy provision was essentially the same but
stated in addition, “This age restriction applies to all lots at Limehurst
Mobile Home Park based on VSA 9-4508(b).”
In April 1989, the occupancy provision was revised to state:

Lessees who have entered into a lease agreement after July 1, 1988 shall not
be permitted to have more than two permanent occupants per lease premises.
Lessees prior to July 1, 1988, who have more than two permanent occupants
shall be grandfathered, but the number of occupants cannot expand beyond
what existed as of July 1, 1988. (Emphasis added.)

Currently, only one mobile home in the Park houses a family with a
minor child. This family moved into the Park prior to 1982. No persons
with minor children moved into the Park after the LaBries purchased it,
even after the occupancy provision was changed from adults-only to a
two-occupant maximum. The population of the Park declined from May
1981 to May 1990, from ninety-five residents to sixty residents. The
LaBries also own two other mobile home parks, four homes leased as
residential units, and twelve mobile homes throughout Vermont. There are
minor children living in many of these homes.
Scott and Luanne McCarthy purchased a mobile home in the Park for
$7,000 in August 1986. Linda LaBrie sent them a letter on August 1, 1986,
accepting their application, and stating: “We remind you that Limehurst
Mobile Home Park is an adult park and if you should have children in the
future you will be required to vacate Limehurst Mobile Home Park prior to
the arrival of said child.” In July 1989, the McCarthys contacted a broker
to sell their mobile home because Luanne was pregnant. The broker
determined that the McCarthys should ask $18,000 for their home.
The McCarthys’ son was born September 18, 1989. When they
returned home from the hospital, they found a letter from Linda LaBrie
informing them that they must vacate the premises “upon arrival of your

1376
third occupant.” Following the letter, the McCarthys received telephone
calls, visits, and additional letters from Linda LaBrie telling them to vacate
the Park. On December 28, 1989, the McCarthys were served with a
summons and complaint for eviction brought by the LaBries in the name
of LaBrie, Inc. d/b/a Limehurst Mobile Home Park.
When the McCarthys informed the LaBries that they had accepted a
deposit for the sale of their home, the LaBries delayed the sale, indicating
that they would not act on the purchasers’ application until the eviction
action was resolved. The purchasers’ application was approved February
25, 1990, and the McCarthys sold their mobile home on March 2, 1990,
for $13,000. At trial, the broker testified that one-half of potential
purchasers were ineligible because a minor child in the family put them
over the occupancy limit. There was conflicting evidence regarding the
value of the home, but the court determined that the fair market value of
the home at the time of the sale was $13,000.
From September 1989 through March 1990, while living at the Park,
Luanne McCarthy felt humiliated by Linda LaBrie’s demands to vacate the
premises. Consequently, she did not leave her home often. She was unable
to sleep and had chest pains. The McCarthys moved from the Park to the
home of Scott McCarthy’s parents, where they had to share a family room
in the basement with their newborn child. Luanne McCarthy worried about
their inability to find their own housing; her chest pains increased and she
was given two medications to relieve stress.
The McCarthys filed a complaint with the Human Rights Commission,
which commenced this action in Washington Superior Court in October
1990, alleging that defendants LaBrie, Inc., Linda LaBrie, and Ernest
LaBrie violated the Fair Housing and Public Accommodations Act, Vt.
Stat. tit. 9 §4503(a)(1)-(3), by discriminating against persons intending to
occupy a dwelling with one or more minor children. The Commission
contended that the restrictive occupancy limit for the Park (1) was adopted
for the purpose of discriminating against persons with minor children by
either limiting or eliminating them from occupancy in the Park, and (2)
although facially neutral, has an unlawful discriminatory impact because it
excluded persons with minor children in significant numbers. Defendants
maintained that the occupancy limit was necessary due to limited water
and septic capacity.
At trial, both parties presented expert testimony on the capacity of the
septic system and water supply at the Park. Defendants’ expert testified
that the septic system at the Park was adequate to serve a maximum of
sixty-six people. The court found that the expert had not performed the
tests necessary to properly assess the potential capacity of the septic

1377
system, and concluded that there was no credible evidence that the system
could not support an increase in population in the Park. Similarly, the court
found that there was no credible evidence that water supply or water
pressure was inadequate to serve more than sixty-six people. Although the
court acknowledged the LaBries’ fear that problems — which had existed
prior to installation of a new well and replacement of their leachfields —
would reoccur, it concluded that the LaBries have less restrictive
alternatives available to them than the two-person occupancy limit.
The court concluded that plaintiff had established that the McCarthys
were evicted due to the presence of a minor child, and that persons with
minor children were constructively denied access to housing in the Park by
the two-person occupancy limit. Further, the court concluded that
defendants had not established the occupancy limit as a legitimate business
necessity arising from septic and water capacities of the Park.
Accordingly, the court held that defendants had violated Vt. Stat. tit. 9
§4503(a) and awarded the McCarthys $2,700 in attorney’s fees for the
eviction proceeding, $1,500 for the emotional distress and humiliation
suffered as a result of defendants’ actions, $3,000 for loss of civil rights
caused by the eviction and by restricting potential purchasers, and $3,000
in punitive damages. The court also awarded the Human Rights
Commission civil penalties of $6,000. In subsequent orders, the court
permanently enjoined defendants from adopting or enforcing a two-
person-per-lot occupancy limit at the Limehurst Mobile Home Park, and
awarded plaintiff $51,072 in attorney’s fees, $2,194.39 for expenses and
$240 for discovery costs. Defendants appeal.
The Vermont Fair Housing and Public Accommodations Act (FHPA),
Vt. Stat. tit. 9 §§4500-4507, prohibits discrimination in renting “a dwelling
or other real estate to any person because of the race, sex, sexual
orientation, age, marital status, religious creed, color, national origin or
handicap of a person, or because a person intends to occupy a dwelling
with one or more minor children, or because a person is a recipient of
public assistance.” Vt. Stat. tit. 9 §4503(a)(1). Discrimination on the basis
of age, or because a person intends to occupy a dwelling with one or more
minor children, has been prohibited in the rental of dwelling units in
Vermont since 1986.
Mobile home lot rentals were, however, covered by a separate
provision enacted in 1988, which did not strictly prohibit discrimination on
the basis of age or because a person intended to occupy a dwelling with
one or more minor children. The mobile-home-lot-rental provision was
repealed in 1989, when the Legislature revised Vermont’s housing
discrimination laws to comply with the federal Fair Housing Act

1378
Amendments of 1988. Thus, Vermont’s general housing-discrimination
provision has been applicable to the rental of mobile home lots since 1989.
FHPA is patterned on Title VIII of the Civil Rights Act of 1968 (Fair
Housing Act), 42 U.S.C. §§3601-3631, and therefore, in construing FHPA,
we consider cases construing the federal statute. Courts analyzing Title
VIII, the federal housing-discrimination statute, often rely on cases
analyzing Title VII, the federal employment-discrimination statute.
Accordingly, we also consider Vermont and federal employment-
discrimination law in analyzing the instant case.
Plaintiff alleged violations of FHPA under two theories of
discrimination law: (1) disparate treatment — defendants intentionally
discriminated against members of a statutorily protected category because
of their membership in that group, and (2) disparate impact — defendants’
facially neutral policy has a disproportionate effect on a statutorily
protected category. The trial court found defendants liable for housing
discrimination under both theories. We do not address defendants’
challenges to the trial court’s finding of disparate impact because we
uphold the trial court’s decision on the theory of disparate treatment.
Defendants first claim that the court erred in finding disparate
treatment or intent to discriminate in the absence of any direct evidence of
discrimination against persons with minor children. Intentional
discrimination may be shown by circumstantial or direct evidence. Thus,
the short answer to defendants’ challenge is that no direct evidence is
necessary to prove a disparate-treatment discrimination claim. Indeed,
direct evidence of unlawful discrimination is often difficult to obtain.
In this case, however, plaintiff presented direct evidence of
discrimination. [E]vidence of a discriminatory practice prior to civil rights
legislation, coupled with a post-legislation pattern of maintaining the status
quo, may be sufficient to establish the intent to continue the discrimination
through a neutral policy. In this case, the trial court found that defendants
clearly excluded minor children from the Park prior to 1989. That year,
Vermont’s mobile-home-lot-rental provision was repealed, and defendants
changed the occupancy provision in their leases from adults-only to a two-
person maximum. Although the new occupancy provision appears neutral
on its face, defendants have maintained the status quo at the Park — no
minor children have moved into the Park since defendants purchased it.
This evidence is sufficient to infer that the two-person occupancy limit
was adopted for the purpose of eliminating or limiting persons with minor
children from the Park. Based on defendants’ actions against the
McCarthys and defendants’ pattern and practice of excluding minor
children from the Park, we conclude that there was no clear error in the

1379
trial court finding an intent to discriminate against persons intending to
occupy a dwelling with one or more minor children.
Pursuant to Vt. Stat. tit. 9 §4504(4), defendants assert as an affirmative
defense that their actions against the McCarthys were based on a
legitimate, nondiscriminatory occupancy limit. Section 4504(4) provides
that the unfair-housing-practices provisions do not apply “to limit a
landlord’s right to establish and enforce legitimate business practices
necessary to protect and manage the rental property, such as the use of
references. However, this subdivision shall not be used as a pretext for
discrimination in violation of this section.” FHPA is a remedial statute;
thus, we construe it generously and read exemptions narrowly.
At trial, defendants maintained that their occupancy limit is based on
legitimate septic and water capacity considerations. They presented
evidence that the septic system at the Park was capable of handling a
maximum of sixty-six people — or two persons per lot. They also
presented evidence on the limits of the Park’s water supply. The trial court
rejected this defense, finding that defendants had failed to present credible
evidence that an increase in the number of occupants per living unit would
adversely affect the septic or water systems. It also found that there are
less restrictive alternatives available to defendants. The court, therefore,
concluded that the business necessity advanced by defendants was not
legitimate, but rather, a mere pretext for discriminating against persons
with minor children.
The federal Fair Housing Act has an occupancy restriction provision,
which allows only reasonable local, state or federal restriction on the
maximum number of occupants per dwelling. See 42 U.S.C.A. §3607(b)
(1). Courts have found privately imposed occupancy limits, such as the
limit imposed by defendants in this case, to unreasonably limit or exclude
persons with minor children, and therefore, violate the Fair Housing Act.
See, e.g., United States v. Lepore, 816 F. Supp. 1011, 1023 (M.D. Pa.
1991) (court cannot conclude two-person-per-mobile-home lot limitation
is reasonable when defendants have never attempted any water-saving or
septic-system alternatives). We agree that a privately enforced occupancy
limit must be at minimum reasonable. Defendants failed to show that their
actions against the McCarthys were reasonable or that the sixty-six-person
limit was reasonable.

Notes and Questions

Familial versus marital status. The FHA prohibits discrimination
based on familial status, which does not cover marital status. See White v.

1380
U.S. Department of Housing and Urban Development, 475 F.3d 898, 906
(7th Cir. 2007). However, a number of state and local antidiscrimination
statutes do explicitly prohibit discrimination on the basis of marital status.
In McCready v. Hoffius, 586 N.W.2d 723 (Mich. 1998), defendants were
found to have violated the Michigan Civil Rights Act, Mich. Comp. Laws
§37.2502(1), by refusing to rent to an unmarried couple. The court
interpreted the statutory phrase “marital status” to apply to both married
and unmarried individuals and rejected the argument that the defendant
landlords were discriminating based on the conduct of unmarried
cohabitation. The landlords’ objection was primarily that their refusal to
rent was constitutionally protected “free exercise” of religion. The court
initially rejected this religious defense under the first amendment and the
Michigan constitution, finding the statute validly to apply as a neutral law
of general applicability with no religious motivation. The court later
vacated the decision and remanded the case to determine whether the
statute violated the landlords’ free exercise rights by requiring them to rent
to a cohabiting unmarried couple, 593 N.W.2d 545 (Mich. 1999). Do you
agree with the court’s initial approach or does a neutral statute that
requires landlords to rent in violation of their sincerely held religious
beliefs unconstitutionally infringe on the free exercise of religion?

Problems
1. A landlord refused to rent to a childless married couple when they
refused to sign a document stating that they would not have children while
living in the apartment and would move if the wife became pregnant.
Wasserman v. Three Seasons Association No. 1, Inc., 998 F. Supp. 1445
(S.D. Fla. 1998). They sued the landlord under the Fair Housing Act,
claiming discrimination because of familial status. The landlord contended
that the couple is not covered by 42 U.S.C. §3602(k) because they were
not yet living with a child, and the woman was not pregnant. The
prospective tenants contended, however, that they were “aggrieved
persons” entitled to bring a lawsuit. The Fair Housing Act defines
“aggrieved person” to include “any person who — (1) claims to have been
injured by a discriminatory housing practice; or (2) believes that such
person will be injured by a discriminatory housing practice that is about to
occur.” §3602(i). Judge James Lawrence King ruled in favor of the
landlord, ruling that plaintiffs were not “aggrieved persons” within the
meaning of the FHA because their claimed injury did not bear a sufficient
nexus to actual discrimination against members of a protected class. What
is the plaintiffs’ argument that the landlord did violate the FHA? What is

1381
the defendant’s response? How should the court have ruled?
2. A lesbian couple applies for a foster parents license. Before they are
licensed by the state, they notify their landlord of their intention to act as
foster parents. The landlord objects and sues to evict them. The tenants
argue that they are protected by the “familial status” provisions of the Fair
Housing Act because, as foster parents, they would be the “designee” of
the children’s legal guardian (the state agency in charge of the child). See
42 U.S.C. §3602(k)(2). The landlord contends that they are not protected
by the statute since they have not yet been designated as foster parents and
are not yet living with a foster child. Moreover, the landlord points to the
qualification in the definition of “familial status” in §3602(k), which states
that “[t]he protections against discrimination on the basis of familial status
shall apply to any person who is pregnant or is in the process of securing
legal custody of any individual who has not attained the age of 18 years.”
The landlord notes that prospective foster parents are not “pregnant”;
moreover, they are not in the process of “securing legal custody” since the
state is the legal guardian of foster children and foster parents are mere
“designees” of the state. Are prospective foster parents protected by the
Fair Housing Act? For one view, see Gorski v. Troy, 929 F.2d 1183 (7th
Cir. 1991) (holding that they are protected by the FHA).
3. A landlord converts an apartment building to housing for older
persons, evicting current tenants who have children. Are those tenants
protected under the Fair Housing Act?
4. In Hudson View Properties v. Weiss, 450 N.E.2d 234 (N.Y. 1983), a
landlord sought to evict a tenant from a rent-controlled apartment on the
ground that she had breached a term in her lease under which she
covenanted not to allow anyone to occupy the premises with her who was
not a member of her “immediate family.” She lived with a man “with
whom she [had] a loving relationship,” but the landlord claimed that,
because the couple was not married, the man was not a part of the tenant’s
immediate family. The tenant argued that the lease term discriminated
against her on the basis of marital status. The court found that the man was
not a member of the tenant’s “immediate family” and that it would not
constitute marital status discrimination to enforce the covenant. Do you
agree?

§2.5 Discrimination Based on Sexual Orientation

State ex rel. Sprague v. City of Madison

1382
 555 N.W.2d 409 (Wis. Ct. App. 1996)
ROBERT D. SUNDBY, J.
Ann Hacklander-Ready and Maureen Rowe appeal from a decision
affirming the Madison Equal Opportunity Commission’s (MEOC)
Decision and Order which found that they refused to rent housing to Carol
Sprague as their housemate because of her sexual orientation, in violation
of §3.23(4)(a) of the Madison General Ordinances (MGO).8 We conclude
that the trial court correctly found that §3.23, MGO, unambiguously
applied to housemates at the time this action arose.
At all times relevant to this action Hacklander-Ready leased a four-
bedroom house. She had the owner’s permission to allow others to live
with her and share in the payment of rent. In the fall of 1988, Maureen
Rowe began living with Hacklander-Ready and paying rent. In April 1989
they advertised for housemates to replace two women who were moving
out. They chose Sprague from among numerous applicants. They knew her
sexual orientation when they extended their offer to her. Sprague accepted
their offer and made a rent deposit on May 4, 1989. However, the
following day Hacklander-Ready informed Sprague that they were
withdrawing their offer because they were not comfortable living with a
person of her sexual orientation.
Sprague filed a complaint with MEOC alleging that appellants
discriminated against her on the basis of sexual orientation, contrary to
§3.23(4)(a), MGO.
At the time of the events in issue, §3.23, MGO, provided:

(1) Declaration of Policy. The practice of providing equal opportunities in

housing . . . without regard to . . . sexual orientation . . . is a desirable goal of
the City of Madison and a matter of legitimate concern to its government. In
order that the peace, freedom, safety and general welfare of all inhabitants of
the City may be protected and ensured, it is hereby declared to be the public
policy of the City of Madison to foster and enforce to the fullest extent the
protection by law of the rights of all its inhabitants to equal opportunity to . .
. housing.
(2)(b) “Housing” shall mean any building, structure, or part thereof which
is used or occupied, or is intended, arranged or designed to be used or
occupied, as a residence, home or place of habitation of one or more human
beings.
(4) It shall be an unfair discrimination practice and unlawful and hereby
prohibited:
(a) For any person having the right of ownership or possession or the
right of transfer, sale, rental or lease of any housing, or the agent of any
such person, to refuse to transfer, sell, rent or lease, or otherwise to deny

1383
 or withhold from any person such housing because of . . . sexual
orientation.
(b) Nothing in this ordinance shall prevent any person from renting or
leasing housing, or any part thereof, to solely male or female persons if
such housing or part thereof is rented with the understanding that toilet
and bath facilities must be shared with the landlord or with other tenants.

Sprague claims that §3.23, MGO, was intended to apply to housemate

arrangements.9 Section 3.23(4), MGO, unambiguously prohibits any
person having right of rental to refuse to rent to any person because of the
person’s sexual orientation. Hacklander-Ready concedes that she held the
lease to the house and that she had the right to rent the property to others.
Further, she and Rowe admit that the sole reason they withdrew their offer
was Sprague’s sexual orientation. Finally, the room that appellants sought
to rent falls within the definition of housing under §3.23(2)(b), MGO, as a
part of a building intended as a place of habitation for one or more human
beings.
While appellants correctly argue that a statute is ambiguous if it may
be construed in different ways by reasonably well-informed persons, we
fail to see any reasonable interpretation that would make §3.23, MGO,
inapplicable in this case. Appellants also correctly note that a court may
resort to construction if the literal meaning of a statute produces an absurd
or unreasonable result. However, applying §3.23(4) to the rental of a room
within a house with shared common areas is not unreasonable or absurd.
Because we find that the ordinance clearly and unambiguously applies to
the subleasing of housing by a person having the right of rental, our
inquiry in this respect is at an end.
Appellants argue that to apply the ordinance to the lease of housing by
a tenant to a housemate makes §3.24(4)(a), MGO, unconstitutional in its
application. Appellants cite many cases which they argue support their
constitutional challenge: NAACP v. Alabama, 357 U.S. 449 (1958);
Griswold v. Connecticut, 381 U.S. 479 (1965); Moore v. City of East
Cleveland, 431 U.S. 494 (1977). However, those cases deal either with the
right to privacy in the home or family or the right to engage in first
amendment activity free of unwarranted governmental intrusion.
Appellants gave up their unqualified right to such constitutional protection
when they rented housing for profit. The restrictions placed by the
Madison City Council on persons who rent housing for profit are not
unreasonable and do not encroach upon appellant’s constitutional
protections. We therefore reject appellants’ challenge to the
constitutionality of §3.24, MGO, as applied.

1384
 Notes and Questions
1. Prohibiting housing discrimination on the basis of sexual
orientation. In a landmark study, the Department of Housing and Urban
Development published the first national assessment of housing
discrimination based on sexual orientation. The study used nearly 7,000
matched-pair testers to study the experience of same-sex couples searching
on-line for rental housing in 50 randomly selected housing markets across
the country. The study concluded that “[s]ame-sex couples are
significantly less likely than heterosexual couples to get favorable
responses to e-mail inquiries about electronically advertised rental
housing,” and that “heterosexual couples were favored over gay male
couples in 15.9 percent of tests and over lesbian couples in 15.6 percent of
tests.” M. Davis & Co., et al., U.S. Dept. of Hous. & Urban Dev., An
Estimate of Housing Discrimination Against Same-Sex Couples vii (2013).
The Fair Housing Act does not address sexual orientation, but at least
20 states have passed statutes that specifically or by judicial interpretation
prohibit housing discrimination on that basis. For example, the Wisconsin
Equal Rights Law, Wis. Stat. §106.50(1), provides that “all persons shall
have an equal opportunity for housing regardless of . . . sexual
orientation.” Sexual orientation is defined as “having a preference for
heterosexuality, homosexuality, bisexuality, having a history of such a
preference or being identified with such a preference.” Wis. Stat.
§111.32(13m). The statute provides that it is unlawful to discriminate
“[b]y refusing to sell [or] rent . . . housing,” §106.50(2)(a), and “[by]
engaging in the harassment of a tenant,” §106.50(2)(f).
Other jurisdictions that prohibit housing discrimination on the basis of
sexual orientation include California, Cal. Civ. Code §51, Cal. Govt. Code
§12955; Colorado, Colo. Rev. Stat. §24-34-502; Connecticut, Conn. Gen.
Stat. §§46a-81a & 46a-81e; the District of Columbia, D.C. Code §§2-
1402.21; Hawai`i, Haw. Stat. §§368-1, 378-1 et seq.; Illinois, 775 Ill.
Comp. Stat. 5/3-101 to 5/3-106; Iowa, Iowa Code §216.8; Maine, Me.
Rev. Stat. tit. 5, §§4552, 4582; Maryland, Md. Code art. 20, §20-707;
Massachusetts, Mass. Gen. Laws ch. 151B, §1 et seq.; Minnesota, Minn.
Stat. §§363A.03(44) & 363A.09; New Hampshire, N.H. Rev. Stat. §§354-
A:8 to 354-A:10; New Jersey, N.J. Stat. §10:5-1 et seq.; New Mexico,
N.M. Stat. §28-1-7; New York, N.Y. Exec. Law §291; Oregon, Or. Rev.
Stat. §659A.421(2); Rhode Island, R.I. Gen. Laws §§34-37-1 to 34-37-5.4;
Vermont, Vt. Stat. tit. 9, §§4502, 4503; and Washington, Wash. Rev. Code
§39.60.222.
More than 200 cities also have passed local ordinances prohibiting

1385
discrimination in the real estate market based on sexual orientation or
gender identity. See, e.g., Boston Code tit. 12, ch. 40; Chicago Mun. Code,
ch. 199; Los Angeles Mun. Code, ch. IV; New York City, Admin. Code
§8-102(20); Philadelphia Fair Prac. Ordinance, ch. 9-1100; and San
Francisco Code, art. 33, §3301. For a review of the law on discrimination
based on sexual orientation, see William B. Rubenstein, Jane S. Schacter
& Carlos A. Ball, Cases and Materials on Sexual Orientation and the Law
(5th ed. 2014).
2. Housing discrimination on the basis of sexual orientation and
gender identity in federal housing programs. HUD has issued a rule,
Equal Access to Housing in HUD Programs Regardless of Sexual
Orientation or Gender Identity, 77 Fed. Reg. 5662 (Feb. 3, 2012), “to
ensure that its core programs are open to all eligible individuals and
families regardless of sexual orientation, gender identity, or marital
status.” Id. Given evidence “that lesbian, gay, bisexual, and transgender
(LGBT) individuals and families are being arbitrarily excluded from
housing opportunities,” id., the rule requires that eligibility determinations
for a variety of HUD-assisted housing be made without regard to actual or
perceived sexual orientation, gender identity, or marital status, generally
prohibits inquiries by HUD-funded providers into these issues when
making housing available, and broadens the definition of family in a
number of programs.
In the agency’s first enforcement action under the new rule, Bank of
America settled a claim brought by a lesbian couple who were denied a
mortgage because they were not married. Bank of America agreed to pay a
fine of $7,500 and update its fair lending training. See HUD Announces
Agreement with Bank of America to Settle LGBT Discrimination Claim
(Press Release Jan. 2, 2013). In 2012, HUD insured roughly 15 percent of
all single-family home-purchase loans, see FHA Single Family Activity in
the Home-Purchase Market Through July 2012, available at
http://portal.hud.gov/hudportal/HUD?
src=/program_offices/housing/rmra/oe/rpts/fhamktsh/fhamkt, which
means that the new rule will reach both traditional housing subsidy
programs as well as a significant portion of general single-family home
purchases.
3. Housing discrimination on the basis of sexual orientation by a
roommate. The Sprague court found that the ordinance unambiguously
applied to choices of roommates. Do you agree? Does the Ninth Circuit’s
decision in Roommate.com (see §1.3, above) suggest arguments on the
other side?

1386
 4. Housing discrimination on the basis of sexual orientation by a
cooperative corporation. In 170 West 85 Street HDFC v. Jones, 673
N.Y.S.2d 830 (Civ. Ct. 1998), the court held that a cooperative corporation
may have engaged in unlawful discrimination because of sexual
orientation when it refused to allow Vance Jones, the gay life partner of
Richard Watts, an owner of a cooperative apartment who had died of
AIDS, to purchase the unit and remain living there. The proprietary lease
provided that the corporation could not “unreasonably withhold consent to
assignment of the lease and a transfer of the Shares to a financially
responsible member of the Shareholder’s family (other than the
Shareholder’s spouse, as to whom no consent is required) who shall have
accepted all the terms and conditions of this lease.” Id. at 834 (emphasis in
original). Both a New York City ordinance and the lease itself prohibited
the corporation from discriminating on the basis of sexual orientation.
Citing an earlier rent control case that defined a gay life partner to be a
“family” member for the purpose of succeeding to rights in a rent-
controlled apartment, Braschi v. Stahl Associates, 543 N.E.2d 49 (N.Y.
1989), the court noted that Jones fit within a “more comprehensive
definition of family member.” 673 N.Y.S.2d at 834. This would thus
negate the corporation’s assertion that Jones was “a licensee whose license
had expired, thereby vitiating any independent non-discriminatory grounds
which [it] could have asserted to obtain possession of the subject
apartment.” Id.
5. Damages. In Application of 119-121 East 97th Street Corp. v. New
York City Commission on Human Rights, 642 N.Y.S.2d 638 (App. Div.
1996), the court upheld a damages award of $100,000 for mental anguish
and imposed a civil penalty of $25,000 against landlords who had engaged
in highly abusive conduct toward a gay tenant with AIDS. The defendants
had burglarized the tenant’s apartment, disabled his door locks, turned off
his electricity, refused to accept his timely rent checks, refused to renew
his lease, and commenced eviction proceedings against him. They had also
verbally and physically accosted him in public, calling him a “faggot
punk,” “male whore,” and “sicko.” They knew he had AIDS and told him
they hoped he died. They left threatening messages on his answering
machine, distributed a notice to tenants in his building informing them of
his Human Rights complaint and HIV status, and warned the tenants not to
cooperate with him. The court upheld the damages award on the ground
that the abuse was both “horrendous” and malicious, id. at 644:

In any event, decency and justice call out for redress to this respondent. The
award herein will not only compensate complainant for the mental distress he

1387
 suffered but will also serve as a deterrent to others who might emulate
petitioners’ actions. An agenda of spite, malice and bias, acted upon over an
extended period of time, resulting in the severe emotional and mental abuse
of a tenant, seriously ill with AIDS, will not be met with half-hearted
sanctions or “slaps on the wrist,” and we concur in the award for mental
anguish.

Problems
1. A lesbian couple living in a 25-unit apartment building is often
taunted by teenagers living across the street whenever the couple leaves or
enters the building.
a. Does the couple have a claim against the teenagers under the
Wisconsin statute?
b. Suppose the teenagers live in the same building on another floor.
The couple asks the landlord to stop the abusive conduct; the landlord
does nothing. Does the couple have a claim against the landlord for
violating the Wisconsin statute?
2. An owner of a three-unit building lives on the first floor with her
six-year old son and rents out the apartments on the second and third
floors. Her city prohibits housing discrimination on the basis of both
marital status and sexual orientation.
a. She refuses to rent to unmarried couples because she believes that
her religion would count it to be a sin for her to facilitate sexual
relations outside of marriage. She has therefore refused to rent the
apartments either to same-sex couples or to male-female couples who
are not married. She has, however, rented the second-floor apartment to
a gay man under a lease that prohibits him from having long-term
visitors. When an unmarried lesbian couple seeks to rent the third-floor
apartment, she refuses. Her city has an ordinance prohibiting
discrimination “because of” marital status and sexual orientation. Has
she violated the law?
b. Now assume she rents the second-floor apartment to an unmarried
male-female couple and offers the third-floor apartment for rent. She is
willing to rent to individuals regardless of their sexual orientation and
to male-female couples whether or not they are married. However, she
will not rent to a gay or lesbian couple and insists on a lease that would
prohibit subletting and having long-term visitors. Although her religion
is opposed to cohabitation outside of marriage, she does not feel it is a
sin to rent to an unmarried straight couple. However, her religion
strongly condemns same-sex sexual relationships, and it would violate

1388
 her sincerely held religious beliefs to rent to a cohabiting same-sex
couple. She is sued by a gay male couple when she refuses to rent them
the open apartment. Has she violated the law?
3. A state court rules that a state statute entitles landlords to refuse to
rent apartments to gay, lesbian, and bisexual persons because such rentals
would substantially burden their exercise of their religion and that
eradication of discrimination because of sexual orientation was not a
“compelling state interest” within the meaning of the state religious
freedom statute. Another landlord refuses to rent to heterosexual couples
on the ground that landlords are entitled to use religious reasons to refuse
to rent to gay couples. She claims that her religious beliefs support the
choice to engage in a same-sex relationship and that she wants to make
housing available to gay and lesbian couples who may have trouble
finding housing elsewhere. Has she violated the state statute prohibiting
discrimination on the basis of sexual orientation?

§2.6 Source of Income and Other Economic Discrimination

DiLiddo v. Oxford Street Realty, Inc.

876 N.E.2d 421 (Mass. 2007)

MARGARET MARSHALL, Chief Justice.
Massachusetts law prohibits landlords from discriminating against
tenants who receive public housing subsidies either “because the
individual is such a recipient,” or “because of any requirement” of the
subsidy program. Mass. Gen. Laws ch. 151B, §4(10).10 We consider in
this case whether, consistent with that statute, a landlord may refuse to rent
an apartment to a participant in a subsidy program for temporary housing
because the landlord considers the termination provisions of a form lease
provided by the subsidizing agency to be economically disadvantageous.
For the reasons discussed below, we conclude that the lease
termination provision at issue was a “requirement” of the alternative
housing voucher program (AHVP), the program that provided a housing
subsidy to Lori DiLiddo. We further conclude that, where the Legislature
has exercised its authority to set the balance between the protection of
landlords’ interests and the need for affordable housing, the defendants’
refusal to agree to the provision violated the strictures of Mass. Gen. Laws
ch. 151B, §4(10).
1. Background. [T]he AHVP subsidy program for temporary housing
was established following the abolition of rent control in the

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Commonwealth by popular initiative. See 1995 Mass. Acts ch. 179, §16.
The statute called on the Executive Office of Communities and
Development, now the Department of Housing and Community
Development (department), to “establish and administer a transitional
rental assistance program” for “eligible and qualified handicapped persons
of low income,” and to promulgate rules and regulations to implement the
program (emphasis added). Id. The statute specifies that program
participants pay a monthly rent on a rental unit limited to between twenty-
five and thirty per cent of their income, with the department paying the
remainder of the costs of the unit. Consistent with the transitional nature of
the subsidy, the statute also provides that “all participants in the program
shall be required, as a condition of their participation to accept suitable
permanent affordable housing in accordance with regulations established
by [the department] once such housing becomes available” (emphasis
added). Id.
Pursuant to the enabling statute, the department created the AHVP,
limiting eligibility to nonelderly, low income, handicapped persons. See
760 Code Mass. Regs. §53.03. Among the requirements of program
participation is that, “[w]hen a Participant chooses or is required to move,
the Participant shall give a calendar month’s written notice to the [local
agency administering the program] and to the Owner or Owner’s Agent.”
760 Code Mass. Regs. §53.07.
To administer the program, the department created a standard form
lease to be signed by all landlords and tenants participating in the program
(AHVP lease). Under the AHVP lease, tenancy is for a term of one year
and is automatically extended from year to year unless either the landlord
or the tenant gives sixty days’ notice of election not to renew the lease.
The AHVP lease does not allow either the landlord or the tenant to
terminate the lease early, except for certain enumerated reasons that
constitute “good cause.” In those cases, a landlord may terminate the lease
on thirty days’ notice, and a tenant on one month’s notice. To further
implement the transitional program, the department created an AHVP
voucher, which every participant in the program must sign. The voucher
requires participants to “[a]ttempt to locate other suitable housing for
which [the] AHVP subsidy is not necessary.” The voucher and standard
form lease each specify that the AHVP participant must give one calendar
month’s notice to both the landlord and the housing authority if suitable
permanent housing is found.
DiLiddo, who was disabled after an automobile accident in 1994, was
issued an AHVP voucher by the Cambridge Housing Authority in April,
1998. In late May, 1998, DiLiddo viewed an apartment located at 2

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Belvedere Place, in Cambridge. [After expressing interest in the apartment
and informing the landlord’s agent, Oxford Street Realty, Inc. (Oxford),
and its principal, Jeffrey W. Indeck, that she held an AHVP voucher,
Oxford initially agreed to rent her the apartment but reneged after
concluding that several of the AHVP form lease provisions were
“unreasonable and excessive.” Specifically, Indeck objected to the
provisions that would terminate the lease on one calendar month’s notice
“when the Tenant becomes a participant in another housing subsidy
program, or when the Tenant secures Suitable Permanent Housing, as
defined” in 760 Code Mass. Regs. §53.02. Indeck testified at his
deposition that he believed that these provisions placed an “unreasonable”
burden on landlords.]
2. The “requirement” provision of Mass. Gen. Laws ch. 151B, §4(10).
The question presented is a narrow one of statutory interpretation: Is the
one-month termination provision of the AHVP lease a “requirement” of
the AHVP, and, if so, is it a requirement that a landlord may reject for
purported financial reasons without running afoul of the housing
antidiscrimination law?
The relevant section of Gen. Laws ch. 151B makes it unlawful for a
landlord to discriminate against recipients of rental assistance or housing
subsidies “because of any requirement” of the “housing subsidy program.”
Mass. Gen. Laws ch. 151B, §4(10). The language is unambiguous. By its
plain terms, a “requirement” is “[s]omething that is required; a necessity.”
American Heritage Dictionary of the English Language 1533 (3d ed.
1992). [D]efendants suggest that the department lacked the authority to
require that a landlord use the AHVP lease because neither the statute nor
the regulations mandate any particular form of lease. Mass. Gen. Laws ch.
151B, §4(10), does not limit the scope of the term “requirement” to a
statutory provision or regulation, and their argument misconstrues the
legitimate reach of the department’s authority.
The Legislature granted the department broad authority to “establish
and administer” a transitional housing subsidy program. 1995 Mass. Acts
ch. 179, §16. The development of a standard form AHVP lease containing
clauses designed to implement the program’s transitional character is well
within the bounds of the department’s mandate from the Legislature.
The defendants argue that, even if the termination provisions of the
AHVP lease are “requirements” of the AHVP for purposes of our
antidiscrimination law, they may refuse to accept those requirements so
long as they had a “legitimate, non-discriminatory reason” for doing [so].
Put another way, they contend that, because they rejected the AHVP based
on a good faith attempt to serve the landlord’s economic interests and not

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from any discriminatory “animus,” they may not be held liable for housing
discrimination under Mass. Gen. Laws ch. 151B, §4(10). But it is Mass.
Gen. Laws ch. 151B, itself, not the defendants’ conception of what should
or should not constitute discrimination, that delineates what is “legitimate”
and “nondiscriminatory” under the statute. The statute contains no
language requiring a showing of “animus.”
The defendants urge that we read into the statute an exception that
would allow landlords to reject a participant in any housing subsidy
program whose requirements could cause the landlord “substantial
economic harm.” We may not rewrite the statute’s clear terms. The
General Court was aware that [the statute] imposed financial burdens on
landlords, and it made various policy judgments striking the balance
between those burdens and the public interest in making housing
accessible and affordable for disabled persons. Absent a challenge to the
reach of the statute itself, or a challenge to the scope of the implementing
regulations, we may not strike a different balance.
The AHVP housing subsidy program affects relatively few individuals.
But if landlords or their agents are permitted to reject for their own reasons
the “requirements” of the AHVP program, that could have, as the
Commonwealth argues, “a potentially widespread and profound impact on
the ability of residents in the Commonwealth to utilize any rental
assistance voucher to locate and then actually obtain affordable housing.”
The General Court has spoken unambiguously. The defendants have
proffered no basis for us to ignore its mandate.

Notes and Questions

1. Source of income and economic status. The Fair Housing Act does
not include economic status as a protected category, and the Supreme
Court generally reviews classifications by public entities based on wealth
for equal protection purposes on a deferential rational basis standard. See
San Antonio Independent School District v. Rodriguez, 411 U.S. 1 (1973).
However, a number of states and local governments include “source of
income” in their fair housing laws. See Robert G. Schwemm, Housing
Discrimination Law and Litigation, §30:3 n.3 (at least 12 states and 18
local governments bar source-of-income discrimination in housing); see,
e.g., Feemster v. BSA Limited Partnership, 548 F.3d 1063, 1070-1071
(D.C. Cir. 2008) (applying the District of Columbia Human Rights Act’s
prohibition on source-of-income discrimination to a landlord who
attempted to opt out of Section 8 program); Short v. Manhattan
Apartments, Inc., 916 F. Supp. 2d 375 (S.D.N.Y. 2012) (applying the New

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York City source-of-income statute to find brokers liable for refusing to
show apartments to prospective tenants who receive public assistance).
2. State constitutional claims. In the Mount Laurel case, Southern
Burlington County NAACP v. Township of Mount Laurel, 336 A.2d 713
(N.J. 1975), the New Jersey Supreme Court based its holding in part on
“the relation of housing to the concept of general welfare” under the New
Jersey constitution. See Chapter 7, §5. In Mount Laurel, the combination
of the fundamental importance of housing and the exclusionary nature of
the township’s land use regulations on low- and moderate-income people
was sufficient to violate the due process and equal protection clauses of the
New Jersey constitution.
3. Affirmatively furthering fair housing. As noted above, see §2.2,
the Fair Housing Act imposes an obligation on recipients of federal
housing and urban development funding affirmatively to further the
purposes of the act. 42 U.S.C. §3608(e)(5). In United States ex rel. Anti-
Discrimination Center of Metro New York, Inc. v. Westchester County, 712
F.3d 761 (2d Cir. 2013), the Westchester county executive had reached a
settlement in a case involving this “affirmatively to further” obligation.
The settlement’s consent decree required the county executive to promote
“legislation currently before the [County] Board of Legislators to ban
‘source-of-income’ discrimination in housing.” Id. at 768. A subsequently
elected county executive vetoed such legislation. The Second Circuit held
that the veto violated the consent decree. Id. at 771. Should affirmatively
furthering the Fair Housing Act include local government actions that
would not be directly required by the antidiscrimination provisions of the
act? What are the best arguments on each side?
4. Homelessness. What other legal tools might advocates draw on to
respond to economic discrimination in housing, particularly where
inability to pay denies housing altogether? See Chapter 1, §5.

Problem
A single mother of two children with a federal housing choice voucher
applies to rent an apartment from a private landlord in a small, five-unit
building in which the landlord lives. The landlord tells her that he is
sympathetic to her need for housing, and he gladly rents to a number of
other women like her, but the voucher program involves too much red tape
and is slow to make payments to landlords. As a result, he says, he cannot
accept her application. What legal rights does she have to challenge this
action?

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§3 DISPARATE IMPACT OR DISCRIMINATORY
EFFECTS CLAIMS
In Fair Housing Act disparate impact cases, a facially neutral housing-
related policy or practice is alleged to be discriminatory under the act
because the effects of that policy or practice vary based on a protected
category. Many disparate impact cases involve land use regulations and
related laws; the standards that govern such claims are similar to those
governing private-party practices, but can have some differences when it
comes to evaluating whether a challenged practice or policy is justified.11
Even though every circuit to address the question had ruled that
disparate impact claims may be brought under the Fair Housing Act, the
Supreme Court recently chose to address the question in Texas Department
of Housing & Community Affairs v. Inclusive Communities Project, Inc.,
135 S. Ct. 2507 (2015).12 In the case, the Inclusive Communities Project,
Inc. (ICP), a nonprofit housing assistance corporation, argued that the
point system the Texas Department of Housing and Community Affairs
had used to allocate low-income housing tax credits perpetuated
segregation by disproportionately placing such housing in predominantly
minority communities. The District Court found that ICP had established a
prima facie case of disparate impact, citing both the fact that “from 1999-
2008, [the Department] approved tax credits for 49.7% of proposed non-
elderly units in 0% to 9.9% Caucasian areas, but only approved 37.4% of
proposed non-elderly units in 90% to 100% Caucasian areas,” and that
“92.29% of [low-income housing tax credit] units in the city of Dallas
were located in census tracts with less than 50% Caucasian residents.” Id.
at 2514 (quoting 749 F. Supp. 2d 486, 499 (N.D. Tex. 2010)). The District
Court then found that, assuming the Department’s interests in the point
system were legitimate, it had failed to demonstrate that there were no less
discriminatory alternatives. The Fifth Circuit reversed and remanded,
citing a newly promulgated regulation from the U.S. Department of
Housing and Urban Development (HUD), 24 C.F.R. §100.500, that set a
different framework for evaluating disparate impact claims.13 The
Supreme Court granted certiorari on the threshold question whether such
claims are, in fact, cognizable.
By a 5-4 vote, the Court answered yes. Noting that the act makes it
unlawful to “otherwise make unavailable” housing because of race or other
characteristic, 42 U.S.C. §3604(a), the Court cited cases that had upheld
disparate impact claims in employment discrimination under §703(a) of
Title VII and §4(a) of the Age Discrimination in Employment Act of 1967

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with similar language focused on the consequences of actions rather than
“the mindset of actors.” 135 S. Ct. at 2518. The statutory phrase “because
of race,” the Court continued, does not require a showing of intentional
discrimination. The Court also noted that Congress had more than once
endorsed prior lower-court case law that had interpreted the act to include
a disparate impact claim.
The Court then focused on the purpose of the act — “to eradicate
discriminatory practices within a sector of our Nation’s economy,” id. at
2521 — to bolster its statutory argument.

These unlawful practices include zoning laws and other housing restrictions
that function unfairly to exclude minorities from certain neighborhoods
without any sufficient justification. Suits targeting such practices reside at
the heartland of disparate-impact liability. The availability of disparate-
impact liability, furthermore, has allowed private developers to vindicate the
FHA’s objectives and to protect their property rights by stopping
municipalities from enforcing arbitrary and, in practice, discriminatory
ordinances barring the construction of certain types of housing units.
Recognition of disparate-impact liability under the FHA also plays a role in
uncovering discriminatory intent: It permits plaintiffs to counteract
unconscious prejudices and disguised animus that escape easy classification
as disparate treatment. In this way disparate-impact liability may prevent
segregated housing patterns that might otherwise result from covert and illicit
stereotyping.

Id. at 2521-2522.
Despite this clear statutory and purposive argument, the Court held that
limitations on disparate-impact claims are necessary to avoid “serious
constitutional questions.” Id. at 2522. Such claims must focus on the
“‘removal of artificial, arbitrary, and unnecessary barriers,’ not the
displacement of valid governmental policies.” Id. (quoting Griggs v. Duke
Power Co., 401 U.S. 424, 431 (1971)). Thus, “housing authorities and
private developers” must be given “leeway to state and explain the valid
interest served by their policies [in a way that is] analogous to the business
necessity standard under Title VII.” Id. Similarly, “a disparate-impact
claim that relies on a statistical disparity must fail if the plaintiff cannot
point to a defendant’s policy or policies causing that disparity,” a standard
the Court described as a “robust causality requirement.” Id. And remedial
orders must be limited to eliminating the offending practice and should be
race-neutral where possible. Id. at 2524.
As we shall now see, the lower courts have just begun reconciling the
constitutional limitations the Court described with the framework for

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determining liability that HUD has promulgated.

§3.1 HUD’s Discriminatory Effects Rule

24 C.F.R. §100.500 — Discriminatory effect prohibited

Liability may be established under the Fair Housing Act based on a

practice’s discriminatory effect, as defined in paragraph (a) of this section,
even if the practice was not motivated by a discriminatory intent. The
practice may still be lawful if supported by a legally sufficient
justification, as defined in paragraph (b) of this section. The burdens of
proof for establishing a violation under this subpart are set forth in
paragraph (c) of this section.
(a) Discriminatory effect. A practice has a discriminatory effect where
it actually or predictably results in a disparate impact on a group of
persons or creates, increases, reinforces, or perpetuates segregated housing
patterns because of race, color, religion, sex, handicap, familial status, or
national origin.
(b) Legally sufficient justification. (1) A legally sufficient justification
exists where the challenged practice:
(i) Is necessary to achieve one or more substantial, legitimate,
nondiscriminatory interests of the respondent, with respect to
claims brought under 42 U.S.C. 3612, or defendant, with respect to
claims brought under 42 U.S.C. 3613 or 3614; and
(ii) Those interests could not be served by another practice that
has a less discriminatory effect.
(2) A legally sufficient justification must be supported by evidence
and may not be hypothetical or speculative. The burdens of proof for
establishing each of the two elements of a legally sufficient
justification are set forth in paragraphs (c)(2) and (c)(3) of this section.
(c) Burdens of proof in discriminatory effects cases. (1) The charging
party, with respect to a claim brought under 42 U.S.C. 3612, or the
plaintiff, with respect to a claim brought under 42 U.S.C. 3613 or 3614,
has the burden of proving that a challenged practice caused or predictably
will cause a discriminatory effect.
(2) Once the charging party or plaintiff satisfies the burden of proof
set forth in paragraph (c)(1) of this section, the respondent or defendant
has the burden of proving that the challenged practice is necessary to
achieve one or more substantial, legitimate, nondiscriminatory interests
of the respondent or defendant.
(3) If the respondent or defendant satisfies the burden of proof set

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 forth in paragraph (c)(2) of this section, the charging party or plaintiff
may still prevail upon proving that the substantial, legitimate,
nondiscriminatory interests supporting the challenged practice could be
served by another practice that has a less discriminatory effect.
(d) Relationship to discriminatory intent. A demonstration that a
practice is supported by a legally sufficient justification, as defined in
paragraph (b) of this section, may not be used as a defense against a claim
of intentional discrimination.

Notes and Questions

1. Doctrinal variation. In Villas West II of Willowridge Homeowners
Association v. McGlothin, 885 N.E.2d 1274 (Ind. 2008), the court noted
the varying standard that the circuits had taken in evaluating disparate
impact claims under the Fair Housing Act:

In [Metropolitan Housing Development Corp. v. Village of Arlington

Heights, 558 F.2d 1283 (7th Cir. 1977)], the Seventh Circuit held that
disparate impact recovery under the FHA is proper when the defendant’s
conduct produces a discriminatory effect and four factors balance in favor of
granting relief. The four factors are (1) the strength of the plaintiff’s showing
of discriminatory effect; (2) evidence of discriminatory intent, though not
enough to satisfy the constitutional standard of Washington v. Davis; (3) the
defendant’s interest in the challenged conduct; and (4) whether the plaintiff
seeks affirmative relief or merely to restrain the defendant from interfering
with individual property owners who wish to provide housing. Arlington
Heights II, 558 F.2d at 1290.
One month after Arlington Heights II, the Third Circuit adopted a burden-
shifting framework similar to that already in use in Title VII employment
cases. [Resident Advisory Board v. Rizzo, 564 F.2d 126, 148 (3d Cir. 1977).]
Under this approach, the plaintiff makes a prima facie case by showing that
the defendant’s action has a discriminatory effect. Id. The defendant can
rebut this by showing a justification which “serve[s], in theory and in
practice, a legitimate, bona fide interest” and by showing that “no alternative
course of action could be adopted that would enable that interest to be served
with less discriminatory impact.” Id. at 149.
A decade later, the Huntington court sought to merge Rizzo and Arlington
Heights II. Under the Huntington framework, the plaintiff establishes a prima
facie case by showing that the “challenged practice of the defendant actually
or predictably results in racial discrimination.” [Huntington Branch, NAACP
v. Town of Huntington, 844 F.2d 926, 934 (2d Cir. 1988).] The defendant can
rebut this case by showing that its “actions furthered, in theory and in
practice, a legitimate, bona fide governmental interest and that no alternative
would serve that interest with less discriminatory effect.” The court then

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 balances the four Arlington Heights II factors to determine whether to grant
relief. Id. at 936.
These competing approaches spawned a variety of others. One source of
disagreement was the role, if any, of the Arlington Heights II factors. A few
courts have used the factors as part of the prima facie case. This approach
has been widely rejected as making the plaintiff’s case too difficult. Other
courts applied the Arlington Heights II factors only in cases involving public
defendants. Still others discarded the second Arlington Heights II factor —
proof of discriminatory intent — and weighed the remaining three, reasoning
that intent was relevant only in disparate treatment cases. More recently,
most federal circuits have abandoned the Arlington Heights II factors
altogether. Yet, at least one circuit and several district courts have continued
to balance.
Huntington’s burden-shifting framework has also morphed. Several courts
changed Huntington’s two burdens into three. This test still requires
plaintiffs to show a discriminatory effect, but rebutting defendants need to
provide only a bona fide, nondiscriminatory justification. Once the defendant
offers an appropriate justification, the burden shifts back to the plaintiff to
show an alternative that would serve the defendant’s interest with less
discriminatory effect. Courts adopting this approach explain that requiring
the plaintiff to propose an alternative gives the plaintiff the ultimate burden
of proving a violation and has the advantage that “neither party is saddled
with having to prove a negative (the nonexistence of bona fide reasons or the
absence of less discriminatory alternatives).” [Hispanics United v. Village of
Addison, 988 F. Supp. 1130, 1162 (N.D. Ill. 1997).]
Finally, a much smaller number of federal courts have applied a variant of
the disparate treatment test from McDonnell Douglas Corp. v. Green, 411
U.S. 792 (1973), a leading employment discrimination case, to resolve
disparate impact FHA claims. Under this approach, the plaintiff must prove a
discriminatory effect, which the defendant may rebut by offering a
legitimate, nondiscriminatory reason for its rule. Instead of the plaintiff then
showing a less discriminatory alternative, the plaintiff shows the defendant’s
offered reason is a pretext.

Id. at 1280-1282 (some citations omitted). It is into this confusion that the
U.S. Department of Housing and Urban Development stepped in 2013
when it used its authority under 42 U.S.C. §3614a to promulgate
regulations under the Fair Housing Act. See Implementation of the Fair
Housing Act’s Discriminatory Effects Standard, 78 Fed. Reg. 11,460,
11,462 (Feb. 15, 2013).
How does HUD’s rule, which is codified at 24 C.F.R. §100.500,
resolve the variations between the standards adopted by various circuits?
2. The HUD rule’s three-part framework

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 a. Establishing a prima facie case. Generally, parties challenging a
policy or practice can meet their initial burden either by showing (1)
statistical evidence that the policy or practice has a significantly greater
impact on a class of persons protected by the Fair Housing Act than it
does on others; or (2) the policy or practice tends to perpetuate
segregation. In establishing a disproportionate effect, plaintiffs can rely
on local statistics, but national statistics may be deemed relevant as
well in unusual cases. Statistics focus on the relative percentages of
people in each group affected by the policy rather than their absolute
numbers. See Graoch Associates #33, L.P. v. Louisville/Jefferson
County Metro Human Relations Commission, 508 F.3d 366, 378 (6th
Cir. 2007). Moreover, the challenged discriminatory effects must be
“significant.” Pfaff v. HUD, 88 F.3d 739, 745 (9th Cir. 1996); Simms v.
First Gibraltar Bank, 83 F.3d 1546, 1555 (5th Cir. 1996).
There is no hard and fast rule for establishing a sufficiently
disproportionate burden. As HUD stated in promulgating its
discriminatory effects rule, “[w]hether a particular practice results in a
discriminatory effect is a fact-specific inquiry. Given the numerous and
varied practices and wide variety of private and governmental entities
covered by the Act, it would be impossible to specify the showing that
would be required to demonstrate a discriminatory effect in each of
these contexts.” 78 Fed. Reg. at 11,468.
b. Legally sufficient justification for a disparate impact? Under
the HUD rule, once a party establishes its prima facie case, the burden
shifts to the party defending the challenged practice or policy to show
that the policy or practice “is necessary to achieve one or more
substantial, legitimate, nondiscriminatory interests,” and that “[t]hose
interests could not be served by another practice that has a less
discriminatory effect.” 24 C.F.R. §100.500(b)(1), (c)(2). As HUD has
explained:

[a]ny interest justifying a practice with a discriminatory effect must be

“substantial.” A “substantial” interest is a core interest of the organization
that has a direct relationship to the function of that organization. The
requirement that an entity’s interest be substantial is analogous to the Title
VII requirement that an employer’s interest in an employment practice with a
disparate impact be job related. [T]he more general standard of substantiality
[recognizes that] there is no single objective, such as job-relatedness, against
which every practice covered by the Fair Housing Act could be measured.
The determination of whether goals, objectives, and activities are of
substantial interest to a respondent or defendant such that they can justify
actions with a discriminatory effect requires a case-specific, fact-based

1399
 inquiry. The word “legitimate,” used in its ordinary meaning, is intended to
ensure that a justification is genuine and not false, while the word
“nondiscriminatory” is intended to ensure that the justification for a
challenged practice does not itself discriminate based on a protected
characteristic.

78 Fed. Reg. at 11,470.

c. Less discriminatory alternatives? Under the HUD rule, if a
policy or practice that has a disparate impact is legally justified, the
burden shifts back to the party challenging the policy or practice to
show that the “interests supporting the challenged practice could be
served by another practice that has a less discriminatory effect.”
In practice, how difficult is it for tenants and others challenging
practices on a disparate impact theory under the Fair Housing Act to
show that there are alternative policies that have a less discriminatory
effect?

Problems
1. An African American woman with two children is denied an
apartment in a landlord’s building. She is a welfare recipient. The landlord
has historically refused to rent to welfare recipients. The woman brings a
lawsuit claiming that the landlord’s policy of not renting to welfare
recipients has an impermissible disparate impact on three protected
groups: African Americans, women (of all races), and children. As
plaintiff’s attorney, how would you persuade the court that the “no welfare
recipients” policy has a disparate impact on the basis of race, sex, familial
status, or all of those categories, that is unjustified by any legitimate
interest of the landlord? What would you argue as defendant’s attorney to
persuade the court that the policy is consistent with the Fair Housing Act?
What rule of law should the court promulgate to implement the statutory
language, regulatory interpretation, and policies?
2. A homeowner rented out her home despite a real covenant
prohibiting leasing. She argued that the restraint on leasing had a disparate
impact on African Americans. The court in Villas West II of Willowridge
Homeowners Association, supra, agreed, but found the disparate impact
justified by a legitimate, nondiscriminatory reason for the policy, i.e., that
the covenant promoted property values by limiting occupancy to resident
owners. “Renters do not maintain homes which they rent as well as owners
maintain their homes. Therefore, the exclusion of renters helps maintain
property values.” 885 N.E.2d at 1283-1284. Was the case correctly

1400
decided?
3. A group of Orthodox Jewish students sued Yale University to
challenge its policy of requiring all students (other than married students
or students over 21) in their first and second years to live in coeducational
residence halls. They claimed that their “religious beliefs and obligations
regarding sexual modesty forbid them to reside in the coeducational
housing provided and mandated by Yale.” Hack v. President & Fellows of
Yale College, 16 F. Supp. 2d 183, 187 (D. Conn. 1998), aff’d, 237 F.3d 81
(2d Cir. 2000). They sought and were denied exemptions from the policy.
The district court rejected their claim that Yale had violated the Fair
Housing Act, noting that Yale had reserved rooms for each of the plaintiffs
and had in no way denied them housing. Plaintiffs claimed that the
housing offered was not of a type that they could accept because of their
religious beliefs. Id. How could the plaintiffs argue that the university
policy had a disparate impact on them because of their religion in violation
of the Fair Housing Act? What is Yale’s defense to this argument? How
should the court have ruled?
4. A landlord refuses to rent to tenants who do not speak English. A
tenant claims that this policy constitutes national origin discrimination
because it has an unjustified disparate impact on persons born outside the
United States.
a. Does the policy impose a disparate impact based on national
origin?
b. If so, is it justified by a legitimate business interest?
5. In addition to the Fair Housing Act’s prohibition against
discrimination on the basis of sex, most states have similar provisions,
nearly half also prohibit sexual orientation discrimination, and a number of
state and local governments also prohibit discrimination on the basis of
gender identity. See §2.5, above. Universities have traditionally assigned
students to housing in single-sex dormitories based on the sex on the
student’s birth certificate. Do such policies discriminate against
transgender students? Students who are gender non-binary? On what
basis? And if you were representing a university facing a challenge to its
single-sex dormitory policy, would your advice differ depending on
whether the jurisdiction prohibits sex discrimination but not sexual
orientation or gender identity discrimination? Or prohibits both sex and
sexual orientation discrimination but not gender identity discrimination?
Cf. Troy J. Perdue, Trans* Issues for Colleges and Universities: Records,
Housing, Restrooms, Locker Rooms, and Athletics, 41 J.C. & U.L. 45, 55-

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56 (2015).

§3.2 Racially Discriminatory Effects in Land Use Regulation

MHANY Management v. County of Nassau

819 F.3d 581 (2d Cir. 2016)

[The facts as well as the Second Circuit’s discussion of disparate
treatment under the Fair Housing Act are in §2.2, above.]

Disparate Impact
Garden City also challenges the district court’s conclusion that the shift
from R-M to R-T zoning violated the disparate impact prong of the Fair
Housing Act. The Supreme Court recently affirmed that disparate impact
claims are cognizable under the Fair Housing Act. See [Texas Department
of Housing & Community Affairs v. Inclusive Communities Project, Inc.,
135 S. Ct. 2507, 2525 (2015)].
The Second Circuit has outlined a burden-shifting test for a disparate
impact claim. Under this test, a plaintiff must first establish a prima facie
case by showing, “(1) the occurrence of certain outwardly neutral
practices, and (2) a significantly adverse or disproportionate impact on
persons of a particular type produced by the defendant’s facially neutral
acts or practices.” Once a plaintiff has presented a prima facie case of
disparate impact, “the burden shifts to the defendant to ‘prove that its
actions furthered, in theory and in practice, a legitimate, bona fide
governmental interest and that no alternative would serve that interest with
less discriminatory effect.’”
In 2013, however, before the district court’s decision was rendered, the
Secretary of Housing and Urban Development (“HUD”) issued a
regulation interpreting disparate-impact liability under the FHA. See
Implementation of the Fair Housing Act’s Discriminatory Effects
Standard, 78 Fed. Reg. 11,460 (Feb. 15, 2013) (codified at 24 C.F.R. Part
100). In addition to affirming disparate impact liability as an element of
the FHA, it outlined the “[b]urdens of proof in discriminatory effects
cases.” 24 C.F.R. §100.500(c). Under this framework, the first two steps
are substantially the same as in our case law: First, a plaintiff or charging
party must come forward with a prima facie case; and second, the
defendant or respondent may rebut the prima facie case by proving that the
“challenged practice is necessary to achieve one or more substantial,
legitimate, nondiscriminatory interests of the respondent or defendant.” 24

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C.F.R. §100.500(c)(1)-(2). [I]f the defendant meets its burden, the burden
of proof shifts back to the plaintiff to show that the “substantial, legitimate,
nondiscriminatory interests supporting the challenged practice could be
served by another practice that has a less discriminatory effect.” 24 C.F.R.
§100.500(c)(3).
Instead of following HUD’s framework, despite being well aware of
HUD’s regulation, the district court applied our traditional test [established
in Huntington Branch, N.A.A.C.P. v. Town of Huntington, 689 F.2d 391,
394 (2d Cir. 1982)]. The district court concluded that Plaintiffs had
established a prima facie case of disparate impact, finding that Garden
City’s rejection of R-M zoning in favor of R-T zoning had a significant
disparate impact on minorities because it “largely eliminated the potential
for the type of housing that minorities were disproportionately likely to
need — namely, affordable rental units.” But the district court also found
that R-T zoning advanced certain legitimate, bona fide governmental
interests, noting that R-T zoning (1) would have reduced traffic and (2)
would have provided for the construction of townhouses. But the district
court held that Garden City “did not establish the absence of a less
discriminatory alternative.” For this reason, Garden City argues that the
district court erred in requiring it to prove the absence of a less
discriminatory alternative.
Section 808(a) of the FHA gives the Secretary of HUD the “authority
and responsibility for administering [the] Act,” 42 U.S.C. §3608(a), and
confers upon the Secretary authority to “make rules (including rules for the
collection, maintenance, and analysis of appropriate data) to carry out this
subchapter.” 42 U.S.C. §3614a. Because Congress afforded HUD the
authority to implement the FHA, under Chevron, U.S.A., Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837 (1984), this Court must
defer to the agency’s reasonable interpretation unless “the intent of
Congress is clear.” The Supreme Court implicitly adopted HUD’s
approach.
[T]he question of whether one of our decisions has been abrogated by
an agency regulation that reflects the agency’s interpretation of an
ambiguous statutory provision is a question of law that we can, and should,
answer ourselves. Our earlier burden-shifting approach applied in
Huntington Branch may only survive if we previously held that our
“construction follows from the unambiguous terms of the statute and thus
leaves no room for agency discretion.” Because we did not hold that the
statute was unambiguous, Huntington Branch, 844 F.2d at 936, we are
obliged to defer to the more recent HUD regulations. Thus, we remand to
the district court for consideration of whether Plaintiffs satisfied their

1403
burden of proving an available alternative practice that has less disparate
impact and serves Defendants’ legitimate nondiscriminatory interests.
[A]s the Supreme Court has made clear this year, zoning laws or
ordinances prohibiting construction of multi-family dwellings have been
found in violation of the FHA. Plaintiffs note that there are two methods of
proving the discriminatory effect of a zoning ordinance: (1) “adverse
impact on a particular minority group,” and (2) “harm to the community
generally by the perpetuation of segregation.” Here, the district court
concluded that “the R-T zone’s restriction on the development of multi-
family housing perpetuates segregation generally because it decreases the
availability of housing to minorities in a municipality where minorities
constitute approximately only 4.1% of the overall population and only
2.6% of the population living in households.” Special App’x at 171.
For these reasons, we agree with the district court’s assessment that
plaintiffs more than established a prima facie case. We also agree that
Defendants identified legitimate, bona fide governmental interests, such as
increased traffic and strain on public schools. But for the reasons stated
above, we remand for consideration of whether Plaintiffs met their burden
under §100.500(c)(3).

Notes and Questions

1. Applying disparate impact theory to public actors. In dealing
with public defendants, courts are often reluctant to second guess policy
justifications. Indeed, once a governmental entity provides a justification
for its policy, some courts have held that this ends the matter. The First
Circuit decision in Langlois v. Abington Housing Authority, 207 F.3d 43
(1st Cir. 2000), for example, holds that if the defendant has a “valid
justification” for its policy that amounts to a “legitimate and substantial
goal,” then the defendant should prevail. As Judge Boudin explained, “we
do not think that the courts’ job is to ‘balance’ objectives, with individual
judges deciding which seem to them more worthy.” Id. at 50-51. Most
courts have traditionally taken the view, expressed by the Second Circuit
in Huntington Branch, NAACP v. Town of Huntington, 844 F.2d 926, 937
(2d Cir.), aff’d per curiam, 488 U.S. 15 (1988), that courts must balance
the justification for the policy against the disparate impact, adding another
step to the analysis. Once the plaintiff has shown a disproportionate effect
or an effect that perpetuates segregation, and the defendant has provided a
valid justification for its policy, courts must weigh the adverse impact
against the defendant’s justification. HUD’s discriminatory effects
regulation now governs at the final stage of the analysis, but leaves much

1404
room in application, as MHANY illustrates.
2. Perpetuation of segregation as a basis for liability. Early circuit
court Fair Housing Act cases involving land use restrictions or decisions
that impeded projects that would have provided integrated housing in
predominantly white areas held that the act could be violated if municipal
defendants’ actions had the effect of “perpetuating segregation.” See, e.g.,
Huntington Branch, NAACP, supra; Resident Advisory Board v. Rizzo, 564
F.2d 126, 146-149 (3d Cir. 1977); United States v. City of Black Jack,
Missouri, 508 F.2d 1179, 1184-1187 (8th Cir. 1974). Perpetuation of
segregation cases are much less common than disparate impact cases, but
courts continue to distinguish these two as independent ways to establish
discriminatory effects. See, e.g., Mount Holly Gardens Citizens in Action,
Inc. v. Township of Mount Holly, 658 F.3d 375, 385 (3d Cir. 2011).
3. Contrasting equal protection and the intent requirement. In
Village of Arlington Heights v. Metropolitan Housing Development Corp.,
429 U.S. 252 (1977), a developer applied for a rezoning of a 15-acre parcel
from single-family to multiple-family use, intending to build 190 clustered
townhouses for low- and moderate-income tenants. The town refused to
rezone and the developer sued, claiming that the failure to rezone had a
discriminatory effect on African Americans because they were less likely
than white persons to be able to afford single-family homes in the town
and that this effect violated the equal protection clause. Only 27 of the
town’s 64,000 residents were African American. Applying its ruling in
Washington v. Davis, 426 U.S. 229 (1976), the Supreme Court held that
the equal protection clause of the fourteenth amendment was violated only
if a state actor engaged in intentional or purposeful discrimination and that
racially disproportionate impacts of neutral governmental policies did not
violate the state’s obligation to provide equal protection of the laws.
Plaintiff had to prove that a discriminatory purpose was a “motivating
factor” in the governmental decision in order to establish a constitutional
violation. Accord, City of Cuyahoga Falls v. Buckeye Community Hope
Foundation, 538 U.S. 188 (2003).

Problems
1. A suburban municipality just outside a major city has a zoning law
that limits construction to single-family homes on one-acre lots with a
small commercial district for shops and restaurants. Multi-family housing,
whether in townhouses or apartment buildings, is prohibited throughout
the town. As discussed in Chapter 7, the Supreme Court of New Jersey
held in Southern Burlington County NAACP v. Township of Mount Laurel,

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336 A.2d 713 (N.J. 1975), that the state constitution required
municipalities to allow affordable housing to be built somewhere in the
community of sufficient quantity to meet the town’s “fair share” of the
regional need for housing for low- and moderate-income families. Imagine
you are in a state that has not adopted Mount Laurel and has no state
statute that parallels the doctrine. A housing developer purchases land in
the town, obtains subsidies from government and nonprofit sources, and
seeks a variance or rezoning to enable it to build affordable multi-family
housing. When the town denies the variance and refuses to rezone the land,
the developer sues the town claiming that the zoning law violates the Fair
Housing Act because excluding multi-family housing effectively excludes
all affordable housing and this has a disparate impact on several groups
protected by the Fair Housing Act that have a high percentage of families
with low or moderate incomes, including race, sex, familial status, and
handicap. Does the Fair Housing Act require every state to adopt some
version of the Mount Laurel doctrine? What are the best arguments on
either side?
2. After Hurricane Katrina, St. Bernard Parish, located just outside
New Orleans, was devastated by the flood. When a developer proposed to
build four mixed-income rental apartment complexes designed to provide
affordable housing, city officials at first reacted favorably, but when public
opposition developed after a local editorial suggested that crime would
increase if the development went forward and that the community would
turn into a “ghetto with drugs, crime, vandalism, and violence,” the city
council reacted by passing ordinances prohibiting the construction of
multi-family housing and the rental of single-family homes to anyone
other than a blood relative of the owner without a special permit. In
litigation challenging these ordinances as causing a disparate impact on
African Americans in violation of the FHA, Judge Helen Berrigan found
that African Americans were “85% more likely to live in structures with
more than five units than Caucasian households.” She further found that
the moratorium reduced the supply of rental properties, and while only 25
percent of white families lived in rental housing with more than five units,
more than 50 percent of African Americans did so. Finally, she found that
African Americans were more likely than whites to come within the
income guidelines making them eligible for affordable housing. The city
defended the suit by citing a number of nondiscriminatory reasons for the
ordinances, each of which was found by the judge to be unsupported by
the evidence. Greater New Orleans Fair Housing Action Center v. St.
Bernard Parish, Case No. 06-7185 (E.D. La., order issued Mar. 25, 2009),

1406
available at http://www.gnofairhousing.org/wp-
content/uploads/2012/02/233-Order_Rescinding_Ordinance_3.25.09.pdf.
a. If you were the lawyer for the defendant municipality in this case,
what advice would you have given the city when presented with this
lawsuit? What justifications could be presented to defend the
ordinances?
b. If you were the lawyer for the plaintiff, how would you have
rebutted the defendant’s justifications?

§4 DISCRIMINATION AGAINST PERSONS WITH

DISABILITIES
§4.1 Reasonable Accommodations and Modifications

Janush v. Charities Housing Development Corp.

169 F. Supp. 2d 1133 (N.D. Cal. 2000)

RONALD M. WHYTE, District Judge.
Plaintiff Brenda Janush (“plaintiff”) suffers from a severe mental
health disability. Plaintiff’s treating psychiatrist, Dr. David Kilgore, has
testified that plaintiff’s pets, two birds and two cats, lessen the effects of
this disability by providing her with companionship and are necessary to
her mental health.
On December 6, 1999, plaintiff signed a rental agreement for an
apartment in Pensione Esperanza, a low-income apartment building run by
[Charities Housing Development Corp. (CHD)], a non-profit corporation
affiliated with Catholic Charities of Santa Clara County. Paragraph 23 of
the rental agreement contains a “no pets” clause. Plaintiff did not alert
CHD to the presence of her animals prior to moving into the apartment on
January 2, 2000. On January 10, 2000, a maintenance worker discovered
plaintiff’s animals in the apartment. Discussions ensued between plaintiff
and defendants over whether plaintiff would be allowed to keep the
animals in the apartment and under what conditions. The parties disagree
as to what offers and counter-offers were made. Essentially, plaintiff
alleges that defendants harassed her and refused to offer any reasonable
accommodation. Defendants allege that they were willing to accommodate
plaintiff’s requests, at least in part, but plaintiff refused to provide
requested documentation such as proof that the animals had been
vaccinated. On February 7, 2000, defendants filed eviction proceedings

1407
against plaintiff. On March 26, 2000, plaintiff moved out of Pensione
Esperanza.
Plaintiff filed suit on March 10, 2000, principally alleging
discrimination based on defendants’ refusal to reasonably accommodate
plaintiff’s disability as required by the Fair Housing Act, as well as other
federal and state law causes of action. Defendants now move to dismiss, or
in the alternative, for summary judgment.
To establish a prima facie case of housing discrimination based on an
alleged “refusal to make reasonable accommodations in rules, policies,
practices, or services, when such accommodations may be necessary to
afford such person equal opportunity to use and enjoy a dwelling[,]” 42
U.S.C. §3604(f)(3), a plaintiff must show that: (1) she suffers from a
handicap as defined in 42 U.S.C. §3602(h); (2) defendant knew of the
handicap or should reasonably be expected to know of it; (3)
accommodation of the handicap “may be necessary” to afford plaintiff an
equal opportunity to use and enjoy the dwelling; and (4) defendants
refused to make such accommodation.
Defendants argue that the core allegation in each of plaintiff’s claims is
that she was entitled to keep her animals as a reasonable accommodation.
Notwithstanding the brevity of defendants’ moving papers (three pages of
legal argument) and the frankness of their position (“[t]his issue is
important to defendants because, given the number of low-income
residents they serve, there is a very real risk that the no-pet policy at
Pensione Esperanza will be overrun with demands for ‘accommodations’
by persons who claim to need the companionship of a variety of
animals.”), defendants have failed to point out which elements of which
causes of actions plaintiff has failed to adequately plead. Nor have
defendants cited a single case in their moving papers.
The legal basis for defendants’ motion appears to be the assertion that
California’s definition of a “service dog” should be read into the federal
statute to create a bright-line rule that accommodation of animals other
than service dogs is per se unreasonable. See Cal. Civ. Code. §54.1(b)(6)
(C)(iii). Although the federal regulations specifically refer to
accommodation of seeing-eye dogs, there is no indication that
accommodation of other animals is per se unreasonable under the statute.
In fact, the federal regulations provide a broad definition of service
animals. “Service animal means any guide dog, signal dog, or other animal
individually trained to do work or perform tasks for the benefit of an
individual with a disability. . . .” 28 C.F.R. §36.104. Even if plaintiff’s
animals do not qualify as service animals, defendants have not established
that there is no duty to reasonably accommodate non-service animals. As

1408
plaintiff has adequately plead that she is handicapped, that defendants
knew of her handicap, that accommodation of the handicap may be
necessary and that defendants refused to make such accommodation,
defendants’ motion to dismiss is denied.
Federal law prohibits the failure to reasonably accommodate disabled
persons in residential housing. “It shall be unlawful for any person to
refuse to make reasonable accommodations in rules, policies, practices, or
services, when such accommodations may be necessary to afford a
handicapped person equal opportunity to use and enjoy a dwelling unit,
including public and common use areas.” 24 C.F.R. §100.204(a). Whether
a particular accommodation is reasonable under the circumstances is the
type of fact-intensive, case-specific determination that will infrequently be
appropriate for resolution on summary judgment. Whether it is a
reasonable accommodation for this landlord to allow this disabled tenant to
keep animals in an apartment where pets are not generally permitted
strikes the court as inappropriate for resolution on summary judgment
based on the showing made to date.
Moreover, plaintiff has not yet had the opportunity to conduct any
discovery. Specifically, plaintiff has not been able to discover the likely
costs or administrative burdens that would be imposed on the defendants if
they were to accommodate her. Accordingly, plaintiff’s request to defer
resolution of summary judgment until such time as she has had an
opportunity to conduct adequate discovery is well taken. Without some
evidence as to the burden plaintiff’s requested accommodation will impose
on defendants, the court is unable to balance that burden against the
benefit to plaintiff of the requested accommodation and the court is
accordingly unable to make a determination that plaintiff’s request is
necessarily unreasonable.
The court is not unsympathetic to defendants’ concerns regarding a
flood of accommodation requests. However, the law imposes on
defendants the obligation to consider each request individually and to grant
requests that are reasonable. Defendants have no obligation to grant
unreasonable requests. The court respects defendants’ charitable mission,
and suspects that the burden of individually considering accommodation
requests from disabled tenants and granting reasonable requests will not
prevent defendants from fulfilling that mission. Unless a tenant has a
disability, the reasonable accommodation issue does not arise.

Notes and Questions

1. Reasonable accommodations and modifications for persons with

1409
disabilities. It is clearly a violation of the Fair Housing Act to refuse to
rent or sell housing to an individual because of that individual’s disability.
A significant number of fair housing cases, however, turn on the statute’s
provisions for reasonable accommodations and reasonable
modifications.14 Under §3604(f)(3)(B), the provision at issue in Janush, it
is unlawful to refuse “to make reasonable accommodations in rules,
policies, practices, or services when such accommodations may be
necessary to afford” individuals with disabilities “equal opportunity to use
and enjoy a dwelling.” Under §3604(f)(3)(A), by contrast, it is unlawful to
refuse “to permit, at the expense of the [disabled] person, reasonable
modifications of existing premises” if such modifications may be
necessary for full enjoyment of the premises, subject to a landlord’s right
to require restoration of the interior. Courts have noted that the obligation
to permit tenants to pay for their own reasonable modifications can cover
different activities, most notably new construction or rebuilding of
facilities, than the obligation on landlords to make reasonable
accommodations in rules, policies, practices, or services. See, e.g., Reyes v.
Fairfield Properties, 661 F. Supp. 2d 249, 258-262 (E.D.N.Y. 2009) (not a
failure to make a reasonable accommodation even though the landlord
refused to pay to install a ramp and widen doors for a disabled child in a
wheelchair).
As the First Circuit recently noted, refusal to make a reasonable
accommodation for an individual with a disability is a third theory of
liability under the Fair Housing Act, in addition to disparate treatment and
disparate impact. Astralis Condominium Association v. Secretary, U.S.
Department of Housing & Urban Development, 620 F.3d 62, 67 (1st Cir.
2010). For reasonable accommodation claims, courts generally require
plaintiffs to demonstrate that they are disabled; that the party from whom
they requested an accommodation knew, or reasonably should have
known, of the disability; that a reasonable accommodation that may be
necessary to afford the plaintiff an equal opportunity to use and enjoy the
housing was requested; and that the reasonable accommodation was
refused. See, e.g., id.
HUD’s FHA regulations contain several examples of the landlord’s
obligations to permit reasonable modifications, 24 C.F.R. §100.203(c):

Example (1): A tenant with a handicap asks his or her landlord for
permission to install grab bars in the bathroom at his or her own expense. It
is necessary to reinforce the walls with blocking between studs in order to
affix the grab bars. It is unlawful for the landlord to refuse to permit the
tenant, at the tenant’s own expense, from making the modifications necessary

1410
 to add the grab bars. However, the landlord may condition permission for the
modification on the tenant agreeing to restore the bathroom to the condition
that existed before the modification, reasonable wear and tear excepted. It
would be reasonable for the landlord to require the tenant to remove the grab
bars at the end of the tenancy. The landlord may also reasonably require that
the wall to which the grab bars are to be attached be repaired and restored to
its original condition, reasonable wear and tear excepted. However, it would
be unreasonable for the landlord to require the tenant to remove the blocking,
since the reinforced walls will not interfere in any way with the landlord’s or
the next tenant’s use and enjoyment of the premises and may be needed by
some future tenant.
Example (2): An applicant for rental housing has a child who uses a
wheelchair. The bathroom door in the dwelling unit is too narrow to permit
the wheelchair to pass. The applicant asks the landlord for permission to
widen the doorway at the applicant’s own expense. It is unlawful for the
landlord to refuse to permit the applicant to make the modification. Further,
the landlord may not, in usual circumstances, condition permission for the
modification on the applicant paying for the doorway to be narrowed at the
end of the lease because a wider doorway will not interfere with the
landlord’s or the next tenant’s use and enjoyment of the premises.

The regulation pertinent to the landlord’s duty to make reasonable

accommodations in rules and practices, 24 C.F.R. §100.204, contains the
following examples:

Example (1): A blind applicant for rental housing wants to live in a

dwelling unit with a seeing eye dog. The building has a “no pets” policy. It is
a violation of §100.204 for the owner or manager of the apartment complex
to refuse to permit the applicant to live in the apartment with a seeing eye
dog because, without the seeing eye dog, the blind person will not have an
equal opportunity to use and enjoy a dwelling.
Example (2): Progress Gardens is a 300 unit apartment complex with 450
parking spaces which are available to tenants and guests of Progress Gardens
on a “first come first served” basis. John applies for housing in Progress
Gardens. John is mobility impaired and is unable to walk more than a short
distance and therefore requests that a parking space near his unit be reserved
for him so he will not have to walk very far to get to his apartment. It is a
violation of §100.204 for the owner or manager of Progress Gardens to
refuse to make this accommodation. Without a reserved space, John might be
unable to live in Progress Gardens at all or, when he has to park in a space
far from his unit, might have great difficulty getting from his car to his
apartment unit. The accommodation therefore is necessary to afford John an
equal opportunity to use and enjoy a dwelling. The accommodation is
reasonable because it is feasible and practical under the circumstances.

1411
 In recent years, a number of cases have involved reasonable
accommodations for assistance animals in residences that have no-pet
policies. Courts have taken varying approaches to resolving these cases.
Some, like Janush, have taken a broad view of the importance of such
animals to individuals with disabilities, even when the animals might not
qualify as “service animals” such as a seeing-eye dog.
A number of courts have been more skeptical, however, relying on the
argument that to be a reasonable accommodation, an animal must meet the
definition of a “service animal” provided in the Americans with
Disabilities Act (ADA), namely that the animal be “individually trained to
do work or perform tasks for the benefit of an individual with a disability.”
28 C.F.R. §36.104. See, e.g., Inle v. Association of Apartment Owners of
2987 Kalakaua, 304 F. Supp. 2d 1245 (D. Haw. 2003), aff’d on other
grounds, 453 F.3d 1175 (9th Cir. 2006) (assertion by resident disabled by
depression, anxiety, and dizziness, that his dog was trained to provide
emotional support was insufficient to make the dog a “service animal” for
purposes of reasonable accommodation claim); see also Meadowland
Apartments v. Schumacher, 813 N.W.2d 618 (S.D. 2012) (not a violation
of the FHA for landlord to evict a mentally disabled tenant for, among
other things, keeping a dog without notifying landlord, even though tenant
had left a doctor’s note about the dog with her rent). HUD has taken the
position that the ADA’s narrow definition of “service animal” does not
control the question whether keeping a given animal might be a reasonable
accommodation for purposes of the Fair Housing Act. See Memorandum
from Sara K. Pratt, Deputy Assistant Secretary for Enforcement and
Programs, to FHEO Regional Directors and Regional Counsel, New ADA
Regulations and Assistance Animals as Reasonable Accommodations
Under the Fair Housing Act and Section 504 of the Rehabilitation Act of
1973 (Feb. 17, 2011).
2. The Federal Rehabilitation Act of 1973. In addition to the Fair
Housing Act, the Federal Rehabilitation Act of 1973 prohibits
discrimination on the basis of disability in federally funded programs. A
provision in the act, 29 U.S.C. §794, commonly referred to as Section 504
because of the statute’s original bill numbering, provides in relevant part
that:

No otherwise qualified individual with a disability shall, solely by reason of

her or his disability, be excluded from the participation in, be denied the
benefits of, or be subjected to discrimination under any program or activity
receiving Federal financial assistance.

1412
 Although disagreements and uncertainties may arise about what
constitutes “federal financial assistance,” the statute clearly applies to any
direct transfer payments made by the government, such as those made to
public housing programs and for individual tenant vouchers for use in
paying for private housing. See Housing Authority of Lake Charles v.
Pappion, 540 So. 2d 567 (La. Ct. App. 1989) (housing vouchers); Whittier
Terrace Associates v. Hampshire, 532 N.E.2d 712 (Mass. App. Ct. 1989)
(private housing subsidized by HUD).
Cases also address the issue of identifying which persons with
disabilities are “otherwise qualified” for the program financed by federal
funds under the Federal Rehabilitation Act. See, e.g., Fialka-Feldman v.
Oakland University Board of Trustees, 678 F. Supp. 2d 576, 584 (E.D.
Mich. 2009). In Pappion, supra, the court held that a paranoid
schizophrenic tenant was not “otherwise qualified” to remain in a
subsidized housing project because he interfered with the quiet enjoyment
of other tenants by making loud noises, threatening other residents, and
engaging in “bizarre” behavior. In City Wide Associates v. Penfield, 564
N.E.2d 1003 (Mass. 1991), however, the court found that a tenant in
Section 8 housing who suffered from a mental disability manifested by her
hearing voices was “otherwise qualified” despite the fact that she had
responded to the auditory hallucinations by striking the walls of the
apartment, causing superficial damage amounting to less than one month’s
rent. The court justified its holding on the ground that the tenant had not
disturbed the quiet enjoyment of neighboring tenants and had promised to
obtain counseling.15

Problems
1. A mobile home park charges its residents a fee of $1.50 a day for the
presence of long-term guests and $25 per month for guest parking. A
tenant whose daughter’s health condition requires a full-time attendant
argues that the owner violated the Fair Housing Act’s reasonable
accommodation provisions by refusing to waive the charges for her
attendant. The Ninth Circuit has held that the regulation would violate
§3604(f)(3)(B) if it had an “unequal impact” on persons with disabilities
and resulted in an “exclusionary effect” so long as the financial impact on
the landlord was not “unduly burdensome.” United States v. California
Mobile Home Park Management Co., 29 F.3d 1413 (9th Cir. 1994). Do
you agree with this formulation of what §3604(f)(3)(B) requires? Assume
that the financial burden to the landlord is minimal and that enforcement of
the policy will not cause the tenants to move. Should accommodation be

1413
required under the terms of the statute?
2. A tenant living on the first floor of a three-unit building of three
stories is in a car accident and is paralyzed from the waist down. He wants,
at his own expense, to install a ramp to enable him to enter the front door
without assistance since his wheelchair could not negotiate the steps to the
front porch. Without such a ramp, he cannot return home. The small front
yard will be largely taken up by the ramp if the ramp is installed. The
landlord objects to the installation of the ramp on aesthetic and economic
grounds. She can demonstrate that the market value of the property will
decline from $200,000 to $180,000 if the ramp is installed. The tenant
argues that he will pay to have the ramp removed if he moves out of the
apartment. Is the landlord required to allow the tenant to install the ramp?
See Rodriguez v. Montalvo, 337 F. Supp. 2d 212 (D. Mass. 2004)
(presumptive Fair Housing Act duty to allow tenant to affix permanent
ramp to back entrance of building when landlord gave no proof that it
would cause financial harm).

§4.2 Integration and the Example of Group Homes for

Persons with Disabilities

Familystyle of St. Paul, Inc. v. City of St. Paul

923 F.2d 91 (8th Cir. 1991)

Map: St. Paul, Minnesota

ROGER L. WOLLMAN, Circuit Judge.

Familystyle [of St. Paul, Inc.] provides rehabilitative services to
mentally ill persons and operates residential group homes for them in St.
Paul, Minnesota. Familystyle sought special use permits for the addition of
three houses to its existing campus of group homes, intending to expand its
capacity from 119 to 130 mentally ill persons. Twenty-one of
Familystyle’s houses, including the three proposed additions, are clustered
in a one and one-half block area. On the condition that Familystyle would
work to disperse its facilities, the St. Paul City Council issued temporary
permits for the three additional houses. Familystyle failed to meet the

1414
conditions of the special use permits, and the permits expired. After St.
Paul denied renewal of the permits, Familystyle exchanged its license for
one excluding the three additional houses.
Relying upon the provisions of the Fair Housing Amendment Act of
1988, Familystyle challenges the city ordinance and state laws that bar the
addition of these three houses to its campus.
Minnesota requires facilities that provide residential services for
people with mental illness and retardation to be licensed. Minnesota seeks
through the licensing of group homes to place the mentally ill in the least
restrictive environment possible and to allow them “the benefits of normal
residential surroundings.” Minn. Stat. §245A.11, subd. 1. “Care, treatment,
and deinstitutionalization of mentally ill adults [is] a matter of special state
concern” in Minnesota. Nw. Residence, Inc. v. City of Brooklyn Ctr., 352
N.W.2d 764, 772 (Minn. Ct. App. 1984).
An integral part of the licensing process guarantees that residential
programs are geographically situated, to the extent possible, in locations
where residential services are needed, where they would be a part of the
community at large, and where access to other necessary services is
available. Minn. Stat. §245A.11, subd. 4. This licensing requirement
reflects the goal of deinstitutionalization — a philosophy of creating a full
range of community-based services and reducing the population of state
institutions.
Deinstitutionalization of the mentally ill is advanced in Minnesota by
requiring a new group home to be located at least a quarter mile from an
existing residential program unless the local zoning authority grants a
conditional use or special use permit. Minn. Stat. §245A.11, subd. 4. The
St. Paul zoning code similarly requires community residential facilities for
the mentally impaired to be located at least a quarter of a mile apart.
Familystyle argues that the Minnesota and St. Paul dispersal
requirements are invalid because they limit housing choices of the
mentally handicapped and therefore conflict with the language and
purpose of the 1988 Amendments to the Fair Housing Act. We disagree.
We perceive the goals of non-discrimination and deinstitutionalization to
be compatible. Congress did not intend to abrogate a state’s power to
determine how facilities for the mentally ill must meet licensing standards.
Minnesota’s dispersal requirements address the need of providing
residential services in mainstream community settings. The quarter-mile
spacing requirement guarantees that residential treatment facilities will, in
fact, be “in the community,” rather than in neighborhoods completely
made up of group homes that re-create an institutional environment — a
setting for which Familystyle argues. We cannot agree that Congress

1415
intended the Fair Housing Amendment Act of 1988 to contribute to the
segregation of the mentally ill from the mainstream of our society. The
challenged state laws and city ordinance do not affect or prohibit a
retarded or mentally ill person from purchasing, renting, or occupying a
private residence or dwelling.
The state plays a legitimate and necessary role in licensing services for
the mentally impaired. We agree with the district court that the dispersal
requirement as part of the licensure process is a legitimate means to
achieve the state’s goals in the process of deinstitutionalization of the
mentally ill.

Notes and Questions

1. Disparate impact and reasonable accommodation in land use
regulation. Courts have generally held that land use restrictions having the
effect of excluding group homes for people with disabilities violate the
FHA both because they impose an unjustified disparate impact — making
housing “unavailable” under 42 U.S.C. §3604(f)(1) — and because they
fail to accord with the requirement to make reasonable accommodations
for persons with disabilities, as required by §3604(f)(3)(B). However,
some courts have been more deferential to the policy goals asserted by
local governments. See, e.g., Oxford House-C v. City of St. Louis, 77 F.3d
249 (8th Cir. 1996) (ordinance limiting group homes to eight residents did
not violate the Fair Housing Act because the city had legitimate interests
in decreasing congestion, traffic, and noise in residential areas). In Brandt
v. Chebanse, 82 F.3d 172 (7th Cir. 1996), the court held that a city did not
violate the Fair Housing Act when it refused to grant a variance that would
have allowed a property owner to establish a four-unit residence for
persons with disabilities in an area restricted to single-family homes.
According to Judge Frank Easterbrook, no disparate impact claim could be
brought because the city agreed to allow the plaintiff to establish her multi-
unit residence in another part of town and the city was not required, as a
reasonable accommodation, to relax its restrictions on multi-family
occupancy in the single-family home neighborhood, id. at 175:

The variance is not necessary to allow handicapped persons to live in

Chebanse, for those capable of independent living (the only ones who could
use the proposed structure) could live as easily, if somewhat more
expensively, in new or remodeled single-family houses. Brandt does not
argue that the Fair Housing Act requires municipalities to eliminate rules that
increase the expense of housing for all persons equally. Is the proposed
accommodation “reasonable” in the sense that it is cost-justified? Again, not

1416
 on this record. The costs include an increased potential for flooding and the
loss of whatever tranquility single-family zoning offers to a neighborhood
with little corresponding benefit — for the proposed multi-unit building
could be built as easily in the many tracts of suburbia or rural America
already open to multi-family buildings. Unless the Fair Housing Act has
turned the entire United States into a multi-family dwelling zone, Brandt
must lose. It doesn’t, so she does.

Do you agree with this reasoning? What would the argument be on the
other side?
2. Segregation of individuals with disabilities. Under HUD’s
regulations implementing the Rehabilitation Act, recipients of federal
assistance are prohibited from providing “different or separate housing,
aid, benefits, or services to individuals with [disabilities] or to any class of
individuals with [disabilities] from that provided to others unless such
action is necessary to provide qualified individuals with [disabilities] with
housing, aid, benefits, or services that are as effective as those provided to
others.” 24 C.F.R. §8.4(b)(1)(iv). This mandate is an attempt to balance
the imperatives of integration with the recognition that some services are
more effective if targeted to individuals with disabilities.
Beginning in the 1950s, a movement began to shut down state-run
psychiatric facilities, which were often dehumanizing warehouses for the
mentally ill. Between 1955 and 1994, the national population of severely
mentally ill patients in public psychiatric hospitals was reduced from
558,239 to 71,619. E. Fuller Torrey, Out of the Shadows: Confronting
America’s Mental Illness Crisis 8-9 (1997). This deinstitutionalization was
predicated on providing individuals with disabilities the ability to live in
community settings, where there is a sufficient amount of supportive
housing, but that has proven to be an ongoing challenge.
In Olmstead v. L.C., 527 U.S. 581 (1999), a case involving the public
services provision of the Americans with Disabilities Act, 42 U.S.C.
§§12131-12165, the Supreme Court held that “[u]njustified isolation . . . is
properly regarded as discrimination based on disability.” Id. at 597.
Accordingly, states must “provide community-based treatment for persons
with mental disabilities” when such placement is clinically appropriate. Id.
at 607. Olmstead has been called the Brown v. Board of Education of the
disability rights movement, and HUD has issued guidance to recipients of
federal financial assistance on how to further the goals of the decision. See
Statement of the Department of Housing and Urban Development on the
Role of Housing in Accomplishing the Goals of Olmstead (June 4, 2013),
available at http://portal.hud.gov/hudportal/documents/huddoc?

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id=OlmsteadGuidnc060413.pdf.
Olmstead’s integrationist vision, however, raises a number of
questions. For example, can a housing provider design a facility to serve
individuals with a particular type of disability, such as a group home for
individuals with physical, but not mental, disabilities? Can individuals
with disabilities themselves choose to exclude others with dissimilar
disabilities? In Beckert v. Our Lady of Angels Apartments, Inc., 192 F.3d
601 (6th Cir. 1999), the court held that it was permissible for a federally
subsidized facility to provide housing to elderly physically disabled
tenants to the exclusion of individuals with mental disabilities. Id. at 607.
Beckert relied on the language of the statute authorizing the particular
subsidy at issue, so it may be limited in its reach, but the issue the court
faced has become a significant flashpoint. See Henry Korman, Clash of the
Integrationists: The Mismatch of Civil Rights Imperatives in Supportive
Housing for People with Disabilities, 26 St. Louis U. Pub. L. Rev. 3
(2007).
3. Spacing requirements for group homes. In Horizon House
Developmental Services, Inc. v. Town of Upper Southampton, 804 F. Supp.
683 (E.D. Pa. 1992), aff’d, 995 F.2d 217 (3d Cir. 1993), a case similar to
Familystyle, the court invalidated a municipal spacing requirement for
group homes. A nonprofit organization leased two single-family homes,
each housing three or four people with mental disabilities. The township
then enacted an ordinance that (a) prohibited group homes providing
permanent care or professional supervision within 3,000 feet of one
another or within 3,000 feet of any educational, religious, recreational, or
institutional entity; (b) required a six-foot-high fence surrounding group
homes; and (c) required a conditional use permit. The ordinance also
defined “single-family homes” to exclude group homes for purposes of the
zoning ordinance. The ordinance was later amended, reducing the spacing
requirement from 3,000 to 1,000 feet. Judge Lowell A. Reed, Jr. held that
the ordinance violated the Fair Housing Act, rejecting the town’s claim
that the ordinance was rationally tailored to promote integration of persons
with mental retardation into the community. Citing United States v.
Starrett City Associates, 840 F.2d 1096 (2d Cir. 1988),16 Judge Reed
noted that “integration is not an adequate justification” under the Fair
Housing Amendments Act of 1988 for a zoning requirement that
“disadvantages a class of people protected” by the act by “indefinitely
limiting access of that class to housing, by setting an upper limit or cap or
quota on the number of persons with handicap who may live in the
Township.” 804 F. Supp. at 695. Familystyle justified the spacing

1418
requirement, not as an effort to achieve integration, but as necessary to
promote the mental health of group home residents. Is this sufficient to
distinguish it from Horizon House? Is Familystyle consistent with Starrett
City Associates? If not, which case is correctly decided?
4. Limits on the number of unrelated persons who can live
together. In Edmonds v. Oxford House, Inc., 514 U.S. 725 (1995), a
nonprofit organization, Oxford House-Edmonds, attempted to open a
group home for 10 to 12 adults recovering from drug addiction and
alcoholism. Although the town zoning law allowed any number of
“family” members related by “genetics, adoption, or marriage” to live
together, it limited to five the number of unrelated persons who could live
together. Oxford House challenged the zoning restriction as discriminatory
against persons with disabilities, both because it made a dwelling
“unavailable . . . because of a handicap,” §3604(f)(1)(A), and because the
town failed to make “reasonable accommodations” in its “rules, policies
[and] practices, §3604(f)(3)(B).” The town defended by pointing to the
Fair Housing Act’s exemption for “any reasonable local, State, or Federal
restrictions regarding the maximum number of occupants permitted to
occupy a dwelling.” 42 U.S.C. §3607(b)(1). The Supreme Court found the
exemption unavailable on the ground that the town’s law did not prescribe
“the maximum number of occupants” a dwelling unit could house because
it did not limit the number of traditional family members who could live
together. Justice Ginsburg wrote: “We hold that §3607(b)(1) does not
exempt prescriptions of the family-defining kind, i.e., provisions designed
to foster the family character of a neighborhood. Instead, §3607(b)(1)’s
absolute exemption removes from the FHA’s scope only total occupancy
limits, i.e., numerical ceilings that serve to prevent overcrowding in living
quarters.” 514 U.S. at 728.
5. Homeless shelters and sex discrimination. In Doe v. Butler, 892
F.2d 315 (3d Cir. 1989), three women who had been victims of domestic
violence charged that the city of Butler, Pennsylvania had violated the Fair
Housing Act’s prohibition on sex discrimination when the city refused to
approve a temporary shelter for abused women and children. The city’s
denial was based primarily on a zoning provision that limited transitional
shelters to six residents plus staff, despite the argument from the shelter
provider that only a larger facility would be economically feasible.
Rejecting a challenge to this limit on the size of shelters, the court stated
that the limit’s impact on women “does not alone establish discriminatory
effect, because the resident limitation would have a comparable effect on
males if the transitional dwelling was established for a different group,

1419
such as, for example, recovering male alcoholics.” Id. at 323. Can you
think of a counterargument to this proposition? How might the exclusion
of shelters for battered women impose a disparate impact on women as
compared to men?

Problems
1. Suppose the City of St. Paul experiences a sudden influx of
immigrants, such as Soviet Jews or persons from Southeast Asia. To
integrate these immigrants into the community more effectively, the city
council passes an ordinance prohibiting all immigrants from buying or
renting homes or apartments on the same block as another immigrant
family. Under the reasoning of Familystyle, would such an ordinance be
enforceable under the Fair Housing Act? Suppose the ordinance prohibits
any African American family from living next door to another African
American family as a means to combat racial segregation. Does this
violate the Fair Housing Act?
2. An organization buys a house to set up a group home for mentally
disabled persons. Opposition to the group home develops in the
neighborhood. In response to community pressure, the city amends its
zoning ordinance to require that all facilities housing more than four
unrelated persons together have one parking space off the street for every
two residents. The city council justifies the ordinance by noting that
unrelated persons are more likely to have separate cars, whereas family
members may share a vehicle and that residents in group homes need more
parking for supervisors, visitors, and doctors. Moreover, the city is
relatively built up and most houses do not have off-street parking. Streets
are quite congested, and parking spaces are hard to find. The effect of the
ordinance, however, is to make it financially impossible to set up the group
home in the city. The organization sues the city, arguing that the new
ordinance violates the Fair Housing Act. What arguments could you make
on behalf of the plaintiffs? On behalf of the defendant city? What should
the court do?

§5 FAIR LENDING
M & T Mortgage Corp. v. Foy

20 Misc. 3d 274 (N.Y. Sup. Ct. 2008)

1420
 Map: 517 Rogers Avenue, Brooklyn,
New York

HERBERT KRAMER, Justice.

Equity abhors discrimination.
Equity will not enforce discriminatory practices.
This Court holds, for reasons set forth below, that a mortgage granted
to a minority buyer for the purchase of property in a minority area which
carries an interest rate that exceeds nine percent creates a rebuttable
presumption of discriminatory practice.
This Court further holds that the lender who has brought this
proceeding to foreclose the mortgage must demonstrate by a fair
preponderance of the evidence that the mortgage was not the product of
unlawful discrimination. If the lender is unable to do so, the foreclosure
proceeding will be dismissed and the lender left to its remedies at law.
Major Jahn K. Foy, a reserve officer, was engaged on active duty,
when foreclosure proceedings were initiated against her property, 517
Rogers Avenue in Brooklyn, which is located within a minority
neighborhood. The thirty year note and mortgage dated July of 2000
carried an interest rate of nine and one half percent (9½%).
Previously, Major Foy moved to reform the mortgage pursuant to New
York Military Law claiming, in essence, that her ability to comply with the
terms of the 9½% mortgage was materially affected by her deployment on
several tours of active duty over the course of the past several years. This
Court granted a hearing.
Review of the post hearing submissions and additional research
suggested that the defendant may have been the victim of a process called
“reverse redlining.”17 Accordingly, on December 6, 2007 this Court
informed the parties that it intended to continue the hearing and placed the
burden on the defendant to demonstrate that she was a victim of
discriminatory lending.
Thus the Court now modifies that decision so as to place the burden of
proof upon the plaintiff to demonstrate that the loan in question is not a
“higher priced loan” which is the product of discriminatory practices.18 In
so doing this Court is mindful of the effect of discrimination upon the
larger population. Research has revealed that when minorities subjected to
discrimination represent a very small percentage of the population, the cost
of discrimination falls mainly upon the minority, however when they
represent a larger segment of society, the cost of discrimination falls upon

1421
both the minorities and the majority as currently evidenced by the world
wide subprime mortgage meltdown.19
In shifting the burden of proof this Court will use the Home Mortgage
Disclosure Act of 1975 (HMDA), 12 U.S.C. §2801 et seq., definition of
“higher priced loan” to determine whether the loan is one that may require
further investigation for possible discriminatory practices. A loan is
deemed

“ ‘higher priced’20 [if its] rate spread [for a first tier loan] is three percentage
points above the Treasury security of comparable maturity. [Moreover,]
[t]hough price data [in and of itself] does not support definitive conclusions
[with respect to the issue of unlawful discrimination, it] provides a useful
screen, previously unavailable, to identify lenders, products, applicants, and
geographic markets where price differences among racial or other groups are
sufficiently large to warrant further investigation.” Julia Reade, HMDA, New
Pricing Data, (Federal Reserve Bank of Boston, Spring, 2006) (frequently
asked questions about the new HMDA data); see also Proposal to Amend
Regulation Z, 73 FR 1673.

“In fall 2005, the Board of Governors of the Federal Reserve System
published its first study of the new HMDA interest-rate data.” HMDA data
is used by government agencies to identify, inter alia, loans, institutions or
geographic markets that “reveal disparities in loan applications or
originations by race, ethnicity or other characteristics that may warrant
further investigation under the Equal Credit Opportunity Act (ECOA) or
the Fair Housing Act (FHA). With the addition of price data for higher
priced loans, the agencies are also able to identify in the HMDA data price
disparities that may warrant further investigation.”21 Extensive national
analyses of mortgage pricing patterns across racial and ethnic groups
revealed that “[t]raditionally under-served minority groups were more
likely than other populations to pay higher prices for mortgages.” HMDA,
New Pricing Data, supra (italics added).
The mortgage in the instant matter and indeed most thirty-year
mortgages written after the year 2000, which call for an interest rate of
nine percent, would constitute “higher priced loans” under these criteria.22
Thus, this Court holds that an interest rate exceeding nine percent
evidences the existence of a higher priced loan and creates a rebuttable
presumption of discrimination. See also McGlawn v. Pennsylvania Human
Relations Commission, 891 A.2d 757 (Pa. Commw. 2006) (Pennsylvania
Human Relations Commission relied upon expert testimony indicating that
an interest rate three percent beyond that which exists in the general

1422
market is predatory and thus discriminatory).
Equity, which abhors unconscionable and unjust results, mandates a
shift in the burden of proof to the plaintiff-lender to demonstrate that the
loan is not discriminatory. Indeed, our decisional law has long since
recognized that a litigant “seeking affirmative judicial action in equity . . .
may not succeed if [the litigant] is asking [for] an inequitable or
unconscionable result.” Monaghan v. May, 273 N.Y.S. 475 (App. Div.
1934). Moreover, “[i]n the absence of legislation, courts of equity have
exercised jurisdiction in suits for the foreclosure of mortgages to fix the
time and terms of sale and to refuse to confirm sales upon equitable
grounds where they were found to be unfair or inadequacy of price was so
gross as to shock the conscience.” Home Building and Loan Ass’n v.
Blaisdell, 290 U.S. 398, 446 (1934). “As we have seen, equity will
intervene in individual cases where it is palpably apparent that gross
unfairness is imminent. That is the law of New York.” Gelfert v. National
City Bank of New York, 313 U.S. 221, 233 (1941). Indeed in our current
climate — where this Court takes judicial notice — there are substantial
amounts of undefended foreclosure proceedings in minority
neighborhoods, the placement of the burden of proof upon the borrower23
who is very much in a distaff position when it comes to protecting his or
her rights, renders illusory the possibility of meaningful legal redress. See,
e.g., EquiCredit Corp. v. Turcios, 752 N.Y.S.2d 684 (App. Div. 2002)
(counterclaims alleging reverse redlining practices in claimed violation of
the ECOA and the FHA dismissed for failure to show that mortgagors
qualified for the loans in question as required pursuant to these statutes).
The courts are not merely automatons mindlessly processing paper
motions in mortgage foreclosure actions most of which proceed on default.
Where, as here, there is a presumably discriminatory rate, the court must
order a hearing in a litigated action or an inquest where there is a default.
This presumption may be rebutted by proof that the mortgage was given
for non-discriminatory economic reasons.

Notes and Questions

1. Lending discrimination. Discrimination has long been a significant
problem in mortgage markets. See Robert G. Schwemm & Jeffrey L.
Taren, Discretionary Pricing, Mortgage Discrimination, and the Fair
Housing Act, 45 Harv. C.R.-C.L. Rev. 375, 385-390 (2010). This
discrimination can take several forms. Early in the development of modern
home-finance, during the New Deal, federal policies encouraged
“redlining,” which is the practice of not providing loans in minority

1423
neighborhoods. The term derives from a practice originated by a federal
agency created during the New Deal, the Home Owners’ Loan Corporation
(HOLC). HOLC, which was created in 1933 to refinance distressed
mortgages, set about to examine cities across the country and create color-
coded “residential security maps” that sorted urban and suburban
neighborhoods into “A,” “B,” “C,” or “D” ratings. These letter grades
were used to evaluate the quality of loans that might be made in those
neighborhoods. “A” neighborhoods were generally white and usually
native born while the lowest rated neighborhoods, “D,” were generally
African American. On the HOLC maps, “D” neighborhoods were colored
red, and lenders were discouraged from lending in those areas. See
Kenneth T. Jackson, Crabgrass Frontier: The Suburbanization of the
United States 199-203 (1985). This approach, subsequently adopted by the
Federal Housing Administration, a federal agency that insures mortgages,
shaped the landscape of home lending for decades in the twentieth century.
More recently, in the run-up to the subprime crisis, the outright denial
of loans became less of a problem than the provision of loans on terms that
were disadvantageous to minority borrowers. See Alan M. White,
Borrowing While Black: Applying Fair Lending Laws to Risk-Based
Mortgage Pricing, 60 S.C. L. Rev. 677, 678 (2009). Several common
practices reinforced unequal access to credit. For example, some criteria in
underwriting — which is the process of evaluating borrowers for loans —
include factors, such as the value of property used for collateral, that
reflect structural disadvantages for minority borrowers. This practice is
often referred to as reverse redlining, because it makes unfair loans more,
rather than less, available to particular neighborhoods. Minority borrowers
have also been treated unfairly where banks have given loan officers
discretion to vary the terms of loans from objective criteria. And even
where underwriting is standardized and facially nondiscriminatory,
minority borrowers have often been steered into subprime loan products
that have higher interest rates and less favorable terms. See Schwemm &
Taren, supra; White, supra. Many minority borrowers, moreover, were
drawn into homeownership before the subprime crisis with inadequate
resources to weather the subsequent downturn, leading to significantly
worse outcomes for those borrowers when the crash hit. See Patrick Bayer
et al., The Vulnerability of Minority Homeowners in the Housing Boom
and Bust (ERID Working Paper Number 145) (Apr. 29, 2013).
In the wake of the subprime crisis, lenders have significantly tightened
underwriting standards to ensure that borrowers have the ability to repay
and new regulations have been implemented that focus on policing the
process of origination. See Chapter 12, §4.2. Although these new

1424
regulations are an important corrective to the abusive practices that
induced many homeowners to take out unsustainable loans, one
consequence of the new standards is that mortgages are now more difficult
to obtain for minority home buyers. See William C. Apgar, Getting on the
Right Track: Improving Low-Income and Minority Access to Mortgage
Credit After the Housing Bust (2012), available at
http://www.jchs.harvard.edu/research/publications/getting-right-track-
improving-low-income-and-minority-access-mortgage-credit.
2. Fair lending laws. Fair lending is regulated primarily through the
Equal Credit Opportunity Act of 1974 (ECOA), 15 U.S.C. §§1691-1691f,
and the Fair Housing Act. ECOA bars discrimination in all credit
transactions, including home lending, on the basis of race, color, religion,
national origin, sex or marital status, or age. 15 U.S.C. §1691(a). The Fair
Housing Act specifically bars “any person or other entity whose business
includes engaging in residential real estate-related transactions,” which
includes the “making or purchasing of loans or providing other financial
assistance secured by residential real estate,” from discriminating on the
basis of race, color, religion, sex, handicap, familial status, or national
origin. 42 U.S.C. §3605.24 Fair lending is also regulated under state
consumer protection statutes and, as M & T Mortgage Corp. demonstrates,
through the traditional tools of equity.
The Dodd-Frank Wall Street Reform and Consumer Protection Act,
Pub. L. No. 111-203, 124 Stat. 1376 (2010) (the Dodd-Frank Act)
(codified as amended in scattered sections of the U.S. Code) brought a
number of changes to the regulatory landscape of fair lending at the federal
level. The Dodd-Frank Act gave the new Consumer Financial Protection
Bureau (CFPB) supervisory, enforcement, and rulemaking authority for
ECOA and the Home Mortgage Disclosure Act of 1975 (HMDA), 12
U.S.C. §2801 et seq. The Fair Housing Act is still enforced by HUD and
the Justice Department. The Dodd-Frank Act also defined “fair lending” as
“fair, equitable, and nondiscriminatory access to credit for consumers.” 12
U.S.C. §5481(13). This definition has not yet been the subject of CFPB
rulemaking or case law, but it has the potential, through CFPB oversight of
lending institutions, to expand significantly the breadth of consumer
protection for fair access to credit. Can you see how?
3. Enforcement and aggregation. In HMDA, Congress provided
advocates an important tool to understand lenders’ aggregate lending
practices. See Carol Necole Brown, Intent and Empirics: The Race to the
Subprime, 93 Marq. L. Rev. 907 (2010). HMDA requires lenders to track
and disclose a wide variety of information not only about the loans they

1425
make, but about loan applications as well. This information includes the
race, ethnicity, and gender of borrowers and applicants, which can reveal
discriminatory patterns in lending practices.
Because direct evidence of lending discrimination is rare, it has been
important for plaintiffs to use HMDA data and the tool of class action
certification to aggregate sufficient comparative data to demonstrate either
that an individual minority borrower has been treated less favorably than
non-minority borrowers or that given practices have discriminatory effects.
Schwemm & Taren, supra, at 389. However, the Supreme Court has
narrowed the interpretation of one of the factors courts use to evaluate
whether to grant a group of litigants class-action status. In Wal-Mart
Stores, Inc. v. Dukes, 564 U.S. 338 (2011), the Court considered a
potential class of over a million female Wal-Mart employees who alleged
that they suffered a disparate impact on the basis of sex because of
decisions made by supervisors across the country on pay and promotion
issues. Rule 23(b)(2) of the Federal Rules of Civil Procedure requires
“commonality” to certify a class of plaintiffs, and the Supreme Court ruled
that this requirement could not be met in Dukes given the individual
discretion granted to supervisors. Because so much of the evidence of
discriminatory lending involves statistical analysis of patterns and
practices attributable to individual loan officers, the Dukes case makes it
significantly more difficult for fair-lending plaintiffs to obtain class status.
See, e.g., In re Countrywide Finance Corp. Mortgage Lending Practices
Litigation, 708 F.3d 704 (6th Cir. 2013) (class certification denied on lack
of commonality for African American and Hispanic borrowers who
alleged that they were charged higher loan rates as a result of the
subjective component of mortgage lender’s loan-pricing policy).
What other tools can advocates for fair lending use to respond to
discriminatory lending practices, if aggregate litigation is now more
difficult?
4. Fair lending and mortgage securitization. In Adkins v. Morgan
Stanley, No. 12 CV 7667(HB), 2013 WL 3835198 (S.D.N.Y. 2013),
African American homeowners sued Morgan Stanley, arguing that its
policies and practices caused a lender, New Century Mortgage Company,
to target borrowers in the Detroit area for loans that had a disparate impact
upon African Americans under the Fair Housing Act, 42 U.S.C. §3601 et
seq. (FHA). Morgan Stanley moved to dismiss the FHA claim. Judge
Harold Baer denied the motion. Judge Baer, accepting the allegations of
the complaint for purposes of the motion, noted the plaintiffs’ argument
for how Morgan Stanley could have violated the FHA:

1426
 From 2004 to 2007, “New Century was among the most notoriously
predatory of the subprime lenders operating at that time.” (Compl. ¶2.)
Plaintiffs’ theory here is that Morgan Stanley discriminated against African
Americans when New Century issued predatory loans and that they did so as
a result of Morgan Stanley’s conduct. That conduct consisted of “five
interrelated and centralized policies and practices” to securitize New
Century’s loans. (Id. ¶36.) First, Morgan Stanley “routinely purchased loans”
with excessive debt-to-income (“DTI”) ratios. (Id. ¶¶44-45.) High DTI ratios
indicate that the loan is larger than the borrower can afford. Second, Morgan
Stanley “regularly purchase[d] and securitize[d] mortgage loans from New
Century where the [loan-to-value ratio] . . . exceeded 100%.” (Id. ¶51.) High
loan-to-value ratios, which compare the amount of the loan to the value of
the home, are loans where the borrower faces a greater risk of delinquency or
foreclosure. Third, Morgan Stanley required New Century to issue loans with
adjustable rates and prepayment penalties. Morgan Stanley also “purchased
and securitized large numbers of New Century mortgage loans with balloon
payment features,” exacerbating a borrower’s financial risk. (Id. ¶60.)
Fourth, Morgan Stanley provided necessary funding — in the form of
warehouse lending, precommitments to purchase loans, and funding for loan
closings — to New Century that allowed it to remain in business. Once New
Century’s funding dried up in 2007, the firm entered bankruptcy. (Id. ¶69.)
Fifth, Morgan Stanley purchased loans that “deviated substantially from
basic underwriting standards,” going so far as to “encourage[ ] lending
tactics that increased the levels of risk associated with individual loans.” (Id.
¶¶73, 75.) According to Plaintiffs, by creating the conditions under which
New Century originated toxic loans, Morgan Stanley caused African-
American borrowers to fall prey to those loans at a disproportionate rate, or
put another way, to make this homeowner nightmare come true.

Id. at *1. By setting the terms under which it would purchase loans from
New Century, Morgan Stanley was directly responsible for setting the
conditions under which New Century’s predatory loans were issued.
Morgan Stanley, it was alleged,

[“]required New Century, as a condition of the companies’ lucrative business

relationship, to issue large volumes of Combined-Risk Loans[,]” [(Compl.
¶43, which had] at least two of the following risk-enhancing features: “(a)
the loan was issued based upon the ‘stated income,’ rather than the verified-
income, of the borrower; (b) the debt-to-income ratio exceeds 55%; (c) the
loan-to-value ratio is at least 90%; (d) the loan has an adjustable interest rate;
(e) the loan has ‘interest only’ payment features; (f) the loan has negative
amortization features; (g) the loan has ‘balloon’ payment features; and/or (h)
the loan imposes prepayment penalties.” (Id. ¶34.) While any one of these
features is both risky and costly to the borrower, combining those features in

1427
 the same loan “dramatically” increases the loan’s financial hazards. (Id. ¶35.)

Id. at *2. These high risk loans, the complaint continued, generated
elevated rates of foreclosure, and disproportionately so for African
American borrowers. As a result of Morgan Stanley’s policies, “a high-
cost loan originated by New Century was more than six times as likely to
be in a 90%-plus minority neighborhood than the average loan originated
in the Detroit region,” id. (quoting Compl. ¶119), and “an African-
American borrower in a minority neighborhood had a 21% greater chance
of receiving a high-cost loan than a similarly-situated white borrower in a
white neighborhood.” Id. (quoting Compl. ¶122.) The resulting harms
were both financial, for the plaintiffs, but also impacted the communities
in which they lived.

Detroit’s recent bankruptcy filing only emphasizes the broader consequences

of predatory lending and the foreclosures that inevitably result. Indeed, “[b]y
2012, banks had foreclosed on 100,000 homes [in Detroit], which drove
down the city’s total real estate value by 30 percent and spurred a mass
exodus of nearly a quarter million people.” Laura Gottesdiener, Detroit’s
Debt Crisis: Everything Must Go, Rolling Stone, June 20, 2013. The
resulting blight stemming from “60,000 parcels of vacant land” and “78,000
vacant structures, of which 38,000 are estimated to be in potentially
dangerous condition” has further strained Detroit’s already taxed resources.
Kevyn D. Orr, Financial and Operating Plan 9 (2013). And as residents flee
the city, Detroit’s shrinking ratepayer base renders its financial outlook even
bleaker. Id. Given these conditions, it is not difficult to conclude that
Detroit’s current predicament, at least in part, is an outgrowth of the
predatory lending at issue here. See Monica Davey & Mary Williams Walsh,
Billions in Debt, Detroit Tumbles Into Insolvency, N.Y. Times, July 18,
2013, at A1 (listing Detroit’s “shrunken tax base but still a huge, 139-square-
mile city to maintain” as one factor contributing to the city’s financial woes).

Id. All of this sufficed to deny Morgan Stanley’s motion to dismiss the
plaintiffs’ FHA claim. As Judge Baer wrote:

Plaintiffs here have successfully alleged a disparate impact under the

FHA. [A] prima facie case under the FHA on a disparate impact theory
requires only that Plaintiffs allege “that an outwardly neutral practice
actually or predictably has a discriminatory effect; that is, has a significantly
adverse or disproportionate impact on minorities, or perpetuates
segregation.” Fair Hous. in Huntington Comm. Inc. v. Town of Huntington,
N.Y., 316 F.3d 357, 366 (2d Cir. 2003). Plaintiffs here have met their
pleading burden. First, they have identified the policy that they allege has a

1428
 disproportionate impact on minorities. That policy consisted of Morgan
Stanley (1) routinely purchasing both stated income loans and loans with
unreasonably high debt-to-income ratios, (2) routinely purchasing loans with
unreasonably high loan-to-value ratios, (3) requiring that New Century’s
loans include adjustable rates and prepayment penalties as well as purchasing
loans with other high-risk features, (4) providing necessary funding to New
Century, and (5) purchasing loans that deviated from basic underwriting
standards. Plaintiffs go on to state that these policies resulted in “New
Century aggressively target[ing] African American borrowers and
communities . . . for the Combined-Risk Loans.” (Compl. ¶81.) Indeed,
Plaintiffs allege in detail the effect that New Century’s lending had upon the
African American community in the Detroit area. (Compl. ¶¶115-122). That
lending, according to Plaintiffs, was a direct result of Morgan Stanley’s
policies. And while Plaintiffs do not allege that they qualified for better
loans, they allege discrimination based only upon the receipt of these
predatory, toxic loans that placed them at high financial risk. These risks
exist regardless of Plaintiffs’ qualifications. On a motion to dismiss, these
allegations are sufficient to demonstrate a disparate impact.
Morgan Stanley argues that the FHA does not reach Plaintiffs’ theory here.
But as an entity “engage[d] in residential real estate-related transactions,”
Morgan Stanley — as a loan purchaser and mortgage securitizer — falls
within the scope of the FHA. 42 U.S.C. §3605(a). And as such, the FHA
prohibits Morgan Stanley both from discriminating in “making available”
real-estate related transactions as well as discriminating “in the terms or
conditions of such a transaction.” §3605(a); see also 24 C.F.R. §100.125 (“It
shall be unlawful for any . . . entity engaged in the purchasing of loans or
other debts or securities . . . to impose different terms or conditions for such
purchases, because of race. . . .”).
Morgan Stanley’s policies themselves resulted in Plaintiffs suffering a
disparate impact. Indeed, Morgan Stanley’s policies set the terms and
conditions on which it would purchase loans from New Century. For
example, “Morgan Stanley placed at least two employees onsite at New
Century full-time when conducting due diligence on loans it would purchase
for securitization.” (Compl. ¶75.) When a “full documentation loan”
indicated that a borrower could not afford a particular loan, “Morgan Stanley
would shred the documentation and tell the originator to get a new, ‘stated
income’ loan.” (Id.) This stated income loan would appear less risky and
permit the borrower to qualify, but would do nothing to change the fact that
the borrower could not afford the loan. Thus the terms and conditions
governing Morgan Stanley’s loan purchases directly resulted in a disparate
impact when they caused New Century to issue toxic loans to Plaintiffs.

Id. at *8-10.
Morgan Stanley’s argument in Adkins that the FHA does not reach

1429
securitization was predicated on the idea that merely purchasing loans
from a lender could not create a disparate impact under the FHA,
regardless of the resulting actions a lender might take. Judge Baer rejected
this argument in denying the motion to dismiss, but that does not
necessarily end the case. Despite the plaintiffs’ successfully alleged prima
facie case of disparate impact, Morgan Stanley may have the opportunity
to prove “that the challenged practice,” which is to say its securitization
practices, were “necessary to achieve one or more substantial, legitimate,
nondiscriminatory interests.” 24 C.F.R. §100.500(c). What business
justifications might Morgan Stanley offer for why the mortgages it
purchased were beneficial to consumers rather than harmful, or were
otherwise legitimate? If the plaintiffs in Adkins were then to attempt to
prove “that the substantial, legitimate, nondiscriminatory interests
supporting the challenged practice could be served by another practice that
has a less discriminatory effect,” id., what would their best arguments be?
How should these competing arguments be assessed in light of the harms
the plaintiffs alleged?
5. Liability to local governments and the breadth of the Fair
Housing Act. A number of cities and counties have asserted Fair Housing
Act claims against banks, arguing that discriminatory lending practices
injured not only borrowers, but also the local governments themselves. As
the Eleventh Circuit has described one example in a suit by the City of
Miami:

The City claims that the bank targeted black and Latino customers in Miami
for predatory loans that carried more risk, steeper fees, and higher costs than
those offered to identically situated white customers, and created internal
incentive structures that encouraged employees to provide these types of
loans. The predatory loans, as identified by the City, include: high-cost loans
(i.e., those with an interest rate at least three percentage points above a
federally established benchmark), subprime loans, interest-only loans,
balloon payment loans, loans with prepayment penalties, negative
amortization loans, no documentation loans, and adjustable rate mortgages
with teaser rates (i.e., a lifetime maximum rate greater than the initial rate
plus 6%). The City alleged that by steering minorities toward these predatory
loans, Bank of America caused minority-owned properties throughout Miami
to fall into unnecessary or premature foreclosure, depriving the City of tax
revenue and forcing it to spend more on municipal services (such as police,
firefighters, trash and debris removal, etc.) to combat the resulting blight.

City of Miami v. Bank of America Corp., 800 F.3d 1262, 1266 (11th
Cir. 2015), cert. granted sub nom. Bank of Am. Corp. v. City of Miami,

1430
Fla., No. 15-1111, 2016 WL 853246 (U.S. June 28, 2016). The Eleventh
Circuit held that Miami had alleged injury from the bank’s actions
sufficient to satisfy constitutional standing requirements and then turned to
a series of questions about the breadth of the act’s statutory language
providing that only those “aggrieved” by violations of the act have a cause
of action. 42 U.S.C. §3613(a)(1)(A); id. at §3602(i) (defining an
“aggrieved person” as anyone who “claims to have been injured by a
discriminatory housing practice,” or “believes that such person will be
injured by a discriminatory housing practice that is about to occur”). The
court held that the act’s “zone of interests” is as broad as Article III
standing, reaffirming longstanding Supreme Court doctrine recently called
into question by other lower courts. 800 F.3d at 1278. The court then held,
drawing on tort law, that the standard for proximate cause under the act is
foreseeability — that a party alleged to have violated the Fair Housing Act
must have been reasonably able to foresee the harm suffered by the party
alleging the harm. Id. at 1282. The Supreme Court has now granted
certiorari in this case, consolidating a related case by Miami against Wells
Fargo, to consider the questions of the act’s zone of interests and causation
requirements. Bank of Am. Corp. v. City of Miami, Fla., No. 15-1111,
2016 WL 853246 (U.S. June 28, 2016).
Should lenders be responsible for the collateral consequences of their
lending practices in the communities they serve? What are the best
arguments on both sides of this question?

Problem
A mortgage lender allows its loan officers to use subjective criteria
unrelated to a borrower’s objective credit characteristics, such as credit
history and income, to impose discretionary charges and interest mark-ups
that increase the cost of borrowing money. Although application of these
subjective criteria has a disparate impact on African Americans, banks
defend these policies as necessary to their business model of assessing risk
by careful consideration of the qualifications of borrowers and the
likelihood that they will default on the loans. Does this practice violate the
FHA and ECOA? Suppose the lender targets a relatively less well-off
neighborhood to market subprime loans, leading several years later to
massive foreclosures and decreases in the market value of all land in the
neighborhood. Does this practice violate the FHA and ECOA?

1. The Fair Housing Act uses the term “handicap” but it is more common now to
use the term “disability” and this chapter will generally do so. There is no

1431
distinction in legal meaning. See Bragdon v. Abbott, 524 U.S. 624, 631 (1998).
2. Section 1982 provides: “All citizens of the United States shall have the same
right, in every State and Territory, as is enjoyed by white citizens thereof to inherit,
purchase, lease, sell, hold, and convey real and personal property.” — EDS.
3. Note that this test applies only to claims based on the defendant’s “refusal to
sell” or “refusal to lease” to the plaintiff. A landlord who selectively takes a
particular apartment off the market, refusing to rent it to anyone so as to avoid
renting it to a member of a protected class, may be violating the statute on the
ground that such conduct constitutes a “refusal to deal” or “otherwise make[s]
unavailable or den[ies]” housing because of race. 42 U.S.C. §3604(a).
4. In addition, Title VI of the Civil Rights Act of 1964 provides that “[n]o person
in the United States shall, on the ground of race, color, or national origin, be
excluded from participation in, be denied the benefits of, or be subjected to
discrimination under any program or activity receiving Federal financial
assistance.” 42 U.S.C. §2000d. Title VI is narrower than the Fair Housing Act in
the categories it protects and covers only programs and activities, including
housing benefits, considered to be federal financial assistance. However, because
Title VI covers areas beyond housing, there are a few areas where Title VI may
provide broader coverage than the Fair Housing Act. See, e.g., April Kuehnhoff,
Holding on to Home: Preventing Eviction and Termination of Tenant-Based
Subsidies for Limited English Proficiency Tenants Living in Housing Units with
HUD Rental Assistance, 17 Geo. J. on Poverty L. & Poly. 221, 234 (2010) (noting
that Title VI, but not the Fair Housing Act, has produced regulations and guidance
for language access for limited English proficient groups).
5. Affordable housing, as defined in this case, means housing which requires no
more than 30% of a household’s income for households earning 80% or less of the
Area Median Income for the Nassau-Suffolk Metropolitan Statistical Area.
6. As discussed below, the MHANY court also addressed disparate impact
liability under the Fair Housing Act. See infra §3.2. — EDS.
7. This “affirmatively furthering fair housing” mandate has been at issue in
litigation against Westchester County, New York. See United States ex rel. Anti-
Discrimination Center of Metro New York, Inc. v. Westchester County, 712 F.3d
761 (2d Cir. 2013).
8. Madison General Ordinances §3.23 is now §39.03. — EDS.
9. In September 1989, subsequent to the commencement of this action, the
Madison City Council amended the Equal Opportunities Ordinance by adding
§3.23(c), MGO, which states, “Nothing in this ordinance shall affect any person’s
decision to share occupancy of a lodging room, apartment or dwelling unit with
another person or persons.”
10. Mass. Gen. Laws ch. 151B, §4(10), provides: “It shall be an unlawful
practice . . . [f]or any person furnishing credit, services or rental accommodations
to discriminate against any individual who is a recipient of federal, state, or local
public assistance, including medical assistance, or who is a tenant receiving
federal, state, or local housing subsidies, including rental assistance or rental

1432
supplements, because the individual is such a recipient, or because of any
requirement of such public assistance, rental assistance, or housing subsidy
program.”
11. Claims relying on disparate impact can be brought against private parties or
governmental entities. Some courts had held that disparate impact claims are
available only against government, not private, defendants, but the Supreme Court
in Texas Department of Housing & Community Affairs v. Inclusive Communities
Project, Inc., 135 S. Ct. 2507 (2015), clarified that disparate impact claims are
available against both public and private actors. See, e.g., id. at 2524 (“The [Fair
Housing Act] imposes a command with respect to disparate-impact liability. Here,
that command goes to a state entity. In other cases, the command will go to a
private person or entity.”).
12. In 2011, the Court had granted certiorari on this question in a case involving
a claim against St. Paul, Minnesota, but the parties agreed to settle before the Court
ruled. See Magner v. Gallagher, 132 S. Ct. 548 (Mem) (2011) (granting certiorari
to review Gallagher v. Magner, 619 F.3d 823 (8th Cir. 2010)); 132 S. Ct. 1306
(Mem) (dismissing the case). The Court granted certiorari on a second case that
presented the same question, but it settled as well. See Mount Holly Gardens
Citizens in Action, Inc. v. Township of Mount Holly, 658 F.3d 375, 385 (3d Cir.
2011), cert. granted, 80 U.S.L.W. 3711 (U.S. June 17, 2013) (No. 11-1507), cert.
dismissed, 2013 WL 6050174 (U.S. Nov. 15, 2013) (No. 11-1507).
13. On the regulatory standard, see §3.1, infra.
14. There is, in addition, an obligation under the Fair Housing Act to design and
construct covered multi-family dwellings to be accessible to individuals with
disabilities, as specified in the statute and elaborated in HUD’s regulations. See 42
U.S.C. §3604(f)(3)(C); 24 C.F.R. §100.200 et seq.; HUD, Fair Housing Act Design
Manual (April 1998).
15. One important difference between the Fair Housing Act and the
Rehabilitation Act is in the area of reasonable modifications: Under the former, the
tenant is required to pay for structural changes, such as ramps and grab bars, while
under the latter, in many circumstances, landlords are obligated to pay. See Joint
Statement of the Department of Housing and Urban Development and the
Department of Justice, Reasonable Modifications Under the Fair Housing Act, at 2
n.4 (Mar. 5, 2008).
16. For a discussion of Starrett City Associates, see §2.2, above.
17. “Redlining is the practice of denying the extension of credit to specific
geographic areas due to the income, race, or ethnicity of its residents. The term was
derived from the actual practice of drawing a red line around certain areas in which
credit would be denied. Reverse redlining is the practice of extending credit on
unfair terms to those same communities.” United Cos. Lending Corp. v. Sargeant,
20 F. Supp. 2d 192, 203 n.5 (D. Mass. 1998).
18. The Court’s ability to supervise lending practices that take advantage of
unsophisticated borrowers is not newly minted. There is a well-established
statutory and common law basis for the supervision of purchasers of streams of

1433
income to insure that the purchase of income from lotteries or settlements is not
accomplished at a high rate of interest. See e.g., In re Cabrera, 765 N.Y.S.2d 208
(Sup. Ct. 2003); In re Settlement Capital Corp., 769 N.Y.S.2d 817 (Sup. Ct. 2003).
This Court has found that an interest rate of nine percent which is the judgment
interest rate, is reasonable and has approved those applications where all other
circumstances being equal a rate no greater than that is charged.
19. Gary S. Becker, The Economics of Discrimination (2d ed. 1971). Gary
Becker is a 1992 Nobel laureate in Economics.
20. This is to be distinguished from the Home Ownership and Equity Protection
Act (HOEPA) which targets high cost loans and imposes substantive restrictions
and special pre-closing disclosures on particularly high-cost refinancing and home
equity loans where the “APR at consummation will exceed the yield on treasury
securities of comparable maturity by more than 8 percentage points for first-lien
loans.” Board of Governors of the Federal Reserve System, Proposal to Amend
Regulation Z, 73 FR 1677 n.23. Regulation Z implements the Federal Truth in
Lending Act and the Home Ownership and Equity Protection Act in order to protect
consumers in the mortgage market from unfair, abusive or deceptive lending and
services practices. See also N.Y. Banking Law §6-l, which has comparable
standards and restrictions.
21. If disparities are found to violate the Equal Credit Opportunity Act (ECOA)
or the Fair Housing Act (FHA), certain federal agencies are authorized to compel
lenders to cease discriminatory practices and, among other remedies, obtain
monetary relief for victims. HMDA, New Pricing Data. “The price data take the
form of a ‘rate spread.’ Lenders must report the spread (difference) between the
annual percentage rate (APR) on a loan and the rate on Treasury securities of
comparable maturity but only for loans with spreads above designated thresholds.”
Id.
22. The loan in question is a year 2000 30-year loan with an interest rate of nine
and one half percent. The monthly history of the constant maturity Treasury yields
reveals that since the year 2000 to date there have been only two months where the
thirty year treasuries exceeded six percent.
23. In a seminal decision under the Fair Housing Act, the Court adopted a two-
prong test for discrimination: First the plaintiff must establish the defendant’s
lending practices and loan terms were predatory and unfair; and second the
plaintiff must establish that defendant intentionally targeted them because of their
race or that the defendant’s lending practices had a disparate impact on the basis of
race. Hargraves v. Capital City Mortg. Corp., 140 F. Supp. 2d 7, 20 (D.D.C.
2000).
24. Lenders are also generally subject to the Americans with Disabilities Act’s
accessibility requirements. See, e.g., Settlement Agreement Between the United
States of America and Wells Fargo & Co. Under the Americans with Disabilities
Act, No. 202-11-239 (DOJ May 31, 2011), available at
http://www.ada.gov/wells_fargo/wells_fargo_settle.htm (bank refused to accept
calls from individuals with hearing and speech disabilities who use telephone relay

1434
services, instead requiring those individuals to call a separate number and leave
messages that were never answered; bank ordered to pay roughly $17 million in
compensation and penalties as well as change its practices).

1435
PART SIX

CONSTITUTIONAL
PROTECTION FOR PROPERTY

1436
CHAPTER 14

Equal Protection
and Due Process

§1 PROPERTY AS A MEDIATOR BETWEEN

CITIZENS AND THE STATE: DEFINING
VERSUS DEFENDING PROPERTY RIGHTS
Property rights serve “twin roles — as protector of individual rights
against other citizens, and as safeguard against excessive government
interference.” Jeremy Paul, The Hidden Structure of Takings Law, 64 S.
Cal. L. Rev. 1393, 1402 (1991). Property rights mediate disputes by
defining legal relations among people regarding control of valued
resources. Property rights are not absolute because owners do not live
alone; their rights are limited to protect the legitimate interests of other
owners and of non-owners who may be affected by the exercise of those
property rights. Because property rights must be limited to protect the
property and personal rights of others, the state must have the power to
define the scope of property rights so as to establish the basic framework
of legal relationships in the market and to ensure that property rights are
not exercised in ways that infringe on the legitimate interests of other
owners or the public at large. Thus, the state must have the power to pass
laws regulating and limiting the use of property to protect public health,
safety, and welfare.
At the same time, granting the state the power to define property rights
leaves individuals vulnerable to state infringement of those rights. The
state may misuse its power to define property rights and go too far, thereby
taking property rights away from owners to which they should be entitled.
Property rights not only protect people against other persons but serve as a
bulwark against state power. By delegating power to individuals and
groups to control specific resources, the state attempts to decentralize
power relationships. Individuals, rather than officials in a centralized state
bureaucracy, have control of many of society’s most valued resources. To
maintain this decentralization, owners must be protected from having their
property rights seized or unduly infringed by the state. Property rights

1437
must be defended from illegitimate encroachment by the state.
This dual role of property law creates an awful dilemma. How can the
state both define property rights and be limited by them? If the state can
simply redefine the incidents of property to readjust relations among
private persons, then property rights cannot serve as a limit to state power.
Some limits must be imposed on the state’s ability to redefine property
rights in order to defend property owners from illegitimate governmental
power. But if the definition of property rights is frozen while
circumstances change, the state is deprived of the ability to regulate the
use of property to promote the general welfare. Professor Paul notes that
“[t]o reconcile American law’s double-edged reliance on property
concepts, [we] must successfully distinguish between the courts’ role as
definers and defenders of property rights.” Id. at 1415.
One strategy for managing the state’s dual role is to impose
constitutional limits on the state’s power to reconfigure property rights. To
that end, many legal systems specifically provide for some form of
constitutional protection of property against government encroachment. In
a legal system with robust judicial review, constitutionally protecting
property empowers courts to police the behavior of government actors to
ensure that, in carrying out their duties, they do not act in ways that violate
constitutionally protected property rights. By finding some particular state
action to violate the Constitution, courts place limits on the state that can
only be undone through constitutional amendment. Determining the proper
boundaries of this judicial review of the actions of other state actors within
a democratic system is one of the deep questions of constitutional theory,
one whose contours are more properly explored in a course dedicated to
constitutional law. In the last two chapters of this book, our focus will be
on the U.S. Constitution’s protection of private property against
government intrusion.
Many provisions in the U.S. Constitution interact with property rights
in some way. For example, the regulation of land use can implicate both
the religion and speech clauses of the first amendment. See Chapter 7, §6.
Other provisions, such as the “right of the people to be secure in their
persons, houses, papers, and effects, against unreasonable searches and
seizures” in the fourth amendment, U.S. Const., amend. IV, and even the
third amendment’s prohibition against the quartering of troops “in any
house,” U.S. Const., amend. III, protect property rights against specific
types of government action. The U.S. Constitution, however, more directly
and broadly protects property in both the fifth and fourteenth amendments.
The fifth amendment’s due process clause states that “no person shall . . .
be deprived of . . . property, without due process of law.” The fourteenth

1438
amendment has very similar due process language. And the fifth
amendment’s takings clause prohibits the government from taking “private
property” for “public use” without “just compensation.” In this chapter, we
will discuss the due process clause, as well as the very similar doctrines
that courts have adopted under the rubric of the fourteenth amendment’s
equal protection clause. In the next chapter, we will explore the complex
body of law that courts have developed under the takings clause.

Miller v. Schoene

276 U.S. 272 (1928)

Mr. Justice HARLAN FISKE STONE delivered the opinion of the Court.
Acting under the Cedar Rust Act of Virginia, Va. Code §§885-893
(1924), defendant in error, the state entomologist, ordered the plaintiffs in
error 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 Virginia statute presents a comprehensive scheme for the
condemnation and destruction of red cedar trees infected by cedar rust. By
section 1 it is declared to be unlawful for any person to “own, plant or
keep alive and standing” on his premises any red cedar tree which is or
may be the source or “host plant” of the communicable plant disease
known as cedar rust, and any such tree growing within a certain radius of
any apple orchard is declared to be a public nuisance, subject to
destruction. Section 2 makes it the duty of the state entomologist, “upon
the request in writing of ten or more reputable freeholders of any county or
magisterial district, to make a preliminary investigation of the locality . . .
to ascertain if any cedar tree or trees . . . are the source of, harbor or
constitute the host plant for the said disease . . . and constitute a menace to
the health of any apple orchard in said locality, and that said cedar tree or
trees exist within a radius of two miles of any apple orchard in said
locality.” If affirmative findings are so made, he is required to direct the
owner in writing to destroy the trees and, in his notice, to furnish a
statement of the “fact found to exist whereby it is deemed necessary or
proper to destroy” the trees and to call attention to the law under which it
is proposed to destroy them. Section 5 authorizes the state entomologist to
destroy the trees if the owner, after being notified, fails to do so.
As shown by the evidence and as recognized in other cases involving
the validity of this statute, cedar rust is an infectious plant disease in the
form of a fungoid organism which is destructive of the fruit and foliage of

1439
the apple, but without effect on the value of the cedar. Its life cycle has
two phases which are passed alternately as a growth on red cedar and on
apple trees. It is communicated by spores from one to the other over a
radius of at least two miles. It appears not to be communicable between
trees of the same species, but only from one species to the other, and other
plants seem not to be appreciably affected by it. The only practicable
method of controlling the disease and protecting apple trees from its
ravages is the destruction of all red cedar trees, subject to the infection,
located within two miles of apple orchards.
The red cedar, aside from its ornamental use, has occasional use and
value as lumber. It is indigenous to Virginia, is not cultivated or dealt in
commercially on any substantial scale, and its value throughout the state is
shown to be small as compared with that of the apple orchards of the state.
Apple growing is one of the principal agricultural pursuits in Virginia. The
apple is used there and exported in large quantities. Many millions of
dollars are invested in the orchards, which furnish employment for a large
portion of the population, and have induced the development of attendant
railroad and cold storage facilities.
On the evidence we may accept the conclusion of the Supreme Court
of Appeals that the state was under the necessity of making a choice
between the preservation of one class of property and that of the other
wherever both existed in dangerous proximity. It would have been none
the less a choice if, instead of enacting the present statute, the state, by
doing nothing, had permitted serious injury to the apple orchards within its
borders to go on unchecked. 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, in the judgment of the
legislature, is of greater value to the public. It will not do to say that the
case is merely one of a conflict of two private interests and that the
misfortune of apple growers may not be shifted to cedar owners by
ordering the destruction of their property; for it is obvious that there may
be, and that here there is, a preponderant public concern in the preservation
of the one interest over the other. And where the public interest is involved
preferment of that interest over the property interest of the individual, to
the extent even of its destruction, is one of the distinguishing
characteristics of every exercise of the police power which affects
property.
We need not weigh with nicety the question whether the infected
cedars constitute a nuisance according to the common law; or whether they
may be so declared by statute. For where, as here, the choice is
unavoidable, we cannot say that its exercise, controlled by considerations

1440
of social policy which are not unreasonable, involves any denial of due
process.

Notes and Questions

1. The impossibility of doing nothing. Can the government stay out
of this kind of conflict? What if, instead of destroying the cedar trees, the
government refused to take any action at all? In that case, the government
would seem to have made a choice to let the costs of the cedar rust fall on
apple orchards. How should the government go about choosing which
property owner to favor? Would payment of compensation to either the
cedar tree owners or the apple tree owners change the nature of the
government’s dilemma? If so, who should pay that compensation? The
government (meaning taxpayers)? The benefited private parties?
2. Nuisance. If the owners of orchards brought a nuisance action
against the owners of nearby cedar trees, would they be likely to prevail?
If a court found the cedar trees to be a nuisance, would an injunction
requiring the cedar tree owners to destroy their trees violate the property
rights of the cedar tree owners? If not, should a legislature (or
administrative agency) be able to make the same determination in the
absence of a lawsuit?
3. Harm prevention versus benefit conferral. Is the government in
Miller acting to prevent owners of cedar trees from harming apple
orchards or is it harming cedar tree owners to confer a benefit on the
owners of apple orchards? The apple tree owners could argue that the
cedar tree owners were harming them by maintaining trees on their
property that were causing great destruction on neighboring apple
orchards. The cedar tree owners could respond that they had done nothing
wrong; that the problem was with the delicate nature of apple trees, and
that they should not be made to pay for the costs of protecting the apple
trees from disease. Indeed, in a case very similar to Miller, the Florida
Supreme Court required compensation to be paid to owners of the state-
destroyed trees. Department of Agriculture and Consumer Services v. Mid-
Florida Growers, Inc., 521 So. 2d 101, 103 (Fla. 1988) (holding that the
state had to pay just compensation when it destroyed healthy orange trees
to prevent the spread of citrus canker because “destruction of the healthy
trees benefited the entire citrus industry and, in turn, Florida’s economy,
thereby conferring a public benefit rather than preventing a public harm”).
See also Rose Acre Farms, Inc. v. United States, 373 F.3d 1177 (1st Cir.
2004) (egg producer entitled to compensation when more eggs were taken
than necessary to respond to a salmonella outbreak). In the context of

1441
government regulation of incompatible land uses, is there any way to
distinguish between harm prevention and benefit conferral?

§2 EQUAL PROTECTION

CONTEXT

The fourteenth amendment’s equal protection clause says: “No state shall . . .
deny to any person within its jurisdiction the equal protection of the laws.”

All laws classify people, either explicitly or implicitly, for the purposes
of achieving some regulatory goal. Do classifications of different property
owners violate the equal protection clause by treating them differently
from one another? Consider the typical zoning code, which permits some
owners to engage only in residential use of their land while permitting
others to engage in either commercial or residential uses. In assessing
whether such a legal classification violates the requirements of equal
protection, courts engage in a means-ends analysis that asks whether the
classification chosen (the means) bears a sufficiently strong relationship to
the goals the state is seeking to accomplish (the ends). How tightly the
means must be tied to the ends varies based on the particular kind of
classification the state is trying to use.
Certain classifications, such as racial distinctions, are deemed
inherently suspect and therefore presumptively unconstitutional. They will
be upheld only if they are strictly necessary to achieve a compelling
governmental interest. Other classifications, such as those based on sex,
are deemed to be sometimes relevant but often invalid. They are subject to
an intermediate level of scrutiny. They must bear a substantial relationship
to an important government objective. Classifications not included in the
first two categories, such as those used in most regulation of property, are
presumptively permissible. They are subject to a very deferential rational
basis test. Applying these standards, differential treatment of various
classes of property owners under a typical zoning law will be upheld if the
classification is (at least arguably) rationally related to a legitimate
government purpose. This test will almost always be satisfied.

Village of Willowbrook v. Olech

528 U.S. 562 (2000)

1442
PER CURIAM.
Respondent Grace Olech and her late husband Thaddeus asked
petitioner Village of Willowbrook to connect their property to the
municipal water supply. The Village at first conditioned the connection on
the Olechs granting the Village a 33-foot easement. The Olechs objected,
claiming that the Village only required a 15-foot easement from other
property owners seeking access to the water supply. After a 3-month
delay, the Village relented and agreed to provide water service with only a
15-foot easement.
Olech sued the Village claiming that the Village’s demand of an
additional 18-foot easement violated the Equal Protection Clause of the
Fourteenth Amendment. Olech asserted that the 33-foot easement demand
was “irrational and wholly arbitrary”; that the Village’s demand was
actually motivated by ill will resulting from the Olechs’ previous filing of
an unrelated, successful lawsuit against the Village; and that the Village
acted either with the intent to deprive Olech of her rights or in reckless
disregard of her rights.
The District Court dismissed the lawsuit pursuant to Federal Rule of
Civil Procedure 12(b)(6) for failure to state a cognizable claim under the
Equal Protection Clause. Relying on Circuit precedent, the Court of
Appeals for the Seventh Circuit reversed, holding that a plaintiff can allege
an equal protection violation by asserting that state action was motivated
solely by a “spiteful effort to ‘get’ him for reasons wholly unrelated to any
legitimate state objective.” It determined that Olech’s complaint
sufficiently alleged such a claim. We granted certiorari to determine
whether the Equal Protection Clause gives rise to a cause of action on
behalf of a “class of one” where the plaintiff did not allege membership in
a class or group.
Our cases have recognized successful equal protection claims brought
by a “class of one,” where the plaintiff alleges that she has been
intentionally treated differently from others similarly situated and that
there is no rational basis for the difference in treatment. In so doing, we
have explained that “the purpose of the equal protection clause of the
Fourteenth Amendment is to secure every person within the State’s
jurisdiction against intentional and arbitrary discrimination, whether
occasioned by express terms of a statute or by its improper execution
through duly constituted agents.” Sioux City Bridge Co. v. Dakota County,
260 U.S. 441, 445 (1923).
That reasoning is applicable to this case. Olech’s complaint can fairly
be construed as alleging that the Village intentionally demanded a 33-foot
easement as a condition of connecting her property to the municipal water

1443
supply where the Village required only a 15-foot easement from other
similarly situated property owners. The complaint also alleged that the
Village’s demand was “irrational and wholly arbitrary” and that the
Village ultimately connected her property after receiving a clearly
adequate 15-foot easement. These allegations, quite apart from the
Village’s subjective motivation, are sufficient to state a claim for relief
under traditional equal protection analysis. We therefore affirm the
judgment of the Court of Appeals, but do not reach the alternative theory
of “subjective ill will” relied on by that court. . . .

Justice STEPHEN BREYER, concurring in the result.

The Solicitor General and the village of Willowbrook have expressed
concern lest we interpret the Equal Protection Clause in this case in a way
that would transform many ordinary violations of city or state law into
violations of the Constitution. It might be thought that a rule that looks
only to an intentional difference in treatment and a lack of a rational basis
for that different treatment would work such a transformation. Zoning
decisions, for example, will often, perhaps almost always, treat one
landowner differently from another, and one might claim that, when a
city’s zoning authority takes an action that fails to conform to a city zoning
regulation, it lacks a “rational basis” for its action (at least if the regulation
in question is reasonably clear).
This case, however, does not directly raise the question whether the
simple and common instance of a faulty zoning decision would violate the
Equal Protection Clause. That is because the Court of Appeals found that
in this case respondent had alleged an extra factor as well — a factor that
the Court of Appeals called “vindictive action,” “illegitimate animus,” or
“ill will.”
In my view, the presence of that added factor in this case is sufficient
to minimize any concern about transforming run-of-the-mill zoning cases
into cases of constitutional right. For this reason, along with the others
mentioned by the Court, I concur in the result.

Notes and Questions

Rational basis with teeth. Although rational basis review under the
equal protection clause is very deferential, it may sometimes be possible to
challenge government actions such as applications of zoning or building
regulations as violations of the equal protection clause when the
municipality treats similarly situated properties differently and cannot
present a legitimate defense of this differential treatment. The equal

1444
protection challenge may be most likely to succeed when the facts of the
case present some reason to think that the city was motivated by animus
against the group in question, even where the group is not normally
understood to be a “suspect classification” subject to less deferential
scrutiny. See City of Cleburne v. Cleburne Living Center, 473 U.S. 432
(1985) (city violates equal protection clause when it requires group homes
for persons with mental retardation to seek special permits to operate but
does not impose this requirement on other group homes such as fraternities
or nursing homes, and city can present no legitimate government
justification for the differential treatment but is based solely on an
“irrational prejudice against the mentally retarded”); cf. Romer v. Evans,
517 U.S. 620, 634 (1996) (striking down state constitutional amendment
that barred local governments from enacting protections against
discrimination on the basis of sexual orientation and noting that “laws of
the kind now before us raise the inevitable inference that the disadvantage
imposed is born of animosity toward the class of persons affected”).

Problem
A town’s zoning ordinance requires setbacks of ten feet in a particular
area of the town. The zoning board routinely grants variances from this
restriction as long as construction is kept five feet away from the boundary
and none of the abutting neighbors objects. This practice violates the
express terms of the zoning ordinance itself, as well as the state’s zoning
enabling act, both of which allow variances to be granted only if the owner
can demonstrate extreme hardship. An owner applies for a variance to add
a dining room onto her single-family home, seeking to build it so that it
will be five feet from the boundary of her property. One of the four
abutting neighbors objects, and the zoning board denies the variance. The
owner sues the town, claiming that this deprives her of equal protection of
the laws, citing Willowbrook v. Olech, 528 U.S. 562 (2000). The owner
points out that two of her neighbors in the immediate neighborhood were
granted variances to build structures that extended to five feet from the
border of their properties. The zoning board defends the denial on the
ground that it is rational to allow neighbors veto power over variances
because such variances will affect their property more than that of anyone
else. The owner contends that this effective delegation of discretion to the
neighbors denies her equal protection of law. Who is right? What else
might you need to know about the owner and her neighbors to evaluate
this question?

1445
§3 DUE PROCESS
§3.1 Procedural and Substantive Due Process

CONTEXT

The fifth amendment’s due process clause says: “No person shall . . . be
deprived of . . . property, without due process of law.” The fourteenth
amendment has a similar clause, which says: “nor shall any state deprive any
person of . . . property, without due process of law.”

Although the notion of “due process” appears to be merely procedural,

courts have interpreted the Constitution’s due process clauses to provide
both procedural and substantive protection for property owners.
Procedurally, several issues are often at stake in litigation over whether the
government has complied with due process when it deprives a person of
property: (1) the adequacy of notice to the owner; (2) the quality of the
decision maker (especially its neutrality); (3) the opportunity of the owner
to be heard (either before or after the deprivation); (4) an opportunity to
present evidence to the decision maker; (5) an opportunity to confront
witnesses and evidence and cross-examine or contest them; (6) the right to
have an attorney present; and (7) the right to have a formal decision
rendered based on a fixed record and with a statement of the reasons for
the decision that can provide a basis for appeal. See Ronald E. Rotunda &
John E. Nowak, 3 Treatise on Constitutional Law §17.8 (a) (2013).
The U.S. Supreme Court applies a sliding scale to determine how
much process is due to an owner before the state may deprive her of
property. As the Court put it in the leading case of Matthews v. Eldridge,
424 U.S. 319 (1976), the law balances several factors in determining
whether a deprivation satisfies the requirements of procedural due process:

First, the private interest that will be affected by the official action; second,
the risk of an erroneous deprivation of such interest through the procedures
used, and the probable value, if any, of additional or substitute procedural
safeguards; and finally, the Government’s interest, including the function
involved and the fiscal and administrative burdens that the additional or
substitute procedural requisites would entail.

Substantively, the due process clause protects owners from deprivation

of “property” rights by “arbitrary and capricious” government actions.

1446
Nectow v. City of Cambridge, 277 U.S. 183, 187-188 (1928). Accord,
Pennell v. City of San Jose, 485 U.S. 1, 11 (1988) (due process is violated
if law is “arbitrary, discriminatory, or demonstrably irrelevant to the policy
the legislature is free to adopt”); Village of Arlington Heights v.
Metropolitan Housing Development Corp., 429 U.S. 252, 263 (1977)
(owners have a “right to be free from arbitrary or irrational zoning
actions”); Town of Rhine v. Bizzell, 751 N.W.2d 780, 793-794 (Wis. 2008)
(zoning ordinance presumed valid unless “clearly arbitrary and
unreasonable in the restricted sense that it has no substantial relation to the
public health, safety, morals or general welfare”). As with equal
protection, in determining whether a state action is arbitrary in the
forbidden sense, courts usually apply a deferential means-ends analysis
that asks whether the state’s action (or means) is rationally related to a
permissible government goal (or end). The difference is this requirement
for some minimal fit between means and ends under the rubric of
substantive due process applies to all government actions, and not just
those involving the creation of legal categories. In a sense, courts treat
rational basis review under the due process clause as defining the outer
limits of state police-power action. To constitute a valid exercise of the
state’s police power, all state action must be minimally rational and must
be directed toward some permissible public goal.

Bonner v. City of Brighton

495 Mich. 209 (2014)

MARY BETH KELLY, J.

Facts and Procedural History

Plaintiffs Leon and Marilyn Bonner own two residential properties,
122 E. North Street and 116 E. North Street, both located in downtown
Brighton. Situated on these properties are three structures — two former
residential homes and one barn/garage — all of which have been
unoccupied and generally unmaintained for over 30 years. In January
2009, defendant city of Brighton’s (the City) building and code
enforcement officer, James Rowell (the building official), informed
plaintiffs via written notice that these three structures had been deemed
“unsafe” in violation of the Brighton Code of Ordinances, and further
constituted public nuisances in violation of Michigan common law.1
Plaintiffs were also informed of the building official’s additional

1447
Figure 1 — One of the Bonners’ houses (courtesy of Dennis B. Dubuc, the
Bonners’ attorney)

determination that it was unreasonable to repair these structures

consistent with the standard set forth in BCO §18-59, which provides in its
entirety as follows:

Whenever the city manager, or his designee, has determined that a structure
is unsafe and has determined that the cost of the repairs would exceed 100
percent of the true cash value of the structure as reflected on the city
assessment tax rolls in effect prior to the building becoming an unsafe
structure, such repairs shall be presumed unreasonable and it shall be
presumed for the purpose of this article that such structure is a public
nuisance which may be ordered demolished without option on the part of the
owner to repair. This section is not meant to apply to those situations where
a structure is unsafe as a result of an event beyond the control of the owner,
such as fire, windstorm, tornado, flood or other Act of God. If a structure has
become unsafe because of an event beyond the control of the owner, the
owner shall be given by the city manager, or his designee, reasonable time
within which to make repairs and the structure shall not be ordered
demolished without option on the part of the owner to repair. If the owner
does not make the repairs within the designated time period, then the
structure may be ordered demolished without option on the part of the owner
to repair. The cost of demolishing the structure shall be a lien against the real
property and shall be reported to the city assessor, who shall assess the cost
against the property on which the structure is located.

1448
Consequently, plaintiffs were ordered to demolish the structures within 60
days of the date of the building official’s letter.
Because demolition had been ordered without an option to repair,
plaintiffs appealed the building official’s determination to the Brighton
City Council (city council) pursuant to the appellate process set forth in
BCO §18-61, which provides in relevant part:

An owner of a structure determined to be unsafe may appeal the decision to

the city council. The appeal shall be in writing and shall state the basis for
the appeal. . . . The owner or his agent shall have an opportunity to be heard
by the city council at a regularly scheduled council meeting. The city council
may affirm, modify, or reverse all or part of the determination of the city
manager, or his designee.

Initially, the city council stayed its review pending the building
official’s interior inspection of the structures. However, despite having
previously agreed to allow the building official interior access, plaintiffs
thereafter refused entry, causing the City to petition for and obtain
administrative search warrants. On May 27, 2009, the building official and
several other representatives of the City inspected the structures and found
over 45 unsafe conditions therein. The hearing resumed on June 4, 2009,
and June 18, 2009, during which the city council received written reports
and heard oral testimony from both parties on the issues of the City’s
findings and conclusions pursuant to the interior and exterior inspection of
the premises, as well as its cost estimates for the structures’ repair versus
their demolition. On July 16, 2009, the city council unanimously affirmed
the building official’s determination that the structures were unsafe under
all ten of the standards set forth in BCO §18-46.2 The city council likewise
found that plaintiffs had been maintaining unsafe structures in violation of
[city ordinance], that the structures were unreasonable to repair under
BCO §18-59, and that demolition was required within 60 days of its
decision.
Rather than appeal the city council’s decision . . . , plaintiffs instead
filed this independent cause of action against the City, alleging violations
of due process, generally, as well as substantive due process. [The Circuit
Court granted plaintiffs’ summary judgment motion on their substantive
due process claim. The Court of Appeals affirmed.]
We granted the City’s application for leave to appeal.

Analysis
Plaintiffs make two facial constitutional attacks upon BCO §18-59.

1449
First, they assert that the ordinance violates substantive due process by
permitting demolition of an unsafe structure without extending to its owner
an option to repair, because denying a property owner the chance to repair
an unsafe structure does not advance the City’s otherwise legitimate
interest in protecting the health, safety, and welfare of the Brighton
citizenry. Second, plaintiffs argue that the ordinance violates procedural
due process by failing to provide a procedure to safeguard a property
owner’s right to choose whether to repair a structure municipally deemed
unsafe before the City orders it demolished. We will address plaintiffs’
arguments in this order; before proceeding further, however, we find it
necessary to make two critical observations.
First, we emphasize that this is a facial challenge to BCO §18-59;
plaintiffs do not challenge the ordinance’s application in a particular
instance. A party challenging the facial constitutionality of an ordinance
faces an extremely rigorous standard. To prevail, plaintiffs must establish
that “ ‘no set of circumstances exists under which the [ordinance] would
be valid’ ” and “ ‘[t]he fact that the . . . [ordinance] might operate
unconstitutionally under some conceivable set of circumstances is
insufficient’ ” to render it invalid.3 Indeed, “ ‘if any state of facts
reasonably can be conceived that would sustain [the ordinance], the
existence of the state of facts at the time the law was enacted must be
assumed’ ” and the ordinance upheld.4 Finally, because facial attacks, by
their nature, are not dependent on the facts surrounding any particular
decision, the specific facts surrounding plaintiffs’ claim are inapposite.
Second, and particularly noteworthy here, we emphasize that analysis
of substantive and procedural due process involves two separate legal
tests. While the touchstone of due process, generally, is protection of the
individual against arbitrary action of government, the substantive
component protects against the arbitrary exercise of governmental power,
whereas the procedural component is fittingly aimed at ensuring
constitutionally sufficient procedures for the protection of life, liberty, and
property interests.

A. General Due Process Principles

The federal due process provision guarantees that no person shall be
deprived of “life, liberty, or property, without due process of law.”5 Prior
caselaw has interpreted this language to “guarante[e] more than fair
process,”6 but to encompass a substantive sphere as well, “barring certain
government actions regardless of the fairness of the procedures used to
implement them.”7 Determining whether the ordinance in this case

1450
violates due process requires that we engage in several inquiries, the first
and most essential of which asks whether the interest allegedly infringed
by the challenged government action — here, a property owner’s interest
in repairing an unsafe structure — comes within the definition of “life,
liberty or property.” If it does not, the Due Process Clause affords no
protection. If, however, a life, liberty or property interest is found to exist
and to be threatened by the City’s conduct, the next two queries will
address what process is due before the government can interfere with that
interest. Because the Due Process Clause offers two separate types of
protections — substantive and procedural — separate inquiries must
examine whether these protections have been provided.
Plaintiffs allege that their property rights have been violated by the
City’s decision to order their structures demolished without providing
them with the option to repair the structures. Explicit in our state and
federal caselaw is the recognition that an individual’s vested interest in the
use and possession of real estate is a property interest protected by due
process.8 Accordingly, plaintiffs, as owners of the three structures at issue
and the land on which those structures are situated, have a significant
property interest within the protection of the Due Process Clause.

B. Substantive Due Process

Having identified a significant property interest protected by the Due
Process Clause, we continue our analysis by addressing plaintiffs’
substantive due process claim. Substantive due process analysis must
begin with a careful description of the asserted right, for there has “always
been reluctan[ce] to expand the concept of substantive due process” given
that “[t]he doctrine of judicial self-restraint requires us to exercise the
utmost care whenever we are asked to break new ground in this field.”9
Where the right asserted is not fundamental, the government’s interference
with that right need only be reasonably related to a legitimate
governmental interest.10
A zoning ordinance must similarly stand the test of reasonableness —
that it is reasonably necessary for the preservation of public health, morals,
or safety — and it is presumed to be so until the plaintiff demonstrates
otherwise. Accordingly, a plaintiff may successfully challenge a local
ordinance on substantive due process grounds, and therefore overcome the
presumption of reasonableness, by proving either “that there is no
reasonable governmental interest being advanced by the present zoning
classification itself . . . or, secondly, that an ordinance [is] unreasonable
because of the purely arbitrary, capricious and unfounded exclusion of

1451
other types of legitimate land use from the area in question.”11 The
reasonableness of the ordinance thus becomes the test of its legality.
Mindful of these principles, we begin by describing the right asserted
by plaintiffs. Plaintiffs are not generally arguing that they have a
categorical right of property use or possession, but assert a much more
limited constitutional right; namely, that encompassed within the Due
Process Clause’s protection of property is a property owner’s right to
repair a structure municipally deemed “unsafe” before that structure can be
demolished. However, we are unaware of any court that has ever granted a
property owner the fundamental right of an absolute repair option
involving property that has fallen into such disrepair as to create a risk to
the health and safety of the public. Indeed, that conclusion would hardly be
compatible with the line of cases in which this Court and the United States
Supreme Court have held that reasonableness is essential to the validity of
an exercise of police power affecting the general rights of the land owner
by restricting the character of the owner’s use, which would include the
opportunity to repair unsafe structures. The right asserted by plaintiffs,
then, cannot be considered fundamental. Therefore, to demonstrate a
violation on substantive due process grounds, plaintiffs have the burden of
showing that the unreasonable-to-repair presumption set forth in BCO
§18-59 does not bear any reasonable relationship to a legitimate
governmental interest.
BCO §18-59 was enacted pursuant to the City’s police powers, and its
purpose is to abate a public nuisance by requiring repairs or demolition of
unsafe structures. It is firmly established that nuisance abatement, as a
means to promoting public health, safety, and welfare, is a legitimate
exercise of police power12 and that demolition is a permissible method of
achieving that end.13 Certainly, then, there can be no dispute that the
public interest that BCO §18-59 is intended to serve — protecting the
health and welfare of the citizens of Brighton by eliminating the hazards
posed by dangerous and unsafe structures — is a legitimate one. What is in
dispute, however, is whether the unreasonable-to-repair presumption bears
a reasonable relationship to that interest.
The Court of Appeals found it did not. In the Court of Appeals’ view,
to refuse a willing and able property owner the option to repair property
that has been deemed unsafe because of the City’s view of the
unreasonableness of the cost does no more to advance this permissible
legislative objective than does allowing corrective repairs to be made in
the first instance. In our view, however, if permitting demolition of unsafe
structures (notwithstanding the willingness and financial ability of

1452
property owners to undertake corrective repairs) is not unconstitutional in
itself, it does not become so simply because it is shown to be less desirable
than some other action. While affording a property owner the opportunity
to perform corrective repairs is one method by which the dangers posed by
an unsafe structure may be remedied, it is by no means the only method —
much less the only constitutional method — of doing so. As long as
certain minimum standards have been met, and the ordinance does not
encroach upon a property owner’s fundamental rights, the decision to
exceed those standards by providing a property owner with an automatic
right of repair, as some municipalities have chosen to do, is a policy
judgment, not a constitutional mandate.
Indeed, to satisfy substantive due process, the infringement of an
interest that is less than fundamental, such as the right asserted here,
requires no more than a reasonable relationship between the governmental
purpose and the means chosen to advance that purpose. This standard
allows a municipal body sufficient latitude to decide, as the City has, that
certain considerations favor using one means, i.e., demolition, rather than
another, i.e., repairing. Enacting an ordinance that presumes repairs will be
unreasonable to undertake if the cost of those repairs exceeds 100 percent
of the property’s value before it became unsafe protects children and
others from the risk of increased injury, reduces the opportunity for crime,
and aids in the maintenance of property values and marketability of lands.
Any one of these purposes is reasonably related to the City’s interest in
promoting the health, safety, and welfare of its citizens and it is presumed
that the City acted for such reasons, or for any other valid reason, in
enacting BCO §18-59.
Without question, property owners have a constitutional right of
property use, but this does not translate into an absolute constitutional right
to repair unsafe structures. Moreover, even assuming that plaintiffs had a
protected interest in repairing the unsafe structures at issue here before that
property could be subject to demolition, BCO §18-59 is reasonably related
to several governmental interests, and thus did not facially violate
substantive due process. Accordingly, plaintiffs’ asserted private right of
repair must yield to the City’s higher governmental interest in protecting
the health, safety, and welfare of its citizens.
Plaintiffs argue, and the Court of Appeals agreed, that the
unreasonable-to-repair presumption in BCO §18-59 can only be overcome
upon a showing of economic reasonableness, i.e., that repair costs would
not exceed “100 percent of the true cash value of the structure as reflected
on the city assessment tax rolls prior to the building becoming an unsafe
structure.” There is, however, no textual support for this interpretation

1453
because BCO §18-59 does not specify the manner in which the
unreasonable-to-repair presumption may be overcome. A showing of
reasonableness could therefore be established by presenting a viable repair
plan; evidence from the challenger’s own experts that, contrary to the
City’s estimates, the repair costs would not exceed 100 percent of the
property value; or evidence that the structure subject to demolition has
some sort of cultural, historical, familial, or artistic value.
Furthermore, even if the relationship between BCO §18-59 and the
City’s interest in promoting the public health, safety, and welfare is
debatable, we need more than a mere difference of opinion to establish a
substantive due process violation, and plaintiffs have failed to make such a
showing. Accordingly, the presumption of constitutionality favors the
ordinance’s validity, and we may not second-guess the City’s policy
judgment in enacting it.
Because plaintiffs have failed to satisfy the burden necessary to
invalidate BCO §18-59 on substantive due process grounds, it must be
sustained.

C. Procedural Due Process

We turn now from the claim that the City may not, by virtue of BCO
§18-59, deprive plaintiffs of their asserted property interest without first
affording them the opportunity to repair a structure deemed unsafe by the
City, to plaintiffs’ procedural due process claim that the City may not
order demolition on the basis of the procedures BCO §18-59 provides.
Well established is the assurance that deprivation of a significant property
interest cannot occur except by due process of law. While the meaning of
the Due Process Clause and the extent to which due process must be
afforded has been the subject of many disputes, there can be no question
that, at a minimum, due process of law requires that deprivation of life,
liberty, or property by adjudication must be preceded by notice and an
opportunity to be heard.14 To comport with these procedural safeguards,
the opportunity to be heard must be granted at a meaningful time and in a
meaningful manner. As recognized by the U.S. Supreme Court,

[I]dentification of the specific dictates of due process generally requires

consideration of three distinct factors: First, the private interest that will be
affected by the official action; second, the risk of an erroneous deprivation of
such interest through the procedures used, and the probable value, if any, of
additional or substitute procedural safeguards; and finally, the Government’s
interest, including the function involved and the fiscal and administrative
burdens that the additional or substitute procedural requirement would

1454
 entail.15

To determine whether BCO §18-59 provides property owners the

process to which they are constitutionally entitled, we first review in some
detail the procedures the City has employed through this ordinance. The
City’s demolition process ordinarily begins with an inspection of a
particular structure followed by a determination by the city manager, or
some other agent designated by the City, that the structure is unsafe
pursuant to any one or more of the ten factors delineated in BCO §18-46
and is, therefore, subject to demolition. This determination triggers BCO
§18-59, which requires that the city manager, or the city manager’s
designee, determine the cost to repair the structure and compare that cost
to the structure’s true cash value as reflected in assessment tax rolls before
the structure became unsafe. If the cost to repair exceeds the structure’s
true cash value, then the structure is presumed to be a public nuisance
subject to demolition. If not, the structure remains in its unsafe condition
but may not, at this point, be subject to demolition. In either case, the city
manager must then serve the structure’s owner with written notice
pursuant to BCO §18-52. If the city manager has determined that the
structure at issue can be made safe, the notice must identify the required
repairs and improvements with which the property owner must comply
within a reasonable time or face demolition. However, if, as in this case,
the city manager determines that the structure cannot be made safe, the
notice must indicate that demolition will ensue. Moreover, following either
determination, the notice must inform the property owner of the right to
appeal the city manager’s determination to the city council pursuant to
BCO §18-61. Within ten calendar days of receipt of this notice, the
property owner must notify the City of his or her intent to accept or reject
the terms of the notice.
If the owner rejects the terms of the notice and submits a written
appeal that “state[s] the basis for the appeal,” “[t]he owner or his agent
shall have an opportunity to be heard by the city council at a regularly
scheduled council meeting.”16 The city council then has the discretion to
“affirm, modify, or reverse all or part of the determination of the city
manager, or his designee.”17 If the owner receives an adverse final
decision from the city council, the owner “may appeal th[at] decision to
the county circuit court by filing a complaint within 20 calendar days from
the date of the decision.”18
Because this is a facial constitutional challenge, plaintiffs do not argue
that the City failed to properly execute or enforce this procedural system.

1455
Instead, plaintiffs contend that the City’s procedural system results in an
unconstitutional deprivation of a property interest absent due process of
law because it fails to give the owner of an unsafe structure the procedural
protection of a repair option before that property may be demolished.
Because this argument is simply the substantive due process argument
recast in procedural due process terms, the argument meets with the same
fate.
At least as it pertains to this facial challenge, due process was satisfied
by giving plaintiffs the right to an appeal before the city council and the
opportunity to appeal that decision to the circuit court.
The essence of due process is the requirement that “a person in
jeopardy of serious loss [be given] notice of the case against him and
opportunity to meet it.” All that is necessary, then, is that the procedures at
issue be tailored to the capacities and circumstances of those who are to be
heard to ensure that they are given a meaningful opportunity to present
their case, which must generally occur before they are permanently
deprived of the significant interest at stake. Here, there is no dispute that if
the city manager orders a structure to be demolished under BCO §18-59,
aggrieved parties, such as plaintiffs, have the right to appeal that
determination to the city council under BCO §18-61. Although BCO §18-
59 creates a presumption that an unsafe structure shall be demolished as a
public nuisance if the cost to repair the structure would exceed 100 percent
of the structure’s true cash value as reflected in the assessment tax rolls
before the structure became unsafe, this presumption is rebuttable. To
rebut this presumption and avoid demolition, the aggrieved party need
only show that the repair is reasonable, a showing that may be achieved by
economic or noneconomic means. It is then within the city council’s
discretion to “affirm, modify, or reverse all or part of the determination of
the city manager, or his designee.” When the city council decides, as it did
here, to affirm the determination of the building official based on the
evidence before it, that adverse ruling does not render an aggrieved party’s
opportunity to be heard any less meaningful. To the contrary, it shows that
the procedures in place are sufficient to provide property owners with
notice and a meaningful opportunity to be heard.
Furthermore, vital to the assessment of what process is due in this case
is the tenet that substantial weight must be given to the procedures
provided for by those individuals holding legislative office — including
members of a city council with whom the electorate has entrusted the duty
of protecting the health and safety of all citizens — for “[i]t is too well
settled to require citation that a statute must be treated with the deference
due to a deliberate action of a coordinate branch of our State government. .

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. .”19 This is especially so where, as here, in addition to providing the
aggrieved party with an effective process for asserting his or her claim
before any demolition, the prescribed procedures also ensure the right to a
hearing, as well as to subsequent judicial review, before the denial of the
aggrieved party’s claim becomes final. For these reasons, we conclude that
plaintiffs have failed to demonstrate a facial procedural due process
violation where they received all the process to which they were
constitutionally entitled.

Notes and Questions

1. Deference. Courts applying this means-ends, due process analysis
are usually extremely deferential to the elected political branches. That
deference makes substantive due process claims exceedingly difficult for
property owners to win. Is the Michigan Supreme Court too deferential to
the city in Bonner? In assessing the reasonableness of the demolition
statute, what reasons does the court identify? Do the reasons proffered by
the court need to relate to the reasonableness of requiring demolition or the
reasonableness of refusing to allow the owner to repair the premises? From
a due process point of view, is there any meaningful difference between
those two state actions or would the same reasons that justify one
necessarily justify the other?
2. Defining “property” for the Constitution. The text of the U.S.
Constitution neither creates property interests nor defines what it means by
“property.” When considering federal constitutional property claims,
where do courts turn in order to give content to the concept of property?
This definitional puzzle actually has two different dimensions. First, as a
threshold matter, courts need to determine what sorts of interests qualify as
“property” in order to define the reach of the Constitution’s property
protections. If some valuable legal interest is not “property” for the
purposes of the fifth amendment’s due process clause, for example, its
deprivation by a governmental actor cannot violate the requirements of due
process, at least as they relate to property (as opposed to “life” and
“liberty”). See, e.g., College Savings Bank v. Florida Prepaid
Postsecondary Education Expense Board, 527 U.S. 666, 673-674 (1999)
(no due process violation where the interest affected by state action did not
qualify as “property”). Similarly, if an interest is not “private property” for
the purposes of the fifth amendment’s takings clause, its taking by the
government for public use does not trigger the requirement of just
compensation. See Bowen v. Public Agencies Opposed to Social Security
Entrapment, 477 U.S. 41, 55-56 (1986); Tee-Hit-Ton Indians v. United

1457
States, 348 U.S. 272 (1955). See Chapter 15, §1.4.
While the interests that the Supreme Court considers when applying
the due process and takings clauses are not themselves created by the
Constitution, see Board of Regents v. Roth, 408 U.S. 564 (1972), the
question of the reach of those provisions is one of federal constitutional
law. See Town of Castle Rock v. Gonzales, 545 U.S. 748 (2005). The Court
has not always been attentive to this threshold “reach” question, and it has
employed different ways of answering it in different cases. Generally
speaking, the Court seems to apply a broader definition of property for due
process claims than for takings claims. See Thomas W. Merrill, The
Landscape of Constitutional Property, 86 Va. L. Rev. 885, 886-894
(2000).
For due process claims, the Court has rejected the position that “all
civil rights of pecuniary value” count as “property.” College Savings Bank,
527 U.S. at 673-674. Nevertheless, the Court has embraced an extremely
broad conception of “property” for due process purposes, particularly in
procedural cases. As the Court put it in Board of Regents v. Roth, “the
property interests protected by procedural due process extend well beyond
actual ownership of real estate, chattels, or money.” 408 U.S. at 571.
According to the Court, the “hallmark” of property protected by the due
process clause is an entitlement that “cannot be removed except for cause.”
Logan v. Zimmerman Brush Co., 455 U.S. 422, 430 (1982); see also Town
of Castle Rock, 545 U.S. at 756 (“[A] benefit is not a protected entitlement
if government officials may grant or deny it in their discretion.”). This
means that, when considering due process claims, courts have treated as
“property” a great many interests that would not be treated as such in other
legal contexts. These include professional licenses, government benefits,
and even certain forms of government employment. See, e.g., Goss v.
Lopez, 419 U.S. 565 (1975) (treating the right to a public education as
property for procedural due process purposes); Perry v. Sindermann, 408
U.S. 593, 599-600 (1972) (treating an informal tenure arrangement at a
junior college as a property interest for due process purposes); Goldberg v.
Kelly, 397 U.S. 254 (1970) (welfare benefits treated as property for
procedural due process purposes); Schware v. Board of Bar Examiners of
State of New Mexico, 353 U.S. 232 (1957) (law license is property for due
process purposes); see also Merrill, supra, at 956-957.
In the takings context, on the other hand, the Court has tended to draw
the circle more narrowly. See Merrill, supra, at 957. In Eastern
Enterprises v. Apfel, 524 U.S. 498 (1998), for example, five members of
the Court agreed that the “private property” protected by the takings clause
was a narrower category than “property” for due process purposes. While

1458
due process “property” includes general obligations to pay money, the five
Justices reasoned, to count as “private property” for takings purposes, the
interest in question must constitute a discrete thing, or what Justice
Kennedy called in his concurring opinion a “specific property interest,”
such as money contained in a specific bank account. Id. at 540-542
(Kennedy, J., concurring).
A second dimension of the definitional problem arises when courts
need to actually apply federal constitutional standards to the specific legal
interests created by state or federal law. In order to apply constitutional
property norms, courts need to ascertain the precise content of an owner’s
legal rights. For example, in determining whether some state restriction of
an owner’s land use has “taken” the owner’s property for public use
without just compensation, a court needs to know whether the owner had
the right to engage in the restricted use to begin with. In carrying out this
task, courts turn to the body of law from which the property interest arises,
whether that be state property law or federal statute. See Ruckelshaus v.
Monsanto Co., 467 U.S. 986, 1001 (1984).
3. Due process and zoning: Nectow v. City of Cambridge, 277 U.S.
183 (1928). In Nectow v. City of Cambridge, a vacant lot was bisected by a
newly enacted zoning ordinance. The bulk of the parcel was zoned for
industrial uses, but one vacant part of the parcel was limited to residential
use. Although the vacant part was 100 feet wide, the master who heard the
case found that the city might widen the street in such a manner as to
reduce the depth of that lot to 65 feet and that as a result, “no practical use
can be made of the land in question for residential purposes, because . . .
there would not be adequate return on the amount of any investment for
the development of the property.” The Supreme Court held that the statute,
as applied to this portion of the land, impermissibly infringed on
constitutionally protected property rights. The Court explained its result,
id. at 187-189:

The last finding of the master is: “I am satisfied that the districting of the
plaintiff’s land in a residence district would not promote the health, safety,
convenience, and general welfare of the inhabitants of that part of the
defendant city, taking into account the natural development thereof and the
character of the district and the resulting benefit to accrue to the whole city
and I so find.”
It is made pretty clear that because of the industrial and railroad purposes
to which the immediately adjoining lands to the south and east have been
devoted and for which they are zoned, the locus is of comparatively little
value for the limited uses permitted by the ordinance.

1459
 We quite agree with the opinion expressed below that a court should not
set aside the determination of public officers in such a matter unless it is
clear that their action “has no foundation in reason and is a mere arbitrary or
irrational exercise of power having no substantial relation to the public
health, the public morals, the public safety or the public welfare in its proper
sense.” Euclid v. Ambler Co., [272 U.S.] at 395.
An inspection of a plat of the city upon which the zoning districts are
outlined, taken in connection with the master’s findings, shows with
reasonable certainty that the inclusion of the locus in question is not
indispensable to the general plan. The boundary line of the residential district
before reaching the locus runs for some distance along the streets, and to
exclude the locus from the residential district requires only that such line
shall be continued 100 feet further along Henry street and thence south along
Brookline street. There does not appear to be any reason why this should not
be done. Nevertheless, if that were all, we should not be warranted in
substituting our judgment for that of the zoning authorities primarily charged
with the duty and responsibility of determining the question. But that is not
all. The governmental power to interfere by zoning regulations with the
general rights of the land owner by restricting the character of his use, is not
unlimited, and, other questions aside, such restriction cannot be imposed if it
does not bear a substantial relation to the public health, safety, morals, or
general welfare. Here, the express finding of the master, already quoted,
confirmed by the court below, is that the health, safety, convenience, and
general welfare of the inhabitants of the part of the city affected will not be
promoted by the disposition made by the ordinance of the locus in question.
This finding of the master, after a hearing and an inspection of the entire area
affected, supported, as we think it is, by other findings of fact, is
determinative of the case. That the invasion of the property of plaintiff in
error was serious and highly injurious is clearly established; and, since a
necessary basis for the support of that invasion is wanting, the action of the
zoning authorities comes within the ban of the Fourteenth Amendment and
cannot be sustained.

The Supreme Court had just two years earlier upheld comprehensive
zoning in Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926)
against a facial attack on the statute, but left open the possibility that it
might revisit that judgment in an as-applied challenge. Id. at 395 (noting
that “when, if ever, the provisions set forth in the ordinance in tedious and
minute detail, come to be concretely applied to particular premises . . . or
to particular conditions, or to be considered in connection with specific
complaints, some of them, or even many of them, may be found to be
clearly arbitrary and unreasonable”). See Chapter 7, §1.2. Since Nectow,
however, the Supreme Court has not found any zoning ordinances to
violate substantive due process on grounds of irrationality, leaving the

1460
policing of constitutional due process in zoning primarily to the state
courts.
4. Vagueness. Due process is also implicated in zoning statutes that
are unconstitutionally vague. In Cunney v. Board of Trustees of Village of
Grand View, New York, 660 F.3d 612 (2d Cir. 2011), an owner of a parcel
situated between the Hudson River and a street called River Road had
applied for permits to improve his house. In order to preserve views of the
river, the Village’s zoning ordinance limited the height of buildings that
abutted River Road to no more than “four and one-half (4½) feet above the
easterly side of River Road.” The owner obtained the requisite permits for
his project based on height measurements that appeared to conform to this
provision. However, the Village denied a certificate of occupancy after
construction based on a report from the Village engineer, who took
measurements that seemed to indicate that the height restriction had been
violated. The property was on a slope running along River Road and
throughout the permitting and approval process, it had been unclear where
exactly on that slope compliance with the ordinance should be measured.
The Second Circuit held that the statute violated the due process clause of
the fourteenth amendment because it failed to give the owner “a
reasonable opportunity to understand what conduct it prohibits,” id. at 621
(quoting Hill v. Colorado, 530 U.S. 703, 732 (2000)), and because the
statute failed to provide explicit standards for the officials charged with
applying it, id. at 622. For a discussion of vagueness in the context of
aesthetic zoning, see Chapter 7, §6.1.
The Michigan Supreme Court in Bonner observed that the demolition
ordinance in that case “does not specify the manner in which the
unreasonable-to-repair presumption may be overcome.” That is, the
ordinance offers no standards to guide or constrain decisions by the city
council about whether to override the rebuttable presumption against
allowing owners to repair structures where the costs of doing so would
exceed the structure’s market value. If, in a future case, the city council
were to refuse to override the presumption, would its action necessarily be
arbitrary? How might the city council blunt the charge of arbitrariness? Is
the lack of a standard relevant to the Bonners’ facial challenge or only to a
future, as-applied challenge? See Kosalka v. Town of Georgetown, 752
A.2d 183 (Me. 2000) (striking down a zoning ordinance as impermissibly
vague because it “fails to furnish a guide which will enable those to whom
the law is to be applied to reasonably determine their rights”).
5. Retroactivity. Whenever property rules change, lawmakers must
confront the question whether to apply the new rule to property interests

1461
created prior to the change. The potential for new rules to unsettle (or even
destroy) existing property rights raises potential constitutional concerns.
Under the due process clause, courts evaluate the retroactive application of
a new property rule according to due process standards that assess whether
the state’s application of the new rule to existing property entitlements is
itself rationally related to a permissible government purpose. See, e.g.,
American Express Travel Related Services, Inc. v. Sidamon-Eristoff, 669
F.3d 359 (3d Cir. 2012) (retroactive application of shortened period for
unclaimed property statute to existing travelers checks did not violate due
process because it had a conceivable rational basis). But, while the
substance of the inquiry concerning the fundamental fairness of
retroactivity remains the same as due process analysis in other contexts,
judges considering retroactivity questions sometimes seem to apply a more
exacting scrutiny. See, e.g., Eastern Enterprises v. Apfel, 524 U.S. 498,
547 (1998) (Kennedy, J., concurring). But see id. at 557 (“[A] law that is
fundamentally unfair because of its retroactivity is a law that is basically
arbitrary [in violation of the usual Due Process principles].”) (Breyer, J.,
dissenting). Can you think of a situation in which the retroactive
application of an otherwise valid new property rule would not pass muster
under a rational basis, due process review?

Problem
In City of Wilmington v. Hill, 657 S.E.2d 670 (N.C. Ct. App. 2008), the
court held unconstitutional a city ordinance that prohibited owners from
renting their property and effectively required owners to occupy their own
homes. The owner had constructed a garage apartment, and the city
interpreted the zoning law to require the owner to reside either in the main
residence or in the garage apartment. The court held that the zoning
enabling act did not delegate power to the city to pass such a law because
it allowed municipalities to regulate the “use” of property, not their
ownership or the identity of the possessor. The court then noted that the
due process clause requires laws to have a “substantial relation to the
public health, the public morals, the public safety or the public welfare”
and that courts should defer to legislatures in debatable cases. Id. at 673.
Suppose the court had held that a requirement that owners occupy their
homes serves no legitimate public purpose and thus is invalid under the
due process clause. Would that be a correct application of the due process
clause?

§3.2 Property Regulations Burdening Fundamental Rights

1462
 An exception to the generally deferential approach to substantive due
process review occurs when the state’s action burdens what the Supreme
Court has deemed to be a “fundamental right,” such as privacy,
association, or marriage. See Washington v. Glucksberg, 521 U.S. 702, 719
(1997) (discussing cases that have found a “fundamental right” whose
burdening by the state triggers heightened scrutiny under the due process
clause). Although often discussed in terms of “liberty interests,” these
fundamental rights can also relate to how people go about using their
property, as the following cases illustrate.

Village of Belle Terre v. Boraas

416 U.S. 1 (1974)

Mr. Justice WILLIAM O. DOUGLAS delivered the opinion of the Court.
Belle Terre is a village on Long Island’s north shore of about 220
homes inhabited by 700 people. Its total land area is less than one square
mile. It has restricted land use to one-family dwellings excluding lodging
houses, boarding houses, fraternity houses, or multiple-dwelling houses.
The word “family” as used in the ordinance means, “[o]ne or more persons
related by blood, adoption, or marriage, living and cooking together as a
single housekeeping unit, exclusive of household servants. A number of
persons but not exceeding two (2) living and cooking together as a single
housekeeping unit though not related by blood, adoption, or marriage shall
be deemed to constitute a family.”
Appellees, the Dickmans, are owners of a house in the village and
leased it in December 1971 for a term of 18 months to Michael Truman.
Later Bruce Boraas became a colessee. Then Anne Parish moved into the
house along with three others. These six are students at nearby State
University at Stony Brook and none is related to the other by blood,
adoption, or marriage. When the village served the Dickmans with an
“Order to Remedy Violations” of the ordinance, the owners plus three
tenants thereupon brought this action under 42 U.S.C. §1983 for an
injunction and a judgment declaring the ordinance unconstitutional.
This case brings to this Court a different phase of local zoning
regulations from those we have previously reviewed. Euclid v. Ambler
Realty Co., 272 U.S. 365 (1926), involved a zoning ordinance classifying
land use in a given area into six categories.
The main thrust of Euclid in the mind of the Court was in the exclusion
of industries and apartments, and as respects that it commented on the
desire to keep residential areas free of “disturbing noises”; “increased
traffic”; the hazard of “moving and parked automobiles”; the “depriving

1463
children of the privilege of quiet and open spaces for play, enjoyed by
those in more favored localities.” The ordinance was sanctioned because
the validity of the legislative classification was “fairly debatable” and
therefore could not be said to be wholly arbitrary.
If the ordinance segregated one area only for one race, it would
immediately be suspect under the reasoning of Buchanan v. Warley, 245
U.S. 60 (1917), where the Court invalidated a city ordinance barring a
black from acquiring real property in a white residential area by reason of
an 1866 Act of Congress, 42 U.S.C. §1982, and an 1870 Act, §17, now 42
U.S.C. §1981, both enforcing the Fourteenth Amendment.
The present ordinance is challenged on several grounds: that it
interferes with a person’s right to travel; that it interferes with the right to
migrate to and settle within a State; that it bars people who are
uncongenial to the present residents; that it expresses the social
preferences of the residents for groups that will be congenial to them; that
social homogeneity is not a legitimate interest of government; that the
restriction of those whom the neighbors do not like trenches on the
newcomers’ rights of privacy; that it is of no rightful concern to villagers
whether the residents are married or unmarried; that the ordinance is
antithetical to the Nation’s experience, ideology, and self-perception as an
open, egalitarian, and integrated society.
We find none of these reasons in the record before us. It is not aimed at
transients. It involves no “fundamental” right guaranteed by the
Constitution, such as voting, the right of association, the right of access to
the courts, or any rights of privacy. We deal with economic and social
legislation where legislatures have historically drawn lines which we
respect against the charge of violation of the Equal Protection Clause if the
law be “reasonable, not arbitrary” and bears “a rational relationship to a
[permissible] state objective.”
It is said, however, that if two unmarried people can constitute a
“family,” there is no reason why three or four may not. But every line
drawn by a legislature leaves some out that might well have been included.
That exercise of discretion, however, is a legislative, not a judicial,
function.
It is said that the Belle Terre ordinance reeks with an animosity to
unmarried couples who live together. There is no evidence to support it;
and the provision of the ordinance bringing within the definition of a
“family” two unmarried people belies the charge.
The ordinance places no ban on other forms of association, for a
“family” may, so far as the ordinance is concerned, entertain whomever it
likes.

1464
 The regimes of boarding houses, fraternity houses, and the like present
urban problems. More people occupy a given space; more cars rather
continuously pass by; more cars are parked; noise travels with crowds.
A quiet place where yards are wide, people few, and motor vehicles
restricted are legitimate guidelines in a land-use project addressed to
family needs. This goal is a permissible one. The police power is not
confined to elimination of filth, stench, and unhealthy places. It is ample to
lay out zones where family values, youth values, and the blessings of quiet
seclusion and clean air make the area a sanctuary for people.
Mr. Justice THURGOOD MARSHALL, dissenting.
My disagreement with the Court today is based upon my view that the
ordinance in this case unnecessarily burdens appellees’ First Amendment
freedom of association and their constitutionally guaranteed right to
privacy.
The freedom of association is often inextricably entwined with the
constitutionally guaranteed right of privacy. The right to “establish a
home” is an essential part of the liberty guaranteed by the Fourteenth
Amendment. And the Constitution secures to an individual a freedom “to
satisfy his intellectual and emotional needs in the privacy of his own
home.” Stanley v. Georgia, 394 U.S. 557, 565 (1969). Constitutionally
protected privacy is, in Mr. Justice Brandeis’ words, “as against the
Government, the right to be let alone . . . the right most valued by civilized
man.” Olmstead v. United States, 277 U.S. 438, 478 (1928) (dissenting
opinion). The choice of household companions — of whether a person’s
“intellectual and emotional needs” are best met by living with family,
friends, professional associates, or others — involves deeply personal
considerations as to the kind and quality of intimate relationships within
the home. That decision surely falls within the ambit of the right to privacy
protected by the Constitution.
The instant ordinance discriminates on the basis of just such a personal
lifestyle choice as to household companions. It permits any number of
persons related by blood or marriage, be it two or twenty, to live in a
single household, but it limits to two the number of unrelated persons
bound by profession, love, friendship, religious or political affiliation, or
mere economics who can occupy a single home. Belle Terre imposes upon
those who deviate from the community norm in their choice of living
companions significantly greater restrictions than are applied to residential
groups who are related by blood or marriage, and compose the established
order within the community. The village has, in effect, acted to fence out
those individuals whose choice of lifestyle differs from that of its current
residents.

1465
 Because I believe that this zoning ordinance creates a classification
which impinges upon fundamental personal rights, it can withstand
constitutional scrutiny only upon a clear showing that the burden imposed
is necessary to protect a compelling and substantial governmental interest.
A variety of justifications have been proffered in support of the
village’s ordinance. It is claimed that the ordinance controls population
density, prevents noise, traffic and parking problems, and preserves the
rent structure of the community and its attractiveness to families. [T]hese
are all legitimate and substantial interests of government. But I think it
clear that the means chosen to accomplish these purposes are both
overinclusive and underinclusive, and that the asserted goals could be as
effectively achieved by means of an ordinance that did not discriminate on
the basis of constitutionally protected choices of lifestyle. The ordinance
imposes no restriction whatsoever on the number of persons who may live
in a house, as long as they are related by marital or sanguinary bonds —
presumably no matter how distant their relationship. Nor does the
ordinance restrict the number of income earners who may contribute to
rent in such a household, or the number of automobiles that may be
maintained by its occupants. In that sense the ordinance is underinclusive.
On the other hand, the statute restricts the number of unrelated persons
who may live in a home to no more than two. It would therefore prevent
three unrelated people from occupying a dwelling even if among them
they had but one income and no vehicles. While an extended family of a
dozen or more might live in a small bungalow, three elderly and retired
persons could not occupy the large manor house next door. Thus the
statute is also grossly overinclusive to accomplish its intended purposes.
There are some 220 residences in Belle Terre occupied by about 700
persons. The density is therefore just above three per household. The
village is justifiably concerned with density of population and the related
problems of noise, traffic, and the like. It could deal with those problems
by limiting each household to a specified number of adults, two or three
perhaps, without limitation on the number of dependent children. The
burden of such an ordinance would fall equally upon all segments of the
community. It would surely be better tailored to the goals asserted by the
village than the ordinance before us today, for it would more realistically
restrict population density and growth and their attendant environmental
costs. Various other statutory mechanisms also suggest themselves as
solutions to Belle Terre’s problems — rent control, limits on the number
of vehicles per household, and so forth, but, of course, such schemes are
matters of legislative judgment and not for this Court. Appellants also refer
to the necessity of maintaining the family character of the village. There is

1466
not a shred of evidence in the record indicating that if Belle Terre
permitted a limited number of unrelated persons to live together, the
residential, familial character of the community would be fundamentally
affected.
By limiting unrelated households to two persons while placing no
limitation on households of related individuals, the village has embarked
upon its commendable course in a constitutionally faulty vessel. I would
find the challenged ordinance unconstitutional. But I would not ask the
village to abandon its goal of providing quiet streets, little traffic, and a
pleasant and reasonably priced environment in which families might raise
their children. Rather, I would commend the village to continue to pursue
those purposes but by means of more carefully drawn and even-handed
legislation.

Moore v. City of East Cleveland

431 U.S. 494 (1977)

Mr. Justice LEWIS F. POWELL announced the judgment of the Court, and
delivered an opinion in which Mr. Justice BRENNAN, Mr. Justice
MARSHALL, and Mr. Justice BLACKMUN joined.
East Cleveland’s housing ordinance, like many throughout the country,
limits occupancy of a dwelling unit to members of a single family.
§1351.02.20 But the ordinance contains an unusual and complicated
definitional section that recognizes as a “family” only a few categories of
related individuals, §1341.08.21 Because her family, living together in her
home, fits none of those categories, appellant stands convicted of a
criminal offense. The question in this case is whether the ordinance
violates the Due Process Clause of the Fourteenth Amendment.

I
Appellant, Mrs. Inez Moore, lives in her East Cleveland home together
with her son, Dale Moore Sr., and her two grandsons, Dale, Jr., and John
Moore, Jr. The two boys are first cousins rather than brothers; we are told
that John came to live with his grandmother and with the elder and
younger Dale Moores after his mother’s death.
In early 1973, Mrs. Moore received a notice of violation from the city,
stating that John was an “illegal occupant” and directing her to comply
with the ordinance. When she failed to remove him from her home, the
city filed a criminal charge. Mrs. Moore moved to dismiss, claiming that
the ordinance was constitutionally invalid on its face. Her motion was

1467
overruled, and upon conviction she was sentenced to five days in jail and a
$25 fine. The Ohio Court of Appeals affirmed after giving full
consideration to her constitutional claims, and the Ohio Supreme Court
denied review. We noted probable jurisdiction of her appeal.

II
The city argues that our decision in Village of Belle Terre v. Boraas,
416 U.S. 1 (1974), requires us to sustain the ordinance attacked here. But
one overriding factor sets this case apart from Belle Terre. The ordinance
there affected only unrelated individuals. It expressly allowed all who
were related by “blood, adoption, or marriage” to live together, and in
sustaining the ordinance we were careful to note that it promoted “family
needs” and “family values.” East Cleveland, in contrast, has chosen to
regulate the occupancy of its housing by slicing deeply into the family
itself. This is no mere incidental result of the ordinance. On its face it
selects certain categories of relatives who may live together and declares
that others may not. In particular, it makes a crime of a grandmother’s
choice to live with her grandson in circumstances like those presented
here.
When a city undertakes such intrusive regulation of the family, neither
Belle Terre nor Euclid [v. Ambler Realty Co., 272 U.S. 365 (1926)],
governs; the usual judicial deference to the legislature is inappropriate.
The city seeks to justify [the ordinance] as a means of preventing
overcrowding, minimizing traffic and parking congestion, and avoiding an
undue financial burden on East Cleveland’s school system. Although these
are legitimate goals, the ordinance before us serves them marginally, at
best. For example, the ordinance permits any family consisting only of
husband, wife, and unmarried children to live together, even if the family
contains a half dozen licensed drivers, each with his or her own car. At the
same time it forbids an adult brother and sister to share a household, even
if both faithfully use public transportation. The ordinance would permit a
grandmother to live with a single dependent son and children, even if his
school-age children number a dozen, yet it forces Mrs. Moore to find
another dwelling for her grandson John, simply because of the presence of
his uncle and cousin in the same household. We need not labor the point.
Section 1341.08 has but a tenuous relation to alleviation of the conditions
mentioned by the city.
Our decisions establish that the Constitution protects the sanctity of the
family precisely because the institution of the family is deeply rooted in
this Nation’s history and tradition. It is through the family that we

1468
inculcate and pass down many of our most cherished values, moral and
cultural. Ours is by no means a tradition limited to respect for the bonds
uniting the members of the nuclear family. The tradition of uncles, aunts,
cousins, and especially grandparents sharing a household along with
parents and children has roots equally venerable and equally deserving of
constitutional recognition. Over the years millions of our citizens have
grown up in just such an environment, and most, surely, have profited
from it. Even if conditions of modern society have brought about a decline
in extended family households, they have not erased the accumulated
wisdom of civilization, gained over the centuries and honored throughout
our history, that supports a larger conception of the family. Out of choice,
necessity, or a sense of family responsibility, it has been common for close
relatives to draw together and participate in the duties and the satisfactions
of a common home. Especially in times of adversity, such as the death of a
spouse or economic need, the broader family has tended to come together
for mutual sustenance and to maintain or rebuild a secure home life. This
is apparently what happened here.
Whether or not such a household is established because of personal
tragedy, the choice of relatives in this degree kinship to live together may
not lightly be denied by the State. [T]he Constitution prevents East
Cleveland from standardizing its children and its adults by forcing all to
live in certain narrowly defined family patterns.
Reversed.

Mr. Justice WILLIAM J. BRENNAN, with whom Mr. Justice MARSHALL

joins, concurring.
I write to underscore the cultural myopia of the arbitrary boundary
drawn by the East Cleveland ordinance in the light of the tradition of the
American home that has been a feature of our society since our beginning
as a Nation the “tradition” in the plurality’s words, “of uncles, aunts,
cousins, and especially grandparents sharing a household along with
parents and children. . . .” The line drawn by this ordinance displays a
depressing insensitivity toward the economic and emotional needs of a
very large part of our society.
In today’s America, the “nuclear family” is the pattern so often found
in much of white suburbia. J. Vander Zanden, Sociology: A Systematic
Approach 322 (3d ed. 1975). The Constitution cannot be interpreted,
however, to tolerate the imposition by government upon the rest of us of
white suburbia’s preference in patterns of family living. The “extended
family” that provided generations of early Americans with social services
and economic and emotional support in times of hardship, and was the

1469
beachhead for successive waves of immigrants who populated our cities,
remains not merely still a pervasive living pattern, but under the goad of
brutal economic necessity, a prominent pattern virtually a means of
survival for large numbers of the poor and deprived minorities of our
society. For them compelled pooling of scant resources requires compelled
sharing of a household.
The “extended” form is especially familiar among black families. We
may suppose that this reflects the truism that black citizens, like
generations of white immigrants before them, have been victims of
economic and other disadvantages that would worsen if they were
compelled to abandon extended, for nuclear, living patterns. Even in
husband and wife households, 13% of black families compared with 3% of
white families include relatives under 18 years old, in addition to the
couple’s own children. In black households whose head is an elderly
woman, as in this case, the contrast is even more striking: 48% of such
black households, compared with 10% of counterpart white households,
include related minor children not offspring of the head of the household.
I do not wish to be understood as implying that East Cleveland’s
enforcement of its ordinance is motivated by a racially discriminatory
purpose: The record of this case would not support that implication. But
the prominence of other than nuclear families among ethnic and racial
minority groups, including our black citizens, surely demonstrates that the
“extended family” pattern remains a vital tenet of our society. It suffices
that in prohibiting this pattern of family living as a means of achieving its
objectives, appellee city has chosen a device that deeply intrudes into
family associational rights that historically have been central, and today
remain central, to a large proportion of our population.

Mr. Justice JOHN PAUL STEVENS, concurring in the judgment.

In my judgment the critical question presented by this case is whether
East Cleveland’s housing ordinance is a permissible restriction on
appellant’s right to use her own property as she sees fit. Long before the
original States adopted the Constitution, the common law protected an
owner’s right to decide how best to use his own property. The holding in
Euclid v. Ambler Realty Co., 272 U.S. 365 (1926), that a city could use its
police power, not just to abate a specific use of property which proved
offensive, but also to create and implement a comprehensive plan for the
use of land in the community, vastly diminished the rights of individual
property owners. It did not, however, totally extinguish those rights. On
the contrary, that case expressly recognized that the broad zoning power
must be exercised within constitutional limits.

1470
 Litigation involving single-family zoning ordinances is common.
These cases delineate the extent to which the state courts have allowed
zoning ordinances to interfere with the right of a property owner to
determine the internal composition of his household. The intrusion on that
basic property right has not previously gone beyond the point where the
ordinance defines a family to include only persons related by blood,
marriage, or adoption. Indeed, state courts have not always allowed the
intrusion to penetrate that far. There appears to be no precedent for an
ordinance which excludes any of an owner’s relatives from the group of
persons who may occupy his residence on a permanent basis.
[Chief Justice Burger, in dissent, would not have reached the
constitutional issue on the argument that appellant could have, but did not,
apply for a variance under the ordinance, a proposition the majority
rejected.]

Mr. Justice POTTER STEWART, with whom Mr. Justice REHNQUIST joins,
dissenting.
In my view, the appellant’s claim that the ordinance in question
invades constitutionally protected rights of association and privacy is in
large part answered by the Belle Terre decision. To suggest that the
biological fact of common ancestry necessarily gives related persons
constitutional rights of association superior to those of unrelated persons is
to misunderstand the nature of the associational freedoms that the
Constitution has been understood to protect. Freedom of association has
been constitutionally recognized because it is often indispensable to
effectuation of explicit First Amendment guarantees. But the scope of the
associational right, until now, at least, has been limited to the
constitutional need that created it; obviously not every “association” is for
First Amendment purposes or serves to promote the ideological freedom
that the First Amendment was designed to protect. The “association” in
this case is not for any purpose relating to the promotion of speech,
assembly, the press, or religion. And wherever the outer boundaries of
constitutional protection of freedom of association may eventually turn out
to be, they surely do not extend to those who assert no interest other than
the gratification, convenience, and economy of sharing the same residence.
[A]ppellant contends that the importance of the “extended family” in
American society requires us to hold that her decision to share her
residence with her grandsons may not be interfered with by the State. This
decision, like the decisions involved in bearing and raising children, is said
to be an aspect of “family life” also entitled to substantive protection under
the Constitution. Without pausing to inquire how far under this argument

1471
an “extended family” might extend, I cannot agree. When the Court has
found that the Fourteenth Amendment placed a substantive limitation on a
State’s power to regulate, it has been in those rare cases in which the
personal interests at issue have been deemed “ ‘implicit in the concept of
ordered liberty.’ ” See Roe v. Wade, 410 U.S. 113, 152 (1973), quoting
Palko v. Connecticut, 302 U.S. 319, 325 (1937). The interest that the
appellant may have in permanently sharing a single kitchen and a suite of
contiguous rooms with some of her relatives simply does not rise to that
level.

Mr. Justice BYRON WHITE, dissenting.

Mrs. Moore’s interest in having the offspring of more than one
dependent son live with her qualifies as a liberty protected by the Due
Process Clause; but, because of the nature of that particular interest, the
demands of the Clause are satisfied once the Court is assured that the
challenged proscription is the product of a duly enacted or promulgated
statute, ordinance, or regulation and that it is not wholly lacking in purpose
or utility. That under this ordinance any number of unmarried children
may reside with their mother and that this number might be as destructive
of neighborhood values as one or more additional grandchildren is just
another argument that children and grandchildren may not constitutionally
be distinguished by a local zoning ordinance.
That argument remains unpersuasive to me. Here the head of the
household may house himself or herself and spouse, their parents, and any
number of their unmarried children. A fourth generation may be
represented by only one set of grandchildren and then only if born to a
dependent child. The ordinance challenged by appellant prevents her from
living with both sets of grandchildren only in East Cleveland, an area with
a radius of three miles and a population of 40,000. The ordinance thus
denies appellant the opportunity to live with all her grandchildren in this
particular suburb; she is free to do so in other parts of the Cleveland
metropolitan area. If there is power to maintain the character of a single-
family neighborhood, as there surely is, some limit must be placed on the
reach of the “family.” Had it been our task to legislate, we might have
approached the problem in a different manner than did the drafters of this
ordinance; but I have no trouble in concluding that the normal goals of
zoning regulation are present here and that the ordinance serves these
goals by limiting, in identifiable circumstances, the number of people who
can occupy a single household. The ordinance does not violate the Due
Process Clause.

1472
 Notes and Questions
1. Fundamental rights? Which rights did the parties challenging the
single-family ordinance in Belle Terre invoke? Did the majority in Belle
Terre apply heightened scrutiny in light of these asserted rights? Should it
have?
2. Constitutional protection for the traditional family. On what
basis did the Moore Court distinguish Belle Terre? Does this distinction
make sense to you? If constitutional protection for shared living turns on
traditional conceptions of family, even broadly conceived, what kinds of
families might that leave out?
In 2010, 41 percent of children were born to unmarried parents. Joyce
A. Martin et al., Births: Final Data for 2010, 61 Natl. Vital Stats. Rep. 1, 8
(2012). Does that suggest that the constitutionality of zoning that restricts
who may live in certain neighborhoods to people related by blood,
marriage, or adoption (as many such ordinances hold) should be evaluated
solely or even primarily through a prism of “tradition”?
3. State constitutional protection of nontraditional families. Many
state courts accept the reasoning of Belle Terre and interpret their
constitutions as lacking protection for nontraditional family access to real
property. See, e.g., McMaster v. Columbia Board of Zoning Appeals, 719
S.E.2d 660 (S.C. 2011); Ames Rental Property Association v. City of
Ames, 736 N.W.2d 255 (Iowa 2007).
A minority of state courts, however, have held that their state
constitutions provide greater protection for nontraditional family access to
real property than the federal constitution, as construed by the Supreme
Court in Belle Terre. For example, Charter Township of Delta v. Dinolfo,
351 N.W.2d 831 (Mich. 1984), involved a challenge to a single-family
ordinance that limited single-family residences to two or more persons
related by blood, marriage, or adoption, and not more than one other
unrelated person. Members of The Work of Christ Community had formed
two “families” that each included not only a husband, wife, and children,
but also six unrelated adults. Acknowledging that Belle Terre had affirmed
the constitutionality of a nearly identical ordinance, the Michigan Supreme
Court nonetheless held that the ordinance violated the due process clause
of the Michigan constitution:

Plaintiff lists the objectives of this ordinance: preservation of traditional

family values, maintenance of property values and population and density
control. We cannot disagree that those are not only rational but laudable
goals. Where the difficulty arises, however, is when plaintiff attempts to

1473
 convince us that the classification at hand — limiting to two the number of
unrelated persons who may occupy a residential dwelling together or with a
biological family — is reasonably related to the achievement of those goals.
It is precisely this rational relationship between the means used to achieve
the legislative goals that must exist in order for this deprivation of the
defendants’ use of their property to pass the due process test.
Here, plaintiff attempts to have us accept its assumption that different and
undesirable behavior can be expected from a functional family. Yet, we have
been given not a single argument in support of such an assumption, only the
assumption. Defendants, on the other hand, relying on decisions from other
jurisdictions construing their own state constitutions, present a compelling
argument that the means are not rationally related to the end sought.
Those states that have rejected Belle Terre have stressed that a line drawn
near the limit of the traditional family is both over- and under-inclusive.
Unrelated persons are artificially limited to as few as two, while related
families may expand without limit. Under the instant ordinance, twenty male
cousins could live together, motorcycles, noise, and all, while three unrelated
clerics could not. A greater example of over- and under-inclusiveness we
cannot imagine. The ordinance indiscriminately regulates where no
regulation is needed and fails to regulate where regulation is most needed.

Id. at 840-842.
Cases similar to Dinolfo include City of Santa Barbara v. Adamson,
610 P.2d 436 (Cal. 1980) (invalidating restrictive ordinance); Borough of
Glassboro v. Vallorosi, 568 A.2d 888 (N.J. 1990) (invalidating restrictive
ordinance); McMinn v. Town of Oyster Bay, 488 N.E.2d 1240 (N.Y. 1985)
(invalidating an ordinance that limited occupancy to persons related by
blood, marriage, or adoption, or two unrelated persons over the age of 62).
4. Intimate association. In Obergefell v. Hodges, 135 S. Ct. 2584
(2015), the case finding a constitutional right to same-sex marriage, the
Supreme Court reasoned that “[t]he fundamental liberties protected by [the
fourteenth amendment’s due process clause] . . . extend to certain personal
choices central to individual dignity and autonomy, including intimate
choices that define personal identity and beliefs.” Id. at 2597. In that case,
the Court frequently characterized this underlying right regarding
“intimate choices” as a right of “intimate association.” Id. at 2600. Does
this fundamental right of “intimate association” encompass decisions about
cohabitation for unmarried couples? Groups of close friends? Is the
deferential, rational-basis review of Belle Terre for cohabitants who
(unlike the claimants in Moore) do not claim the mantle of “family”
undermined by Obergefell? See Rigel C. Oliveri, Single-Family Zoning,
Intimate Association, and the Right to Choose Household Companions, 67

1474
Fla. L. Rev. 1401 (2015).

Problem
You are counsel to a municipal planning board that is seeking to zone a
new neighborhood for single-family residential purposes. What advice
would you have for the board in light of Belle Terre and Moore about
crafting the relevant definition of family for this ordinance? If the
municipality wants to limit potential harms related to groups of people
living together, are there other ways to regulate those harms directly rather
than through the proxy of limiting certain dwellings to a specific definition
of “family”?

§3.3 Forfeiture

Bennis v. Michigan

516 U.S. 442 (1996)

Chief Justice WILLIAM REHNQUIST delivered the opinion of the Court.
Petitioner was a joint owner, with her husband, of an automobile in
which her husband engaged in sexual activity with a prostitute. A
Michigan court ordered the automobile forfeited as a public nuisance, with
no offset for her interest, notwithstanding her lack of knowledge of her
husband’s activity. We hold that the Michigan court order did not offend
the Due Process Clause of the Fourteenth Amendment or the Takings
Clause of the Fifth Amendment.
Detroit police arrested John Bennis after observing him engaged in a
sexual act with a prostitute in the automobile while it was parked on a
Detroit city street. Bennis was convicted of gross indecency. The State
then sued both Bennis and his wife, petitioner Tina B. Bennis, to have the
car declared a public nuisance and abated as such under §§600.3801 and
600.3825 of Michigan’s Compiled Laws.
Petitioner defended against the abatement of her interest in the car on
the ground that, when she entrusted her husband to use the car, she did not
know that he would use it to violate Michigan’s indecency law. The
Wayne County Circuit Court rejected this argument, declared the car a
public nuisance, and ordered the car’s abatement. In reaching this
disposition, the trial court judge recognized the remedial discretion he had
under Michigan’s case law. He took into account the couple’s ownership
of “another automobile,” so they would not be left “without
transportation.” He also mentioned his authority to order the payment of

1475
one-half of the sale proceeds, after the deduction of costs, to “the innocent
co-title holder.” He declined to order such a division of sale proceeds in
this case because of the age and value of the car (an 11-year-old Pontiac
sedan recently purchased by John and Tina Bennis for $600); he
commented in this regard: “[T]here’s practically nothing left minus costs
in a situation such as this.”
The gravamen of petitioner’s due process claim is . . . [that she] was
entitled to contest the abatement by showing she did not know her husband
would use it to violate Michigan’s indecency law. But a long and unbroken
line of cases holds that an owner’s interest in property may be forfeited by
reason of the use to which the property is put even though the owner did
not know that it was to be put to such use.
Our earliest opinion to this effect is Justice Story’s opinion for the
Court in The Palmyra, 12 Wheat. 1, 6 L. Ed. 531 (1827). The Palmyra,
which had been commissioned as a privateer by the King of Spain and had
attacked a United States vessel, was captured by a United States war ship
and brought into Charleston, South Carolina, for adjudication. On the
Government’s appeal from the Circuit Court’s acquittal of the vessel, it
was contended by the owner that the vessel could not be forfeited until he
was convicted for the privateering. The Court rejected this contention,
explaining: “The thing is here primarily considered as the offender, or
rather the offence is attached primarily to the thing.” Id., at 14.
In Van Oster v. Kansas, 272 U.S. 465 (1926), this Court upheld the
forfeiture of a purchaser’s interest in a car misused by the seller. Van Oster
purchased an automobile from a dealer but agreed that the dealer might
retain possession for use in its business. The dealer allowed an associate to
use the automobile, and the associate used it for the illegal transportation
of intoxicating liquor. The State brought a forfeiture action pursuant to a
Kansas statute, and Van Oster defended on the ground that the
transportation of the liquor in the car was without her knowledge or
authority. This Court rejected Van Oster’s claim:

It is not unknown or indeed uncommon for the law to visit upon the owner of
property the unpleasant consequences of the unauthorized action of one to
whom he has entrusted it. . . . [C]ertain uses of property may be regarded as
so undesirable that the owner surrenders his control at his peril.

Id., at 467-468.
Notwithstanding this well-established authority rejecting the innocent-
owner defense, petitioner argues that we should in effect overrule it by
importing a culpability requirement from cases having at best a tangential

1476
relation to the “innocent owner” doctrine in forfeiture cases. She cites
Foucha v. Louisiana, 504 U.S. 71 (1992), for the proposition that a
criminal defendant may not be punished for a crime if he is found to be not
guilty. She also argues that our holding in Austin v. United States, 509 U.S.
602 (1993), that the Excessive Fines Clause limits the scope of civil
forfeiture judgments, “would be difficult to reconcile with any rule
allowing truly innocent persons to be punished by civil forfeiture.”
In Austin, the Court held that because “forfeiture serves, at least in
part, to punish the owner,” forfeiture proceedings are subject to the
limitations of the Eighth Amendment’s prohibition against excessive fines.
509 U.S. at 618. In this case, Michigan’s Supreme Court emphasized with
respect to the forfeiture proceeding at issue: “It is not contested that this is
an equitable action,” in which the trial judge has discretion to consider
“alternatives [to] abating the entire interest in the vehicle.” [527 N.W.2d
483, 495 (Mich. 1994).]
In any event, forfeiture also serves a deterrent purpose distinct from
any punitive purpose. Forfeiture of property prevents illegal uses “both by
preventing further illicit use of the [property] and by imposing an
economic penalty, thereby rendering illegal behavior unprofitable.”
Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 687 (1974).
This deterrent mechanism is hardly unique to forfeiture. For instance,
because Michigan also deters dangerous driving by making a motor
vehicle owner liable for the negligent operation of the vehicle by a driver
who had the owner’s consent to use it, petitioner was also potentially liable
for her husband’s use of the car in violation of Michigan negligence law.
Mich. Comp. Laws §257.401 (1990). “The law thus builds a secondary
defense against a forbidden use and precludes evasions by dispensing with
the necessity of judicial inquiry as to collusion between the wrongdoer and
the alleged innocent owner.” Van Oster, 272 U.S., at 467-468.
Petitioner also claims that the forfeiture in this case was a taking of
private property for public use in violation of the Takings Clause of the
Fifth Amendment, made applicable to the States by the Fourteenth
Amendment. But if the forfeiture proceeding here in question did not
violate the Fourteenth Amendment, the property in the automobile was
transferred by virtue of that proceeding from petitioner to the State. The
government may not be required to compensate an owner for property
which it has already lawfully acquired under the exercise of governmental
authority other than the power of eminent domain. United States v. Fuller,
409 U.S. 488, 492 (1973).
At bottom, petitioner’s claims depend on an argument that the
Michigan forfeiture statute is unfair because it relieves prosecutors from

1477
the burden of separating co-owners who are complicit in the wrongful use
of property from innocent co-owners. This argument, in the abstract, has
considerable appeal. Its force is reduced in the instant case, however, by
the Michigan Supreme Court’s confirmation of the trial court’s remedial
discretion, and petitioner’s recognition that Michigan may forfeit her and
her husband’s car whether or not she is entitled to an offset for her interest
in it.
We conclude today, as we concluded 75 years ago, that the cases
authorizing actions of the kind at issue are “too firmly fixed in the punitive
and remedial jurisprudence of the country to be now displaced.” The State
here sought to deter illegal activity that contributes to neighborhood
deterioration and unsafe streets. The Bennis automobile, it is conceded,
facilitated and was used in criminal activity. Both the trial court and the
Michigan Supreme Court followed our longstanding practice, and the
judgment of the Supreme Court of Michigan is therefore affirmed.

Justice CLARENCE THOMAS, concurring.

As the Court notes, evasion of the normal requirement of proof before
punishment might well seem “unfair.” One unaware of the history of
forfeiture laws and 200 years of this Court’s precedent regarding such laws
might well assume that such a scheme is lawless — a violation of due
process.
This case is ultimately a reminder that the Federal Constitution does
not prohibit everything that is intensely undesirable. As detailed in the
Court’s opinion and the cases cited therein, forfeiture of property without
proof of the owner’s wrongdoing, merely because it was “used” in or was
an “instrumentality” of crime has been permitted in England and this
country, both before and after the adoption of the Fifth and Fourteenth
Amendments.
Improperly used, forfeiture could become more like a roulette wheel
employed to raise revenue from innocent but hapless owners whose
property is unforeseeably misused, or a tool wielded to punish those who
associate with criminals, than a component of a system of justice. When
the property sought to be forfeited has been entrusted by its owner to one
who uses it for crime, however, the Constitution apparently assigns to the
States and to the political branches of the Federal Government the primary
responsibility for avoiding that result.

Justice RUTH BADER GINSBURG, concurring.

First, it bears emphasis that the car in question belonged to John
Bennis as much as it did to Tina Bennis. At all times he had her consent to

1478
use the car, just as she had his. And it is uncontested that Michigan may
forfeit the vehicle itself. The sole question, then, is whether Tina Bennis is
entitled not to the car, but to a portion of the proceeds (if any there be after
deduction of police, prosecutorial, and court costs) as a matter of
constitutional right.
Second, it was “critical” to the judgment of the Michigan Supreme
Court that the nuisance abatement proceeding is an “equitable action.”
That means the State’s Supreme Court stands ready to police exorbitant
applications of the statute. It shows no respect for Michigan’s high court to
attribute to its members tolerance of, or insensitivity to, inequitable
administration of an “equitable action.”
Nor is it fair to charge the trial court with “blatant unfairness” in the
case at hand. That court declined to order a division of sale proceeds, as
the trial judge took pains to explain, for two practical reasons: the
Bennises have “another automobile,” and the age and value of the forfeited
car (an 11-year-old Pontiac purchased by John and Tina Bennis for $600)
left “practically nothing” to divide after subtraction of costs.
Michigan, in short, has not embarked on an experiment to punish
innocent third parties. Nor do we condone any such experiment. Michigan
has decided to deter Johns from using cars they own (or co-own) to
contribute to neighborhood blight, and that abatement endeavor hardly
warrants this Court’s disapprobation.

Justice JOHN PAUL STEVENS, with whom Justice SOUTER and Justice
BREYER join, dissenting.
I would reverse because petitioner is entirely without responsibility for
[her husband’s] act. Fundamental fairness prohibits the punishment of
innocent people.
In other contexts, we have regarded as axiomatic that persons cannot
be punished when they have done no wrong. I would hold now what we
have always assumed: that the principle is required by due process.
The unique facts of this case demonstrate that petitioner is entitled to
the protection of that rule. Without knowledge that he would commit such
an act in the family car, or that he had ever done so previously, surely
petitioner cannot be accused of failing to take “reasonable steps” to
prevent the illicit behavior. She is just as blameless as if a thief, rather than
her husband, had used the car in a criminal episode.
Forfeiture of an innocent owner’s property that plays a central role in a
criminal enterprise may be justified on reasoning comparable to the basis
for imposing liability on a principal for an agent’s torts. Just as the risk of
respondeat superior liability encourages employers to supervise more

1479
closely their employees’ conduct, so the risk of forfeiture encourages
owners to exercise care in entrusting their property to others. But the law
of agency recognizes limits on the imposition of vicarious liability in
situations where no deterrent function is likely to be served; for example, it
exonerates the employer when the agent strays from his intended mission
and embarks on a “frolic of his own.” In this case, petitioner did not
“entrust” the car to her husband on the night in question; he was entitled to
use it by virtue of their joint ownership. There is no reason to think that the
threat of forfeiture will deter an individual from buying a car with her
husband — or from marrying him in the first place — if she neither knows
nor has reason to know that he plans to use it wrongfully.
The absence of any deterrent value reinforces the punitive nature of
this forfeiture law. But petitioner has done nothing that warrants
punishment. She cannot be accused of negligence or of any other
dereliction in allowing her husband to use the car for the wholly legitimate
purpose of transporting himself to and from his job. She affirmatively
alleged and proved that she is not in any way responsible for the conduct
that gave rise to the seizure. If anything, she was a victim of that conduct.
In my opinion, these facts establish that the seizure constituted an arbitrary
deprivation of property without due process of law.

Justice ANTHONY KENNEDY, dissenting.

The forfeiture of vessels pursuant to the admiralty and maritime law
has a long, well-recognized tradition, evolving as it did from the necessity
of finding some source of compensation for injuries done by a vessel
whose responsible owners were often half a world away and beyond the
practical reach of the law and its processes. The prospect of deriving
prompt compensation from in rem forfeiture, and the impracticality of
adjudicating the innocence of the owners or their good-faith efforts in
finding a diligent and trustworthy master, combined to eliminate the
owner’s lack of culpability as a defense.
This forfeiture cannot meet the requirements of due process. Nothing
in the rationale of the Michigan Supreme Court indicates that the forfeiture
turned on the negligence or complicity of petitioner, or a presumption
thereof, and nothing supports the suggestion that the value of her co-
ownership is so insignificant as to be beneath the law’s protection.
For these reasons, and with all respect, I dissent.

Notes and Questions

1. Tradition and due process. One aspect of the debate between the

1480
majority and dissent in Moore v. East Cleveland, 431 U.S. 494 (1977),
involved the role of tradition in defining the scope of constitutional rights.
See §3.2, above. What role does tradition play in the majority and dissents
in Bennis?
2. Public nuisance, seizure of property, and crime control. In recent
years, local governments have used public nuisance ordinances to abate a
wide variety of activities related to crime, including ordinances that even
declare certain gang-related activities to be a public nuisance. See People
ex rel. Gallo v. Acuna, 929 P.2d 596, 608, 615 (Cal. 1997) (upholding
injunction against gang members “[s]tanding, sitting, walking, driving,
gathering, or appearing anywhere in public view . . . with any other known
[fellow gang] member”). The practice of civil forfeiture of property
connected to alleged criminal activity has grown steadily in recent
decades, with proceeds collected by the Justice Department increasing
from $27 million in 1985 to nearly $4.2 billion in 2012. See Sarah
Stillman, Taken, The New Yorker, Aug. 12, 2013. Advocates have raised
concerns that civil forfeiture, particularly by cash-strapped local
governments, is rife with abuse and that it is difficult for parties whose
property is seized by the police to challenge those seizures because the
costs of doing so often outstrip the value of the property. Id.
In Keshbro, Inc. v. City of Miami, 801 So. 2d 864 (Fla. 2001), the
Florida Supreme Court upheld the temporary closure of a motel that had
been the site of numerous drug and prostitution offenses but overturned an
order closing an apartment complex for one year when it had been the site
of only two illegal drug sales. The court held that the city had taken the
property of the apartment complex owner without just compensation
because the illegal activity was not so pervasive as to constitute either a
private or public nuisance. Did the court rule correctly? Is this result
consistent with Bennis?
3. Eviction of innocent public housing tenants. In Department of
Housing and Urban Development v. Rucker, 535 U.S. 125 (2002), the
Supreme Court interpreted a federal statute to allow eviction of innocent
public housing tenants when members of their households have engaged in
illegal drug use or sales on or off the housing site. See 42 U.S.C. §1437d(l)
(6) (requiring public housing authorities to use leases that provide that
“any drug-related criminal activity on or off such premises, engaged in by
a public housing tenant, any member of the tenant’s household, or any
guest or other person under the tenant’s control, shall be cause for
termination of [the] tenancy”). See also 24 C.F.R. §966.4(e)(12). The
Court found no constitutional problem with forfeiture of property owned

1481
by an innocent party even if that tenant had done everything possible to
prevent family members from using or selling drugs on the ground that the
government was acting as an owner-landlord placing conditions in the
lease with which the tenants voluntarily concurred and not as a sovereign
regulating the lease terms or punishing an innocent party because of the
criminal acts of another. Is this holding consistent with the holding in
Keshbro? Do you agree?

1. Specifically, the property was deemed “unsafe,” as defined by BCO §18-46,

for the following defects: “collapsing porch structure and foundations for same;
collapsing porch roof structure; damaged or missing shingles; rotted roof
sheathing; lacking platform at front door; rotted and damaged wood siding;
damaged/collapsing rear porch roof structure; damaged or missing stairs, handrails,
guardrails at rear porch; damaged/missing footings for rear porch; rotted rafters;
fascia and exterior trim; damaged and/or lacking foundations; and repair damaged
chimney.” This list only included violations observable from outside the structures.
2. BCO §18-46 provides,

Unsafe structure means a structure which has any of the following defects or
is in any of the following conditions:

(1) A structure, because of dilapidation, decay, damage, faulty

construction, or otherwise which is unsanitary or unfit for human use;
(2) A structure that has light, air, or sanitation facilities which are
inadequate to protect the health, safety, or general welfare of those who live
or may live within;
(3) A structure that has inadequate means of egress as required by this
Code;
(4) A structure, or part thereof, which is likely to partially or entirely
collapse, or some part of the foundation or underpinning is likely to fall or
give way so as to injure persons or damage property;
(5) A structure that is in such a condition so as to constitute a nuisance, as
defined by this Code;
(6) A structure that is hazardous to the safety, health, or general welfare of
the people of the city by reason of inadequate maintenance, dilapidation, or
abandonment;
(7) A structure that has become vacant, dilapidated, and open at door or
window, leaving the interior of the structure exposed to the elements or
accessible to entrance by trespassers or animals or open to casual entry;
(8) A structure that has settled to such an extent that walls or other
structural portions have less resistance to winds than is required in the case of
new construction by this Code;

1482
 (9) A structure that has been damaged by fire, wind, flood, or by any other
cause to such an extent as to be dangerous to the life, safety, health, or general
welfare of the people living in the city;
(10) A structure that has become damaged to such an extent that the cost
of repair to place it in a safe, sound, and sanitary condition exceeds 50 percent
of the assessed valuation of the structure, at the time when repairs are to be
made.

3. Council of Orgs., 455 Mich. at 568, 566 N.W.2d 208, quoting United States v.
Salerno, 481 U.S. 739, 745, 107 S. Ct. 2095, 95 L. Ed. 2d 697 (1987).
4. Id. at 568-569, quoting 16 Am. Jur. 2d, Constitutional Law, §218, p. 642.
5. U.S., Const., Am., XIV.
6. Washington v. Glucksberg, 521 U.S. 702, 719 (1997).
7. Daniels v. Williams, 474 U.S. 327, 331 (1986).
8. See, e.g., Dow v. Michigan, 396 Mich. 192, 204, 240 N.W.2d 450 (1976); Bd.
of Regents of State Colleges v. Roth, 408 U.S. 564, 571-572, 92 S. Ct. 2701, 33 L.
Ed. 2d 548 (1972) (The “actual owner[ ] . . . of real estate, chattels or money” has
“property interests protected by procedural due process”).
9. Collins v. City of Harker Hts., 503 U.S. 115, 125 (1992). See also Albright v.
Oliver, 510 U.S. 266, 272 (1994).
10. TIG Ins. Co., Inc. v. Dep’t of Treasury, 464 Mich. 548, 557-558, 629
N.W.2d 402 (2001). Discussing the parameters of this standard, this Court in TIG
stated:

“Rational basis review does not test the wisdom, need, or appropriateness of
the legislation, or whether the classification is made with ‘mathematical
nicety,’ or even whether it results in some inequity when put into practice.”
Crego v. Coleman, 463 Mich. 248, 260, 615 N.W.2d 218 (2000). Rather, it
tests only whether the legislation is reasonably related to a legitimate
governmental purpose. The legislation will pass “constitutional muster if the
legislative judgment is supported by any set of facts, either known or which
could reasonably be assumed, even if such facts may be debatable.” Id. at
259-260, 615 N.W.2d 218. To prevail under this standard, a party challenging
a statute must overcome the presumption that the statute is constitutional.
Thoman v. Lansing, 315 Mich. 566, 576, 24 N.W.2d 213 (1946). [TIG Ins.
Co., 464 Mich. at 557-558, 629 N.W.2d 402.]
11. Kropf v. Sterling Hts., 391 Mich. 139, 158, 215 N.W.2d 179 (1974).
12. Austin v. Tennessee, 179 U.S. 343, 349 (1900).
13. See MCL 125.486.
14. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 313 (1950).
15. Mathews v. Eldridge, 424 U.S. 319, 334-35 (1976).
16. BCO §18-61.
17. Id.

1483
 18. BCO §18-63.
19. Dearborn Twp. v. Dail, 334 Mich. at 680, 55 N.W.2d 201.
20. All citations by section number refer to the Housing Code of the city of East
Cleveland, Ohio.
21. Section 1341.08 (1966) provides:
“ ‘Family’ means a number of individuals related to the nominal head of the
household or to the spouse of the nominal head of the household living as a single
housekeeping unit in a single dwelling unit, but limited to the following:
“(a) Husband or wife of the nominal head of the household.
“(b) Unmarried children of the nominal head of the household or of the spouse
of the nominal head of the household, provided, however, that such unmarried
children have no children residing with them.
“(c) Father or mother of the nominal head of the household or of the spouse of
the nominal head of the household.
“(d) Notwithstanding the provisions of subsection (b) hereof, a family may
include not more than one dependent married or unmarried child of the nominal
head of the household or of the spouse of the nominal head of the household and
the spouse and dependent children of such dependent child. For the purpose of this
subsection, a dependent person is one who has more than fifty percent of his total
support furnished for him by the nominal head of the household and the spouse of
the nominal head of the household.
“(e) A family may consist of one individual.”

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CHAPTER 15

Takings Law

§1 EMINENT DOMAIN
§1.1 The Eminent Domain Power and the Condemnation
Process
As an inherent aspect of their sovereignty, the federal and state
governments have the power to take property by eminent domain. The fifth
amendment provides that “Nor shall private property be taken for public
use, without just compensation.” U.S. Const., amend. V. That clause is
made applicable to the States by the fourteenth amendment, Chicago,
Burlington & Quincy Railroad Co. v. Chicago, 166 U.S. 226 (1897), and
all state constitutions have equivalent provisions. The text of the takings
clause suggests several constitutional questions in eminent domain: Does a
purported taking involve “private property” subject to the clause; is the
taking for “public use”; and, if so, has there been payment of “just
compensation”?
When the government acquires property without the owner’s consent,
it is usually clear that a taking has occurred and compensation must be
paid. However, where governmental actions interfere with an owner’s
property rights but do not involve an actual transfer to the government, the
question is whether there has been a “taking” at all. We will focus on that
issue, which falls under the doctrinal heading of “regulatory takings,”
beginning in §2.
The condemnation power is regulated and defined by statute.
Sometimes the legislature exercises the power directly and sometimes it
delegates eminent domain authority to an agency that is empowered by the
government to take property for specific purposes. For example, the
Massachusetts Port Authority has the statutory power to take property for
airport or harbor purposes and the U.S. Department of Transportation has
the power to take property for highway purposes, as authorized by
legislation. Municipalities generally are delegated eminent domain power
as well for purposes such as road and school construction and
condemnation of unsafe structures. In some circumstances private entities,
such as railroads, utilities, and turnpike companies, are also delegated the

1485
authority to condemn private property.
Statutes define the procedures by which the condemnation process
occurs. Some states have “quick-take” statutes that authorize the seizure of
property immediately in certain circumstances, with the government
paying what it deems to be just compensation, and placing the burden on
the owner to challenge that amount. Usually, however, the condemning
agency must attempt to negotiate to purchase the property from the owner
for a fair price before filing a lawsuit against the owner and any occupants
to condemn the property. If the parties cannot agree on a fair price, the
court may appoint experts to determine the fair market value of the
property, and a lawsuit with witnesses on both sides may be conducted to
determine the compensation mandated by both statute and the constitution.
Absent appeals, the suit ends with a condemnation decree that transfers
title to the property from the owner to the condemning agency.

§1.2 Public Use

Kelo v. City of New London

545 U.S. 469 (2005)

Map: Trumbull Street, New London,

Connecticut

Justice JOHN PAUL STEVENS delivered the opinion of the Court, in which
KENNEDY, SOUTER, GINSBURG, and BREYER, JJ., joined.
In 2000, the city of New London approved a development plan that, in
the words of the Supreme Court of Connecticut, was “projected to create
in excess of 1,000 jobs, to increase tax and other revenues, and to
revitalize an economically distressed city, including its downtown and
waterfront areas.” In assembling the land needed for this project, the city’s
development agent has purchased property from willing sellers and
proposes to use the power of eminent domain to acquire the remainder of
the property from unwilling owners in exchange for just compensation.
The question presented is whether the city’s proposed disposition of this
property qualifies as a “public use” within the meaning of the Takings
Clause of the Fifth Amendment to the Constitution.

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 I
The city of New London (hereinafter City) sits at the junction of the
Thames River and the Long Island Sound in southeastern Connecticut.
Decades of economic decline led a state agency in 1990 to designate the
City a “distressed municipality.” In 1996, the Federal Government closed
the Naval Undersea Warfare Center, which had been located in the Fort
Trumbull area of the City and had employed over 1,500 people. In 1998,
the City’s unemployment rate was nearly double that of the State, and its
population of just under 24,000 residents was at its lowest since 1920.
These conditions prompted state and local officials to target New
London, and particularly its Fort Trumbull area, for economic
revitalization. To this end, respondent New London Development
Corporation (NLDC), a private nonprofit entity established some years
earlier to assist the City in planning economic development, was
reactivated. In January 1998, the State authorized a $5.35 million bond
issue to support the NLDC’s planning activities and a $10 million bond
issue toward the creation of a Fort Trumbull State Park. In February, the
pharmaceutical company Pfizer Inc. announced that it would build a $300
million research facility on a site immediately adjacent to Fort Trumbull;
local planners hoped that Pfizer would draw new business to the area,
thereby serving as a catalyst to the area’s rejuvenation. After receiving
initial approval from the city council, the NLDC continued its planning
activities and held a series of neighborhood meetings to educate the public
about the process. In May, the city council authorized the NLDC to
formally submit its plans to the relevant state agencies for review. Upon
obtaining state-level approval, the NLDC finalized an integrated
development plan focused on 90 acres of the Fort Trumbull area.
The Fort Trumbull area is situated on a peninsula that juts into the
Thames River. The area comprises approximately 115 privately owned
properties, as well as the 32 acres of land formerly occupied by the naval
facility (Trumbull State Park now occupies 18 of those 32 acres). The
development plan encompasses seven parcels. Parcel 1 is designated for a
waterfront conference hotel at the center of a “small urban village” that
will include restaurants and shopping. This parcel will also have marinas
for both recreational and commercial uses. A pedestrian “riverwalk” will
originate here and continue down the coast, connecting the waterfront
areas of the development. Parcel 2 will be the site of approximately 80
new residences organized into an urban neighborhood and linked by public
walkway to the remainder of the development, including the state park.
This parcel also includes space reserved for a new U.S. Coast Guard

1487
Museum. Parcel 3, which is located immediately north of the Pfizer
facility, will contain at least 90,000

Fort Trumball before. Photo Courtesy of the Renaissance City

Development Association.

square feet of research and development office space. Parcel 4A is a 2.4-

acre site that will be used either to support the adjacent state park, by
providing parking or retail services for visitors, or to support the nearby
marina. Parcel 4B will include a renovated marina, as well as the final
stretch of the riverwalk. Parcels 5, 6, and 7 will provide land for office and
retail space, parking, and water-dependent commercial uses.
The NLDC intended the development plan to capitalize on the arrival
of the Pfizer facility and the new commerce it was expected to attract. In
addition to creating jobs, generating tax revenue, and helping to “build
momentum for the revitalization of downtown New London,” the plan was
also designed to make the City more attractive and to create leisure and
recreational opportunities on the waterfront and in the park.
The city council approved the plan in January 2000, and designated the
NLDC as its development agent in charge of implementation. See Conn.
Gen. Stat. §8-188. The city council also authorized the NLDC to purchase
property or to acquire property by exercising eminent domain in the City’s
name. Id. §8-193. The NLDC successfully negotiated the purchase of most
of the real estate in the 90-acre area, but its negotiations with petitioners
failed. As a consequence, in November 2000, the NLDC initiated the
condemnation proceedings that gave rise to this case.

II
Petitioner Susette Kelo has lived in the Fort Trumbull area since 1997.

1488
She has made extensive improvements to her house, which she prizes for
its water view. Petitioner Wilhelmina Dery was born in her Fort Trumbull
house in 1918 and has lived there her entire life. Her husband Charles (also
a petitioner) has lived in the house since they married some 60 years ago.
In all, the nine petitioners own 15 properties in Fort Trumbull — 4 in
parcel 3 of the development plan and 11 in parcel 4A. Ten of the parcels
are occupied by the owner or a family member; the other five are held as
investment properties. There is no allegation that any of these properties is
blighted or otherwise in poor condition; rather, they were condemned only
because they happen to be located in the development area.
In December 2000, petitioners brought this action in the New London
Superior Court. They claimed, among other things, that the taking of their
properties would violate the “public use” restriction in the Fifth
Amendment. After a 7-day bench trial, the Superior Court granted a
permanent restraining order prohibiting the taking of the properties located
in parcel 4A (park or marina support). It, however, denied petitioners relief
as to the properties located in parcel 3 (office space).1
After the Superior Court ruled, both sides took appeals to the Supreme
Court of Connecticut. That court held, over a dissent, that all of the City’s
proposed takings were valid. [R]elying on cases such as Hawai`i Housing
Authority v. Midkiff, 467 U.S. 229 (1984), and Berman v. Parker, 348 U.S.
26 (1954), the court held that such economic development qualified as a
valid public use under both the Federal and State Constitutions.
The three dissenting justices would have imposed a “heightened”
standard of judicial review for takings justified by economic development.
Although they agreed that the plan was intended to serve a valid public
use, they would have found all the takings unconstitutional because the
City had failed to adduce “clear and convincing evidence” that the
economic benefits of the plan would in fact come to pass.
We granted certiorari to determine whether a city’s decision to take
property for the purpose of economic development satisfies the “public
use” requirement of the Fifth Amendment.

III
Two polar propositions are perfectly clear. On the one hand, it has long
been accepted that the sovereign may not take the property of A for the
sole purpose of transferring it to another private party B, even though A is
paid just compensation. On the other hand, it is equally clear that a State
may transfer property from one private party to another if future “use by
the public” is the purpose of the taking; the condemnation of land for a

1489
railroad with common-carrier duties is a familiar example. Neither of these
propositions, however, determines the disposition of this case.
As for the first proposition, the City would no doubt be forbidden from
taking petitioners’ land for the purpose of conferring a private benefit on a
particular private party. Nor would the City be allowed to take property
under the mere pretext of a public purpose, when its actual purpose was to
bestow a private benefit. The takings before us, however, would be
executed pursuant to a “carefully considered” development plan. The trial
judge and all the members of the Supreme Court of Connecticut agreed
that there was no evidence of an illegitimate purpose in this case.
Therefore, as was true of the statute challenged in Midkiff, 467 U.S., at
245, the City’s development plan was not adopted “to benefit a particular
class of identifiable individuals.”
On the other hand, this is not a case in which the City is planning to
open the condemned land — at least not in its entirety — to use by the
general public. Nor will the private lessees of the land in any sense be
required to operate like common carriers, making their services available
to all comers. But although such a projected use would be sufficient to
satisfy the public use requirement, this “Court long ago rejected any literal
requirement that condemned property be put into use for the general
public.” Id. at 244. Indeed, while many state courts in the mid-19th century
endorsed “use by the public” as the proper definition of public use, that
narrow view steadily eroded over time. Not only was the “use by the
public” test difficult to administer (e.g., what proportion of the public need
have access to the property? at what price?), but it proved to be impractical
given the diverse and always evolving needs of society.2 Accordingly,
when this Court began applying the Fifth Amendment to the States at the
close of the 19th century, it embraced the broader and more natural
interpretation of public use as “public purpose.” Thus, in a case upholding
a mining company’s use of an aerial bucket line to transport ore over
property it did not own, Justice Holmes’ opinion for the Court stressed
“the inadequacy of use by the general public as a universal test.” Strickley
v. Highland Boy Gold Mining Co., 200 U.S. 527, 531 (1906).3 We have
repeatedly and consistently rejected that narrow test ever since.
The disposition of this case therefore turns on the question whether the
City’s development plan serves a “public purpose.” Without exception, our
cases have defined that concept broadly, reflecting our longstanding policy
of deference to legislative judgments in this field.
In Berman v. Parker, 348 U.S. 26 (1954), this Court upheld a
redevelopment plan targeting a blighted area of Washington, D.C., in
which most of the housing for the area’s 5,000 inhabitants was beyond

1490
repair. Under the plan, the area would be condemned and part of it utilized
for the construction of streets, schools, and other public facilities. The
remainder of the land would be leased or sold to private parties for the
purpose of redevelopment, including the construction of low-cost housing.
The owner of a department store located in the area challenged the
condemnation, pointing out that his store was not itself blighted and
arguing that the creation of a “better balanced, more attractive community”
was not a valid public use. Writing for a unanimous Court, Justice Douglas
refused to evaluate this claim in isolation, deferring instead to the
legislative and agency judgment that the area “must be planned as a
whole” for the plan to be successful. The Court explained that “community
redevelopment programs need not, by force of the Constitution, be on a
piecemeal basis — lot by lot, building by building.” The public use
underlying the taking was unequivocally affirmed, id. at 33:

We do not sit to determine whether a particular housing project is or is not

desirable. The concept of the public welfare is broad and inclusive. The
values it represents are spiritual as well as physical, aesthetic as well as
monetary. It is within the power of the legislature to determine that the
community should be beautiful as well as healthy, spacious as well as clean,
well-balanced as well as carefully patrolled. In the present case, the Congress
and its authorized agencies have made determinations that take into account
a wide variety of values. It is not for us to reappraise them. If those who
govern the District of Columbia decide that the Nation’s Capital should be
beautiful as well as sanitary, there is nothing in the Fifth Amendment that
stands in the way.

In Hawai`i Housing Authority v. Midkiff, 467 U.S. 229 (1984), the

Court considered a Hawai`i statute whereby fee title was taken from
lessors and transferred to lessees (for just compensation) in order to reduce
the concentration of land ownership. We unanimously upheld the statute
and rejected the Ninth Circuit’s view that it was “a naked attempt on the
part of the state of Hawai`i to take the property of A and transfer it to B
solely for B’s private use and benefit.” Reaffirming Berman’s deferential
approach to legislative judgments in this field, we concluded that the
State’s purpose of eliminating the “social and economic evils of a land
oligopoly” qualified as a valid public use. Our opinion also rejected the
contention that the mere fact that the State immediately transferred the
properties to private individuals upon condemnation somehow diminished
the public character of the taking. “It is only the taking’s purpose, and not
its mechanics,” we explained, that matters in determining public use. Id. at
244.

1491
 In that same Term we decided another public use case that arose in a
purely economic context. In Ruckelshaus v. Monsanto Co., 467 U.S. 986
(1984), the Court dealt with provisions of the Federal Insecticide,
Fungicide, and Rodenticide Act under which the Environmental Protection
Agency could consider the data (including trade secrets) submitted by a
prior pesticide applicant in evaluating a subsequent application, so long as
the second applicant paid just compensation for the data. We
acknowledged that the “most direct beneficiaries” of these provisions were
the subsequent applicants, but we nevertheless upheld the statute under
Berman and Midkiff. We found sufficient Congress’ belief that sparing
applicants the cost of time-consuming research eliminated a significant
barrier to entry in the pesticide market and thereby enhanced competition.
Viewed as a whole, our jurisprudence has recognized that the needs of
society have varied between different parts of the Nation, just as they have
evolved over time in response to changed circumstances. Our earliest cases
in particular embodied a strong theme of federalism, emphasizing the
“great respect” that we owe to state legislatures and state courts in
discerning local public needs. For more than a century, our public use
jurisprudence has wisely eschewed rigid formulas and intrusive scrutiny in
favor of affording legislatures broad latitude in determining what public
needs justify the use of the takings power.

IV
Those who govern the City were not confronted with the need to
remove blight in the Fort Trumbull area, but their determination that the
area was sufficiently distressed to justify a program of economic
rejuvenation is entitled to our deference. The City has carefully formulated
an economic development plan that it believes will provide appreciable
benefits to the community, including — but by no means limited to — new
jobs and increased tax revenue. As with other exercises in urban planning
and development,4 the City is endeavoring to coordinate a variety of
commercial, residential, and recreational uses of land, with the hope that
they will form a whole greater than the sum of its parts. Given the
comprehensive character of the plan, the thorough deliberation that
preceded its adoption, and the limited scope of our review, it is appropriate
for us, as it was in Berman, to resolve the challenges of the individual
owners, not on a piecemeal basis, but rather in light of the entire plan.
Because that plan unquestionably serves a public purpose, the takings
challenged here satisfy the public use requirement of the Fifth
Amendment.

1492
 To avoid this result, petitioners urge us to adopt a new bright-line rule
that economic development does not qualify as a public use. Putting aside
the unpersuasive suggestion that the City’s plan will provide only purely
economic benefits, neither precedent nor logic supports petitioners’
proposal. Promoting economic development is a traditional and long
accepted function of government. There is, moreover, no principled way of
distinguishing economic development from the other public purposes that
we have recognized. In our cases upholding takings that facilitated
agriculture and mining, for example, we emphasized the importance of
those industries to the welfare of the States in question; in Berman, we
endorsed the purpose of transforming a blighted area into a “well-
balanced” community through redevelopment;5 in Midkiff, we upheld the
interest in breaking up a land oligopoly that “created artificial deterrents to
the normal functioning of the State’s residential land market”; and in
Monsanto, we accepted Congress’ purpose of eliminating a “significant
barrier to entry in the pesticide market.” It would be incongruous to hold
that the City’s interest in the economic benefits to be derived from the
development of the Fort Trumbull area has less of a public character than
any of those other interests. Clearly, there is no basis for exempting
economic development from our traditionally broad understanding of
public purpose.
Petitioners contend that using eminent domain for economic
development impermissibly blurs the boundary between public and private
takings. Again, our cases foreclose this objection. Quite simply, the
government’s pursuit of a public purpose will often benefit individual
private parties. For example, in Midkiff, the forced transfer of property
conferred a direct and significant benefit on those lessees who were
previously unable to purchase their homes. In Monsanto, we recognized
that the “most direct beneficiaries” of the data-sharing provisions were the
subsequent pesticide applicants, but benefiting them in this way was
necessary to promoting competition in the pesticide market. The owner of
the department store in Berman objected to “taking from one businessman
for the benefit of another businessman,” referring to the fact that under the
redevelopment plan land would be leased or sold to private developers for
redevelopment.6 Our rejection of that contention has particular relevance
to the instant case: “The public end may be as well or better served
through an agency of private enterprise than through a department of
government — or so the Congress might conclude. We cannot say that
public ownership is the sole method of promoting the public purposes of
community redevelopment projects.” Id. at 34.7

1493
 It is further argued that without a bright-line rule nothing would stop a
city from transferring citizen A’s property to citizen B for the sole reason
that citizen B will put the property to a more productive use and thus pay
more taxes. Such a one-to-one transfer of property, executed outside the
confines of an integrated development plan, is not presented in this case.
While such an unusual exercise of government power would certainly raise
a suspicion that a private purpose was afoot,8 the hypothetical cases
posited by petitioners can be confronted if and when they arise. They do
not warrant the crafting of an artificial restriction on the concept of public
use.9
Alternatively, petitioners maintain that for takings of this kind we
should require a “reasonable certainty” that the expected public benefits
will actually accrue. Such a rule, however, would represent an even greater
departure from our precedent. “When the legislature’s purpose is
legitimate and its means are not irrational, our cases make clear that
empirical debates over the wisdom of takings — no less than debates over
the wisdom of other kinds of socioeconomic legislation — are not to be
carried out in the federal courts.” Midkiff, 467 U.S., at 242. Indeed, earlier
this Term we explained why similar practical concerns (among others)
undermined the use of the “substantially advances” formula in our
regulatory takings doctrine. See Lingle v. Chevron U.S.A. Inc., 544 U.S.
528, 544 (2005) (noting that this formula “would empower — and might
often require — courts to substitute their predictive judgments for those of
elected legislatures and expert agencies”). The disadvantages of a
heightened form of review are especially pronounced in this type of case.
Orderly implementation of a comprehensive redevelopment plan obviously
requires that the legal rights of all interested parties be established before
new construction can be commenced. A constitutional rule that required
postponement of the judicial approval of every condemnation until the
likelihood of success of the plan had been assured would unquestionably
impose a significant impediment to the successful consummation of many
such plans.
Just as we decline to second-guess the City’s considered judgments
about the efficacy of its development plan, we also decline to second-guess
the City’s determinations as to what lands it needs to acquire in order to
effectuate the project. “It is not for the courts to oversee the choice of the
boundary line nor to sit in review on the size of a particular project area.
Once the question of the public purpose has been decided, the amount and
character of land to be taken for the project and the need for a particular
tract to complete the integrated plan rests in the discretion of the legislative
branch.” Berman, 348 U.S., at 35-36.

1494
 In affirming the City’s authority to take petitioners’ properties, we do
not minimize the hardship that condemnations may entail, notwithstanding
the payment of just compensation. We emphasize that nothing in our
opinion precludes any State from placing further restrictions on its exercise
of the takings power. Indeed, many States already impose “public use”
requirements that are stricter than the federal baseline. Some of these
requirements have been established as a matter of state constitutional
law,10 while others are expressed in state eminent domain statutes that
carefully limit the grounds upon which takings may be exercised.11 As the
submissions of the parties and their amici make clear, the necessity and
wisdom of using eminent domain to promote economic development are
certainly matters of legitimate public debate.12 This Court’s authority,
however, extends only to determining whether the City’s proposed
condemnations are for a “public use” within the meaning of the Fifth
Amendment to the Federal Constitution. Because over a century of our
case law interpreting that provision dictates an affirmative answer to that
question, we may not grant petitioners the relief that they seek.
The judgment of the Supreme Court of Connecticut is affirmed.

Justice ANTHONY M. KENNEDY, concurring.

This Court has declared that a taking should be upheld as consistent
with the Public Use Clause, U.S. Const., Amdt. 5., as long as it is
“rationally related to a conceivable public purpose.” Hawai`i Housing
Authority v. Midkiff, 467 U.S. 229, 241 (1984). This deferential standard of
review echoes the rational-basis test used to review economic regulation
under the Due Process and Equal Protection Clauses, see, e.g., FCC v.
Beach Communications, Inc., 508 U.S. 307, 313-314 (1993); Williamson v.
Lee Optical of Okla., Inc., 348 U.S. 483 (1955). The determination that a
rational-basis standard of review is appropriate does not, however, alter the
fact that transfers intended to confer benefits on particular, favored private
entities, and with only incidental or pretextual public benefits, are
forbidden by the Public Use Clause.
A court applying rational-basis review under the Public Use Clause
should strike down a taking that, by a clear showing, is intended to favor a
particular private party, with only incidental or pretextual public benefits,
just as a court applying rational-basis review under the Equal Protection
Clause must strike down a government classification that is clearly
intended to injure a particular class of private parties, with only incidental
or pretextual public justifications. See Cleburne v. Cleburne Living Center,
Inc., 473 U.S. 432, 446-47, 450 (1985); Department of Agriculture v.

1495
Moreno, 413 U.S. 528, 533-36 (1973).
A court confronted with a plausible accusation of impermissible
favoritism to private parties should treat the objection as a serious one and
review the record to see if it has merit, though with the presumption that
the government’s actions were reasonable and intended to serve a public
purpose. Here, the trial court conducted a careful and extensive inquiry
into “whether, in fact, the development plan is of primary benefit to the
developer [i.e., Corcoran Jennison], and private businesses which may
eventually locate in the plan area [e.g., Pfizer], and in that regard, only of
incidental benefit to the city.” The trial court considered respondents’
awareness of New London’s depressed economic condition and evidence
corroborating the validity of this concern; the substantial commitment of
public funds by the State to the development project before most of the
private beneficiaries were known; evidence that respondents reviewed a
variety of development plans and chose a private developer from a group
of applicants rather than picking out a particular transferee beforehand;
and the fact that the other private beneficiaries of the project are still
unknown because the office space proposed to be built has not yet been
rented.
The trial court concluded, based on these findings, that benefiting
Pfizer was not “the primary motivation or effect of this development
plan”; instead, “the primary motivation for [respondents] was to take
advantage of Pfizer’s presence.” Likewise, the trial court concluded that
“there is nothing in the record to indicate that [respondents] were
motivated by a desire to aid [other] particular private entities.” This case,
then, survives the meaningful rational basis review that in my view is
required under the Public Use Clause.
My agreement with the Court that a presumption of invalidity is not
warranted for economic development takings in general, or for the
particular takings at issue in this case, does not foreclose the possibility
that a more stringent standard of review than that announced in Berman
and Midkiff might be appropriate for a more narrowly drawn category of
takings. There may be private transfers in which the risk of undetected
impermissible favoritism of private parties is so acute that a presumption
(rebuttable or otherwise) of invalidity is warranted under the Public Use
Clause. This demanding level of scrutiny, however, is not required simply
because the purpose of the taking is economic development.
This is not the occasion for conjecture as to what sort of cases might
justify a more demanding standard, but it is appropriate to underscore
aspects of the instant case that convince me no departure from Berman and
Midkiff is appropriate here. This taking occurred in the context of a

1496
comprehensive development plan meant to address a serious city-wide
depression, and the projected economic benefits of the project cannot be
characterized as de minimus. The identity of most of the private
beneficiaries were unknown at the time the city formulated its plans. The
city complied with elaborate procedural requirements that facilitate review
of the record and inquiry into the city’s purposes. In sum, while there may
be categories of cases in which the transfers are so suspicious, or the
procedures employed so prone to abuse, or the purported benefits are so
trivial or implausible, that courts should presume an impermissible private
purpose, no such circumstances are present in this case.

Justice SANDRA DAY O’CONNOR, with whom THE CHIEF JUSTICE, Justice
SCALIA, and Justice THOMAS join, dissenting.
Over two centuries ago, just after the Bill of Rights was ratified,
Justice Chase wrote:

An ACT of the Legislature (for I cannot call it a law) contrary to the great
first principles of the social compact, cannot be considered a rightful exercise
of legislative authority. A few instances will suffice to explain what I mean.
[A] law that takes property from A. and gives it to B: It is against all reason
and justice, for a people to entrust a Legislature with SUCH powers; and,
therefore, it cannot be presumed that they have done it. Calder v. Bull, 3 U.S.
386, 388 (1798) (emphasis deleted).

Today the Court abandons this long-held, basic limitation on

government power. Under the banner of economic development, all
private property is now vulnerable to being taken and transferred to
another private owner, so long as it might be upgraded — i.e., given to an
owner who will use it in a way that the legislature deems more beneficial
to the public — in the process. To reason, as the Court does, that the
incidental public benefits resulting from the subsequent ordinary use of
private property render economic development takings “for public use” is
to wash out any distinction between private and public use of property —
and thereby effectively to delete the words “for public use” from the
Takings Clause of the Fifth Amendment. Accordingly I respectfully
dissent.
Where is the line between “public” and “private” property use? We
give considerable deference to legislatures’ determinations about what
governmental activities will advantage the public. But were the political
branches the sole arbiters of the public-private distinction, the Public Use
Clause would amount to little more than hortatory fluff. An external,

1497
judicial check on how the public use requirement is interpreted, however
limited, is necessary if this constraint on government power is to retain any
meaning.
This case presents an issue of first impression: Are economic
development takings constitutional? I would hold that they are not. We are
guided by two precedents about the taking of real property by eminent
domain. In Berman, we upheld takings within a blighted neighborhood of
Washington, D.C. The neighborhood had so deteriorated that, for example,
64.3% of its dwellings were beyond repair. It had become burdened with
“overcrowding of dwellings,” “lack of adequate streets and alleys,” and
“lack of light and air.” Congress had determined that the neighborhood had
become “injurious to the public health, safety, morals, and welfare” and
that it was necessary to “eliminate all such injurious conditions by
employing all means necessary and appropriate for the purpose,” including
eminent domain. Mr. Berman’s department store was not itself blighted.
Having approved of Congress’ decision to eliminate the harm to the public
emanating from the blighted neighborhood, however, we did not second-
guess its decision to treat the neighborhood as a whole rather than lot-by-
lot. See Midkiff, 467 U.S., at 244 (“it is only the taking’s purpose, and not
its mechanics, that must pass scrutiny”).
In Midkiff, we upheld a land condemnation scheme in Hawai`i
whereby title in real property was taken from lessors and transferred to
lessees. At that time, the State and Federal Governments owned nearly
49% of the State’s land, and another 47% was in the hands of only 72
private landowners. Concentration of land ownership was so dramatic that
on the State’s most urbanized island, Oahu, 22 landowners owned 72.5%
of the fee simple titles. The Hawai`i Legislature had concluded that the
oligopoly in land ownership was “skewing the State’s residential fee
simple market, inflating land prices, and injuring the public tranquility and
welfare,” and therefore enacted a condemnation scheme for redistributing
title.
In those decisions, we emphasized the importance of deferring to
legislative judgments about public purpose. Because courts are ill-
equipped to evaluate the efficacy of proposed legislative initiatives, we
rejected as unworkable the idea of courts’ “ ‘deciding on what is and is not
a governmental function and invalidating legislation on the basis of their
view on that question at the moment of decision, a practice which has
proved impracticable in other fields.’ ” Id. at 240-41.
The Court’s holdings in Berman and Midkiff were true to the principle
underlying the Public Use Clause. In both those cases, the extraordinary,
precondemnation use of the targeted property inflicted affirmative harm on

1498
society — in Berman through blight resulting from extreme poverty and in
Midkiff through oligopoly resulting from extreme wealth. And in both
cases, the relevant legislative body had found that eliminating the existing
property use was necessary to remedy the harm. Thus a public purpose
was realized when the harmful use was eliminated. Because each taking
directly achieved a public benefit, it did not matter that the property was
turned over to private use. Here, in contrast, New London does not claim
that Susette Kelo’s and Wilhelmina Dery’s well-maintained homes are the
source of any social harm. Indeed, it could not so claim without adopting
the absurd argument that any single-family home that might be razed to
make way for an apartment building, or any church that might be replaced
with a retail store, or any small business that might be more lucrative if it
were instead part of a national franchise, is inherently harmful to society
and thus within the government’s power to condemn.
In moving away from our decisions sanctioning the condemnation of
harmful property use, the Court today significantly expands the meaning
of public use. It holds that the sovereign may take private property
currently put to ordinary private use, and give it over for new, ordinary
private use, so long as the new use is predicted to generate some secondary
benefit for the public — such as increased tax revenue, more jobs, maybe
even aesthetic pleasure. But nearly any lawful use of real private property
can be said to generate some incidental benefit to the public. Thus, if
predicted (or even guaranteed) positive side-effects are enough to render
transfer from one private party to another constitutional, then the words
“for public use” do not realistically exclude any takings, and thus do not
exert any constraint on the eminent domain power.
Any property may now be taken for the benefit of another private
party, but the fallout from this decision will not be random. The
beneficiaries are likely to be those citizens with disproportionate influence
and power in the political process, including large corporations and
development firms. As for the victims, the government now has license to
transfer property from those with fewer resources to those with more. The
Founders cannot have intended this perverse result. “That alone is a just
government,” wrote James Madison, “which impartially secures to every
man, whatever is his own.” For the National Gazette, Property, (Mar. 29,
1792), reprinted in 14 Papers of James Madison 266 (R. Rutland et al. eds.
1983).

Justice CLARENCE THOMAS, dissenting.

Long ago, William Blackstone wrote that “the law of the land . . .
postpones even public necessity to the sacred and inviolable rights of

1499
private property.” 1 Commentaries on the Laws of England 134-135
(1765). The Framers embodied that principle in the Constitution, allowing
the government to take property not for “public necessity,” but instead for
“public use.” Amdt. 5. Defying this understanding, the Court replaces the
Public Use Clause with a “ ‘Public Purpose’” Clause (or perhaps the
“Diverse and Always Evolving Needs of Society” Clause (capitalization
added)), a restriction that is satisfied, the Court instructs, so long as the
purpose is “legitimate” and the means “not irrational.” This deferential
shift in phraseology enables the Court to hold, against all common sense,
that a costly urban-renewal project whose stated purpose is a vague
promise of new jobs and increased tax revenue, but which is also
suspiciously agreeable to the Pfizer Corporation, is for a “public use.”
I cannot agree. The most natural reading of the [Public Use] Clause is
that it allows the government to take property only if the government
owns, or the public has a legal right to use, the property, as opposed to
taking it for any public purpose or necessity whatsoever. At the time of the
founding, dictionaries primarily defined the noun “use” as “the act of
employing any thing to any purpose.” 2 S. Johnson, A Dictionary of the
English Language 2194 (4th ed. 1773). The term “use,” moreover, “is
from the Latin utor, which means ‘to use, make use of, avail one’s self of,
employ, apply, enjoy, etc.’ ” J. Lewis, Law of Eminent Domain §165, p.
224, n.4 (1888). When the government takes property and gives it to a
private individual, and the public has no right to use the property, it strains
language to say that the public is “employing” the property, regardless of
the incidental benefits that might accrue to the public from the private use.
The term “public use,” then, means that either the government or its
citizens as a whole must actually “employ” the taken property.
Granted, another sense of the word “use” was broader in meaning,
extending to “convenience” or “help,” or “qualities that make a thing
proper for any purpose.” 2 Johnson 2194. Nevertheless, read in context,
the term “public use” possesses the narrower meaning. Elsewhere, the
Constitution twice employs the word “use,” both times in its narrower
sense. Claeys, Public-Use Limitations and Natural Property Rights, 2004
Mich. St. L. Rev. 877, 897. Article 1, §10 provides that “the net Produce
of all Duties and Imposts, laid by any State on Imports or Exports, shall be
for the Use of the Treasury of the United States,” meaning the Treasury
itself will control the taxes, not use it to any beneficial end. And Article I,
§8 grants Congress power “to raise and support Armies, but no
Appropriation of Money to that Use shall be for a longer Term than two
Years.” Here again, “use” means “employed to raise and support Armies,”
not anything directed to achieving any military end. The same word in the

1500
Public Use Clause should be interpreted to have the same meaning. The
Constitution’s text, in short, suggests that the Takings Clause authorizes
the taking of property only if the public has a right to employ it, not if the
public realizes any conceivable benefit from the taking.
The Constitution’s common-law background reinforces this
understanding. The common law provided an express method of
eliminating uses of land that adversely impacted the public welfare:
nuisance law. Blackstone and Kent, for instance, both carefully
distinguished the law of nuisance from the power of eminent domain.
Blackstone rejected the idea that private property could be taken solely for
purposes of any public benefit. “So great . . . is the regard of the law for
private property,” he explained, “that it will not authorize the least
violation of it; no, not even for the general good of the whole community.”
1 Blackstone 135. He continued: “If a new road . . . were to be made
through the grounds of a private person, it might perhaps be extensively
beneficial to the public; but the law permits no man, or set of men, to do
this without the consent of the owner of the land.” Id. Only “by giving [the
landowner] full indemnification” could the government take property, and
even then “the public [was] now considered as an individual, treating with
an individual for an exchange.” Id. When the public took property, in other
words, it took it as an individual buying property from another typically
would: for one’s own use. The Public Use Clause, in short, embodied the
Framers’ understanding that property is a natural, fundamental right,
prohibiting the government from “taking property from A. and giving it to
B.” Calder v. Bull, 3 U.S. 386, 388 (1798).
Early American eminent domain practice largely bears out this
understanding of the Public Use Clause. States employed the eminent
domain power to provide quintessentially public goods, such as public
roads, toll roads, ferries, canals, railroads, and public parks. Though use of
the eminent domain power was sparse at the time of the founding, many
States did have so-called Mill Acts, which authorized the owners of grist
mills operated by water power to flood upstream lands with the payment of
compensation to the upstream landowner. Those early grist mills “were
regulated by law and compelled to serve the public for a stipulated toll and
in regular order,” and therefore were actually used by the public. J. Lewis,
Law of Eminent Domain §178, at 246, & n.3 (1888). They were common
carriers — quasi-public entities. These were “public uses” in the fullest
sense of the word, because the public could legally use and benefit from
them equally.
To be sure, some early state legislatures tested the limits of their state-
law eminent domain power. Some States enacted statutes allowing the

1501
taking of property for the purpose of building private roads. These statutes
were mixed; some required the private landowner to keep the road open to
the public, and others did not. Later in the 19th century, moreover, the Mill
Acts were employed to grant rights to private manufacturing plants, in
addition to grist mills that had common-carrier duties. See, e.g., M.
Horwitz, The Transformation of American Law 1780-1860, at 51-52
(1977).
These early uses of the eminent domain power are often cited as
evidence for the broad “public purpose” interpretation of the Public Use
Clause, but in fact the constitutionality of these exercises of eminent
domain power under state public use restrictions was a hotly contested
question in state courts throughout the 19th and into the 20th century. The
disagreement among state courts, and state legislatures’ attempts to
circumvent public use limits on their eminent domain power, cannot
obscure that the Public Use Clause is most naturally read to authorize
takings for public use only if the government or the public actually uses
the taken property.
I would revisit our Public Use Clause cases and consider returning to
the original meaning of the Public Use Clause: that the government may
take property only if it actually uses or gives the public a legal right to use
the property. The consequences of today’s decision are not difficult to
predict, and promise to be harmful. So-called “urban renewal” programs
provide some compensation for the properties they take, but no
compensation is possible for the subjective value of these lands to the
individuals displaced and the indignity inflicted by uprooting them from
their homes. Allowing the government to take property solely for public
purposes is bad enough, but extending the concept of public purpose to
encompass any economically beneficial goal guarantees that these losses
will fall disproportionately on poor communities. Those communities are
not only systematically less likely to put their lands to the highest and best
social use, but are also the least politically powerful. If ever there were
justification for intrusive judicial review of constitutional provisions that
protect “discrete and insular minorities,” United States v. Carolene
Products Co., 304 U.S. 144, 152 n.4 (1938), surely that principle would
apply with great force to the powerless groups and individuals the Public
Use Clause protects. The deferential standard this Court has adopted for
the Public Use Clause is therefore deeply perverse. It encourages “those
citizens with disproportionate influence and power in the political process,
including large corporations and development firms” to victimize the weak
(see ante, O’Connor, J., dissenting).
Those incentives have made the legacy of this Court’s “public

1502
purpose” test an unhappy one. In the 1950’s, no doubt emboldened in part
by the expansive understanding of “public use” this Court adopted in
Berman, cities “rushed to draw plans” for downtown development. B.
Frieden & L. Sagalayn, Downtown, Inc. How America Rebuilds Cities 17
(1989). “Of all the families displaced by urban renewal from 1949 through
1963, 63 percent of those whose race was known were nonwhite, and of
these families, 56 percent of nonwhites and 38 percent of whites had
incomes low enough to qualify for public housing, which, however, was
seldom available to them.” Id. at 28. Public works projects in the 1950’s
and 1960’s destroyed predominantly minority communities in St. Paul,
Minnesota, and Baltimore, Maryland. Id. at 28-29. In 1981, urban planners
in Detroit, Michigan, uprooted the largely “lower-income and elderly”
Poletown neighborhood for the benefit of the General Motors Corporation.
J. Wylie, Poletown: Community Betrayed 58 (1989). Urban renewal
projects have long been associated with the displacement of blacks; “in
cities across the country urban renewal came to be known as ‘Negro
removal.’” Pritchett, The “Public Menace” of Blight: Urban Renewal and
the Private Uses of Eminent Domain, 21 Yale L. & Pol’y Rev. 1, 47
(2003). Over 97 percent of the individuals forcibly removed from their
homes by the “slum-clearance” project upheld by this Court in Berman
were black. 348 U.S. at 30. Regrettably, the predictable consequence of the
Court’s decision will be to exacerbate these effects.

Notes and Questions

1. The eminent domain power and the police power. In Hawai`i
Housing Authority v. Midkiff, 467 U.S. 229, 240 (1984), the Supreme
Court held that “[t]he ‘public use’ requirement is coterminous with the
scope of a sovereign’s police powers.” This means that whatever the state
may legitimately achieve through its power to regulate property under the
police power, it may instead choose to do through the power to take
property through eminent domain. Justice Kennedy, in a passage quoted by
the majority in Kelo, justified the breadth of public use on the theory that,
unlike the police power, the takings clause “operates as a conditional
limitation, permitting the government to do what it wants so long as it pays
the charge.” Eastern Enterprises v. Apfel, 524 U.S. 498, 545 (1998)
(Kennedy, J., concurring in judgment and dissenting in part). Are there
reasons to take a narrower view of public use in the power to take property
by eminent domain than the full reach of the police power to regulate?
Conversely, are there actions that the government might not be able to take
through its power to regulate that it might, nonetheless, justify as public

1503
use for purposes of condemnation?
2. Detecting political process failure. As the Kelo majority suggests,
one reason for courts to take a deferential approach to reviewing public use
challenges is to respect the democratic process. However, Justice
Kennedy, in his concurrence, argues that courts should nonetheless
scrutinize takings for “impermissible favoritism,” and take a more
skeptical approach to their review where such favoritism is evident. Both
the Kelo majority and Justice Kennedy placed some weight on the fact that
there had been an extensive planning process for the redevelopment of the
Fort Trumbull area. If the New London city council had passed legislation
taking the property at issue in the case as part of the city council’s ordinary
business, but without a separate planning process, would that have made
the taking more vulnerable to a public use challenge? Should it?
3. Harms and benefits. Justice O’Connor, in her Kelo dissent,
distinguished the Supreme Court’s unanimous decisions in Berman and
Midkiff, the latter of which she authored, as cases that involved property
arrangements that “inflicted affirmative harm on society.” Is there a
principled way to distinguish between exercises of the power of eminent
domain that cause harm and those that seek to improve conditions or
otherwise confer a benefit? Is there a reason to limit the power of eminent
domain to harm prevention?
4. “Use by the public.” Justice Thomas would have held that “the
government may take property only if it actually uses or gives the public a
legal right to use the property.” There are certainly relatively easy cases
under this standard, as with a government buildings, public parks, and
highways. Would public housing, which is publicly funded but open only
to a limited number of qualified tenants, be an acceptable “public use”
under Justice Thomas’s standard?
5. State constitutions. Many state supreme courts have historically
interpreted their state constitutions in a manner consistent with the federal
interpretation. See, e.g., County of Hawai`i v. C & J Coupe Family LP, 242
P.3d 1136, 1151 (Haw. 2010) (“Great weight is accorded to legislative
findings and declarations of public use, and a heavy burden is on the
defendant to demonstrate that the use was clearly and palpably of a private
character.”). However, states are entitled to grant greater protection for
property than that afforded by the U.S. Constitution, and an increasing
number of supreme courts have adopted a different path, interpreting their
state constitutional “public use” requirements more stringently than has the
U.S. Supreme Court.

1504
 First, some courts have adopted a version of the test proposed by
Justice Kennedy and held that the public use test is not met unless “the
public benefits and characteristics of the intended use substantially
predominate over the private nature of that use.” Bailey v. Myers, 76 P.3d
898, 904 (Ariz. Ct. App. 2003) (city could not take private property for
transfer to private developers to construct a retail shopping and office
center). Accord, In re Opening Private Road for Benefit of O’Reilly, 5
A.3d 246, 258-259 (Pa. 2010) (private roads act can only be constitutional
if the public is “the primary and paramount beneficiary of the taking”);
City of Bozeman v. Vaniman, 898 P.2d 1208 (Mont. 1995) (not a public
purpose to take property for space in visitors center to be occupied by
private Chamber of Commerce).
Second, some courts have adopted a version of the test proposed by
Justice O’Connor and held that property cannot be taken and transferred
from one owner to another unless the nature of the property itself justifies
the taking. Such rulings prohibit takings for economic development
purposes unless the property being taken is causing harm to others. For
example, property may be taken and transferred to another owner if its
condition is dangerous to occupants or neighbors and in need in demolition
or if it is “blighted” and in need of redevelopment to counteract slum
conditions. See Arvada Urban Renewal Authority v. Columbine
Professional Plaza Association, 85 P.3d 1066 (Colo. 2004) (not a public
purpose to take a private lake for a new Wal-Mart unless there was a
recent finding that the property was blighted). Accord, Gallenthin Realty
Development, Inc. v. Borough of Paulsboro, 924 A.2d 447 (N.J. 2007);
City of Norwood v. Horney, 853 N.E.2d 1115 (Ohio 2006).
Third, some courts have held that the taking must be justified in the
sense that the public purpose could not be achieved in any other way than
through a taking of one owner’s property and transfer to another.
Southwestern Illinois Development Authority v. National City
Environmental, 768 N.E.2d 1 (Ill. 2002) (not a public purpose to take a
factory’s property to expand a parking lot for a race track next door).
The Michigan Supreme Court combined several of these rationales in
Wayne County v. Hathcock, 684 N.W.2d 765 (Mich. 2004), which
unanimously overruled the famous 1981 decision in Poletown
Neighborhood Council v. City of Detroit, 304 N.W.2d 455 (Mich. 1981).
Poletown had held that the public use requirement was met when a city
took private homes and other properties in a residential area and
transferred those lots to General Motors Corp. to construct an automobile
manufacturing plant. However, in Hathcock, the Michigan Supreme Court
reversed course, holding that economic development was not a sufficient

1505
purpose to justify the condemnation of private lands for transfer to another
private owner. Rather, the court held that transferring property from one
private owner to another satisfies the public use test only when (1) “public
necessity of the extreme sort” requires collective action; (2) the property
will be “subject to public oversight after transfer to a private entity”; and
(3) the property is selected because of “facts of independent public
significance” about the property being taken, rather than advantage to the
private entity to whom the property is transferred, such as a conclusion
that the area is blighted and in need of redevelopment that is unlikely to
occur without public action of this sort. 684 N.W.2d at 781-783.

Quick Review:
Imagine that Poletown was evaluated under federal law after Kelo. What
arguments could you make on both sides?

Finally, some courts have adopted a version of the approach proposed

by Justice Thomas and held that “public use” means either “public
ownership” or “use by the public,” thereby denying the power to take
property from any private person if it is to be transferred to another and
used privately rather than by the public at large. For example, in
Manufactured Housing Communities of Washington v. Washington, 13
P.3d 183 (Wash. 2000), the Washington Supreme Court struck down a
state law granting existing mobile home tenants a right of first refusal if
the landlord sought to sell the property on which their mobile homes sat.
As the court explained:

Although preserving dwindling housing stocks for a particularly vulnerable

segment of society provides a “public benefit,” this public benefit does not
constitute a public use. If it is something in which he has the actual right of
property there is no rule of law nor principle of equity which would warrant a
court in taking it from him against his will for the benefit of another. No
amount of hardship in a given case would justify the establishment of such a
precedent. The next step in the invasion of the right of property would be to
invite the courts to measure the comparative needs of private parties, and
compel a transfer to the one most needing and who might best utilize the
property. If a man may be required to surrender what is his own, because he
does not need it and cannot use it, and because another does need it and can
use it, then there is no reason why he may not be required to surrender what
he needs but little because another needs it much. A doctrine so insidiously
dangerous should never find lodgment in the body of the law through judicial

1506
 declaration.

Id. at 196. Do you agree with this reasoning?13

6. Statutory constraints on eminent domain for economic
development. In response to Kelo, Congress has enacted some limitations
on using federal funds for projects that involve economic development
eminent domain. See, e.g., 12 U.S.C. §4567(f) (2008) (prohibiting use of
federal funds appropriated for affordable housing in conjunction with
properties taken by eminent domain for economic development). But see
Consolidated Appropriations Act, 2016, Pub. L. No. 114-113, Div. L,
§407, 129 Stat. 2242, 2905 (2015) (exempting most transportation, utility,
infrastructure, and public safety condemnations from limitations on
economic development eminent domain).
Many states have passed legislation or constitutional amendments that
limit the power to take property for economic development purposes. See
Marc Mihaly & Turner Smith, Kelo’s Trail: A Survey of State and Federal
Legislative and Judicial Activity Five Years Later, 38 Ecology L.Q. 703
(2011). The legislation limiting eminent domain powers falls into several
categories; some states have passed laws in just one of these categories,
and others passed more than one type of limitation. Some states repudiate
Kelo by prohibiting the use of eminent domain to take property from one
person to transfer it to another person if the taking is for economic
development purposes, such as increased tax revenue or additional jobs.
See, e.g., Alaska Stat. §§09.55.240(d), 29.35.030; 735 Ill. Comp. Stat.
30/5-5-5(c); Me. Rev. Stat. tit. 1, §816; N.H. Rev. Stat. §162-K:2(IX-a)(b);
Vt. Stat. tit. 12, §1040(a). Some states adopt Justice Thomas’s literal
approach by prohibiting all takings of property from one private owner for
transfer to another unless the property is open for public “use,” meaning
public ownership or access. See Fla. Stat. §73.013; Iowa Code §§6A.21 to
6A.22; N.H. Rev. Stat. §162-K:2(IX-a)(a); Tenn. Code §29-17-102(2).
Many states passed laws prohibiting takings unless the property being
taken is “blighted,” raising health or safety concerns. Ala. Code §§24-2-2,
24-3-2; Cal. Health & Safety §33030; Iowa Code §§6A.22; Mo. Rev. Stat.
§523.271; Wis. Stat. §32.03(6). And some states regulate takings by
procedural measures designed to increase public participation in the
process through more hearings, better public notice, or through
requirements that the taking authority present evidence sufficient to justify
the taking. See 735 Ill. Comp. Stat. 30/5-5-5(d); W. Va. Code §16-18-6.
7. What happened in New London? Ten years after the Supreme
Court decision, the attorneys for New London and the plaintiffs gathered

1507
to discuss the background of Kelo, the litigation, and its aftermath. Their
remarks are published at Bethany Berger, Wesley Horton, Thomas J.
Londregan & Clark Neily, Kelo: A Decade Later, 47 Conn. L. Rev. 1433
(2015).

Problems
1. The original plan for the redevelopment of the Fort Trumbull
neighborhood, the controversy at issue in the Kelo case, was for the New
London Development Corporation to own the land and enter into long-
term ground leases with private parties, who would then develop and own
the buildings. See Kelo v. City of New London, 843 A.2d 500, 510 (Conn.
2004). Imagine instead that New London had decided to develop the Fort
Trumbull property itself and become the landlord for the occupants of the
planned residences, offices, and retail facilities. Because the government
would still own the entire property outright, it would no longer be
transferring to a private party, except as landlord. Would this be more or
less offensive than the transfer to private parties in Kelo? Why do you
imagine the city did not do this?
2. An economically depressed city on the Atlantic Ocean seeks to take
58 modest single-family homes located on the beach to transfer the
property to a developer who will build 10-story luxury condominiums with
restaurants and shops on the first floor. Most of the homes have been
owned by the same families for a very long time — an average of 46 years
— and about one-third of the residents are retirees. The area is on the
northern end of a redevelopment area designated by the town in a
comprehensive plan designed to revitalize the local tourist industry, create
jobs, and increase property taxes to pay for local fire and police services
and local public schools. The redevelopment would encourage greater
density, create a walkable environment, and foster an enlarged base
population to sustain a lively, year-round retail and residential core on the
town’s oceanfront. The homeowners refuse to sell their properties to the
city and resist having them taken by eminent domain. See City of Long
Branch v. Anzalone, 2008 WL 3090052 (N.J. Super. Ct. App. Div. 2008)
(describing a situation like this).
a. Assume the state constitution is worded the same as the federal
constitution. Should the state supreme court allow the taking by
applying the standard applied by the majority opinion in Kelo, or
should it find the taking not to constitute a public use under the state
constitution by applying some other standard? If the latter, what
standard should it use?

1508
 b. Assume now the state constitution allows takings of property for
transfer to another private owner only if the property is “blighted.” See
N.J. Const. art. I, ¶20; Gallenthin Realty Development, Inc. v. Borough
of Paulsboro, 924 A.2d 447 (N.J. 2007). A study finds that 37 percent
of the properties in the area are vacant, 27 percent of the homes are in
fair condition, and 19 percent are in poor condition, while only 17
percent are in good condition. No construction permits had been
granted in the area over the prior 5 years, as opposed to 4,725 permits
issued for the rest of the city. What standard should the court adopt to
define “blighted property”?

§1.3 Just Compensation

As noted, the U.S. Constitution requires payment of “just
compensation” when private property is taken for public use. U.S. Const.
amends. V & XIV. The Supreme Court has held that this requires payment
of the fair market value of the property prior to the taking. In general, this
means the amount the property would likely sell for on the open market.
Compensation is measured by the damage suffered to the owner, not the
benefit attained by the government; thus any increase in value of the
property caused by the taking is not owed to the owner. By definition, fair
market value is likely to undercompensate the owner. For example, any
owner who is not trying to sell her property likely values it at more than
fair market value because if you offered to buy her property at its market
price, the owner would refuse. To induce such an owner to sell, one would
have to offer more (and perhaps much more) than fair market value. If the
goal is to fully indemnify the owner for the loss, then the just measure of
compensation should be the owner’s asking price, not market value. But
the Supreme Court has rejected asking price as the constitutional measure
of just compensation because it is too hard to figure out what an owner’s
asking price is, while market value can be determined relatively
objectively. Kimball Laundry Co. v. United States, 338 U.S. 1, 5 (1949)
(“In view of the liability of all property to condemnation for the common
good, loss to the owner of nontransferable values deriving from his unique
need for property or idiosyncratic attachment to it, like loss due to an
exercise of the police power, is properly treated as part of the burden of
common citizenship.”).
The potential unfairness of paying market value may be especially
acute if the property taken is a home or a small business. In such cases, the
owner may have substantial emotional attachment to the property, and no
amount of compensation will make up for the loss. We saw such a case

1509
with Susette Kelo, who refused to sell her house in New London. See §1.2
above. Our legal system allows this where such takings are necessary to
collect the properties required for the common good, such as public roads.
It arguably also reflects the fact that vulnerability to having one’s property
taken is one of the obligations imposed on citizens in a democracy. Cf.
Brian Angelo Lee, Just Undercompensation: The Idiosyncratic Premium
in Eminent Domain, 113 Colum. L. Rev. 593, 622 (2013) (“Each member
of the community has a social duty, in his or her relationship with
property, not to impose too much upon the well-being of other members of
the community, and a ready criterion for what is ‘too much’ in the property
context is what appreciably exceeds the ordinary community member’s
level of imposition.”).
A few states have legislation mandating payment of 125 or 150 percent
of fair market value when property is taken for public use. For example,
Indiana requires payment of 150 percent of fair market value if a residence
is taken. Ind. Code §32-24-4.5-8(2)(A). Although this may mitigate the
harm to the owner, it cannot fully compensate for losses that cannot be
measured in dollar terms and for which money cannot make the owner
whole. Such “super-compensation” statutes have the side effect of
impeding voluntary transfers of property to the government at fair market
value. Owners whose asking prices are near fair market value will likely
refuse to sell for less than 150 percent of fair market value if statutes
entitle them to recover this amount; in such cases, the government may be
overcompensating. At the same time, such overcompensation may be
justified to mitigate injustice to owners who really do value their homes at
amounts far exceeding market value.
Moving costs, consequential loss, and business goodwill. Do owners
have a constitutional right to compensation for costs of moving to another
location? Because the constitution provides compensation for the
“property” taken, and nothing else, the Supreme Court has held that the
answer is no. What about loss of business goodwill and going-concern
value? Business goodwill is the “value which inheres in the fixed and
favorable consideration of customers, arising from an established and well-
known and well-conducted business.” Los Angeles Gas & Electric Corp. v.
Railroad Commission, 289 U.S. 287, 313 (1933). “Going-concern value”
refers to “the many advantages inherent in acquiring an operating business
as compared to starting a new business with only land, buildings and
equipment in place.” Gray Line Bus Co. v. Greater Bridgeport Transit
District, 449 A.2d 1036, 1039 (Conn. 1982). For example, a barber shop
located on Massachusetts Avenue in Cambridge near Harvard Square

1510
depends on a particular customer base; taking the property means the
business must close and seek another location, but it is not clear that such a
location can be found for a comparable price. Nor is it clear that the
customers will follow the barber to the new location.
The Supreme Court has refused to grant compensation for either
goodwill or going-concern value on the ground that only the land and
buildings are taken; the business is free to relocate elsewhere, where it
may be as profitable if not more so. Any barrier to relocation is merely an
incidental result of the taking of the land and is noncompensable. Mitchell
v. United States, 267 U.S. 341 (1925); see generally United States v.
General Motors Corp., 323 U.S. 373, 378 (1945) (distinguishing between
compensable losses and noncompensable consequential harms from
takings). Accord, United States v. 0.073 Acres of Land, 705 F.3d 540 (5th
Cir. 2013) (taking of units in a townhouse development to facilitate
rebuilding of levees after Hurricane Katrina did not constitute a taking of
the homeowners association’s right to collect assessments on the
properties, as that property interest was a noncompensable consequential
loss). Can you reconcile this reasoning with the approach that states take to
the treatment of goodwill as property to be divided upon divorce? See
Chapter 9, §3.3.
One exception to this general principle is applied in takings that are not
permanent, which may entitle the business owner to compensation for loss
of goodwill. In Kimball Laundry Co. v. United States, 338 U.S. 1 (1949),
the government temporarily took over a factory from 1942 to 1946,
retaining most of the employees and using the laundry for military
purposes. The Court accepted the owner’s argument that because the
taking was temporary, the owner was unable to reestablish its business
elsewhere during the takeover. Thus, the loss of going-concern value was
compensable. See also, e.g., Primetime Hospitality, Inc. v. Albuquerque,
206 P.3d 112, 122-123 (N.M. 2009) (compensation for lost profits allowed
following a temporary taking).
Statutory compensation. The federal government has passed
legislation requiring compensation for moving costs, lost personal property
occasioned by the move, and “actual reasonable expenses in searching for
a replacement business” if property is taken by the federal government or
by state governments using federal funding. See Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970, 42 U.S.C.
§§4601 to 4655. The act also provides extra compensation if a person’s
home is taken. 42 U.S.C. §4623.
Some states have passed legislation providing for compensation for

1511
goodwill when a business is inextricably tied to a particular location and
the loss cannot be avoided by relocation of the business after the land and
structures are taken. Cal. Civ. Proc. Code §1263.510; Ind. Code §32-24-
4.5-8(2)(A); Wyo. Stat. §1-26-713. Some state courts have also allowed
compensation for business losses in narrow instances if the business is not
easily movable because of the unique character of the property. See, e.g.,
City of McCall v. Seubert, 130 P.3d 1118, 1123 (Idaho 2005); Housing
Authority v. S.R., 264 S.E.2d 174 (Ga. 1980); Housing & Redevelopment
Authority v. Naegele Outdoor Advertising Co., 282 N.W.2d 537 (Minn.
1979).
Professor Nicole Garnett has argued that public agencies empowered
to take property have incentives to avoid undercompensation, including
financial penalties if mandatory negotiations with owners fail and an
obligation to pay statutory compensation to displaced owners that can be
substantially above the constitutional minimum. Such agencies, Garnett
also argues, may avoid taking property that people are particularly
attached to not because just compensation takes that subjective value into
account, but because such owners are more likely to challenge the taking
and create political sympathy. See Nicole Stelle Garnett, The Neglected
Political Economy of Eminent Domain, 105 Mich. L. Rev. 101 (2006). On
the other hand, there is empirical evidence to suggest that agencies tend to
undercompensate lower-valued property but overcompensate higher-value
property. See Thomas W. Mitchell, Stephen Malpezzi & Richard K.
Green, Forced Sale Risk: Class, Race, and the “Double Discount,” 37 Fla.
St. U. L. Rev. 589, 632-638 (2010). How might these incentives shape the
choices that public officials make about which public projects to pursue —
and where?
Delineating the “property” taken. In Almota Farmers Elevator &
Warehouse v. United States, 409 U.S. 470 (1972), the U.S. government
took property from a railroad company that it had leased to a business that
had constructed buildings on the property and used them for its business
purposes. At the time of the taking, more than seven years remained on the
lease. Although the lease did not give the lessee a legally enforceable right
to renew the lease, the lessor had routinely renewed the lease in the past
and was likely to do so in the future. There was no question that the
leasehold held by the tenant was “property” compensable when taken by
the government or that the value of the improvements during the
remaining years of the lease should be counted in determining the market
value of the lease, but the trial court had held that there should be no
compensation for the likelihood that the lease would be renewed or for the

1512
value of the buildings that would remain after the lease ended.
The Supreme Court held that just compensation should be measured by
the market value of the lease and that this included the “full monetary
equivalent of the property taken. The owner is to be put in the same
position monetarily as he would have occupied if his property had not been
taken.” Id. at 473-474. Since “fair market value” is defined by the amount
“a willing buyer would pay in cash to a willing seller,” the lessee was
entitled to be compensated for the value of the improvements on the land
over their useful life, based on evidence that the lessor would likely have
continued to renew the lease and that the lessee could have alienated the
leasehold based on the ability of the purchaser to continue to use those
buildings. Id. at 474. Four Justices dissented, arguing that the “property”
taken by the government should be defined by the legal rights acquired by
the government and that, in this case, the government condemned the
leasehold and not the buildings or the business; because the tenant had no
contractual right to renewal of the lease, it was not entitled to
compensation for the mere expectation of renewal. 409 U.S. at 484-485
(Rehnquist, J, dissenting).
In United States v. 564.54 Acres of Land, More or Less, 441 U.S. 506
(1979), however, the Supreme Court held that the owner was not entitled
to the replacement cost of the buildings on the land that was taken. The
owner operated three nonprofit summer camps along the Delaware River,
and although the cost of building functionally equivalent facilities
elsewhere was approximately $5.8 million, the fair market value of the
properties taken was only $485,400. Justice Thurgood Marshall noted that
“fair market value does not include the special value of property to the
owner arising from its adaptability to his particular use.” Id. at 512. The
Court acknowledged that this result might be unjust but found that “it is
not at all unusual that property uniquely adapted to the owner’s use has a
market value on condemnation which falls far short of enabling the owner
to preserve that use.” Id. at 514. Accord, United States v. 50 Acres of Land,
469 U.S. 24 (1984) (public owner legally obligated to replace the facilities
taken has no right to compensation for replacement costs).
Partial takings. Imagine an owner has 100 acres of farmland. If the
state takes only 40 acres from the owner to build a government facility,
rather than the property as a whole, it must compensate not only for the
fair market value of those 40 acres but also for any reduction in value to
the remaining 60 acres caused by the taking of the 40. This reduction in
the value of the remaining 60 acres is called severance damages. New
Hampshire Department of Transportation v. Franchi, 48 A.3d 849, 852

1513
(N.H. 2012). For example, in State v. Weiswasser, 693 A.2d 864 (N.J.
1997), New Jersey took a sliver of property from a large undeveloped
parcel near a major highway as part of road project. The court held that the
owners were entitled to compensation not only for the physical property
that was taken, but also for the diminution of value of the owners’
remaining property that was specifically attributable to the fact that the
property could now not be seen as easily from the nearby highway, which
made marketing development on the parcel more expensive. Id. at 876.
Accord, Utah Department of Transportation v. Admiral Beverage Corp.,
275 P.3d 208, 214 (Utah 2011).
However, sometimes the taking will increase the value of the owner’s
remaining property by providing a special benefit that will not accrue to
the public at large. This can happen, for example, by placing a major road
along the land in a way that will increase its attractiveness to retail
business. It may be that all businesses in the area will benefit from
improved traffic circulation, but some businesses will benefit specifically
by being particularly close to the opportunity that new traffic creates — a
benefit that derives from the taking itself. Where there are severance
damages and special benefits, courts will generally reduce, or offset, the
severance damages by the amount of the special benefit. City of Maryland
Heights v. Heitz, 358 S.W.3d 98, 105-108 (Mo. Ct. App. 2011); Oregon v.
Fullerton, 34 P.3d 1180 (Or. Ct. App. 2001). Some courts allow an offset
for both special and general benefits accruing to the remaining property.
L.A. County v. Continental Development Corp., 941 P.2d 809 (Cal. 1997);
see also McCoy v. Union Elevated Railroad Co., 247 U.S. 354, 366 (1918)
(holding that “we are unable to say that [an owner] suffers deprivation of
any fundamental right when a state . . . permits consideration of actual
benefits-enhancement in market value flowing directly from a public work,
although all in the neighborhood receive like advantages”).
Courts are divided on the question whether the government may reduce
the amount it owes to an owner for property actually taken by the amount
of the special benefit accruing to the land not taken. For example, assume
the 40 acres taken by the government are worth $200,000 but the taking
provides a special benefit that increases the value of the remaining 60
acres by $50,000. Under an old Supreme Court case, Bauman v. Ross, 167
U.S. 548 (1897), the increase in value from a special benefit to the
remaining 60 acres would be offset against the amount due for the taking
of the 40 acres; thus, the owner would receive only $150,000. A
substantial number of states agree. E-470 Public Highway Authority v.
Revenig, 91 P.3d 1038, 1043-1044 (Colo. 2004); see also Department of
Transportation v. Rowe, 549 S.E.2d 203 (N.C. 2001). However, most

1514
states do not allow such an offset, and instead would award the owner the
full $200,000 for the taken land without any reduction for the increase in
the value of the retained land. Williams Natural Gas Co. v. Perkins, 952
P.2d 483 (Okla. 1997). Is granting an owner full value for property taken
as well as the increase in value to any retained property from the taking a
fair measure of compensation to an owner?
New Jersey recently changed its longstanding rule that limited any
reduction in compensation for partial takings to special benefits. In
Borough of Harvey Cedars v. Karan, 70 A.3d 524 (N.J. 2013), the
borough government took part of a couple’s beachfront property to
construct dunes to prevent erosion or loss during storms. At the
condemnation trial, the court allowed the owners to introduce evidence
that the dunes had reduced the value of their home by obstructing their
view, but did not allow the borough to introduce evidence that the dune
had enhanced the value of the couple’s home by protecting it from storms
and ocean surges. The jury awarded the couple $375,000. The New Jersey
Supreme Court reversed. “In a partial-takings case,” the court held,
“homeowners are entitled to the fair market value of their loss, not to a
windfall, not to a pay out that disregards the home’s enhanced value
resulting from a public project.” Id. at 527. That meant that just
compensation for a partial taking “must be based on a consideration of all
relevant, reasonably calculable, and non-conjectural factors that either
decrease or increase the value of the remaining property,” including in this
case that “the dune would likely spare the Karans’ home from total
destruction in certain fierce storms and from other damage in lesser
storms.” Id. This eliminated the distinction between special and general
benefits, and instead simply required any benefits to the owner, if
reasonably quantifiable, to be measured against losses in market value
caused by the partial taking.

Problem
Starting around 2006, the real estate market in the U.S. began to suffer
a significant downturn. See Chapter 12, §4.2. In the wake of the subprime
crisis, home values plummeted, leaving many owners “underwater,”
meaning that they owe more — sometimes multiple times more — on their
mortgage loans than their homes are worth. Refinancing these mortgages
would reduce the incentive to default and the risk of foreclosure, relieving
the burden on communities where cascades of foreclosure have caused
significant harm. However, many of these mortgages were securitized,
posing significant barriers to renegotiation. Securitized mortgages are

1515
typically managed by servicers who may have no incentive to renegotiate,
and often contractually cannot renegotiate without the agreement of a
supermajority of the disparate investors with interests in the securities.
Robert C. Hockett, It Takes a Village: Municipal Condemnation
Proceedings and Public/Private Partnerships for Mortgage Loan
Modification, Value Preservation, and Local Economic Recovery, 18 Stan.
J.L. Bus. & Fin. 121, 139-142 (2012).
A private company called Mortgage Resolution Partners has proposed
working with local governments to use eminent domain to solve this
impasse. A local government would condemn a homeowner’s loan, using
funds provided by private investors to pay just compensation to the lender.
The compensation for these loans would be set based on the fact that if an
underwater mortgage were sold on the open market, its value should be
less than its face value because the security for the loan is worth less than
the outstanding debt. The local government, now the owner of the
mortgage loan, would then negotiate with the borrower — the homeowner
— to refinance the mortgage at a rate that more clearly reflected the
home’s post-crisis value. See Tad Friend, Home Economics: Can an
Entrepreneur’s Audacious Plan Fix the Mortgage Mess?, New Yorker,
Feb. 4, 2013, at 26.
a. Would this use of eminent domain satisfy the public use
requirement? What else might you need to know to answer this
question?
b. Is the measure of compensation based on the discounted value of
the mortgage “just”? What are the best arguments on both sides?
c. What other legal issues might this plan to use eminent domain to
condemn mortgages raise?

§1.4 Expropriation Without “Taking”

In a number of contexts, courts are called upon to decide whether a
claimed interest that might be considered property for some purposes is
“private property” under the takings clause. See, e.g., United States v.
Rands, 389 U.S. 121, 125-126 (1967) (state-created riparian rights that
“are not assertable against the superior rights of the United States, are not
property” for the takings clause even though they might be enforceable
against private parties). As a general matter, the Supreme Court has noted
that “[b]ecause the Constitution protects rather than creates property
interests, the existence of a property interest is determined by reference to
‘existing rules or understandings that stem from an independent source
such as state law.’ ” Phillips v. Washington Legal Foundation, 524 U.S.

1516
156, 164 (1998).
In the case of interests in land and most personal property, determining
whether the interest is “private property” for purposes of the takings clause
is not often controversial, although it can be. Compare, e.g., Lynch v.
United States, 292 U.S. 571, 579 (1934) (“Valid contracts are property,
whether the obligor be a private individual, a municipality, a State or the
United States.”), with New England Estates, LLC v. Town of Branford, 988
A.2d 229, 241-243 (Conn. 2010) (option to purchase property is a
contractual right not protected by the takings clause). Takings claims are
also brought in the context of intangible property. See, e.g., Ruckelshaus v.
Monsanto Co., 467 U.S. 986, 1001-1004 (1984) (trade secrets); Armstrong
v. United States, 364 U.S. 40 (1960) (materialmen’s liens); West River
Bridge Co. v. Dix, 47 U.S. 507, 533 (1848) (corporate franchise); see also
City of Oakland v. Oakland Raiders, 646 P.2d 835 (Cal. 1982)
(condemnation of sports team).14
Are there reasons why an interest might be recognized as “property” in
some constitutional (or common law) contexts, but not for purposes of the
takings clause? What might interference, or even the outright
expropriation, of an interest recognized as property in one context, but not
for purposes of the takings clause, look like? Consider the following case.

Tee-Hit-Ton Indians v. United States

348 U.S. 272 (1955)

Map: (Tongass National Forest)

Wrangell Island, Alaska

Mr. Justice STANLEY REED delivered the opinion of the Court.

This case rests upon a claim under the Fifth Amendment by petitioner,
an identifiable group of American Indians of between 60 and 70
individuals residing in Alaska, for compensation for a taking by the United
States of certain timber from Alaskan lands allegedly belonging to the
group. The area claimed is said to contain over 350,000 acres of land and
150 square miles of water. The Tee-Hit-Tons, a clan of the Tlingit Tribe,
brought this suit in the Court of Claims under 28 U.S.C. §1505. The
compensation claimed does not arise from any statutory direction to pay.
Payment, if it can be compelled, must be based upon a constitutional right

1517
of the Indians to recover.
The Court of Claims held that petitioner was an identifiable group of
American Indians residing in Alaska; that its interest in the lands prior to
purchase of Alaska by the United States in 1867 was “original Indian title”
or “Indian right of occupancy.” It was further held that if such original
Indian title survived the Treaty of 1867, 15 Stat. 539, Arts. III and VI, by
which Russia conveyed Alaska to the United States, such title was not
sufficient basis to maintain this suit as there had been no recognition by
Congress of any legal rights in petitioner to the land in question. [W]e
granted certiorari.
The Alaskan area in which petitioner claims a compensable interest is
located near and within the exterior lines of the Tongass National Forest.
By Joint Resolution of August 8, 1947, 61 Stat. 920, the Secretary of
Agriculture was authorized to contract for the sale of national forest timber
located within this National Forest “notwithstanding any claim of
possessory rights.” The Resolution defines “possessory rights”15 and
provides for all receipts from the sale of timber to be maintained in a
special account in the Treasury until the timber and land rights are finally
determined.
The Secretary of Agriculture, on August 20, 1951, contracted for sale
to a private company of all merchantable timber in the area claimed by
petitioner. This is the sale of timber which petitioner alleges constitutes a
compensable taking by the United States of a portion of its proprietary
interest in the land.
The problem presented is the nature of the petitioner’s interest in the
land, if any. Petitioner claims a “full proprietary ownership” of the land;
or, in the alternative, at least a “recognized” right to unrestricted
possession, occupation and use. Either ownership or recognized
possession, petitioner asserts, is compensable. If it has a fee simple interest
in the entire tract, it has an interest in the timber and its sale is a partial
taking of its right to “possess, use and dispose of it.” United States v.
General Motors, 323 U.S. 373, 378 (1945).

I. Recognition
Where the Congress by treaty or other agreement has declared that
thereafter Indians were to hold the lands permanently, compensation must
be paid for subsequent taking. The petitioner contends that Congress has
sufficiently “recognized” its possessory rights in the land in question so as
to make its interest compensable. Petitioner points specifically to two
statutes to sustain this contention.

1518
 We have carefully examined these statutes and the pertinent legislative
history and find nothing to indicate any intention by Congress to grant to
the Indians any permanent rights in the lands of Alaska occupied by them
by permission of Congress.

II. Indian Title

It is well settled that in all the States of the Union the tribes who
inhabited the lands of the States held claim to such lands after the coming
of the white man, under what is sometimes termed original Indian title or
permission from the whites to occupy. That description means mere
possession not specifically recognized as ownership by Congress. After
conquest they were permitted to occupy portions of territory over which
they had previously exercised “sovereignty,” as we use that term. This is
not a property right but amounts to a right of occupancy which the
sovereign grants and protects against intrusion by third parties but which
right of occupancy may be terminated and such lands fully disposed of by
the sovereign itself without any legally enforceable obligation to
compensate the Indians.
This position of the Indian has long been rationalized by the legal
theory that discovery and conquest gave the conquerors sovereignty over
and ownership of the lands thus obtained. The great case of Johnson v.
M’Intosh, 21 U.S. (8 Wheat.) 543 (1823), denied the power of an Indian
tribe to pass their right of occupancy to another. It confirmed the practice
of two hundred years of American history “that discovery gave an
exclusive right to extinguish the Indian title of occupancy, either by
purchase or by conquest.” 8 Wheat. at 587.

Conquest gives a title which the Courts of the conqueror cannot deny,
whatever the private and speculative opinions of individuals may be,
respecting the original justice of the claim which has been successfully
asserted. 8 Wheat. at 590-591.

In Beecher v. Wetherby, 95 U.S. 517 (1877), a tract of land which

Indians were then expressly permitted by the United States to occupy was
granted to Wisconsin. In a controversy over timber, this Court held the
Wisconsin title good.

The grantee, it is true, would take only the naked fee, and could not disturb
the occupancy of the Indians: that occupancy could only be interfered with or
determined by the United States. It is to be presumed that in this matter the
United States would be governed by such considerations of justice as would

1519
 control a Christian people in their treatment of an ignorant and dependent
race. Be that as it may, the propriety or justice of their action towards the
Indians with respect to their lands is a question of governmental policy, and
is not a matter open to discussion in a controversy between third parties,
neither of whom derives title from the Indians. The right of the United States
to dispose of the fee of lands occupied by them has always been recognized
by this court from the foundation of the government. 95 U.S. at 525.

In 1941 a unanimous Court wrote, concerning Indian title, the following:

Extinguishment of Indian title based on aboriginal possession is of course a

different matter. The power of Congress in that regard is supreme. The
manner, method and time of such extinguishment raise political, not
justiciable issues. United States v. Santa Fe Pacific R. Co., 314 U.S. 339, 347
(1941).

No case in this Court has ever held that taking of Indian title or use by
Congress required compensation. The American people have compassion
for the descendants of those Indians who were deprived of their homes and
hunting grounds by the drive of civilization. They seek to have the Indians
share the benefits of our society as citizens of this Nation. Generous
provision has been willingly made to allow tribes to recover for wrongs, as
a matter of grace, not because of legal liability.
This is true, not because an Indian or an Indian tribe has no standing to
sue or because the United States has not consented to be sued for the
taking of original Indian title, but because Indian occupation of land
without government recognition of ownership creates no rights against
taking or extinction by the United States protected by the Fifth
Amendment or any other principle of law.
What has been heretofore set out deals largely with the Indians of the
Plains and east of the Mississippi. The Tee-Hit-Tons urge, however, that
their stage of civilization and their concept of ownership of property takes
them out of the rule applicable to the Indians of the States. They assert that
Russia never took their lands in the sense that European nations seized the
rest of America. The Court of Claims, however, saw no distinction
between their use of the land and that of the Indians of the Eastern United
States. That court had no evidence that the Russian handling of the Indian
land problem differed from ours. The natives were left the use of the great
part of their vast hunting and fishing territory but what Russia wanted for
its use and that of its licensees, it took. The court’s conclusion on this issue
was based on strong evidence.
In considering the character of the Tee-Hit-Tons’ use of the land, the

1520
Court of Claims had before it the testimony of a single witness who was
offered by plaintiff. He stated that he was the chief of the Tee-Hit-Ton
tribe. He qualified as an expert on the Tlingits, a group composed of
numerous interconnected tribes including the Tee-Hit-Tons. His testimony
showed that the Tee-Hit-Tons had become greatly reduced in numbers.
Membership descends only through the female line. At the present time
there are only a few women of childbearing age and a total membership of
some 65.
The witness pointed out that their claim of ownership was based on
possession and use. The use that was made of the controverted area was
for the location in winter of villages in sheltered spots and in summer
along fishing streams and/or bays. The ownership was not individual but
tribal. As the witness stated, “Any member of the tribe may use any
portion of the land that he wishes, and as long as he uses it that is his for
his own enjoyment, and is not to be trespassed upon by anybody else, but
the minute he stops using it then any other member of the tribe can come
in and use that area.”
The witness learned the alleged boundaries of the Tee-Hit-Ton area
from hunting and fishing with his uncle after his return from Carlisle
Indian School about 1904. From the knowledge so obtained, he outlined in
red on the map, which petitioner filed as an exhibit, the territory claimed
by the Tee-Hit-Tons. Use by other tribal members is sketchily asserted.
This is the same 350,000 acres claimed by the petition. On it he marked six
places to show the Indians’ use of the land: (1) his great uncle was buried
here, (2) a town, (3) his uncle’s house, (4) a town, (5) his mother’s house,
(6) smokehouse. He also pointed out the uses of this tract for fishing
salmon and for hunting beaver, deer and mink.
The testimony further shows that while membership in the tribe and
therefore ownership in the common property descended only through the
female line, the various tribes of the Tlingits allowed one another to use
their lands. Before power boats, the Indians would put their shelters for
hunting and fishing away from villages. With the power boats, they used
them as living quarters.
In addition to this verbal testimony, exhibits were introduced by both
sides as to the land use. These exhibits are secondary authorities but they
bear out the general proposition that land claims among the Tee-Hit-Tons
[were] wholly tribal. It was more a claim of sovereignty than of ownership.
There were scattered shelters and villages moved from place to place as
game or fish became scarce. There was recognition of tribal rights to hunt
and fish on certain general areas, with claims to that effect carved on totem
poles. From all that was presented, the Court of Claims concluded, and we

1521
agree, that the Tee-Hit-Tons were in a hunting and fishing stage of
civilization, with shelters fitted to their environment, and claims to rights
to use identified territory for these activities as well as the gathering of
wild products of the earth.
The line of cases adjudicating Indian rights on American soil leads to
the conclusion that Indian occupancy, not specifically recognized as
ownership by action authorized by Congress, may be extinguished by the
Government without compensation. Every American schoolboy knows
that the savage tribes of this continent were deprived of their ancestral
ranges by force and that, even when the Indians ceded millions of acres by
treaty in return for blankets, food and trinkets, it was not a sale but the
conquerors’ will that deprived them of their land.
In the light of the history of Indian relations in this Nation, no other
course would meet the problem of the growth of the United States except
to make congressional contributions for Indian lands rather than to subject
the Government to an obligation to pay the value when taken with interest
to the date of payment. Our conclusion does not uphold harshness as
against tenderness toward the Indians, but it leaves with Congress, where it
belongs, the policy of Indian gratuities for the termination of Indian
occupancy of Government-owned land rather than making compensation
for its value a rigid constitutional principle.

Mr. Justice WILLIAM O. DOUGLAS, with whom THE CHIEF JUSTICE and
Mr. Justice FRANKFURTER, concur, dissenting.
The first Organic Act for Alaska became a law on May 17, 1884, 23
Stat. 24. [Section 8 provides that] “the Indians or other persons in said
district shall not be disturbed in the possession of any lands actually in
their use or occupation or now claimed by them but the terms under which
such persons may acquire title to such lands is reserved for future
legislation by Congress.” Respondent contends, and the Court apparently
agrees, that this provision should be read, not as recognizing Indian title,
but as reserving the question whether they have any rights in the land.
[In the debates about the Act,] Senator Benjamin Harrison [said] it was
the intention of the committee “to save from all possible invasion the
rights of the Indian residents of Alaska . . . except in so far as it was
necessary in order to establish title to mining claims in the Territory.” The
conclusion seems clear that Congress in the 1884 Act recognized the
claims of these Indians to their Alaskan lands. [Given uncertainty about
the extent of Indian claims,] Congress did the humane thing of saving to
the Indians all rights claimed; it let them keep what they had prior to the
new Act. The future course of action was made clear — conflicting claims

1522
would be reconciled and the Indian lands would be put into reservations.
That purpose is wholly at war with the one now attributed to the
Congress of reserving for some future day the question whether the
Indians were to have any rights to the land.

Notes and Questions

1. Indian title and the takings clause. As far back as 1835, the
Supreme Court called it “a settled principle, that [American Indians’] right
of occupancy is considered as sacred as the fee simple of the whites.”
Mitchel v. United States, 34 U.S. 711, 746 (1835). Since 1790, federal
statutes have criminalized trespass on tribal land and required restitution
for damage to tribal property. The federal government has repeatedly sued
to protect or seek damages for interference with the tribal right of
occupancy, regardless of whether that right was guaranteed by the federal
government. See United States v. Santa Fe Pacific Railroad Co., 314 U.S.
339, 345 (1941) (“Unquestionably it has been the policy of the federal
government from the beginning to respect the Indian right of occupancy . .
.”). Congress also enacted many laws waiving sovereign immunity so that
tribes could sue the federal government for taking of tribal property.
Nonetheless, Tee-Hit-Ton holds that Indian title is not property within the
meaning of the fifth amendment’s taking clause, and can instead can be
abrogated by the United States without compensation. Only Indian title
recognized by Congress through a treaty or statute constitutes property that
cannot be taken without just compensation. What justifies this distinction?
2. Statutory compensation after Tee-Hit-Ton. Although not
constitutionally compelled to do so, in 1971 Congress enacted the Alaska
Native Claims Settlement Act, compensating native inhabitants of Alaska
for the loss of their land in the amount of $962.5 million and reserving
approximately 45 million acres of federal public lands to Alaska Native
villages. 43 U.S.C. §1601 et seq.; Cohen’s Handbook of Federal Indian
Law §4.07[3][b][ii][B], at 330 (Nell Newton et al. eds. 2012 ed.). In return,
the Native Alaskans agreed to extinguishment of claims to an additional
335 million acres. The act was catalyzed by the discovery of oil in Prudhoe
Bay in 1968. Because Alaska Natives likely still had property claims
against private individuals, oil developers pressed Congress to reach a
settlement with Alaska Natives to avoid uncertainty in mineral
development.
3. Interest on past expropriations. Perhaps the greatest practical
significance of Tee-Hit-Ton was that it helped protect the United States
from having to pay interest on claims based on seizure of Indian lands. In

1523
1946, Congress had enacted the Indian Claims Commission Act (ICCA),
60 Stat. 1049, 25 U.S.C. §70 et seq., which allowed Indian nations to bring
claims against the United States for uncompensated (or poorly
compensated) takings of their property. The ICCA granted compensation
for takings of both original Indian title land and recognized title land; the
amount of compensation due was measured by the value of the land at the
time of the taking — in many cases, low, nineteenth-century values.
Interest, however, was paid only in takings of recognized title land since
only such takings were found to have violated the fifth amendment. In a
portion of the Tee-Hit-Ton opinion not included in the excerpt above, the
Court noted that “if aboriginal Indian title was compensable without
specific legislation to that effect, there were claims with estimated interest
already pending under the Indian jurisdictional act aggregating
$9,000,000,000.” Of this $9 billion, $8 billion was interest. Nell Jessup
Newton, At the Whim of the Sovereign: Aboriginal Title Reconsidered, 31
Hastings L.J. 1215, 1248 (1980). The Tee-Hit-Ton decision, in effect,
saved the United States $8 billion, almost $70 billion in 2012 dollars.
4. Compensation for the taking of recognized Indian title. In 1868,
the United States entered the Fort Laramie Treaty with the Sioux Nation,
15 Stat. 635, and pledged that the Great Sioux Reservation, including the
Black Hills, would be “set apart for [their] absolute and undisturbed use
and occupation,” “solemnly agree[ing]” that no unauthorized persons
“shall ever be permitted to pass over, settle upon, or reside in [this]
territory.” In return, the Sioux agreed to relinquish their rights under a
prior treaty to occupy territories outside the reservation, while reserving
their right to hunt on some of those lands. The treaty also provided that no
agreement to cede any of the reservation “shall be of any validity or force
as against the said Indians, unless executed and signed by at least three
fourths of all the adult male Indians, occupying or interested in the same.”
In 1874, Lieutenant Colonel George Armstrong Custer led an
expedition to the Reservation, confirming the presence of gold in the
region. That led to an intense popular demand for the “opening” of the
Black Hills for settlement. In 1875, President Grant secretly instructed the
military to stop protecting the Sioux from invasion by settlers. That winter,
the military also sought to prevent the Sioux from hunting off the
reservation; these efforts initially led to the Sioux victory in the Battle of
Little Big Horn, but the hunters were eventually rounded up, deprived of
their horses and weapons, and left dependent on government rations. In
1876, Congress sought new land cessions, threatening to stop supplying
rations if they did not sign. The resulting agreement was signed by only 10

1524
percent of the adult male Sioux population in violation of the Fort Laramie
Treaty. It was enacted into law on Feb. 28, 1877.
United States v. Sioux Nation of Indians, 448 U.S. 371 (1980), found
that the 1877 Act constituted a compensable taking. In its opinion, the
Supreme Court noted that previous cases had held that the United States
may manage tribal lands as a trustee for Indian nations and had discretion
to exchange tribal lands for other property so long as it made a good faith
effort to provide fair compensation. But the power to manage did not
extend “ ‘so far as to enable the Government to give the tribal lands to
others, or to appropriate them to its own purposes, without rendering, or
assuming an obligation to render, just compensation. Spoliation is not
management.’ ” 448 U.S. at 408 (quoting Shoshone Tribe v. United States,
299 U.S. 476, 477, 478 (1937)). The question was how to distinguish
between a “good faith effort” to manage tribal property and an
unconstitutional taking of property without just compensation:

[A] trustee may change the form of trust assets as long as he fairly (or in
good faith) attempts to provide his ward with property of equivalent value. If
he does that, he cannot be faulted if hindsight should demonstrate a lack of
precise equivalence. On the other hand, if a trustee (or the government in its
dealings with the Indians) does not attempt to give the ward the fair
equivalent of what he acquires from him, the trustee to that extent has taken
rather than transmuted the property of the ward.
[In this case, the] only item of “consideration” that possibly could be
viewed as showing an attempt by Congress to give the Sioux the “full value”
of the land the government took from them was the requirement to furnish
them with rations until they became self-sufficient.

Id. at 416-417. Reviewing all the evidence, the Court concluded that these
rations were not viewed as fair compensation, but instead were provided as
“an attempt to coerce the Sioux into capitulating to congressional
demands.” Id. at 418. The 1877 Act was not, therefore, a good faith change
in the form of investment, but a taking of tribal property implying an
obligation to make just compensation to the Sioux Nation with interest.
What justifies the rule in Sioux Nation that when the federal
government takes the recognized title lands of Indian nations, it is not
liable for fair market value as long as it makes a “good faith” effort to
grant “equivalent value”? Does the Supreme Court believe the U.S.
government can be trusted when it deals with Indian lands but not when it
deals with non-Indian lands? Is there any basis for such a conclusion?

1525
§2 AN INTRODUCTION TO REGULATORY
TAKINGS
§2.1 Historical Origins
The Supreme Court has broadly interpreted the police power to allow
states to regulate property for public health, welfare, and safety. Village of
Euclid v. Ambler Realty Co., 272 U.S. 365 (1926). In a long line of cases,
the Court held that in exercising this authority, the state was not required
to compensate owners for any resulting loss in value to their property. For
example, in Mugler v. Kansas, 123 U.S. 623 (1887), the Court held that a
state statute that prohibited the manufacture and sale of alcoholic
beverages did not constitute a “taking” of the plaintiff’s property. It
reached this result even though the brewery had been constructed solely
for the purpose of manufacturing such beverages, the property had “little
value” for any other purpose, and that purpose had been lawful at the time
plaintiff invested in building the factory and its business. The Court
declared that “[a] prohibition simply upon the use of property for purposes
that are declared, by valid legislation, to be injurious to the health, morals,
or safety of the community, cannot, in any just sense, be deemed a taking
or an appropriation of property.” Id. at 668-669. Two years later, Powell v.
Pennsylvania, 127 U.S. 678 (1888), held that it was permissible to outlaw
completely the manufacture of oleomargarine, even if the value of the
plaintiff’s buildings and equipment “would be entirely lost,” so long as the
legislature passed the law for the purpose of protecting public health and
preventing fraud. Similarly, in Hadacheck v. Sebastian, 239 U.S. 394
(1915), the Court upheld a city ordinance prohibiting the operation of an
established brickyard, although the owner had made excavations on the
land that prevented it from being utilized for any other purpose and the
brickyard was lawful when the owner started operating. The Court held
that it was within the legislative power to declare the business a nuisance
and that the city need not compensate even if that declaration destroyed the
business.
In 1922, however, the Supreme Court for the first time suggested limits
on the principle that the state may regulate under the police power without
compensation.

Pennsylvania Coal Co. v. Mahon

260 U.S. 393 (1922)

1526
Mr. Justice OLIVER WENDELL HOLMES delivered the opinion of the Court.
This is a bill in equity brought by the defendants in error to prevent the
Pennsylvania Coal Company from mining under their property in such
way as to remove the supports and cause a subsidence of the surface and of
their house. The bill sets out a deed executed by the Coal Company in
1878, under which the plaintiffs claim. The deed conveys the surface but
in express terms reserves the right to remove all the coal under the same
and the grantee takes the premises with the risk and waives all claim for
damages that may arise from mining out the coal. But the plaintiffs say
that whatever may have been the Coal Company’s rights, they were taken
away by an Act of Pennsylvania, approved May 27, 1921 (P.L. 1198),
commonly known there as the Kohler Act. The Court of Common Pleas
found that if not restrained the defendant would cause the damage to
prevent which the bill was brought but denied an injunction, holding that
the statute if applied to this case would be unconstitutional. On appeal the
Supreme Court of the State agreed that the defendant had contract and
property rights protected by the Constitution of the United States, but held
that the statute was a legitimate exercise of the police power and directed a
decree for the plaintiffs. A writ of error was granted bringing the case to
this Court.
The statute forbids the mining of anthracite coal in such way as to
cause the subsidence of, among other things, any structure used as a
human habitation, with certain exceptions, including among them land
where the surface is owned by the owner of the underlying coal and is
distant more than one hundred and fifty feet from any improved property
belonging to any other person. As applied to this case the statute is
admitted to destroy previously existing rights of property and contract. The
question is whether the police power can be stretched so far.
Government hardly could 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 the police power. But obviously the
implied limitation must have its limits or the contract and due process
clauses are gone. One fact for consideration in determining such limits is
the extent of the diminution. When it reaches a certain magnitude, in most
if not in all cases there must be an exercise of eminent domain and
compensation to sustain the act. So the question depends upon the
particular facts. The greatest weight is given to the judgment of the
legislature but it always is open to interested parties to contend that the
legislature has gone beyond its constitutional power.
This is the case of a single private house. No doubt there is a public

1527
interest even in this, as there is in every purchase and sale and in all that
happens within the commonwealth. Some existing rights may be modified
even in such a case. But usually in ordinary private affairs the public
interest does not warrant much of this kind of interference. A source of
damage to such a house is not a public nuisance even if similar damage is
inflicted on others in different places. The damage is not common or
public. The extent of the public interest is shown by the statute to be
limited, since the statute ordinarily does not apply to land when the surface
is owned by the owner of the coal. Furthermore, it is not justified as a
protection of personal safety. That could be provided for by notice. Indeed
the very foundation of this bill is that the defendant gave timely notice of
its intent to mine under the house. On the other hand the extent of the
taking is great. It purports to abolish what is recognized in Pennsylvania as
an estate in land — a very valuable estate — and what is declared by the
Court below to be a contract hitherto binding the plaintiffs. If we were
called upon to deal with the plaintiffs’ position alone we should think it
clear that the statute does not disclose a public interest sufficient to warrant
so extensive a destruction of the defendant’s constitutionally protected
rights.
It is our opinion that the act cannot be sustained as an exercise of the
police power, so far as it affects the mining of coal under streets or cities in
places where the right to mine such coal has been reserved. As said in a
Pennsylvania case, “For practical purposes, the right to coal consists in the
right to mine it.” Commonwealth v. Clearview Coal Co., 100 A. 820 (Pa.
1917). What makes the right to mine coal valuable is that it can be
exercised with profit. To make it commercially impracticable to mine
certain coal has very nearly the same effect for constitutional purposes as
appropriating or destroying it. This we think that we are warranted in
assuming that the statute does.
It is true that in Plymouth Coal Co. v. Pennsylvania, 232 U.S. 531, it
was held competent for the legislature to require a pillar of coal to the left
along the line of adjoining property, that with the pillar on the other side of
the line would be a barrier sufficient for the safety of the employees of
either mine in case the other should be abandoned and allowed to fill with
water. But that was a requirement for the safety of employees invited into
the mine, and secured an average reciprocity of advantage that has been
recognized as a justification of various laws.
The rights of the public in a street purchased or laid out by eminent
domain are those that it has paid for. If in any case its representatives have
been so short sighted as to acquire only surface rights without the right of
support we see no more authority for supplying the latter without

1528
compensation than there was for taking the right of way in the first place
and refusing to pay for it because the public wanted it very much. The
protection of private property in the Fifth Amendment presupposes that it
is wanted for public use, but provides that it shall not be taken for such use
without compensation. When this seemingly absolute protection is found
to be qualified by the police power, the natural tendency of human nature
is to extend the qualification more and more until at last private property
disappears. But that cannot be accomplished in this way under the
Constitution of the United States.
The general rule at least is that while property may be regulated to a
certain extent, if regulation goes too far it will be recognized as a taking. It
may be doubted how far exceptional cases, like the blowing up of a house
to stop a conflagration, go — and if they go beyond the general rule,
whether they do not stand as much upon tradition as upon principle. In
general it is not plain that a man’s misfortunes or necessities will justify
his shifting the damages to his neighbor’s shoulders. 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. As we already have said this
is a question of degree — and therefore cannot be disposed of by general
propositions.
We assume, of course, that the statute was passed upon the conviction
that an exigency existed that would warrant it, and we assume that an
exigency exists that would warrant the exercise of eminent domain. But
the question at bottom is upon whom the loss of the changes desired
should fall. So far as private persons or communities have seen fit to take
the risk of acquiring only surface rights, we cannot see that the fact that
their risk has become a danger warrants the giving to them greater rights
than they bought.

Mr. Justice LOUIS D. BRANDEIS dissenting.

Coal in place is land, and the right of the owner to use his land is not
absolute. He may not so use it as to create a public nuisance, and uses,
once harmless, may, owing to changed conditions, seriously threaten the
public welfare. Whenever they do, the Legislature has power to prohibit
such uses without paying compensation; and the power to prohibit extends
alike to the manner, the character and the purpose of the use. Are we
justified in declaring that the Legislature of Pennsylvania has, in restricting
the right to mine anthracite, exercised this power so arbitrarily as to violate
the Fourteenth Amendment?
Every restriction upon the use of property imposed in the exercise of

1529
the police power deprives the owner of some right theretofore enjoyed, and
is, in that sense, an abridgment by the state of rights in property without
making compensation. But restriction imposed to protect the public health,
safety or morals from dangers threatened is not a taking. The restriction
here in question is merely the prohibition of a noxious use. The property so
restricted remains in the possession of its owner. The state does not
appropriate it or make any use of it. The state merely prevents the owner
from making a use which interferes with paramount rights of the public.
If by mining anthracite coal the owner would necessarily unloose
poisonous gases, I suppose no one would doubt the power of the state to
prevent the mining, without buying his coal fields. And why may not the
state, likewise, without paying compensation, prohibit one from digging so
deep or excavating so near the surface, as to expose the community to like
dangers? In the latter case, as in the former, carrying on the business
would be a public nuisance.
It is said that one fact for consideration in determining whether the
limits of the police power have been exceeded is the extent of the resulting
diminution in value, and that here the restriction destroys existing rights of
property and contract. But values are relative. If we are to consider the
value of the coal kept in place by the restriction, we should compare it
with the value of all other parts of the land. That is, with the value not of
the coal alone, but with the value of the whole property. The rights of an
owner as against the public are not increased by dividing the interests in
his property into surface and subsoil. The sum of the rights in the parts can
not be greater than the rights in the whole. The estate of an owner in land
is grandiloquently described as extending ab orco usque ad coelum. But I
suppose no one would contend that by selling his interest above 100 feet
from the surface he could prevent the state from limiting, by the police
power, the height of structures in a city. And why should a sale of
underground rights bar the state’s power? For aught that appears the value
of the coal kept in place by the restriction may be negligible as compared
with the value of the whole property, or even as compared with that part of
it which is represented by the coal remaining in place and which may be
extracted despite the statute.
Yet it is said that these provisions of the act cannot be sustained as an
exercise of the police power where the right to mine such coal has been
reserved. The conclusion seems to rest upon the assumption that in order
to justify such exercise of the police power there must be “an average
reciprocity of advantage” as between the owner of the property restricted
and the rest of the community; and that here such reciprocity is absent.
Reciprocity of advantage is an important consideration, and may even be

1530
an essential [one], where the state’s power is exercised for the purpose of
conferring benefits upon the property of a neighborhood, as in drainage
projects or upon adjoining owners, as by party wall provisions. But where
the police power is exercised, not to confer benefits upon property owners
but to protect the public from detriment and danger, there is in my opinion,
no room for considering reciprocity of advantage . . . unless it be the
advantage of living and doing business in a civilized community. That
reciprocal advantage is given by the act to the coal operators.

Notes and Questions

1. When does a regulation go “too far”? Pennsylvania Coal Co. v.
Mahon established the proposition that “while property may be regulated
to a certain extent, if regulation goes too far it will be recognized as a
taking.” But Justice Holmes’s opinion is clear about little else.
Contemporary regulatory takings claims do not rely directly on Mahon for
a doctrinal test, but echoes of Justice Holmes’s reasoning can be heard in
the modern cases.
There are several ways that one might interpret Mahon to discern when
a regulation has gone “too far.” One way is to focus on the magnitude of
the harm to an owner. At some point, under this view, a restriction on
property has crossed a threshold of permissible harm regardless of the
importance of the public purpose at issue, and compensation must be
provided. This might be so because, from an owner’s perspective, such a
regulation is the functional equivalence of an actual physical taking by the
government, which requires compensation even though the exercise of the
power of eminent domain must be for a valid public purpose.
Another interpretation of Mahon is that determining when a regulation
has gone too far requires balancing public interest against private harm. In
this view, the determinative question is not simply the diminution in an
owner’s value, but also the extent to which the public interest demands
such diminution. Pennsylvania Coal in this case had purchased the
“support estate,” a distinct estate under Pennsylvania law consisting of the
subsurface support needed to keep the surface from collapsing. On one
view, then, Justice Holmes may have viewed the act as primarily serving
private interests by shifting the support estate back to the surface estate
holders. See William Michael Treanor, Jam for Justice Holmes:
Reassessing the Significance of Mahon, 86 Geo. L.J. 813, 859-860 (1998).
A third way to read Mahon is that the case is more generally about
when it is fair to concentrate harms as opposed to asking the general
public to bear a given burden. “In general it is not plain,” Justice Holmes

1531
wrote, “that a man’s misfortunes or necessities will justify his shifting the
damages to his neighbor’s shoulders.”
Professor William Treanor has argued that Justice Holmes viewed the
case as involving a different concern: the role of the state not as regulator
but as an interested party acquiring property for the public. According to
Professor Treanor, Holmes was concerned that Pennsylvania was trying to
protect public property by acquiring only surface estates and then requiring
subsurface estates to be left in place without paying for that right. As
Treanor noted, private risks posed by subsidence could have been
protected by notice from coal companies, but there was “greater evidence
of real harm with respect to public lands. The record in the case shows
that, while homeowners might have avoided danger, the same was not true
of people travelling on public roads and children going to school.”
Treanor, supra, at 859-860. In correspondence with then professor, later
Justice, Felix Frankfurter, Holmes wrote that he regretted not “bring[ing]
out more clearly the distinction between the rights of the public generally
and their rights in respect of being in a particular place where they have no
right to be at all except so far as they have paid for it.” Letter from Oliver
Wendell Holmes to Felix Frankfurter (Feb. 14, 1923), in Holmes and
Frankfurter: Their Correspondence, 1912-1934, 150 (Robert M. Mennel
& Christine L. Compston eds. 1996). In this view, then, what went “too
far” in Mahon was the state acting to acquire property for its own purposes
without paying for that property.
The Supreme Court effectively repudiated the result in Mahon in
Keystone Bituminous Coal Association v. DeBenedictis, 480 U.S. 470
(1987), which upheld the constitutionality of a similar law. However, the
principle Mahon established is settled law; regulations that “go too far” —
however that line is determined — may be deemed takings of property.
2. Average reciprocity of advantage and the harm/benefit
distinction. How does Justice Holmes address cases such as Mugler and
Powell? What about Justice Brandeis? Should it make a difference in
terms of whether a restriction on property requires compensation that the
regulatory regime creates reciprocal harms and benefits, as where a rule
requiring an owner to maintain a party wall also protects that owner from
harm by her neighbors? One way to think about reciprocity of advantage is
that certain regulations, however onerous the burden, provide a kind of
implicit compensation that mitigates the unfairness of not directly
compensating owners.
3. What is the extent of the property being regulated? How did
Justice Holmes define the relevant property interest being regulated by the

1532
Kohler Act? How did Justice Brandeis in dissent approach this issue? Why
does it matter?
How one defines the property that is being regulated has come to be
called the denominator question, and it is crucial in determining the
extent to which a regulation diminishes the value of the property, among
other aspects of takings law. See Palazzolo v. Rhode Island, 533 U.S. 606,
631 (2001) (noting “the difficult, persisting question of what is the proper
denominator in the takings fraction”). In discussing this question,
Professor Margaret Jane Radin coined the term “conceptual severance,”
which, she says,

consists of delineating a property interest consisting of just what the

government action has removed from the owner, and then asserting that that
particular whole thing has been permanently taken. Thus this strategy
hypothetically or conceptually “severs” from the whole bundle of rights just
those strands that are interfered with by the regulation, and then
hypothetically or conceptually construes those strands in the aggregate as a
separate whole thing.

Margaret Jane Radin, The Liberal Conception of Property: Cross Currents

in the Jurisprudence of Takings, 88 Colum. L. Rev. 1667, 1676 (1988).
Can you see how this idea applies to the disagreement between Justice
Holmes and Justice Brandeis about how to characterize the property
interest involved in Mahon?

§2.2 “Categorical” Regulatory Takings and the Ad Hoc Test

The Supreme Court has repeatedly said that the takings clause serves
“to bar Government from forcing some people alone to bear public
burdens which, in all fairness and justice, should be borne by the public as
a whole.” Armstrong v. United States, 364 U.S. 40, 49 (1960). A
regulation of property will therefore be deemed a taking if “fairness and
justice” require a court to conclude that “the public at large, rather than a
single owner, must bear the burden of an exercise of state power in the
public interest.” Agins v. Tiburon, 447 U.S. 255, 260 (1980). In other
words, regulations are not takings if they are “properly treated as part of
the burden of common citizenship,” Kimball Laundry Co. v. United States,
338 U.S. 1 (1949).
It is of more than passing interest that the standard the Supreme Court
has adopted to determine whether a regulation has “taken” property is
whether the burden the regulation imposes on the owner is just or fair. This
places concepts of fairness and justice at the heart of both the takings

1533
clause and property law itself. It also assumes that owners have obligations
as well as rights. Owners must live with substantial regulation designed to
protect the interests of others affected by the exercise of their property
rights, including other owners and non-owners, as well as the community
at large. Nevertheless, fairness and justice place limits on the obligations
individual owners can be forced to bear for the good of the community.
Doctrinally, the vast majority of regulatory takings cases are analyzed
under the test the Supreme Court articulated in Penn Central
Transportation Co. v. New York City, 438 U.S. 104 (1978). The Penn
Central test requires courts to engage in “essentially ad hoc, factual
inquiries” of the “particular circumstances” of each case, with a focus on
three factors of “particular significance”: (1) the “economic impact” of the
regulation on the particular owner; (2) the protection of “reasonable” or
“distinct” “investment-backed expectations”; and (3) the “character of the
governmental action.” Id. at 124; Kaiser Aetna v. United States, 444 U.S.
164, 175 (1979). Most, but by no means all, regulations will be upheld
under this test as legitimate exercises of the police power despite their
impact on property use or value. See §3, below.
While the Court normally applies this ad hoc, multifactor test to
determine when a regulation becomes a taking, it has flirted with attempts
to develop per se tests to identify types of regulations that constitute
categorical takings for which compensation is required regardless of
other factors. For a while the Court appeared to be intent on identifying
more per se takings. However, the Court has now clarified that there are
only “two categories of regulatory action that generally will be deemed per
se takings.” Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 538 (2005).

Terms:
Regulatory takings claims are brought through an action for inverse
condemnation. This is a claim by a property owner against a public body
alleging that a regulation has taken the owner’s property without just
compensation. In the usual eminent domain case, the public body brings
condemnation proceedings against the property and the court sets the amount
of just compensation required. Lawsuits by property owners for damages are
the “inverse” of this procedure.

The two types of “categorical” takings are government-mandated

“permanent physical invasions of property,” id.; see Loretto v.
Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982), and
regulations that “completely deprive an owner of all economically viable

1534
use of her property [unless] background principles of nuisance and
property law independently restrict the owner’s intended use of the
property,” Lingle, 544 U.S. at 538; see Lucas v. South Carolina Coastal
Council, 505 U.S. 1003 (1992). These cases apply in “relatively narrow”
circumstances and will only “generally” be deemed per se takings. Lingle,
544 U.S. at 538. Thus even these two classes of cases are not always
deemed takings of property. See §4, below.
The per se categories apply the general rule; they merely identify
particular circumstances that are almost certain to be classified as
regulatory takings. For that reason, if a case does not qualify as a
purportedly categorical taking, it may nonetheless be deemed an
unconstitutional taking of property under the Penn Central test.
There are additional types of regulations or laws that have significantly
more chance to be deemed takings of property, even if the court has not
characterized these categories as per se takings. The first involves the
deprivation of certain core property rights or estates in land, such as the
right to pass on fee simple property at death. See, e.g., Babbitt v. Youpee,
519 U.S. 234 (1997). See §5.1, below. A second type of case involves
retroactive deprivation of vested rights belonging to owners who invested
in reasonable reliance on a prior regulatory authorization. See, e.g., Kaiser
Aetna v. United States, 444 U.S. 164, 179-180 (1979). See §5.2, below. In
addition, a Supreme Court plurality has suggested that judicial decisions
that eliminate property rights, as opposed to legislation or executive action,
might give rise to takings liability. See §5.3, below.
One final doctrinal category bears mention. The Supreme Court has
held that in certain circumstances, conditions on land use development
permits, commonly known as exactions, can be unconstitutional when
those conditions do not “substantially advance[] the same interests that
land-use authorities asserted would allow them to deny the permit
altogether.” Lingle, 544 U.S. at 547; see Koontz v. St. Johns River Water
Management District, 133 S. Ct. 420 (2013); Dolan v. City of Tigard, 512
U.S. 374 (1994); Nollan v. California Coastal Commission, 483 U.S. 825
(1987). As the Court explained in Dolan, the government “may not require
a person to give up a constitutional right — [for example,] the right to
receive just compensation when property is taken for a public use — in
exchange for a discretionary benefit conferred by the government where
the benefit has little or no relationship to the property.” 512 U.S. at 385.
See §6, below.

§2.3 Regulatory Takings and Due Process

1535
 In 1980, the Court stated that a regulatory taking would be found if a
law “does not substantially advance legitimate state interests,” Agins v.
City of Tiburon, 447 U.S. 255 (1980). This formulation suggested a
version of a means-end test akin to due process analysis, but possibly with
a higher level of scrutiny than the deferential rational basis standard. The
formulation reflected longstanding confusion in the Court’s decisions
about the interaction between due process and regulatory takings.
In 2005, however, the Supreme Court unanimously ruled that a
regulation cannot be ruled to be an unconstitutional taking on that basis,
and that it was improper to derive a test for regulatory takings based on
due process precedents. Lingle v. Chevron U.S.A. Inc., 544 U.S. 528
(2005). In Lingle, the Court upheld a Hawai`i statute that limited the rents
that oil companies could charge dealers leasing company-owned stations
against claims that the law was unlikely to achieve its stated purpose of
helping consumers because the oil companies could recoup any reductions
in their rental income by raising wholesale gasoline prices. Id. at 544. The
Court held that the judiciary should not be in the business of
“scrutiniz[ing] the efficacy [of government regulations,] a task for which
courts are not well suited [and which] might often require courts to
substitute their predictive judgments for those of elected legislatures and
expert agencies.” Id. A “substantially advances” inquiry, the Court noted,

suggests a means-ends test: It asks, in essence, whether a regulation of

private property is effective in achieving some legitimate public purpose. An
inquiry of this nature has some logic in the context of a due process
challenge, for a regulation that fails to serve any legitimate governmental
objective may be so arbitrary or irrational that it runs afoul of the Due
Process Clause. See, e.g., County of Sacramento v. Lewis, 523 U.S. 833, 846
(1998) (stating that the Due Process Clause is intended, in part, to protect the
individual against “the exercise of power without any reasonable justification
in the service of a legitimate governmental objective”). But such a test is not
a valid method of discerning whether private property has been “taken” for
purposes of the Fifth Amendment.

Id. at 542. The Court thus made clear that despite the doctrinal variation in
approaches to regulatory takings — a landscape we will be begin to
explore in the next section — each approach “aims to identify regulatory
actions that are functionally equivalent to the classic taking in which
government directly appropriates private property or ousts the owner from
his domain.” Id. at 539.
One area where the distinction between due process and regulatory
takings continues to be unresolved involves retroactivity. It is clear that

1536
newly enacted laws that interfere with owners’ reliance interests can be
unconstitutional; it is not clear, however, whether those interests are most
appropriately protected by the takings clause or by the due process clause.
As you work through regulatory takings doctrine for the remainder of this
chapter, pay attention to this tension.

§3 THE AD HOC TEST: FAIRNESS AND JUSTICE

§3.1 The Foundation of the Ad Hoc Test

Penn Central Transportation Co. v. New York City

438 U.S. 104 (1978)

Map: 100 E. 42nd Street (intersection

with Park Avenue), New York,
New York

Mr. Justice WILLIAM J. BRENNAN delivered the opinion of the court, in

which STEWART, WHITE, MARSHALL, BLACKMUN, and POWELL, JJ.,
joined.
The question presented is whether a city may, as part of a
comprehensive program to preserve historic landmarks and historic
districts, place restrictions on the development of individual historic
landmarks — in addition to those imposed by applicable zoning
ordinances — without effecting a “taking” requiring the payment of “just
compensation.” Specifically, we must decide whether the application of
New York City’s Landmarks Preservation Law to the parcel of land
occupied by Grand Central Terminal has “taken” its owners’ property in
violation of the Fifth and Fourteenth Amendments.

1537
 Façade of Grand Central Terminal 16

I
Over the past 50 years, all 50 States and over 500 municipalities have
enacted laws to encourage or require the preservation of buildings and
areas with historic or aesthetic importance. These nationwide legislative
efforts have been [based on] a widely shared belief that structures with
special historic, cultural, or architectural significance enhance the quality
of life for all.

CONTEXT

New York enacted its Landmarks Preservation Law against the backdrop of the
destruction of the dramatically beautiful former Penn Station building in 1963.
Of the difference between the old and the current Penn Station, Yale
architectural historian Vincent Scully famously said, “One entered the city like
a god; [o]ne scuttles in now like a rat.” Herbert Muschamp, Architecture View:
In This Dream Station Future and Past Collide, N.Y. Times, June 20, 1993.
The demolition shocked historic preservationists into action, and the statute,
and the battle over Grand Central, was the result.

1538
 Under the New York City Landmarks Preservation Law, the
Landmarks Preservation Commission (Commission) [may] designate a
building to be a “landmark,” situated on a particular “landmark site,” or
will designate an area to be a “historic district.” After the Commission
makes a designation, New York City’s Board of Estimate may modify or
disapprove the designation, and the owner may seek judicial review of the
final designation decision. Final designation as a landmark imposes a duty
upon the owner to keep the exterior features of the building “in good
repair” [and requires] Commission [approval of] any proposal to alter the
exterior architectural features of the landmark or to construct any exterior
improvement on the landmark site. Under New York City’s zoning laws,
owners of real property who have not developed their property to the full
extent permitted by the applicable zoning laws are allowed to transfer
development rights to [nearby] parcels.
This case involves the application of New York City’s Landmarks
Preservation Law to Grand Central Terminal (Terminal). The Terminal,
which is owned by the Penn Central Transportation Co. and its affiliates
(Penn Central), is one of New York City’s most famous buildings. Opened
in 1913, it is regarded not only as providing an ingenious engineering
solution to the problems presented by urban railroad stations, but also as a
magnificent example of the French beaux-arts style.
[T]he Commission designated the Terminal a “landmark” and
designated the “city tax block” it occupies a “landmark site” [and the]
Board of Estimate confirmed this action on September 21, 1967. Although
appellant Penn Central had opposed the designation before the
Commission, it did not seek judicial review of the final designation
decision.
[Four months later,] appellant Penn Central entered into a [lease] with
appellant UGP Properties, Inc., [under which] UGP was to construct a [50
story-high] office building above the Terminal.
The Commission rejected two different plans for the building on the
ground that “balanc[ing] a 55-story office tower above a flamboyant
Beaux-Arts facade seems nothing more than an aesthetic joke. Quite
simply, the tower would overwhelm the Terminal by its sheer mass.”
Appellants did not seek judicial review of the denial of either
certificate. Instead, appellants filed suit in New York Supreme Court, Trial
Term, claiming that the application of the Landmarks Preservation Law
had “taken” their property without just compensation in violation of the
Fifth and Fourteenth Amendments and arbitrarily deprived them of their

1539
property without due process of law in violation of the Fourteenth
Amendment.

II

A
The question of what constitutes a “taking” for purposes of the Fifth
Amendment has proved to be a problem of considerable difficulty. While
this Court has recognized that the “Fifth Amendment’s guarantee [is]
designed to bar Government from forcing some people alone to bear
public burdens which, in all fairness and justice, should be borne by the
public as a whole,” Armstrong v. United States, 364 U.S. 40, 49 (1960),
this Court, quite simply, has been unable to develop any “set formula” for
determining when “justice and fairness” require that economic injuries
caused by public action be compensated by the government, rather than
remain disproportionately concentrated on a few persons. See Goldblatt v.
Hempstead, 369 U.S. 590, 594 (1962). Indeed, we have frequently
observed that whether a particular restriction will be rendered invalid by
the government’s failure to pay for any losses proximately caused by it
depends largely “upon the particular circumstances [in that] case.” United
States v. Central Eureka Mining Co., 357 U.S. 155, 168 (1958); see United
States v. Caltex, Inc., 344 U.S. 149, 156 (1952).
In engaging in these essentially ad hoc, factual inquiries, the Court’s
decisions have identified several factors that have particular significance.
The economic impact of the regulation on the claimant and, particularly,
the extent to which the regulation has interfered with distinct investment-
backed expectations are, of course, relevant considerations. So, too, is the
character of the governmental action. A “taking” may more readily be
found when the interference with property can be characterized as a
physical invasion by government, see, e.g., United States v. Causby, 328
U.S. 256 (1946), than when interference arises from some public program
adjusting the benefits and burdens of economic life to promote the
common good.
“Government hardly could go on if to some extent values incident to
property could not be diminished without paying for every such change in
the general law,” Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 413
(1922), and this Court has accordingly recognized, in a wide variety of
contexts, that government may execute laws or programs that adversely
affect recognized economic value.
More importantly for the present case, in instances in which a state

1540
tribunal reasonably concluded that “the health, safety, morals, or general
welfare” would be promoted by prohibiting particular contemplated uses
of land, this Court has upheld land-use regulations that destroyed or
adversely affected recognized real property interests. Zoning laws are, of
course, the classic example, see Euclid v. Ambler Realty Co., 272 U.S. 365
(1926) (prohibition of industrial use); Gorieb v. Fox, 274 U.S. 603, 608
(1927) (requirement that portions of parcels be left unbuilt); Welch v.
Swasey, 214 U.S. 91 (1909) (height restriction), which have been viewed
as permissible governmental action even when prohibiting the most
beneficial use of the property.
Zoning laws generally do not affect existing uses of real property, but
“taking” challenges have also been held to be without merit in a wide
variety of situations when the challenged governmental actions prohibited
a beneficial use to which individual parcels had previously been devoted
and thus caused substantial individualized harm. Miller v. Schoene, 276
U.S. 272 (1928), is illustrative. In that case, [a] unanimous Court [found
no taking when the state ordered the destruction of many ornamental red
cedar trees to prevent the transmission of cedar rust fatal to apple trees
cultivated nearby.] The Court held that the State might properly make “a
choice between the preservation of one class of property and that of the
other” and since the apple industry was important in the State involved,
concluded that the State had not exceeded “its constitutional powers by
deciding upon the destruction of one class of property [without
compensation] in order to save another which, in the judgment of the
legislature, is of greater value to the public.” Id. at 279.
Again, Hadacheck v. Sebastian, 239 U.S. 394 (1915), upheld a law
prohibiting the claimant from continuing his otherwise lawful business of
operating a brickyard in a particular physical community on the ground
that the legislature had reasonably concluded that the presence of the
brickyard was inconsistent with neighboring uses. See also Walls v.
Midland Carbon Co., 254 U.S. 300 (1920) (law prohibiting manufacture of
carbon black upheld); Reinman v. Little Rock, 237 U.S. 171 (1915) (law
prohibiting livery stable upheld); Mugler v. Kansas, 123 U.S. 623 (1887)
(law prohibiting liquor business upheld).
Goldblatt v. Hempstead, supra, [upheld a 1958 city safety ordinance
that] effectively prohibited the claimant from continuing a sand and gravel
mining business that had been operated on the particular parcel since 1927.
The Court upheld the ordinance against a “taking” challenge, although the
ordinance prohibited the present and presumably most beneficial use of the
property and had, like the regulations in Miller and Hadacheck, severely
affected a particular owner. The Court assumed that the ordinance did not

1541
prevent the owner’s reasonable use of the property since the owner made
no showing of an adverse effect on the value of the land. Because the
restriction served a substantial public purpose, the Court thus held no
taking had occurred.
Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), [found a taking
when a law] forbade any mining of coal that caused the subsidence of any
house, unless the house was the property of the owner of the underlying
coal and was more than 150 feet from the improved property of another.
Because the statute made it commercially impracticable to mine the coal,
and thus had nearly the same effect as the complete destruction of rights
claimant had reserved from the owners of the surface land, the Court held
that the statute was invalid as effecting a “taking” without just
compensation. See generally Michelman, Property, Utility, and Fairness:
Comments on the Ethical Foundations of “Just Compensation” Law, 80
Harv. L. Rev. 1165, 1229-34 (1967).
Finally, government actions that may be characterized as acquisitions
of resources to permit or facilitate uniquely public functions have often
been held to constitute “takings.” United States v. Causby, 328 U.S. 256
(1946), is illustrative. In holding that direct over flights above the
claimant’s land that destroyed the present use of the land as a chicken
farm, constituted a “taking,” Causby emphasized that Government had not
“merely destroyed property [but was] using a part of it for the flight of its
planes.” Id. at 262-63 n.7.

B
Appellants urge that the Landmarks Law has deprived them of any
gainful use of their “air rights” above the Terminal and that, irrespective of
the value of the remainder of their parcel, the city has “taken” their right to
this superjacent airspace, thus entitling them to “just compensation”
measured by the fair market value of these air rights.
[T]he submission that appellants may establish a “taking” simply by
showing that they have been denied the ability to exploit a property
interest that they heretofore had believed was available for development is
quite simply untenable. Were this the rule, this Court would have erred not
only in upholding laws restricting the development of air rights, but also in
approving those prohibiting both the subjacent, and the lateral
development of particular parcels. “Taking” jurisprudence does not divide
a single parcel into discrete segments and attempt to determine whether
rights in a particular segment have been entirely abrogated. In deciding
whether a particular governmental action has effected a taking, this Court

1542
focuses rather both on the character of the action and on the nature and
extent of the interference with rights in the parcel as a whole — here, the
city tax block designated as the “landmark site.”
Secondly, appellants, focusing on the character and impact of the New
York City law, argue that it effects a “taking” because its operation has
significantly diminished the value of the Terminal site. Appellants concede
that the decisions sustaining other land-use regulations, which, like the
New York City law, are reasonably related to the promotion of the general
welfare, uniformly reject the proposition that diminution in property value,
standing alone, can establish a “taking,” see Euclid v. Ambler Realty Co.,
272 U.S. 365 (1926) (75% diminution in value caused by zoning law);
Hadacheck v. Sebastian, 239 U.S. 394 (1915) (87 1/2% diminution in
value); and that the “taking” issue in these contexts is resolved by focusing
on the uses the regulations permit. Appellants, moreover, also do not
dispute that a showing of diminution in property value would not establish
a “taking” if the restriction had been imposed as a result of historic-district
legislation, but appellants argue that New York City’s regulation of
individual landmarks is fundamentally different from zoning or from
historic-district legislation because the controls imposed by New York
City’s law apply only to individuals who own selected properties.
Stated baldly, appellants’ position appears to be that the only means of
ensuring that selected owners are not singled out to endure financial
hardship for no reason is to hold that any restriction imposed on individual
landmarks pursuant to the New York City scheme is a “taking” requiring
the payment of “just compensation.” Agreement with this argument would,
of course, invalidate not just New York City’s law, but all comparable
landmark legislation in the Nation. We find no merit in it.
It is true, as appellants emphasize, that both historic-district legislation
and zoning laws regulate all properties within given physical communities
whereas landmark laws apply only to selected parcels. But, contrary to
appellants’ suggestions, landmark laws are not like discriminatory, or
“reverse spot,” zoning: that is, a land-use decision which arbitrarily singles
out a particular parcel for different, less favorable treatment than the
neighboring ones. In contrast to discriminatory zoning, which is the
antithesis of land-use control as part of some comprehensive plan, the New
York City law embodies a comprehensive plan to preserve structures of
historic or aesthetic interest wherever they might be found in the city, and
as noted, over 400 landmarks and 31 historic districts have been
designated pursuant to this plan.
It is, of course, true that the Landmarks Law has a more severe impact
on some landowners than on others, but that in itself does not mean that

1543
the law effects a “taking.” Legislation designed to promote the general
welfare commonly burdens some more than others. The owners of the
brickyard in Hadacheck, of the cedar trees in Miller v. Schoene, and of the
gravel and sand mine in Goldblatt v. Hempstead, were uniquely burdened
by the legislation sustained in those cases.17 Similarly, zoning laws often
affect some property owners more severely than others but have not been
held to be invalid on that account. For example, the property owner in
Euclid who wished to use its property for industrial purposes was affected
far more severely by the ordinance than its neighbors who wished to use
their land for residences.
In any event, appellants’ repeated suggestions that they are solely
burdened and unbenefited is factually inaccurate. This contention
overlooks the fact that the New York City law applies to vast numbers of
structures in the city in addition to the Terminal — all the structures
contained in the 31 historic districts and over 400 individual landmarks,
many of which are close to the Terminal. Unless we are to reject the
judgment of the New York City Council that the preservation of landmarks
benefits all New York citizens and all structures, both economically and by
improving the quality of life in the city as a whole — which we are
unwilling to do — we cannot conclude that the owners of the Terminal
have in no sense been benefited by the Landmarks Law. Doubtless
appellants believe they are more burdened than benefited by the law, but
that must have been true, too, of the property owners in Miller,
Hadacheck, Euclid, and Goldblatt.

C
We now must consider whether the interference with appellants’
property is of such a magnitude that “there must be an exercise of eminent
domain and compensation to sustain [it].” Pennsylvania Coal Co. v.
Mahon, 260 U.S., at 413. That inquiry may be narrowed to the question of
the severity of the impact of the law on appellants’ parcel, and its
resolution in turn requires a careful assessment of the impact of the
regulation on the Terminal site.
[T]he New York City law does not interfere in any way with the
present uses of the Terminal. Its designation as a landmark not only
permits but contemplates that appellants may continue to use the property
precisely as it has been used for the past 65 years: as a railroad terminal
containing office space and concessions. So the law does not interfere with
what must be regarded as Penn Central’s primary expectation concerning
the use of the parcel. More importantly, on this record, we must regard the

1544
New York City law as permitting Penn Central not only to profit from the
Terminal but also to obtain a “reasonable return” on its investment.
Appellants, moreover, exaggerate the effect of the law on their ability
to make use of the air rights above the Terminal in two respects. First, it
simply cannot be maintained, on this record, that appellants have been
prohibited from occupying any portion of the airspace above the Terminal.
While the Commission’s actions in denying applications to construct an
office building in excess of 50 stories above the Terminal may indicate
that it will refuse to issue a certificate of appropriateness for any
comparably sized structure, nothing the Commission has said or done
suggests an intention to prohibit any construction above the Terminal. The
Commission’s report emphasized that whether any construction would be
allowed depended upon whether the proposed addition “would harmonize
in scale, material, and character with [the Terminal].” Since appellants
have not sought approval for the construction of a smaller structure, we do
not know that appellants will be denied any use of any portion of the
airspace above the Terminal.
Second, to the extent appellants have been denied the right to build
above the Terminal, it is not literally accurate to say that they have been
denied all use of even those pre-existing air rights. Their ability to use
these rights has not been abrogated; they are made transferable to at least
eight parcels in the vicinity of the Terminal, one or two of which have
been found suitable for the construction of new office buildings. Although
appellants and others have argued that New York City’s transferable
development-rights program is far from ideal, the New York courts here
supportably found that, at least in the case of the Terminal, the rights
afforded are valuable. While these rights may well not have constituted
“just compensation” if a “taking” had occurred, the rights nevertheless
undoubtedly mitigate whatever financial burdens the law has imposed on
appellants and, for that reason, are to be taken into account in considering
the impact of regulation.
On this record, we conclude that the application of New York City’s
Landmarks Law has not effected a “taking” of appellants’ property. The
restrictions imposed are substantially related to the promotion of the
general welfare and not only permit reasonable beneficial use of the
landmark site but also afford appellants opportunities further to enhance
not only the Terminal site proper but also other properties.
Affirmed.

Mr. Justice REHNQUIST, with whom THE CHIEF JUSTICE and Mr. Justice
STEVENS join, dissenting.

1545
 Of the over one million buildings and structures in the city of New
York, appellees have singled out 400 for designation as official landmarks.
The question in this case is whether the cost associated with the city of
New York’s desire to preserve a limited number of “landmarks” within its
borders must be borne by all of its taxpayers or whether it can instead be
imposed entirely on the owners of the individual properties.
Typical zoning restrictions may, it is true, so limit the prospective uses
of a piece of property as to diminish the value of that property in the
abstract because it may not be used for the forbidden purposes. But any
such abstract decrease in value will more than likely be at least partially
offset by an increase in value which flows from similar restrictions as to
use on neighboring properties. All property owners in a designated area are
placed under the same restrictions, not only for the benefit of the
municipality as a whole but also for the common benefit of one another. In
the words of Mr. Justice Holmes, speaking for the Court in Pennsylvania
Coal Co. v. Mahon, 260 U.S. 393, 415 (1922), there is “an average
reciprocity of advantage.”
Where a relatively few individual buildings, all separated from one
another, are singled out and treated differently from surrounding buildings,
no such reciprocity exists. The cost to the property owner which results
from the imposition of restrictions applicable only to his property and not
that of his neighbors may be substantial — in this case, several million
dollars — with no comparable reciprocal benefits. And the cost associated
with landmark legislation is likely to be of a completely different order of
magnitude than that which results from the imposition of normal zoning
restrictions. Under the historic-landmark preservation scheme adopted by
New York, the property owner is under an affirmative duty to preserve his
property as a landmark at his own expense. The property has been thus
subjected to a nonconsensual servitude not borne by any neighboring or
similar properties.
Appellees are not prohibiting a nuisance. The record is clear that the
proposed addition to the Grand Central Terminal would be in full
compliance with zoning, height limitations, and other health and safety
requirements. Instead, appellees are seeking to preserve what they believe
to be an outstanding example of beaux arts architecture. Penn Central is
prevented from further developing its property basically because too good
a job was done in designing and building it. The city of New York,
because of its unadorned admiration for the design, has decided that the
owners of the building must preserve it unchanged for the benefit of
sightseeing New Yorkers and tourists.
[A] multimillion dollar loss has been imposed on appellants; it is

1546
uniquely felt and is not offset by any benefits flowing from the
preservation of some 400 other “landmarks” in New York City. Appellees
have imposed a substantial cost on less than one one-tenth of one percent
of the buildings in New York City for the general benefit of all its people.
It is exactly this imposition of general costs on a few individuals at which
the “taking” protection is directed.

Notes and Questions

1. Relevant factors. How do the courts determine whether “fairness
and justice” require the cost of a regulatory law to be shared among
taxpayers rather than being borne by the individual property owners whose
interests are negatively affected by the regulation? Penn Central identified
three factors central to this determination: “the economic impact of the
regulation, its interference with reasonable investment backed
expectations, and the character of the government action.” Kaiser Aetna v.
United States, 444 U.S. 164, 175 (1979).

FACTORS

In evaluating the ad hoc analysis of fairness and justice in regulatory takings

cases courts generally look to:

1. The economic impact of the regulation;

2. Its interference with reasonable investment backed expectations; and
3. The character of the governmental action.

a. Economic impact. The greater the diminution in value, the more

likely the regulation will be characterized as a taking. Complete
deprivation of any “economically viable use” is likely to be a taking
unless the regulation denies property rights that never existed in the
first place, such as the right to commit a nuisance, Lucas v. South
Carolina Coastal Council, 505 U.S. 1003 (1992). On the other hand,
no owner is guaranteed the most beneficial use of the property.
Moreover, regulatory laws can be passed and applied to economic
conduct even if this has the effect of depriving the parties of bargained-
for contractual rights. For example, the Supreme Court has repeatedly
upheld the constitutionality of rent control laws as long as they
guarantee the landlord a reasonable return on her investment. Lingle v.

1547
Chevron U.S.A. Inc., 544 U.S. 528 (2005); Yee v. City of Escondido,
503 U.S. 519 (1992); Pennell v. City of San Jose, 485 U.S. 1 (1988);
Block v. Hirsch, 256 U.S. 135 (1921).
The extent of the diminution in value depends on how the courts
define the relevant property interest, a question that first divided the
Supreme Court in Pennsylvania Coal v. Mahon. See §2.1, above. A
zoning law that prohibits construction above four stories can be
understood as destroying a separate parcel of “air rights,” which can,
after all, be bought and sold and are valuable property interests. If,
however, the property right is defined more broadly as “the right to
build on one’s parcel,” then the ordinance will restrict a much smaller
percentage of the total property value since it allows construction up to
four stories.
The question is how to identify the “denominator” against which
the deprivation numerator will be compared. In Penn Central, the
Court endorsed a “parcel as a whole” rule for the denominator, which
echoes Justice Brandeis’s approach in his dissent in Mahon. But what
is that whole parcel? In Penn Central, the Court considered it to be the
“city tax block designated as the ‘landmark site.’ ” The New York
Court of Appeals had earlier determined the relevant parcel to include
Penn Central’s other property in the same vicinity as Grand Central
Terminal. See Penn

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Central Transportation Co. v. New York City, 366 N.E.2d 1271, 1276-
1277 (N.Y. 1977). In a footnote in Lucas v. South Carolina Coastal
Council, 505 U.S. 1003 (1992), Justice Scalia criticized the New York
court’s approach as “extreme” and “unsupportable.” Id. at 1016 n.7.
Was it necessarily so far off? Grand Central Terminal was built as part
of a development on land reclaimed when the New York Central
Railroad, Penn Central’s predecessor, moved its rail yards
underground. New York Central had marketed the entire development
as a single “Terminal City,” a 30-block “city within a city” — the very
area the New York Court of Appeals had in mind for the relevant
parcel.
b. Interference with “distinct” or “reasonable” investment-
backed expectations.18 A regulation is more likely to be held a taking
if a citizen has already invested substantially in reasonable reliance on
an existing statutory or regulatory scheme. It is less likely to be ruled a
taking if the regulation prevents the owner from realizing an expected

1549
benefit in the future, imposing a mere opportunity cost, as was the case
in Penn Central. The dilemma here is that people must have some right
to rely on existing law at the time they invest; otherwise, the state
could pass a general law subjecting all property in the state to being
taken for public use without just compensation, thereby rendering the
constitutional protection meaningless. At the same time, the legislature
must have the power to change the law to impose greater restrictions
on land use when circumstances change or new scientific discoveries
arise concerning the importance of wetlands, navigable waters, and
fragile coastland to the environment.
c. Character of the government action. The state is generally
empowered to legislate to protect the public without compensating
those whose property interests suffer a resultant economic impact.
“Government hardly could go on if to some extent values incident to
property could not be diminished without paying for every such change
in the general law,” Pennsylvania Coal Co. v. Mahon, 260 U.S. 393,
413 (1922). However, if “protecting the public welfare” is sufficient to
characterize a government action as a legitimate regulation rather than
an unconstitutional taking, then the government will be able to destroy
property interests at will without compensation and the takings clause
will be meaningless. On the other hand, by defining “nuisance” or
“public welfare” narrowly, courts will interfere in the legislatures’
ability to protect people from harm and to promote the general welfare;
moreover, activist judges would be substituting their own judgment for
that of democratically elected representatives.
One question this raises is whether a regulatory law is legitimately
preventing an owner from harming others by imposing negative
externalities on neighbors or the community or is illegitimately
requiring the owner to contribute a benefit to the community. The
dispute between the majority and minority opinions in Penn Central
revolves around this issue. It also concerns whether the law
illegitimately imposes a disparate impact on a few owners or
constitutes a legitimate general regulatory law affecting a class of
property that is appropriately subject to restrictions. It is clear that
owners have no vested right to destroy the environment and pollute
neighboring property; the common law of nuisance has always limited
an owner’s property rights in this regard. In contrast, if the city
government needs new office space and wants to take a private home
to be used for that purpose, there is no question it must compensate the
owner for the taking. But drawing the line between harm-preventing
and benefit-conferring legislation is not an exact science. How should

1550
 courts go about making this distinction?
2. Transfer of development rights. The Court in Penn Central argues
that one factor militating against the finding of a taking is that the owners
of Grand Central Terminal could sell their air rights. Transfer of
development rights, or “TDR,” regimes, are increasingly common and
generally involve a kind of market created by a zoning code that allows
owners of unused development rights to sell those rights to other owners.
See Robin Finn, The Great Air Race, N.Y. Times, Feb. 24, 2013, at RE-1.
The general idea is to hold total density of development constant, but shift
where that density is placed in a given community, with the benefit of
creating a valuable asset where there would otherwise only be a restriction.
TDR regimes can also be used to generate funds for public purposes, in
addition to compensating owners, and have been used to support goals
such as preserving open space, maintaining parks, and supporting the arts.
See generally Arthur C. Nelson, Rick Pruetz & Doug Woodruff, The TDR
Handbook: Designing and Implementing Transfer of Development Rights
Programs (2011).

Problems
1. Can the government take the value of property by creating more
of it? In a sequel to the Penn Central case, Midtown TDR Ventures, the
current owner of the Grand Central Terminal, recently filed suit asserting
that a 2015 decision by New York City to rezone to allow more
development in the area around the station constituted a taking of its
remaining TDRs. See Christopher Serkin, Penn Central Take Two, 92
Notre Dame L. Rev. (forthcoming 2017). A developer had acquired
property across the street from the station and proposed to build a massive
office tower. Rather than acquire development rights from Midtown TDR
Ventures, the developer reached an agreement with the city to obtain
additional development rights in exchange for promises to make
infrastructure improvements. Midtown TDR Ventures argued that by
creating new development rights, the city took the value of its preexisting
TDRs. Id.
Although the case settled, see Charles V. Bagli, Owners of Grand
Central Drop Lawsuit, Clearing Way for 1,401-Foot-Tall Skyscraper,
N.Y. Times, Aug. 10, 2016, at A20, it raised the important issue of
whether the government can be liable to holders of existing property rights
created under regulatory regimes such as New York City’s TDR program,
when it purportedly undermines the value of those property interests. Taxi
owners made a similar claim — unsuccessfully — in a suit against Boston,

1551
arguing that the failure to regulate ride-sharing companies such as Uber
and Lyft constituted a taking of the property interest the taxi owners had in
the medallions they were required to obtain in order to operate. See Boston
Taxi Owners Association, Inc. v. City of Boston, No. CV 15-10100-NMG,
2016 WL 1274531 (D. Mass. Mar. 31, 2016) (rejecting the takings claim
on grounds that “exclusivity of medallion owners’ access to the
[transportation-for-hire] market prior to the arrival of [ride-sharing
companies] existed by virtue of [Boston’s] regulatory structure rather than
the medallion owners’ property rights”). These kinds of conflicts are likely
to become more common. As Professor Serkin notes, “regulatory property
has become increasingly important and valuable in our modern economy
and includes such assets as pollution credits, fishing quotas, taxi
medallions, telecommunications spectrum, and financial guarantees,
among many others.” Serkin, supra, at *4. How much should owners of
property created through regulatory regimes be able to rely on the
continuing nature of such programs?
2. A scientific research company builds a facility to test chemical
weapons in the middle of a busy city. The company has a contract with the
U.S. Department of Defense to undertake the research. Word of the
purpose of the facility leaks out to the general public. A referendum is
placed on the ballot to amend the zoning ordinance to prohibit the testing
of chemical weapons anywhere in the city. The company explains that the
facility is perfectly safe; scientific experts agree that operation of the plant
poses little, if any, danger of causing public health problems. Nonetheless,
the public is frightened by the prospect of the facility and votes for the
referendum. The company sues the city, claiming that enforcement of the
amended zoning law would interfere with its vested rights and constitute a
taking of property without just compensation. The multimillion-dollar
facility is not structured for other kinds of scientific research and would
have to be substantially rebuilt in order to convert to other research
purposes; application of the ordinance therefore would destroy millions of
dollars of the company’s investment. The city responds that the
amendment regulates a public nuisance and protects the community from
any possible contagion from the facility. Does the regulation take the
company’s property rights? How should the case be resolved?
3. A law school owns a student center and dormitories designed by a
famous architect. Although designated as a historic monument, the student
center is too small for the current student body, its internal spaces are
cramped, and are unsuited to current university architectural standards.
Moreover, the school has expanded both its student body and its faculty by

1552
about 50 percent, making the facilities inadequate for its current purposes.
The school wants to expand its physical facilities and would like to
demolish all these buildings to create a modern student and dormitory
center. However, designation of the buildings as historic monuments
prevents the change and requires the school to maintain the properties as
is. What is the school’s argument that the historic preservation law effects
an unconstitutional taking of property? What is the state’s response? If you
were on the Supreme Court, how would you rule and what would you say
in the opinion?

§3.2 Takings Statutes

A few states have passed statutes that go beyond the takings clause in
protecting owners from uncompensated deprivation of property rights.
Both the federal government and many states have passed assessment laws
that require government entities to consider the impact of regulations on
private property owners before promulgating them to avoid
unconstitutional takings of property and to review regulations if they are
challenged as regulatory takings or if they are likely to reduce property
values by a set amount. See, e.g., Del. Code tit. 29, §605; Fla. Stat.
§70.001.19
A few states have passed laws that allow either injunctive relief or just
compensation when regulation reduces the value of property, even if that
reduction would not constitute an unconstitutional taking of property.
Some states require compensation if an owner’s property values are
reduced by a particular percentage unless the regulation fits into an
established exemption. See Tex. Govt. Code §§2007.001-2007.045
(Private Real Property Rights Preservation Act) (both injunctive relief and
damages available for state agency regulations that reduce property value
by 25 percent or more unless the regulation fits within a list of
exemptions). Other states provide relief if a regulation imposes an unfair
or inordinate burden on a property owner, even if that burden would not
amount to an unconstitutional taking, effectively leaving it to the courts to
determine what constitutes an unfair burden. See Fla. Stat. §70.001(a)
(Bert J. Harris, Jr. Private Property Rights Protection Act of 1995)
(granting relief when a “new” law or regulation “unfairly affects real
property” by imposing an “inordinate burden” on an existing use of real
property by impairing the owner’s “reasonable, investment-backed
expectation for the existing use of the real property” or by leaving the
owner “with existing or vested uses that are unreasonable such that the
property owner bears permanently a disproportionate share of a burden

1553
imposed for the good of the public, which in fairness should be borne by
the public at large”).
Oregon adopted the most radical law. In 2004, the voters adopted a
state law known as Measure 37 that required compensation when any
regulation “restricts the use of real property” and is enacted after an owner
or a family member acquires title to land if the regulation “has the effect of
reducing the fair market value of property,” unless the regulation restricts
public nuisances, protects public health and safety, or prohibits the use of
property for selling pornography or performing nude dancing. Or. Stat.
§195:305; Michael C. Blumm & Erik Grafe, Enacting Libertarian
Property: Oregon’s Measure 37 and Its Implications, 85 Denv. U. L. Rev.
279 (2007). Because the law applied to any regulations passed after an
owner (or a family member) acquired title, owners could go back to the
laws in effect at the time their family first acquired the land — for some
families, this may go back to a time before any zoning or environmental
laws were in effect. This meant that zoning in a particular area would be
inconsistent if acquired by different families at different times, meaning
each parcel might be subject to different land use regulations.
Rather than pay compensation for land use restrictions going back to
the 1970s, municipalities overwhelmingly chose to waive their zoning
laws. As property owners found their neighbors planning massive
development in their quiet neighborhoods or valuable agricultural land,
support for the Measure turned to passionate opposition. In 2007, Oregon
voters passed Measure 49, which restricted Measure 37 claims to laws
regulating residential, farm, or forest uses of property, while allowing,
without compensation, laws that limit commercial or industrial uses like
strip malls and mines, and limited those seeking compensation for pre-
enactment regulations to waivers to build a few houses on their land. For
lessons from the experience of Measure 37 and its aftermath, see Bethany
R. Berger, What Owners Want and Governments Do: Evidence from the
Oregon Experiment, 78 Fordham L. Rev. 1281 (2009).
In 2006, Arizona passed an act similar to Measure 37, known as
Proposition 207 or the Private Property Rights Protection Act. Ariz. Stat.
§12-1134. Not surprisingly, Proposition 207 has had a chilling effect on
land use regulation in Arizona. Phoenix, for example, has delayed
downtown redevelopment projects, while Tucson chose to forgo regulating
the proliferation of student housing in residential neighborhoods, among
other consequences. See Jeffrey L. Sparks, Note, Land Use Regulation in
Arizona After the Private Property Rights Protection Act, 51 Ariz. L. Rev.
211, 219-222 (2009).

1554
 §3.3 Justifying Regulatory Takings
A number of theories have been proposed to justify the exercise of
identifying regulatory takings as distinct from exercises of the police
power that do not require compensation. These include (a) tradition, (b)
efficiency, and (c) distributive justice. Consider the extent to which these
theories might apply to explain the government’s power of eminent
domain more generally.
Tradition. One answer looks to traditional definitions of property
interests to determine which government actions other than outright
transfer of property to the government constitute “takings” of “property”
that must be compensated. Traditional doctrine may identify both the type
of activity that constitutes a nuisance (thereby helping to distinguish harm
prevention from benefit extraction) and the strands of rights that constitute
core property rights. But how does one identify what property rights are
traditional? Should the courts look just to the common law, or should they
consider longstanding legislative alterations to common law rights?
Recognizing that property law has changed over time (sometimes
dramatically), one must identify both a particular time — and a particular
jurisdiction — to identify the property interests to which “tradition” will
refer. How should this be done? Should changes over time be recognized
as evolution of the tradition or departure from it? See Margaret Jane Radin,
Government Interests and Takings: Cultural Commitments of Property and
the Role of Political Theory in Reinterpreting Property 166, 172-177
(1993) (noting that sudden large changes in property law are more likely to
be held to be takings while the same changes occurring gradually over a
long period of time are less likely to be seen as takings because gradual
evolution alters expectations of what rights go along with ownership).
Even when the rules appear to be clear, determining their scope
involves discretion and judgment; prior cases can, after all, be
distinguished. Moreover, property rights have always been subject to
restrictions incorporated in various equitable doctrines, such as laches,
estoppel and the sic utere doctrine (use your rights so as not to injure the
legitimate rights of others). Should the source of traditional property law
be the relatively clear rules that developed over time (and at what time?)
or the background principles that modify and condition otherwise
applicable rights? See Frank Michelman, Property, Federalism, and
Jurisprudence: A Comment on Lucas and Judicial Conservatism, 35 Wm.
& Mary L. Rev. 301 (1993). A final problem is that the common law
definition of property was developed by unelected judges; why should
their definition of “property” have greater legitimacy than the definition

1555
embodied in statutes promulgated by elected legislators who are
responding to public needs and contemporary social values? See Louise A.
Halper, Why the Nuisance Knot Can’t Undo the Takings Muddle, 28 Ind.
L. Rev. 329 (1995).
Efficiency. In an important article, Frank Michelman argued that
compensation should be required when it will help to promote efficient
(that is, welfare-maximizing) legislation. Frank Michelman, Property,
Utility, and Fairness: Comments on the Ethical Foundations of “Just
Compensation” Law, 80 Harv. L. Rev. 1165, 1184 (1967). Michelman
explained that a utilitarian should be concerned about weighing the gains
from public projects against three kinds of costs: (1) the harms to
uncompensated victims resulting from the project, (2) the settlement or
administrative costs of arranging for compensation for those victims, and
(3) the “demoralization” costs that would accrue if the victims were not
compensated and people believed that this lack of compensation was
unfair. He argued that from a utilitarian perspective, compensation should
be awarded when the demoralization costs of failing to compensate are
greater than the settlement costs of arranging for compensation. Other
scholars have similarly used efficiency analysis to argue for and against
compensation for the effects of particular changes in regulatory laws. See,
e.g., Daniel Farber, Economic Analysis and Just Compensation, 12 Intl.
Rev. L. & Econ. 125 (1992); William A. Fischel, Introduction: Utilitarian
Balancing and Formalism in Takings, 88 Colum. L. Rev. 1581 (1988);
Louis Kaplow, An Economic Analysis of Legal Transitions, 99 Harv. L.
Rev. 509 (1986).
The efficiency argument that would justify requiring compensation
when regulatory laws impinge on property rights rests on the proposition
that legislation is welfare maximizing if its benefits outweigh its costs.
Legislatures may pass statutes that cause more harm than good because
they are responding to special interest groups. Requiring compensation for
those whose property interests are harmed by legislation tests the
proposition that the legislation benefits the public welfare by requiring
those who benefit from the policy to compensate those who lose. If the
winners win more than the losers lose, the winners should be willing to
raise taxes to pay for the program since they will gain more from the
legislation than it costs them in taxes; if winners are not willing to pay for
the program by compensating those who lose, we have evidence that the
program benefits them less than it harms the property owners adversely
affected by it. In this case the legislation is not efficient and should not
have been passed in the first place; requiring compensation will prevent

1556
legislators from passing an inefficient law. This can serve to reduce the
incentive for corruption and align the actions of the government more
closely to the general public good. See Abraham Bell & Gideon
Parchomovsky, The Hidden Function of Takings Compensation, 96 Va. L.
Rev. 1673 (2010); cf. Jed Rubinfeld, Usings, 102 Yale L.J. 1077, 1080
(1993) (arguing that governmental action should require compensation
only “when government conscripts someone’s property for state use”).
On the other hand, there are a number of efficiency arguments that
would justify not compensating owners when regulatory laws impinge on
their property rights.20 First, the administrative costs of compensating
everyone injured by any regulation are enormous and may outweigh any
benefit derived from the regulation. Second, requiring compensation may
mean that efficient legislation, which benefits the public by preventing
activities whose social costs outweigh their benefits, will not be passed;
this may happen when people irrationally underestimate the risks of
current conduct (for example, people seek the short-run benefits of
industrial development and fail to take into account the long-run harm to
the environment). If government fails to adopt welfare-maximizing
policies, government policy will lower social welfare by adopting an
inefficiently low level of regulation. Third, requiring compensation creates
a “moral hazard” by removing incentives for economic actors to foresee
both the effects of their conduct on others and the likelihood that their
conduct will be regulated in the future. Providing compensation for
changes in regulatory law creates insurance against adverse changes in
land use regulation, causing developers to over-invest in socially harmful
activities. In contrast, if no compensation is provided, developers will
discount the profitability of activity that is likely to be regulated in the
future, decreasing the likelihood that they will engage in socially
destructive conduct. See Kaplow, supra.
Distributive justice. A third justification for compensation recognizes
that takings doctrine in many respects rests on distributive concerns. The
central question is whether the regulation causes a loss that the individual
property owner should, in all fairness and justice, bear as a member of
society for the good of the community as a whole.
The distributive argument for requiring compensation is that this
ensures that the costs of public programs benefiting the community are
borne by taxpayers as a group rather than unfairly imposed on individual
property owners. When particular owners suffer unique burdens from
regulation, there is no average reciprocity of advantage; therefore, they
should be compensated unless their use of the property is morally

1557
wrongful.
The distributive argument against requiring compensation is that
regulations prevent owners from engaging in activities that harm the public
welfare. Because individuals have no right to commit a nuisance or to
engage in activities that cause substantial negative externalities, they have
no right to be compensated when those regulations impinge on their
property interests; they have not lost anything to which they were entitled
in the first place. Regulations generally create an “average reciprocity of
advantage”; those harmed by the regulation are also benefited by it
because it regulates not only their activities but their neighbors’ as well.
The distributive effect is therefore fair because the burdens of the
regulation are balanced by a compensating benefit.
Individuals are not generally expected to pay for public goods that
benefit them disproportionately, what can be called “givings” as opposed
to takings. See Abraham Bell & Gideon Parchomovsky, Givings, 111 Yale
L.J. 547 (2001). A property owner whose property greatly increases in
value because the government decides to build a golf course or an off ramp
nearby need not pay for the related giving to her property; does distributive
justice demand that she share some of this unearned benefit with the
community that created it?

§4 “PER SE ” TAKINGS
§4.1 Physical Invasions

PruneYard Shopping Center v. Robins

447 U.S. 74 (1980)

Map: 1875 S. Bascom Avenue,

Campbell, California

Mr. Justice WILLIAM H. REHNQUIST delivered the opinion of the Court.

Appellant PruneYard is a privately owned shopping center in the city
of Campbell, Cal. It covers approximately 21 acres — 5 devoted to
parking and 16 occupied by walkways, plazas, sidewalks, and buildings
that contain more than 65 specialty shops, 10 restaurants, and a movie

1558
theater. The PruneYard is open to the public for the purpose of
encouraging the patronizing of its commercial establishments. It has a
policy not to permit any visitor or tenant to engage in any publicly
expressive activity, including the circulation of petitions, that is not
directly related to its commercial purposes. This policy has been strictly
enforced in a nondiscriminatory fashion. The PruneYard is owned by
appellant Fred Sahadi.
Appellees are high school students who sought to solicit support for
their opposition to a United Nations resolution against “Zionism.” On a
Saturday afternoon they set up a card table in a corner of PruneYard’s
central courtyard. They distributed pamphlets and asked passersby to sign
petitions, which were to be sent to the President and Members of
Congress. Their activity was peaceful and orderly and so far as the record
indicates was not objected to by PruneYard’s patrons.
Soon after appellees had begun soliciting signatures, a security guard
informed them that they would have to leave because their activity
violated PruneYard regulations. The guard suggested that they move to the
public sidewalk at the PruneYard’s perimeter. Appellees immediately left
the premises and later filed this lawsuit in the California Superior Court of
Santa Clara County. They sought to enjoin appellants from denying them
access to the PruneYard for the purpose of circulating their petitions.
The California Supreme Court [held] that the California Constitution
protects “speech and petitioning, reasonably exercised, in shopping centers
even when the centers are privately owned.” It concluded that appellees
were entitled to conduct their activity on PruneYard property.
Before this Court, appellants contend that their constitutionally
established rights under the Fourteenth Amendment to exclude appellees
from adverse use of appellants’ private property cannot be denied by
invocation of a state constitutional provision or by judicial reconstruction
of a State’s laws of private property.
Appellants contend that a right to exclude others underlies the Fifth
Amendment guarantee against the taking of property without just
compensation and the Fourteenth Amendment guarantee against the
deprivation of property without due process of law.
It is true that one of the essential sticks in the bundle of property rights
is the right to exclude others. Kaiser Aetna v. United States, 444 U.S. 164,
179-80 (1979). And here there has literally been a “taking” of that right to
the extent that the California Supreme Court has interpreted the State
Constitution to entitle its citizens to exercise free expression and petition
rights on shopping center property. But it is well established that “not
every destruction or injury to property by governmental action has been

1559
held to be a ‘taking’ in the constitutional sense.” Armstrong v. United
States, 364 U.S. 40, 48 (1960). Rather, the determination whether a state
law unlawfully infringes a landowner’s property in violation of the Taking
Clause requires an examination of whether the restriction on private
property “forc[es] some people alone to bear public burdens which, in all
fairness and justice, should be borne by the public as a whole.” Id. at 49.
This examination entails inquiry into such factors as the character of the
governmental action, its economic impact, and its interference with
reasonable investment-backed expectations. When “regulation goes too far
it will be recognized as a taking.” Pennsylvania Coal Co. v. Mahon, 260
U.S. 393, 415 (1922).
Here the requirement that appellants permit appellees to exercise state-
protected rights of free expression and petition on shopping center
property clearly does not amount to an unconstitutional infringement of
appellants’ property rights under the Taking Clause. There is nothing to
suggest that preventing appellants from prohibiting this sort of activity will
unreasonably impair the value or use of their property as a shopping
center. The PruneYard is a large commercial complex that covers several
city blocks, contains numerous separate business establishments, and is
open to the public at large. The decision of the California Supreme Court
makes it clear that the PruneYard may restrict expressive activity by
adopting time, place, and manner regulations that will minimize any
interference with its commercial functions. Appellees were orderly, and
they limited their activity to the common areas of the shopping center. In
these circumstances, the fact that they may have “physically invaded”
appellants’ property cannot be viewed as determinative.
This case is quite different from Kaiser Aetna v. United States, supra.
Kaiser Aetna was a case in which the owners of a private pond had
invested substantial amounts of money in dredging the pond, developing it
into an exclusive marina, and building a surrounding marina community.
The marina was open only to fee-paying members, and the fees were paid
in part to “maintain the privacy and security of the pond.” Id. at 168. The
Federal Government sought to compel free public use of the private
marina on the ground that the marina became subject to the federal
navigational servitude because the owners had dredged a channel
connecting it to “navigable water.”
The Government’s attempt to create a public right of access to the
improved pond interfered with Kaiser Aetna’s “reasonable investment
backed expectations.” We held that it went “so far beyond ordinary
regulation or improvement for navigation as to amount to a taking.” Id. at
178. Nor as a general proposition is the United States, as opposed to the

1560
several States, possessed of residual authority that enables it to define
“property” in the first instance. A State is, of course, bound by the Just
Compensation Clause of the Fifth Amendment, but here appellants have
failed to demonstrate that the “right to exclude others” is so essential to the
use or economic value of their property that the state-authorized limitation
of it amounted to a “taking.”

Mr. Justice HARRY A. BLACKMUN joins the opinion of the Court except
that sentence thereof, which reads: “Nor as a general proposition is the
United States, as opposed to the several States, possessed of residual
authority that enables it to define ‘property’ in the first instance.”

Mr. Justice THURGOOD MARSHALL, concurring.

Appellants’ claim in this case amounts to no less than a suggestion that
the common law of trespass is not subject to revision by the State,
notwithstanding the California Supreme Court’s finding that state-created
rights of expressive activity would be severely hindered if shopping
centers were closed to expressive activities by members of the public. If
accepted, that claim would represent a return to the era of Lochner v. New
York, 198 U.S. 45 (1905), when common-law rights were also found
immune from revision by State or Federal Government. Such an approach
would freeze the common law as it has been constructed by the courts,
perhaps at its 19th-century state of development. It would allow no room
for change in response to changes in circumstance. The Due Process
Clause does not require such a result.
On the other hand, I do not understand the Court to suggest that rights
of property are to be defined solely by state law, or that there is no federal
constitutional barrier to the abrogation of common-law rights by Congress
or a state government. The constitutional terms “life, liberty, and property”
do not derive their meaning solely from the provisions of positive law.
They have a normative dimension as well, establishing a sphere of private
autonomy which government is bound to respect. Quite serious
constitutional questions might be raised if a legislature attempted to
abolish certain categories of common-law rights in some general way.
Indeed, our cases demonstrate that there are limits on governmental
authority to abolish “core” common-law rights, including rights against
trespass, at least without a compelling showing of necessity or a provision
for a reasonable alternative remedy. That “core” has not been approached
in this case.

Mr. Justice LEWIS F. POWELL, JR., with whom Mr. Justice WHITE joins,

1561
concurring in part and in the judgment.
The State may not compel a person to affirm a belief he does not hold.
A property owner may be faced with speakers who wish to use his
premises as a platform for views that he finds morally repugnant.
Numerous examples come to mind. A minority-owned business confronted
with distributors from the American Nazi Party or the Ku Klux Klan, a
church-operated enterprise asked to host demonstrations in favor of
abortion, or a union compelled to supply a forum to right-to-work
advocates could be placed in an intolerable position if state law requires it
to make its private property available to anyone who wishes to speak. The
strong emotions evoked by speech in such situations may virtually compel
the proprietor to respond.
On the record before us, I cannot say that customers of this vast center
would be likely to assume that appellees’ limited speech activity expressed
the views of the PruneYard or of its owner.

Loretto v. Teleprompter Manhattan CATV Corp.

458 U.S. 419 (1982)

Map: 303 W. 105th Street, New York,

New York

Justice THURGOOD MARSHALL delivered the opinion of the Court.

This case presents the question whether a minor but permanent
physical occupation of an owner’s property authorized by government
constitutes a “taking” of property for which just compensation is due under
the Fifth and Fourteenth Amendments of the Constitution. New York law
provides that a landlord must permit a cable television company to install
its cable facilities upon his property. N.Y. Exec. Law §828(1). In this case,
the cable installation occupied portions of appellant’s roof and the side of
her building. The New York Court of Appeals ruled that this appropriation
does not amount to a taking. Because we conclude that such a physical
occupation of property is a taking, we reverse.
[Appellant Jean Loretto purchased a five-story rental apartment
building located at 303 West 105th Street, New York City in 1971. The
previous owner had granted appellees Teleprompter Corp. and
Teleprompter Manhattan CATV (collectively Teleprompter) permission to

1562
install a crossover cable on the building (serving other property but not the
Loretto property) and the exclusive privilege of furnishing cable television
(CATV) services to the tenants at some point in the future. The cable
measured slightly less than one-half inch in diameter and ran
approximately 36 feet in length along the side of the building;
Teleprompter also installed two directional taps measuring 4 inches by 4
inches by 4 inches and two cable boxes measuring 18 inches by 12 inches
by 6 inches for a total displaced volume of about one and a half cubic feet.
On January 1, 1973, New York state adopted a law that required
residential landlords to allow cable television companies to install cable
boxes and cables on their property to enable tenants to get access to cable
television, N.Y. Exec. Law §828. The state commission established by that
law later ruled that landlords were entitled to a nominal fee of $1 when
such cables are installed.]
Appellant [Loretto] did not discover the existence of the cable until
after she had purchased the building. She brought a class action against
Teleprompter in 1976 on behalf of all owners of real property in the State
on which Teleprompter has placed CATV components, alleging that
Teleprompter’s installation was a trespass and, insofar as it relied on §828,
a taking without just compensation. [The Supreme Court and the Court of
Appeals both upheld the constitutionality of the statute. We reverse.] We
conclude that a permanent physical occupation authorized by government
is a taking without regard to the public interests that it may serve.
[T]he Court has often upheld substantial regulation of an owner’s use
of his own property where deemed necessary to promote the public
interest. At the same time, we have long considered a physical intrusion by
government to be a property restriction of an unusually serious character
for purposes of the Takings Clause. Our cases further establish that when
the physical intrusion reaches the extreme form of a permanent physical
occupation, a taking has occurred. In such a case, “the character of the
government action” not only is an important factor in resolving whether
the action works a taking but also is determinative.
When faced with a constitutional challenge to a permanent physical
occupation of real property, this Court has invariably found a taking. As
early as 1872, in Pumpelly v. Green Bay Co., 13 Wall. 166, this Court held
that the defendant’s construction, pursuant to state authority, of a dam
which permanently flooded plaintiff’s property constituted a taking.
In Kaiser Aetna v. United States, 444 U.S. 164 (1979), the Court held
that the Government’s imposition of a navigational servitude requiring
public access to a pond was a taking where the landowner had reasonably
relied on Government consent in connecting the pond to navigable water.

1563
The Court emphasized that the servitude took the land-owner’s right to
exclude, “one of the most essential sticks in the bundle of rights that are
commonly characterized as property.” Id. at 176. The Court explained
[that] “the imposition of the navigational servitude in this context will
result in an actual physical invasion of the privately owned marina.” Id.
Kaiser Aetna reemphasizes that a physical invasion is a government
intrusion of an unusually serious character.
Another recent case underscores the constitutional distinction between
a permanent occupation and a temporary physical invasion. In PruneYard
Shopping Center v. Robins, 447 U.S. 74 (1980), the Court upheld a state
constitutional requirement that shopping center owners permit individuals
to exercise free speech and petition rights on their property, to which they
had already invited the general public. The Court emphasized that the State
Constitution does not prevent the owner from restricting expressive
activities by imposing reasonable time, place, and manner restrictions to
minimize interference with the owner’s commercial functions. Since the
invasion was temporary and limited in nature, and since the owner had not
exhibited an interest in excluding all persons from his property, “the fact
that [the solicitors] may have ‘physically invaded’ [the owners’] property
cannot be viewed as determinative.” Id. at 84.
In short, when the “character of the governmental action” is a
permanent physical occupation of property, our cases uniformly have
found a taking to the extent of the occupation, without regard to whether
the action achieves an important public benefit or has only minimal
economic impact on the owner.
The historical rule that a permanent physical occupation of another’s
property is a taking has more than tradition to commend it. Such an
appropriation is perhaps the most serious form of invasion of an owner’s
property interests. To borrow a metaphor, cf. Andrus v. Allard, 444 U.S.
51, 65-66 (1979), the government does not simply take a single “strand”
from the “bundle” of property rights: it chops through the bundle, taking a
slice of every strand.
Property rights in a physical thing have been described as the rights “to
possess, use and dispose of it.” United States v. General Motors Corp.,
323 U.S. 373, 378 (1945). To the extent that the government permanently
occupies physical property, it effectively destroys each of these rights.
First, the owner has no right to possess the occupied space himself, and
also has no power to exclude the occupier from possession and use of the
space. The power to exclude has traditionally been considered one of the
most treasured strands in an owner’s bundle of property rights. Second, the
permanent physical occupation of property forever denies the owner any

1564
power to control the use of the property; he not only cannot exclude others,
but can make no nonpossessory use of the property. Although deprivation
of the right to use and obtain a profit from property is not, in every case,
independently sufficient to establish a taking, it is clearly relevant. Finally,
even though the owner may retain the bare legal right to dispose of the
occupied space by transfer or sale, the permanent occupation of that space
by a stranger will ordinarily empty the right of any value, since the
purchaser will also be unable to make any use of the property.
Moreover, an owner suffers a special kind of injury when a stranger
directly invades and occupies the owner’s property. [P]roperty law has
long protected an owner’s expectation that he will be relatively
undisturbed at least in the possession of his property. To require, as well,
that the owner permit another to exercise complete dominion literally adds
insult to injury. See Michelman, Property, Utility, and Fairness:
Comments on the Ethical Foundations of “Just Compensation” Law, 80
Harv. L. Rev. 1165, 1228, and n.110 (1967). Furthermore, such an
occupation is qualitatively more severe than a regulation of the use of
property, even a regulation that imposes affirmative duties on the owner,
since the owner may have no control over the timing, extent, or nature of
the invasion.
The traditional rule also avoids otherwise difficult line-drawing
problems. Few would disagree that if the State required landlords to permit
third parties to install swimming pools on the landlords’ rooftops for the
convenience of the tenants, the requirement would be a taking. If the cable
installation here occupied as much space, again, few would disagree that
the occupation would be a taking. But constitutional protection for the
rights of private property cannot be made to depend on the size of the area
permanently occupied.
Teleprompter’s cable installation on appellant’s building constitutes a
taking under the traditional test. The installation involved a direct physical
attachment of plates, boxes, wires, bolts, and screws to the building,
completely occupying space immediately above and upon the roof and
along the building’s exterior wall.
Teleprompter notes that the law applies only to buildings used as rental
property, and draws the conclusion that the law is simply a permissible
regulation of the use of real property. We fail to see, however, why a
physical occupation of one type of property but not another type is any less
a physical occupation. Insofar as Teleprompter means to suggest that this
is not a permanent physical invasion, we must differ. So long as the
property remains residential and a CATV company wishes to retain the
installation, the landlord must permit it.21

1565
 Finally, we do not agree with appellees that application of the physical
occupation rule will have dire consequences for the government’s power to
adjust landlord-tenant relationships. This Court has consistently affirmed
that States have broad power to regulate housing conditions in general and
the landlord-tenant relationship in particular without paying compensation
for all economic injuries that such regulation entails. See, e.g., Heart of
Atlanta Motel, Inc. v. United States, 379 U.S. 241 (1964) (discrimination
in places of public accommodation); Home Building & Loan Assn. v.
Blaisdell, 290 U.S. 398 (1934) (mortgage moratorium); Block v. Hirsh,
256 U.S. 135 (1921) (rent control). In none of these cases, however, did
the government authorize the permanent occupation of the landlord’s
property by a third party. Consequently, our holding today in no way alters
the analysis governing the State’s power to require landlords to comply
with building codes and provide utility connections, mailboxes, smoke
detectors, fire extinguishers, and the like in the common area of a building.
So long as these regulations do not require the landlord to suffer the
physical occupation of a portion of his building by a third party, they will
be analyzed under the multifactor inquiry generally applicable to
nonpossessory governmental activity. See Penn Central Transp. Co. v.
New York City, 438 U.S. 104 (1978).
Our holding today is very narrow. We affirm the traditional rule that a
permanent physical occupation of property is a taking. In such a case, the
property owner entertains a historically rooted expectation of
compensation, and the character of the invasion is qualitatively more
intrusive than perhaps any other category of property regulation. We do
not, however, question the equally substantial authority upholding a
State’s broad power to impose appropriate restrictions upon an owner’s
use of his property. The issue of the amount of compensation that is due,
on which we express no opinion, is a matter for the state courts to consider
on remand.

Justice HARRY BLACKMUN, with whom Justice BRENNAN and Justice

WHITE, join, dissenting.
The Court of Appeals found, first, that §828 represented a reasoned
legislative effort to arbitrate between the interests of tenants and landlords
and to encourage development of an important educational and
communications medium. Second, the court concluded that the statute’s
economic impact on appellant was de minimis because §828 did not affect
the fair return on her property. Third, the statute did not interfere with
appellant’s reasonable investment-backed expectations. When appellant
purchased the building, she was unaware of the existence of the cable.

1566
Thus, she could not have invested in the building with any reasonable
expectation that the one-eighth cubic foot of space occupied by the cable
television installment would become income-productive.
The Court’s recent Takings Clause decisions teach that nonphysical
government intrusions on private property, such as zoning ordinances and
other land-use restrictions may diminish the value of private property far
more than minor physical touchings. Nevertheless, as the Court
recognizes, it has “often upheld substantial regulation of an owner’s use of
his own property where deemed necessary to promote the public interest.”
Surprisingly, the Court draws an even finer distinction today —
between “temporary physical invasions” and “permanent physical
occupations.” When the government authorizes the latter type of intrusion,
the Court would find “a taking without regard to the public interests” the
regulation may serve. Yet the newly created distinction is even less
substantial than the distinction between physical and nonphysical
intrusions that the Court already has rejected.
First, what does the Court mean by “permanent”? As the Court itself
concedes, §828 does not require appellant to permit the cable installation
forever, but only “[so] long as the property remains residential and a
CATV company wishes to retain the installation.” This is far from
“permanent.”
The Court reaffirms that “States have broad power to regulate housing
conditions in general and the landlord-tenant relationship in particular
without paying compensation for all economic injuries that such regulation
entails.” Thus, §828 merely defines one of the many statutory
responsibilities that a New Yorker accepts when she enters the rental
business. If appellant occupies her own building, or converts it into a
commercial property, she becomes perfectly free to exclude Teleprompter
from her one-eighth cubic foot of roof space. But once appellant chooses
to use her property for rental purposes, she must comply with all
reasonable government statutes regulating the landlord-tenant relationship.
The Court’s talismanic distinction between a continuous “occupation”
and a transient “invasion” finds no basis in either economic logic or
Takings Clause precedent. In the landlord-tenant context, the Court has
upheld against takings challenges rent control statutes permitting
“temporary” physical invasions of considerable economic magnitude. See,
e.g., Block v. Hirsh, 256 U.S. 135 (1921) (statute permitting tenants to
remain in physical possession of their apartments for two years after the
termination of their leases). Moreover, precedents record numerous other
“temporary” officially authorized invasions by third parties that have
intruded into an owner’s enjoyment of property far more deeply than did

1567
Teleprompter’s long-unnoticed cable. See, e.g., PruneYard Shopping
Center v. Robins, 447 U.S. 74 (1980) (leafletting and demonstrating in
busy shopping center).
Setting aside history, the Court also states that the permanent physical
occupation authorized by §828 is a per se taking because it uniquely
impairs appellant’s powers to dispose of, use, and exclude others from, her
property. In fact, the Court’s discussion nowhere demonstrates how §828
impairs these private rights in a manner qualitatively different from other
garden-variety landlord-tenant legislation.
As a practical matter, the regulation ensures that tenants living in the
building will have access to cable television for as long as that building is
used for rental purposes, and thereby likely increases both the building’s
resale value and its attractiveness on the rental market. In any event, §828
differs little from the numerous other New York statutory provisions that
require landlords to install physical facilities “permanently occupying”
common spaces in or on their buildings. As the Court acknowledges, the
States traditionally — and constitutionally — have exercised their police
power “to require landlords to . . . provide utility connections, mailboxes,
smoke detectors, fire extinguishers, and the like in the common area of a
building.” Like §828, these provisions merely ensure tenants access to
services the legislature deems important, such as water, electricity, natural
light, telephones, intercommunication systems, and mail service.
The Court also suggests that §828 unconstitutionally alters appellant’s
right to control the use of her one-eighth cubic foot of roof space. But
other New York multiple dwelling statutes not only oblige landlords to
surrender significantly larger portions of common space for their tenants’
use, but also compel the landlord — rather than the tenants or the private
installers — to pay for and to maintain the equipment. For example, New
York landlords are required by law to provide and pay for mailboxes that
occupy more than five times the volume that Teleprompter’s cable
occupies on appellant’s building. If the State constitutionally can insist that
appellant make this sacrifice so that her tenants may receive mail, it is hard
to understand why the State may not require her to surrender less space,
filled at another’s expense, so that those same tenants can receive
television signals.

Notes and Questions

1. The physical invasion “rule.” The Supreme Court often repeats
that a per se taking occurs when a law authorizes a permanent physical
invasion of property. See Arkansas Game and Fish Commission v. United

1568
States, 133 S. Ct. 511, 518 (2012) (“[A] permanent physical occupation of
property authorized by government is a taking”); Stop the Beach
Renourishment, Inc. v. Florida Department of Environmental Protection,
560 U.S. 702, 713 (2010) (“[I]t is a taking when a state regulation forces a
property owner to submit to a permanent physical occupation”). Although
Loretto tries to establish a clear rule, not all physical invasions of property
authorized by the state are takings of property and the per se rule
announced in Loretto “is very narrow.” 458 U.S. at 441. The Court has
taken varying approaches, at times per se and often ad hoc, to the question
whether a forced physical invasion is a taking.22
2. Parsing the physical invasion cases. The Loretto opinion attempts
to distinguish PruneYard. Consider the cases described below in this note.
Is the Court successful in distinguishing the two cases? If not, which one is
correct?
a. Cases finding a taking on the basis of a physical invasion by
a stranger.
Besides Loretto, a few other cases are routinely cited for the
proposition that forced physical invasion or occupation of property by
a stranger constitutes a per se taking. Here are the most widely cited
cases.
Pumpelly v. Green Bay Co., 80 U.S. 166 (1872). When a statute
authorized a canal company to build a dam and flood the plaintiff’s
land, the Supreme Court had no trouble in finding that this constitutes
a per se taking of plaintiff’s property. The court found that it would be
“a very curious and unsatisfactory result” if the state could “destroy
[the] value [of property] entirely,” or “inflict irreparable and permanent
injury” to it or even cause its “total destruction” and avoid paying
compensation merely because the government did not formally “take”
title to the land. Id. at 177-178. “Such a construction would pervert the
constitutional provision[].” Id. at 178.
United States v. Causby, 328 U.S. 256 (1946). Military aircraft
flew so close to the ground and caused such extreme noise over
plaintiffs’ property near an airport that it both rendered plaintiffs’
home uninhabitable and made it impossible for them to operate their
chicken farm because the noise frightened the chickens and caused
them to fly into the walls, killing many of them. Although owners own
the airspace over their land, and the passage of planes overhead is
technically a trespass, all land ownership is subject to an airspace
servitude that allows this. But because the planes were flying so low to
the ground, the Court found that this exceeded the scope of the public

1569
servitude and thus the entry and passage of the planes constituted a
forced taking of a public easement over the plaintiffs’ land. Although
the “airspace is a public highway, it is obvious that if the landowner is
to have full enjoyment of land, he must have exclusive control of the
immediate reaches of the enveloping atmosphere. Otherwise buildings
could not be erected, trees could not be planted, and even fences could
not be run.” Id. at 264.
Kaiser Aetna v. United States, 444 U.S. 164 (1979). In Kaiser
Aetna, the owner and lessee of a shallow, private lagoon invested
substantial amounts of money in developing the property, connecting it
to navigable waters in the ocean, and creating a marina that was to be
open only to fee-paying members. Navigable waters are subject to a
servitude that allows public access for navigation purposes. The federal
government tried to force the owners to grant public access to the
lagoon once it had been converted into navigable waters. Although
upholding the navigational servitude doctrine, the Supreme Court
noted that the owners had invested in developing the marina and
connecting the lagoon to the ocean in the expectation that they would
continue to be able to control access to the lagoon and charge its
members fees to pay for maintenance of the lagoon; the property
became included in the navigable waters of the United States only
because of the owner’s investment. A public access requirement would
have converted at least some of the property from land controlled by a
private fee-paying club into land freely open to the public. The owners
would therefore have lost “one of the most essential sticks in the
bundle of rights that are commonly characterized as property — the
right to exclude others.” Id. at 176.
b. Cases finding no taking despite a forced physical invasion by
a stranger.
Besides PruneYard, the most important cases authorizing the physical
invasion of land are those upholding the constitutionality of
antidiscrimination laws, including public accommodation, fair housing,
and employment discrimination laws. No takings claims have reached
the Supreme Court to challenge either the employment discrimination
laws or the fair housing laws. Both require owners to suffer the
physical invasion of property by strangers they would rather exclude.
In the case of the Fair Housing Act, 42 U.S.C. §§3601-3631, owners
and landlords covered by the act can be compelled by injunction to
transfer their property to a prospective buyer or tenant when the reason
for refusing to sell or rent is the potential occupant’s race, color,
national origin, religion, sex, familial status, or handicap.

1570
 Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241
(1964). Title II of the Civil Rights Act of 1964, 42 U.S.C. §2000a,
requires, among other things, that hotels and motels accept customers
regardless of race. Since the statute provides for injunctive relief alone,
it authorizes courts to issue injunctions mandating that owners allow
strangers to stay in their premises that those owners would rather
exclude. Besides finding the statute to be properly enacted pursuant to
Congress’s power to regulate interstate commerce, the Supreme Court
held, with no analysis whatsoever, that it did not “find any merit in the
claim that the Act is a taking of property without just compensation.”
Id. at 261.
c. Physical invasions by those in contractual relationships with
the owner.
The Supreme Court has repeatedly upheld anti-eviction laws that grant
tenants the right to continue renting their apartments as long as they
pay the agreed-upon rent and do not damage the property or violate
other material terms of the lease, even if these laws authorize
occupation beyond the end of the lease term. A similar result has
obtained in the case of mortgage moratorium statutes.
Block v. Hirsh, 256 U.S. 135 (1921). In Block v. Hirsh, the Court
upheld against a takings challenge a statute that permitted tenants to
remain in physical possession of their apartments after the termination
of their leases at rents set by a rent control commission. The owner
could evict the tenant only if the tenant were in breach of the lease or if
the owner sought to regain possession for occupancy by herself or her
family. Justice Holmes noted that the statute guaranteed the owner a
“reasonable rent” and that the statutory eviction controls were justified
by the emergency conditions of a housing shortage in Washington,
D.C., brought on by an influx of people during World War I. Accord,
Edgar A. Levy Leasing Co. v. Siegel, 258 U.S. 242 (1922) (upholding a
similar New York law).
Home Building & Loan Association v. Blaisdell, 290 U.S. 398
(1934). In the midst of the Great Depression, Minnesota passed a
mortgage moratorium law giving courts discretion to postpone
foreclosure on homes whose mortgages were in default and giving
borrowers an extension of the period of redemption during which they
could pay their delinquent mortgage charges and thus keep their
homes. The effect of the law was to allow the borrower/homeowner to
remain in her home and to delay transfer of title to the property at
foreclosure sale to a buyer (who often would be the bank that loaned
the money in the first place). The statute thus authorized a forced

1571
physical occupation of the premises by the homeowner in a manner
that was inconsistent with the mortgage agreement and the
mortgagee’s foreclosure rights. The Supreme Court unanimously
upheld the statute against challenges that it violated both the due
process clause and the constitutional clause prohibiting the impairment
of contracts, U.S. Const. art. I, §10, because the moratorium was
temporary and the bank was entitled to rent to compensate for the
extended occupation of the premises.
Yee v. City of Escondido, California, 503 U.S. 519 (1992). The
Supreme Court reaffirmed Block v. Hirsh in Yee, holding that an anti-
eviction law that allowed mobile home owners to continue renting the
land in the mobile home park on which their homes sat, even after the
end of the lease term, did not amount to a forced physical invasion of
the park owner’s property. The statute allowed the park owner to give
six months’ notice and then go out of business, evict the mobile home
tenants, and convert the property to other uses. It did not matter to the
Court that the effect of the anti-eviction law, when combined with the
applicable rent control statute, allowed the mobile home owner to sell
the home in place and transfer the tenancy to the new owner of the
mobile home (at the rent-controlled rent) without the consent of the
park owner. The buyer of the mobile home who would become the
new tenant would of course be a stranger to the park owner. In effect,
the law gave the tenants an absolute right to assign their leasehold even
if assignment was prohibited by the lease. Such a buyer/assignee
would pay more to buy such mobile homes because they were located
in a rent-controlled environment; the mobile home owner, rather than
the landlord, would reap the economic benefit of this one-time
premium.
None of this was relevant to the question of whether the law
constituted a taking even though it imposed a forced physical
occupation by a stranger. Rather, the Court concluded that what
mattered was the initial “invitation” to occupy the land. Id. at 532.
“Because they voluntarily open their property to occupation by others,
petitioners cannot assert a per se right to compensation based on their
inability to exclude particular individuals.” Id. at 531. The statutes here
did “not authorize an unwanted physical occupation” of the park
owners’ land; rather, they were “a regulation of [the park owners’] use
of their property, and thus [did] not amount to a per se taking [under
Loretto].” Id. at 532. However, the Court did note that the ordinance
allowed the owner to go out of business and that “[a] different case
would be presented were the statute, on its face or as applied, to

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 compel a landowner over objection to rent his property or to refrain in
perpetuity from terminating a tenancy.” Id. at 528.
3. Does the landlord have a right to occupy her own land or stop
renting altogether? State courts have generally upheld anti-eviction laws
against takings challenges even when those laws prevent the landlord from
converting the property to another use. In Flynn v. City of Cambridge, 418
N.E.2d 335 (Mass. 1981), for example, the court upheld a condominium
conversion law that prohibited landlords from evicting a tenant so they
could convert the building into condominiums and move into the property
themselves. The court found that the law did not cause an unconstitutional
taking because the owners retained their “primary expectation concerning
the use of the property” and they were still able to “obtain a reasonable
return on [their] investment.” Id. at 339-340; see also Nash v. City of Santa
Monica, 688 P.2d 894 (Cal. 1984), appeal dismissed, 470 U.S. 1046
(1985) (upholding a rent-control ordinance prohibiting removal of rental
units from the housing market by conversion or demolition without a
removal permit). Some courts, however, have struck down anti-eviction
statutes as unconstitutional takings of property when they prevent the
landlord from evicting a tenant so the landlord can move into the property
herself, see, e.g., Cwynar v. City & County of San Francisco, 109 Cal.
Rptr. 2d 233 (Ct. App. 2001), or prevent owners from shutting down and
going out of business, see Seawall Associates v. City of New York, 542
N.E.2d 1059 (N.Y. 1989) (striking down an anti-warehousing law that
imposed a moratorium on conversion of SRO properties as a forced
physical invasion by third parties).
4. Rails-to-trails controversies. One recurring conflict over physical
occupancy by the public involves conversions of abandoned rail corridors
to recreation trails under §8(d) of the National Trails System Act, 16
U.S.C. §1247(d). In the nineteenth century, railroads developed rail
corridors through a variety of means, including private purchases, eminent
domain, and federal and state grants. See Danaya C. Wright, Doing a
Double Take: Rail-Trail Takings Litigation in the Post-Brandt Trust Era,
39 Vt. L. Rev. 703, 710-717 (2015). Section 1247(d) created a process to
convert those corridors to recreational use, which has led claimants to the
underlying land to seek just compensation for public use, arguing either
that recreational uses were not in the scope of the original right of way or
that abandonment by the railroads leaves the underlying land
unencumbered. In these cases, courts have struggled with questions such
as the nature of the original grant (an easement, a fee interest, something
else?) as well as any interests retained by the government at the time of the

1573
grant. In Marvin M. Brandt Revocable Trust v. United States, 134 S. Ct.
1257 (2014), the Supreme Court held that a right of way granted to a
railway under an 1875 federal statute was an easement that terminated
when abandoned in 2006, freeing the underlying land of the restriction. Id.
at 1264. The federal government argued that it retained an implied
reversionary interest at the time of the grant, but the Court disagreed. The
lone dissenter in the case, Justice Sotomayor, noted that this narrow
interpretation of the easement may result in the federal government having
pay “hundreds of millions of dollars” to compensate owners in order to
convert similar rail corridors. Id. at 1272.
5. Physical occupancy of personal property. As should be evident by
now, most takings cases asserting claims of physical occupancy involve
real property. What about personal property? In Horne v. Department of
Agriculture, 133 S. Ct. 2053 (2013), the Supreme Court confronted a
takings challenge to a United States Department of Agriculture program
that required raisin growers to reserve a portion of their crop from sale
under certain conditions to stabilize raisin prices. A committee appointed
by the Secretary of Agriculture would dispose of these set-aside raisins, for
example by selling them to foreign countries at below market rates or
donating them to charity, with any profits returned to the original growers.
The Court found that this program constituted a physical appropriation of
personal property, and thus a per se taking akin to Loretto. The Court
reaffirmed that the takings clause does not prohibit the regulation of
personal property, but having to render specific personal property to the
government is a taking. To the Court, any economic benefits farmers
received from the program or funds returned from sales of the reserved
raisins do not affect the question of whether a taking has occurred. And the
Court likewise held that the government cannot condition participation in a
price-support program on the condition that a grower turn over a portion of
its crop to the government.
In a concurrence, Justice Breyer argued that a remand should have
been ordered to determine if any compensation would have been due had
the grower actually complied with the program. Because the fifth
amendment does not prohibit takings, but simply requires just
compensation when property is taken for public use, Justice Breyer noted
that the possibility that the program may have actually provided just
compensation — by raising the value of the raisins not handed over to the
program — might have obviated any constitutional violation. If that
amount was sufficient to compensate for the value of the raisins handed
over to the government, then no more compensation should be due.

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 Problems
1. A New Jersey statute grants low-income elderly persons and persons
with disabilities a protected tenancy of up to 40 years after an apartment
building is converted to a condominium. Senior Citizens and Disabled
Protected Tenancy Act, N.J. Stat. §§2A:18-61.22 to 2A:18-61.39. This
means that the landlord cannot evict such a tenant even if the landlord
intends to occupy the unit herself or make it available to a member of her
family. This statute was upheld against a takings challenge in Troy v.
Renna, 727 F.2d 287 (3d Cir. 1984). Assume a takings challenge to the
law reaches the Supreme Court. A landlord wishes to evict a tenant so the
landlord can move into the apartment herself. The tenant has a disability
and therefore the statutory right to remain for up to 40 years. Does the
New Jersey statute take the landlord’s property without just compensation?
2. Most states now have restraining order statutes that allow victims of
domestic violence to obtain emergency injunctions on an ex parte basis
(meaning without prior notice to the other party) to exclude from the home
a household member who has allegedly beaten or otherwise assaulted
them. See, e.g., Wis. Stat. §813.12 (judge or family court commissioner
may temporarily or permanently order a respondent in a domestic violence
case to avoid the victim’s residence). Assume an unmarried heterosexual
couple has lived together in the man’s house for five years. He begins to
beat her and she obtains a restraining order excluding him from the house.
The order stays in effect for three months while she looks for a new place
to live. He brings a lawsuit claiming that, because the title to the house is
in his name and the couple is not married, she has no property interest in
the house; to exclude him from his own home, even for a short period of
time, without a criminal conviction, constitutes a taking of property
without just compensation. Is he right? What arguments could you make
on both sides? How would you resolve the issue? Cf. Cote v. Cote, 599
A.2d 869 (Md. Ct. Spec. App. 1992) (no taking where husband accused of
domestic violence was barred from the marital home during the pendency
of a divorce proceeding, on the ground that the husband still derived some
benefit from the home in the form of not having to provide for an
alternative home for his wife during that period).
3. In Loretto, Justice Marshall distinguishes the cases that allow
substantial regulation of landlord-tenant relationships. “In none of these
cases,” he explains, “did the government authorize the permanent
occupation of the landlord’s property by a third party.” 458 U.S. at 440.
The federal Fair Housing Act prohibits discrimination in the sale of real

1575
property and provides for injunctive relief. See Chapter 13, §1. Consider
an owner who is subject to this law who refuses to sell her house to an
African American family. The family sues, and the court orders the owner
to sell the property to them for its fair market value. The court order
effects a permanent physical occupation of the property by strangers. Is
this case distinguishable from Loretto?

§4.2 Deprivation of All Economically Viable Use

Lucas v. South Carolina Coastal Council

505 U.S. 1003 (1992)

Map: Isle of Palms, South Carolina

Justice ANTONIN SCALIA delivered the opinion of the Court.

In 1986, petitioner David H. Lucas paid $975,000 for two residential
lots on the Isle of Palms in Charleston County, South Carolina, on which
he intended to build single family homes. In 1988, however, the South
Carolina Legislature enacted the Beachfront Management Act, S.C. Code
§§48-39-250 et seq. (Act), which had the direct effect of barring petitioner
from erecting any permanent habitable structures on his two parcels. A
state trial court found that this prohibition rendered Lucas’s parcels
“valueless.” This case requires us to decide whether the Act’s dramatic
effect on the economic value of Lucas’s lots accomplished a taking of
private property under the Fifth and Fourteenth Amendments requiring the
payment of “just compensation.” U.S. Const., Amdt. 5.

A
South Carolina’s expressed interest in intensively managing
development activities in the so-called “coastal zone” dates from 1977
when, in the aftermath of Congress’s passage of the federal Coastal Zone
Management Act of 1972, 86 Stat. 1280, as amended, 16 U.S.C. §§1451 et
seq., the legislature enacted a Coastal Zone Management Act of its own.

1576
See S.C. Code §§48-39-10 et seq. (1987). In its original form, the South
Carolina Act required owners of coastal zone land that qualified as a
“critical area” (defined in the legislation to include beaches and
immediately adjacent sand dunes) to obtain a permit from the newly
created South Carolina Coastal Council (respondent here) prior to
committing the land to a “use other than the use the critical area was
devoted to on [September 28, 1977].”
In the late 1970’s, Lucas and others began extensive residential
development of the Isle of Palms, a barrier island situated eastward of the
City of Charleston. Toward the close of the development cycle for one
residential subdivision known as “Beachwood East,” Lucas in 1986
purchased the two lots at issue in this litigation for his own account. No
portion of the lots, which were located approximately 300 feet from the
beach, qualified as a “critical area” under the 1977 Act; accordingly, at the
time Lucas acquired these parcels, he was not legally obliged to obtain a
permit from the Council in advance of any development activity. His
intention with respect to the lots was to do what the owners of the
immediately adjacent parcels had already done: erect single-family
residences. He commissioned architectural drawings for this purpose.
The Beachfront Management Act brought Lucas’s plans to an abrupt
end. Under that 1988 legislation, the Council was directed to establish a
“baseline” connecting the landward-most “point[s] of erosion . . . during
the past forty years” in the region of the Isle of Palms that includes Lucas’s
lots. In action not challenged here, the Council fixed this baseline
landward of Lucas’s parcels. That was significant, for under the Act
construction of occupable improvements was flatly prohibited seaward of
a line drawn 20 feet landward of, and parallel to, the baseline. The Act
provided no exceptions.

B
Lucas promptly filed suit in the South Carolina Court of Common
Pleas, contending that the Beachfront Management Act’s construction bar
effected a taking of his property without just compensation. Lucas did not
take issue with the validity of the Act as a lawful exercise of South
Carolina’s police power, but contended that the Act’s complete
extinguishment of his property’s value entitled him to compensation
regardless of whether the legislature had acted in furtherance of legitimate
police power objectives. Following a bench trial, the court agreed.
The Supreme Court of South Carolina reversed. The Court ruled that
when a regulation respecting the use of property is designed “to prevent

1577
serious public harm,” no compensation is owing under the Takings Clause
regardless of the regulation’s effect on the property’s value. We granted
certiorari.

III

A
Prior to Justice Holmes’ exposition in Pennsylvania Coal Co. v.
Mahon, 260 U.S. 393 (1922), it was generally thought that the Takings
Clause reached only a “direct appropriation” of property, Legal Tender
Cases, 12 Wall. 457, 551 (1871), or the functional equivalent of a
“practical ouster of [the owner’s] possession.” Transportation Co. v.
Chicago, 99 U.S. 635, 642 (1879). Justice Holmes recognized in Mahon,
however, that if the protection against physical appropriations of private
property was to be meaningfully enforced, the government’s power to
redefine the range of interests included in the ownership of property was
necessarily constrained by constitutional limits. If, instead, the uses of
private property were subject to unbridled, uncompensated qualification
under the police power, “the natural tendency of human nature [would be]
to extend the qualification more and more until at last private property
disappear[ed].” Id. at 415. These considerations gave birth in that case to
the oft-cited maxim that, “while property may be regulated to a certain
extent, if regulation goes too far it will be recognized as a taking.” Id.
Nevertheless, our decision in Mahon offered little insight into when,
and under what circumstances, a given regulation would be seen as going
“too far” for purposes of the Fifth Amendment. In 70-odd years of
succeeding “regulatory takings” jurisprudence, we have generally
eschewed any “set formula” for determining how far is too far, preferring
to “engag[e] in . . . essentially ad hoc, factual inquiries,” Penn Central
Transp. Co. v. New York City, 438 U.S. 104, 124 (1978). We have,
however, described at least two discrete categories of regulatory action as
compensable without case-specific inquiry into the public interest
advanced in support of the restraint. The first encompasses regulations that
compel the property owner to suffer a physical “invasion” of his property.
In general (at least with regard to permanent invasions), no matter how
minute the intrusion, and no matter how weighty the public purpose behind
it, we have required compensation. For example, in Loretto v.
Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982), we
determined that New York’s law requiring landlords to allow television
cable companies to emplace cable facilities in their apartment buildings

1578
constituted a taking, even though the facilities occupied at most only 1½
cubic feet of the landlords’ property.
The second situation in which we have found categorical treatment
appropriate is where regulation denies all economically beneficial or
productive use of land. See

David Lucas’s lots and surrounding beachfront. Photo courtesy of William

A. Fischel.

Agins v. Tiburon, 447 U.S. 255, 260 (1980). As we have said on

numerous occasions, the Fifth Amendment is violated when land-use
regulation “does not substantially advance legitimate state interests or
denies an owner economically viable use of his land.” Id. (emphasis
added).23
We have never set forth the justification for this rule. Perhaps it is
simply, as Justice Brennan suggested, that total deprivation of beneficial
use is, from the land-owner’s point of view, the equivalent of a physical
appropriation. Surely, at least, in the extraordinary circumstance when no
productive or economically beneficial use of land is permitted, it is less
realistic to indulge our usual assumption that the legislature is simply
“adjusting the benefits and burdens of economic life,” Penn Central
Transp. Co., 438 U.S., at 124, in a manner that secures an “average
reciprocity of advantage” to everyone concerned. Pennsylvania Coal Co.
v. Mahon, 260 U.S., at 415. And the functional basis for permitting the
government, by regulation, to affect property values without compensation

1579
— that “Government hardly could go on if to some extent values incident
to property could not be diminished without paying for every such change
in the general law,” id. at 413 — does not apply to the relatively rare
situations where the government has deprived a landowner of all
economically beneficial uses.
On the other side of the balance, affirmatively supporting a
compensation requirement, is the fact that regulations that leave the owner
of land without economically beneficial or productive options for its use
— typically, as here, by requiring land to be left substantially in its natural
state — carry with them a heightened risk that private property is being
pressed into some form of public service under the guise of mitigating
serious public harm. The many statutes on the books, both state and
federal, that provide for the use of eminent domain to impose servitudes on
private scenic lands preventing developmental uses, or to acquire such
lands altogether, suggest the practical equivalence in this setting of
negative regulation and appropriation.
We think, in short, that there are good reasons for our frequently
expressed belief that when the owner of real property has been called upon
to sacrifice all economically beneficial uses in the name of the common
good, that is, to leave his property economically idle, he has suffered a
taking.

B
The trial court found Lucas’s two beachfront lots to have been
rendered valueless by respondent’s enforcement of the coastal-zone
construction ban. Under Lucas’s theory of the case, which rested upon our
“no economically viable use” statements, that finding entitled him to
compensation. Lucas believed it unnecessary to take issue with either the
purposes behind the Beachfront Management Act, or the means chosen by
the South Carolina Legislature to effectuate those purposes. The South
Carolina Supreme Court, however, thought otherwise. In its view, the
Beachfront Management Act was no ordinary enactment, but involved an
exercise of South Carolina’s “police powers” to mitigate the harm to the
public interest that petitioner’s use of his land might occasion. By
neglecting to dispute the findings enumerated in the Act or otherwise to
challenge the legislature’s purposes, petitioner “concede[d] that the
beach/dune area of South Carolina’s shores is an extremely valuable public
resource; and that discouraging new construction in close proximity to the
beach/dune area is necessary to prevent a great public harm.” In the court’s
view, these concessions brought petitioner’s challenge within a long line

1580
of this Court’s cases sustaining against Due Process and Takings Clause
challenges the State’s use of its “police powers” to enjoin a property owner
from activities akin to public nuisances. See Mugler v. Kansas, 123 U.S.
623 (1887) (law prohibiting manufacture of alcoholic beverages);
Hadacheck v. Sebastian, 239 U.S. 394 (1915) (law barring operation of
brick mill in residential area); Miller v. Schoene, 276 U.S. 272 (1928)
(order to destroy diseased cedar trees to prevent infection of nearby
orchards); Goldblatt v. Hempstead, 369 U.S. 590 (1962) (law effectively
preventing continued operation of quarry in residential area).
It is correct that many of our prior opinions have suggested that
“harmful or noxious uses” of property may be proscribed by government
regulation without the requirement of compensation. For a number of
reasons, however, we think the South Carolina Supreme Court was too
quick to conclude that that principle decides the present case. The
“harmful or noxious uses” principle was the Court’s early attempt to
describe in theoretical terms why government may, consistent with the
Takings Clause, affect property values by regulation without incurring an
obligation to compensate — a reality we nowadays acknowledge explicitly
with respect to the full scope of the State’s police power. We made this
very point in Penn Central Transportation Co., where, in the course of
sustaining New York City’s landmarks preservation program against a
takings challenge, we rejected the petitioner’s suggestion that Mugler and
the cases following it were premised on, and thus limited by, some
objective conception of “noxiousness”:

[T]he uses in issue in Hadacheck, Miller, and Goldblatt were perfectly

lawful in themselves. They involved no “blameworthiness, . . . moral
wrongdoing or conscious act of dangerous risk-taking which induce[d
society] to shift the cost to a pa[rt]icular individual.” Sax, Takings and the
Police Power, 74 Yale L.J. 36, 50 (1964). These cases are better understood
as resting not on any supposed “noxious” quality of the prohibited uses but
rather on the ground that the restrictions were reasonably related to the
implementation of a policy — not unlike historic preservation — expected to
produce a widespread public benefit and applicable to all similarly situated
property. 438 U.S., at 133-34 n.30.

“Harmful or noxious use” analysis was, in other words, simply the

progenitor of our more contemporary statements that “land-use regulation
does not effect a taking if it ‘substantially advance[s] legitimate state
interests.’ ” Nollan, supra, at 834.
The transition from our early focus on control of “noxious” uses to our
contemporary understanding of the broad realm within which government

1581
may regulate without compensation was an easy one, since the distinction
between “harm-preventing” and “benefit-conferring” regulation is often in
the eye of the beholder. It is quite possible, for example, to describe in
either fashion the ecological, economic, and aesthetic concerns that
inspired the South Carolina legislature in the present case. One could say
that imposing a servitude on Lucas’s land is necessary in order to prevent
his use of it from “harming” South Carolina’s ecological resources; or,
instead, in order to achieve the “benefits” of an ecological preserve.
Compare, e.g., Claridge v. New Hampshire Wetlands Board, 485 A.2d
287, 292 (N.H. 1984) (owner may, without compensation, be barred from
filling wetlands because landfilling would deprive adjacent coastal habitats
and marine fisheries of ecological support), with, e.g., Bartlett v. Zoning
Comm’n of Old Lyme, 282 A.2d 907, 910 (Conn. 1971) (owner barred
from filling tidal marshland must be compensated, despite municipality’s
“laudable” goal of “preserv[ing] marshlands from encroachment or
destruction”). Whether one or the other of the competing characterizations
will come to one’s lips in a particular case depends primarily upon one’s
evaluation of the worth of competing uses of real estate. A given restraint
will be seen as mitigating “harm” to the adjacent parcels or securing a
“benefit” for them, depending upon the observer’s evaluation of the
relative importance of the use that the restraint favors. Whether Lucas’s
construction of single-family residences on his parcels should be described
as bringing “harm” to South Carolina’s adjacent ecological resources thus
depends principally upon whether the describer believes that the State’s
use interest in nurturing those resources is so important that any competing
adjacent use must yield.24
When it is understood that “prevention of harmful use” was merely our
early formulation of the police power justification necessary to sustain
(without compensation) any regulatory diminution in value; and that the
distinction between regulation that “prevents harmful use” and that which
“confers benefits” is difficult, if not impossible, to discern on an objective,
value-free basis; it becomes self-evident that noxious-use logic cannot
serve as a touchstone to distinguish regulatory “takings” — which require
compensation — from regulatory deprivations that do not require
compensation. A fortiori the legislature’s recitation of a noxious-use
justification cannot be the basis for departing from our categorical rule that
total regulatory takings must be compensated. If it were, departure would
virtually always be allowed. The South Carolina Supreme Court’s
approach would essentially nullify Mahon’s affirmation of limits to the
noncompensable exercise of the police power. Our cases provide no
support for this: None of them that employed the logic of “harmful use”

1582
prevention to sustain a regulation involved an allegation that the regulation
wholly eliminated the value of the claimant’s land.
Where the State seeks to sustain regulation that deprives land of all
economically beneficial use, we think it may resist compensation only if
the logically antecedent inquiry into the nature of the owner’s estate shows
that the proscribed use interests were not part of his title to begin with.
This accords, we think, with our “takings” jurisprudence, which has
traditionally been guided by the understandings of our citizens regarding
the content of, and the State’s power over, the “bundle of rights” that they
acquire when they obtain title to property. It seems to us that the property
owner necessarily expects the uses of his property to be restricted, from
time to time, by various measures newly enacted by the State in legitimate
exercise of its police powers; “[a]s long recognized, some values are
enjoyed under an implied limitation and must yield to the police power.”
Pennsylvania Coal Co. v. Mahon, 260 U.S., at 413. And in the case of
personal property, by reason of the State’s traditionally high degree of
control over commercial dealings, he ought to be aware of the possibility
that new regulation might even render his property economically worthless
(at least if the property’s only economically productive use is sale or
manufacture for sale), see Andrus v. Allard, 444 U.S. 51, 66-67 (1979)
(prohibition on sale of eagle feathers). In the case of land, however, we
think the notion pressed by the Council that title is somehow held subject
to the “implied limitation” that the State may subsequently eliminate all
economically valuable use is inconsistent with the historical compact
recorded in the Takings Clause that has become part of our constitutional
culture.25
Where “permanent physical occupation” of land is concerned, we have
refused to allow the government to decree it anew (without compensation),
no matter how weighty the asserted “public interests” involved — though
we assuredly would permit the government to assert a permanent easement
that was a pre-existing limitation upon the landowner’s title. Compare
Scranton v. Wheeler, 179 U.S. 141, 163 (1900) (interests of “riparian
owner in the submerged lands . . . bordering on a public navigable water”
held subject to Government’s navigational servitude), with Kaiser Aetna v.
United States, 444 U.S., at 178-80 (imposition of navigational servitude on
marina created and rendered navigable at private expense held to constitute
a taking). We believe similar treatment must be accorded confiscatory
regulations, i.e., regulations that prohibit all economically beneficial use of
land: Any limitation so severe cannot be newly legislated or decreed
(without compensation), but must inhere in the title itself, in the
restrictions that background principles of the State’s law of property and

1583
nuisance already place upon land ownership. A law or decree with such an
effect must, in other words, do no more than duplicate the result that could
have been achieved in the courts — by adjacent landowners (or other
uniquely affected persons) under the State’s law of private nuisance, or by
the State under its complementary power to abate nuisances that affect the
public generally, or otherwise.26
On this analysis, the owner of a lake bed, for example, would not be
entitled to compensation when he is denied the requisite permit to engage
in a landfilling operation that would have the effect of flooding others’
land. Nor the corporate owner of a nuclear generating plant, when it is
directed to remove all improvements from its land upon discovery that the
plant sits astride an earthquake fault. Such regulatory action may well have
the effect of eliminating the land’s only economically productive use, but
it does not proscribe a productive use that was previously permissible
under relevant property and nuisance principles. The use of these
properties for what are now expressly prohibited purposes was always
unlawful, and (subject to other constitutional limitations) it was open to the
State at any point to make the implication of those background principles
of nuisance and property law explicit. In light of our traditional resort to
“existing rules or understandings that stem from an independent source
such as state law” to define the range of interests that qualify for protection
as “property” under the Fifth (and Fourteenth) amendments, this
recognition that the Takings Clause does not require compensation when
an owner is barred from putting land to a use that is proscribed by those
“existing rules or understandings” is surely unexceptional. When,
however, a regulation that declares “off-limits” all economically
productive or beneficial uses of land goes beyond what the relevant
background principles would dictate, compensation must be paid to sustain
it.27
The “total taking” inquiry we require today will ordinarily entail (as
the application of state nuisance law ordinarily entails) analysis of, among
other things, the degree of harm to public lands and resources, or adjacent
private property, posed by the claimant’s proposed activities, the social
value of the claimant’s activities and their suitability to the locality in
question, and the relative ease with which the alleged harm can be avoided
through measures taken by the claimant and the government (or adjacent
private landowners) alike. The fact that a particular use has long been
engaged in by similarly situated owners ordinarily imports a lack of any
common-law prohibition (though changed circumstances or new
knowledge may make what was previously permissible no longer so). So
also does the fact that other landowners, similarly situated, are permitted to

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continue the use denied to the claimant.
It seems unlikely that common-law principles would have prevented
the erection of any habitable or productive improvements on petitioner’s
land; they rarely support prohibition of the “essential use” of land. The
question, however, is one of state law to be dealt with on remand. We
emphasize that to win its case South Carolina must do more than proffer
the legislature’s declaration that the uses Lucas desires are inconsistent
with the public interest, or the conclusory assertion that they violate a
common-law maxim such as sic utere tuo ut alienum non laedas. As we
have said, a “State, by ipse dixit, may not transform private property into
public property without compensation.” Webb’s Fabulous Pharmacies,
Inc. v. Beckwith, 449 U.S. 155, 164 (1980). Instead, as it would be
required to do if it sought to restrain Lucas in a common-law action for
public nuisance, South Carolina must identify background principles of
nuisance and property law that prohibit the uses he now intends in the
circumstances in which the property is presently found. Only on this
showing can the State fairly claim that, in proscribing all such beneficial
uses, the Beachfront Management Act is taking nothing.28
The judgment is reversed and the cause remanded for proceedings not
inconsistent with this opinion.

Justice ANTHONY M. KENNEDY, concurring in the judgment.

The South Carolina Court of Common Pleas found that petitioner’s
real property has been rendered valueless by the State’s regulation. The
finding appears to presume that the property has no significant market
value or resale potential. This is a curious finding, and I share the
reservations of some of my colleagues about a finding that a beach front
lot loses all value because of a development restriction. While the Supreme
Court of South Carolina on remand need not consider the case subject to
this constraint, we must accept the finding as entered below. Accepting the
finding as entered, it follows that petitioner is entitled to invoke the line of
cases discussing regulations that deprive real property of all economic
value.
The finding of no value must be considered under the Takings Clause
by reference to the owner’s reasonable, investment-backed expectations.
The Takings Clause, while conferring substantial protection on property
owners, does not eliminate the police power of the State to enact
limitations on the use of their property. The rights conferred by the
Takings Clause and the police power of the State may coexist without
conflict. Property is bought and sold, investments are made, subject to the
State’s power to regulate. Where a taking is alleged from regulations

1585
which deprive the property of all value, the test must be whether the
deprivation is contrary to reasonable, investment-backed expectations.
There is an inherent tendency towards circularity in this synthesis, of
course; for if the owner’s reasonable expectations are shaped by what
courts allow as a proper exercise of governmental authority, property tends
to become what courts say it is. Some circularity must be tolerated in these
matters, however, as it is in other spheres. The definition, moreover, is not
circular in its entirety. The expectations protected by the Constitution are
based on objective rules and customs that can be understood as reasonable
by all parties involved.
In my view, reasonable expectations must be understood in light of the
whole of our legal tradition. The common law of nuisance is too narrow a
confine for the exercise of regulatory power in a complex and
interdependent society. The State should not be prevented from enacting
new regulatory initiatives in response to changing conditions, and courts
must consider all reasonable expectations whatever their source. The
Takings Clause does not require a static body of state property law; it
protects private expectations to ensure private investment. I agree with the
Court that nuisance prevention accords with the most common
expectations of property owners who face regulation, but I do not believe
this can be the sole source of state authority to impose severe restrictions.
Coastal property may present such unique concerns for a fragile land
system that the State can go further in regulating its development and use
than the common law of nuisance might otherwise permit.
The Supreme Court of South Carolina erred, in my view, by reciting
the general purposes for which the state regulations were enacted without a
determination that they were in accord with the owner’s reasonable
expectations and therefore sufficient to support a severe restriction on
specific parcels of property. The promotion of tourism, for instance, ought
not to suffice to deprive specific property of all value without a
corresponding duty to compensate. Furthermore, the means as well as the
ends of regulation must accord with the owner’s reasonable expectations.
Here, the State did not act until after the property had been zoned for
individual lot development and most other parcels had been improved,
throwing the whole burden of the regulation on the remaining lots. This
too must be measured in the balance.

Justice HARRY A. BLACKMUN, dissenting.

Today the Court launches a missile to kill a mouse. The Court creates
its new taking jurisprudence based on the trial court’s finding that the
property had lost all economic value. This finding is almost certainly

1586
erroneous. Petitioner still can enjoy other attributes of ownership, such as
the right to exclude others, “one of the most essential sticks in the bundle
of rights that are commonly characterized as property.” Kaiser Aetna v.
United States, 444 U.S. 164, 176 (1979). Petitioner can picnic, swim, camp
in a tent, or live on the property in a movable trailer. State courts
frequently have recognized that land has economic value where the only
residual economic uses are recreation and camping. Petitioner also retains
the right to alienate the land, which would have value for neighbors and
for those prepared to enjoy proximity to the ocean without a house.
The Court [has] create[d] a new scheme for regulations that eliminate
all economic value. From now on, there is a categorical rule finding these
regulations to be a taking unless the use they prohibit is a background
common-law nuisance or property principle.
This Court repeatedly has recognized the ability of government, in
certain circumstances, to regulate property without compensation no
matter how adverse the financial effect on the owner may be. More than a
century ago, the Court explicitly upheld the right of States to prohibit uses
of property injurious to public health, safety, or welfare without paying
compensation: “A prohibition simply upon the use of property for
purposes that are declared, by valid legislation, to be injurious to the
health, morals, or safety of the community, cannot, in any just sense, be
deemed a taking or an appropriation of property.” Mugler v. Kansas, 123
U.S. 623, 668-669 (1887). On this basis, the Court upheld an ordinance
effectively prohibiting operation of a previously lawful brewery, although
the “establishments will become of no value as property.” Id. at 664.
Mugler was only the beginning in a long line of cases. In Powell v.
Pennsylvania, 127 U.S. 678 (1888), the Court upheld legislation
prohibiting the manufacture of oleomargarine, despite the owner’s
allegation that “if prevented from continuing it, the value of his property
employed therein would be entirely lost and he be deprived of the means
of livelihood.” Id. at 682. In Hadacheck v. Sebastian, 239 U.S. 394 (1915),
the Court upheld an ordinance prohibiting a brickyard, although the owner
had made excavations on the land that prevented it from being utilized for
any purpose but a brickyard. In Miller v. Schoene, 276 U.S. 272 (1928),
the Court held that the Fifth Amendment did not require Virginia to pay
compensation to the owner of cedar trees ordered destroyed to prevent a
disease from spreading to nearby apple orchards. The “preferment of [the
public interest] over the property interest of the individual, to the extent
even of its destruction, is one of the distinguishing characteristics of every
exercise of the police power which affects property.” Id. at 280.
More recently, in Goldblatt v. Hempstead, 369 U.S. 590 (1962), the

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Court upheld a town regulation that barred continued operation of an
existing sand and gravel operation in order to protect public safety.
“Although a comparison of values before and after is relevant,” the Court
stated, “it is by no means conclusive.” Id. at 594. In First Lutheran Church
v. Los Angeles County, 482 U.S. 304 (1987), the owner alleged that a
floodplain ordinance had deprived it of “all use” of the property. The
Court remanded the case for consideration whether, even if the ordinance
denied the owner all use, it could be justified as a safety measure.29 And in
Keystone Bituminous Coal [Association v. DeBenedictis, 480 U.S. 470
(1987)], the Court summarized over 100 years of precedent: “the Court has
repeatedly upheld regulations that destroy or adversely affect real property
interests.” 480 U.S. at 489, n.18.
These cases rest on the principle that the State has full power to
prohibit an owner’s use of property if it is harmful to the public. “[S]ince
no individual has a right to use his property so as to create a nuisance or
otherwise harm others, the State has not ‘taken’ anything when it asserts
its power to enjoin the nuisance-like activity.” Keystone Bituminous Coal,
480 U.S., at 491, n.20. It would make no sense under this theory to suggest
that an owner has a constitutionally protected right to harm others, if only
he makes the proper showing of economic loss.
Ultimately even the Court cannot embrace the full implications of its
per se rule: it eventually agrees that there cannot be a categorical rule for a
taking based on economic value that wholly disregards the public need
asserted. Instead, the Court decides that it will permit a State to regulate all
economic value only if the State prohibits uses that would not be permitted
under “background principles of nuisance and property law.”
Until today, the Court explicitly had rejected the contention that the
government’s power to act without paying compensation turns on whether
the prohibited activity is a common-law nuisance. The brewery closed in
Mugler itself was not a common-law nuisance, and the Court specifically
stated that it was the role of the legislature to determine what measures
would be appropriate for the protection of public health and safety. In
upholding the state action in Miller, the Court found it unnecessary to
“weigh with nicety the question whether the infected cedars constitute a
nuisance according to common law; or whether they may be so declared
by statute.” 276 U.S., at 280. Instead the Court has relied in the past, as the
South Carolina Court has done here, on legislative judgments of what
constitutes a harm.
The Court rejects the notion that the State always can prohibit uses it
deems a harm to the public without granting compensation because “the
distinction between ‘harm-preventing’ and ‘benefit-conferring’ regulation

1588
is often in the eye of the beholder.” Since the characterization will depend
“primarily upon one’s evaluation of the worth of competing uses of real
estate,” the Court decides a legislative judgment of this kind no longer can
provide the desired “objective, value-free basis” for upholding a
regulation. The Court, however, fails to explain how its proposed common
law alternative escapes the same trap.
The threshold inquiry for imposition of the Court’s new rule,
“deprivation of all economically valuable use,” itself cannot be determined
objectively. As the Court admits, whether the owner has been deprived of
all economic value of his property will depend on how “property” is
defined. The “composition of the denominator in our ‘deprivation’
fraction,” is the dispositive inquiry. Yet there is no “objective” way to
define what that denominator should be. “We have long understood that
any land-use regulation can be characterized as the ‘total’ deprivation of
an aptly defined entitlement. Alternatively, the same regulation can always
be characterized as a mere ‘partial’ withdrawal from full, unencumbered
ownership of the landholding affected by the regulation.” Michelman,
Takings, 1987, 88 Colum. L. Rev. 1600, 1614 (1988).
Even more perplexing, however, is the Court’s reliance on common-
law principles of nuisance in its quest for a value-free taking
jurisprudence. In determining what is a nuisance at common law, state
courts make exactly the decision that the Court finds so troubling when
made by the South Carolina General Assembly today: they determine
whether the use is harmful.
Common-law public and private nuisance law is simply a
determination whether a particular use causes harm. There is nothing
magical in the reasoning of judges long dead. They determined a harm in
the same way as state judges and legislatures do today. If judges in the
18th and 19th centuries can distinguish a harm from a benefit, why not
judges in the 20th century, and if judges can, why not legislators? There
simply is no reason to believe that new interpretations of the hoary
common law nuisance doctrine will be particularly “objective” or “value-
free.” Once one abandons the level of generality of sic utere tuo ut alienum
non laedas, one searches in vain, I think, for anything resembling a
principle in the common law of nuisance.
Finally, the Court justifies its new rule that the legislature may not
deprive a property owner of the only economically valuable use of his
land, even if the legislature finds it to be a harmful use, because such
action is not part of the “long recognized” “understandings of our
citizens.” These “understandings” permit such regulation only if the use is
a nuisance under the common law. Any other course is “inconsistent with

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the historical compact recorded in the Takings Clause.” It is not clear from
the Court’s opinion where our “historical compact” or “citizens’
understanding” comes from, but it does not appear to be history.
The principle that the State should compensate individuals for property
taken for public use was not widely established in America at the time of
the Revolution. “The colonists . . . inherited . . . a concept of property
which permitted extensive regulation of the use of that property for the
public benefit — regulation that could even go so far as to deny all
productive use of the property to the owner if, as Coke himself stated, the
regulation ‘extends to the public benefit . . . for this is for the public, and
every one hath benefit by it.’ ” F. Bosselman, D. Callies & J. Banta, The
Taking Issue 80-81 (1973), quoting The Case of the King’s Prerogative in
Saltpetre, 12 Co. Rep. 12-13 (1606).
Although, prior to the adoption of the Bill of Rights, America was
replete with land use regulations describing which activities were
considered noxious and forbidden, the Fifth Amendment’s Taking Clause
originally did not extend to regulations of property, whatever the effect.
Most state courts agreed with this narrow interpretation of a taking. Even
when courts began to consider that regulation in some situations could
constitute a taking, they continued to uphold bans on particular uses
without paying compensation, notwithstanding the economic impact,
under the rationale that no one can obtain a vested right to injure or
endanger the public.
Nor does history indicate any common-law limit on the State’s power
to regulate harmful uses even to the point of destroying all economic
value. Nothing in the discussions in Congress concerning the Taking
Clause indicates that the Clause was limited by the common-law nuisance
doctrine. In short, I find no clear and accepted “historical compact” or
“understanding of our citizens” justifying the Court’s new taking doctrine.

Justice JOHN PAUL STEVENS, dissenting.

The Court’s new [categorical] rule is wholly arbitrary. A landowner
whose property is diminished in value 95% recovers nothing, while an
owner whose property is diminished 100% recovers the land’s full value.
Moreover, because of the elastic nature of property rights, the Court’s new
rule will also prove unsound in practice. In response to the rule, courts
may define “property” broadly and only rarely find regulations to effect
total takings.
On the other hand, developers and investors may market specialized
estates to take advantage of the Court’s new rule. The smaller the estate,
the more likely that a regulatory change will effect a total taking. Thus, an

1590
investor may, for example, purchase the right to build a multi-family home
on a specific lot, with the result that a zoning regulation that allows only
single-family homes would render the investor’s property interest
“valueless.” In short, the categorical rule will likely have one of two
effects: Either courts will alter the definition of the “denominator” in the
takings “fraction,” rendering the Court’s categorical rule meaningless, or
investors will manipulate the relevant property interests, giving the Court’s
rule sweeping effect. To my mind, neither of these results is desirable or
appropriate, and both are distortions of our takings jurisprudence.
Like many bright-line rules, the categorical rule established in this case
is only “categorical” for a page or two in the U.S. Reports. No sooner does
the Court state that “total regulatory takings must be compensated,” than it
quickly establishes an exception to that rule. The exception provides that a
regulation that renders property valueless is not a taking if it prohibits uses
of property that were not “previously permissible under relevant property
and nuisance principles.” The Court’s holding today effectively freezes the
State’s common law, denying the legislature much of its traditional power
to revise the law governing the rights and uses of property. Arresting the
development of the common law is not only a departure from our prior
decisions; it is also profoundly unwise. The human condition is one of
constant learning and evolution — both moral and practical. Legislatures
implement that new learning; in doing so they must often revise the
definition of property and the rights of property owners. Thus, when the
Nation came to understand that slavery was morally wrong and mandated
the emancipation of all slaves, it, in effect, redefined “property.” On a
lesser scale, our ongoing self-education produces similar changes in the
rights of property owners: New appreciation of the significance of
endangered species, the importance of wetlands, and the vulnerability of
coastal lands, shapes our evolving understandings of property rights.
Of course, some legislative redefinitions of property will effect a
taking and must be compensated — but it certainly cannot be the case that
every movement away from common law does so. There is no reason, and
less sense, in such an absolute rule. We live in a world in which changes in
the economy and the environment occur with increasing frequency and
importance. If it was wise a century ago to allow Government “the largest
legislative discretion” to deal with “the special exigencies of the moment,”
Mugler, 123 U.S., at 669, it is imperative to do so today. The rule that
should govern a decision in a case of this kind should focus on the future,
not the past.30
[Justice David H. Souter stated that he would have dismissed the writ
of certiorari as improvidently granted. The factual conclusion of the trial

1591
court — that Lucas had been deprived of any economically viable use of
his property — was “questionable” but was not reviewed by the state
supreme court; thus it could not be reviewed by the Supreme Court.]
____________________

Palazzolo v. Rhode Island, 533 U.S. 606 (2001). Anthony Palazzolo

was denied permits to develop his waterfront property in Rhode Island by
a state agency charged with enforcing laws regulating construction on the
coast. After several unsuccessful attempts to obtain approval to fill in his
coastal marshlands and develop 74 homes there, Palazzolo sued the State
of Rhode Island, seeking $3,150,000 in compensation for a taking of his
property. He argued, on the authority of Lucas, that he had been denied all
economically viable use of his property because it appeared that the Rhode
Island Coastal Resources Management Council would not allow him to
build anything on the waterfront property. It did appear that the agency
would allow him to develop the upland part of the property away from the
water; that development was worth $200,000.
The Rhode Island Supreme Court rejected his takings claim for three
reasons. First, the court held that his claim was not ripe for decision; the
state agency had merely rejected several development proposals and had
not issued a final ruling that clearly denied any right to develop the
marshland area. Second, the court held that Palazzolo had not been
deprived of all economic value because he could develop the upland
property away from the water. Third, the court noted that at the time
Palazzolo acquired title to the property from the prior owner (a corporation
in which he had held shares and eventually became the sole shareholder),
the law regulating coastal development was already in place. The court
held that Palazzolo could have no “reasonable” investment-backed
expectations at the time he acquired title if existing laws at the time he
acquired title made his intended use of the property illegal. In effect, the
state court created a safe haven rule that would have protected the state
from any takings claim by an owner who obtained title after a regulatory
law restricting the use of that property came into effect.
The Supreme Court reversed the first and third findings and reserved
judgment on the second. Over the objections of three dissenters, the Court
found, first, that the evidence was sufficiently clear that the coastal agency
would not allow any of the marshland to be filled in; thus the scope of the
permitted development was clear and the takings claim was ripe for
decision. See also MacDonald, Sommer & Frates v. Yolo County, 477 U.S.
340, 351 (1986); Williamson County Regional Planning Commission v.
Hamilton Bank of Johnson City, 473 U.S. 172 (1985) (both holding that a

1592
takings claim is not ripe for decision unless the state has made a final
decision on the scope of the permitted development).
Second, the Supreme Court refused to define the constitutional
standard for determining whether Palazzolo had been denied all
economically viable use of his land. Because it appeared that he could
develop some of his land, but not all of it, the Court was confronted with
the “denominator” question reserved in Lucas. Was the development ban a
100 percent taking of the portion of his land that could not be developed or
only a partial taking of his whole parcel (the upland land that could be
developed combined with the marshland that could not be developed)?
Palazzolo had argued that it was irrelevant that he was allowed to develop
18 acres in the upland part of his property; because the wetlands law
prevented him from building on his substantial waterfront property, that
law had effectively converted a substantial portion of his property into a
“nature reserve,” denying him 100 percent of the value of that land. In
deciding whether this was a partial taking or a total taking, he argued that
the relevant denominator was the developable tract or some subset of his
whole property. The fact that he was allowed to develop part of his
property did not alter the fact that he was denied the right to develop most
of his land; the land he could not develop had been deprived of all
economically viable use. The Supreme Court found that Palazzolo had
effectively waived this argument below. However, Justice Kennedy
observed that “[s]ome of our cases indicate that the extent of deprivation
effected by a regulatory action is measured against the value of the parcel
as a whole, but we have at times expressed discomfort with the logic of
this rule.” 533 U.S. at 631.
Third, the Supreme Court reversed the ruling that states are insulated
from taking claims merely because an owner has acquired title after a
regulatory law went into effect. The fact that the owner took title with
notice of the regulation did not, by itself, immunize the state from facing a
challenge to the regulation as a taking of property. Justice Kennedy
explained, id. at 627-630:

The right to improve property, of course, is subject to the reasonable

exercise of state authority, including the enforcement of valid zoning and
land-use restrictions. The Takings Clause, however, in certain circumstances
allows a landowner to assert that a particular exercise of the State’s
regulatory power is so unreasonable or onerous as to compel compensation.
Just as a prospective enactment, such as a new zoning ordinance, can limit
the value of land without effecting a taking because it can be understood as
reasonable by all concerned, other enactments are unreasonable and do not
become less so through passage of time or title. Were we to accept the

1593
 State’s rule, the postenactment transfer of title would absolve the State of its
obligation to defend any action restricting land use, no matter how extreme
or unreasonable. A State would be allowed, in effect, to put an expiration
date on the Takings Clause. This ought not to be the rule. Future generations,
too, have a right to challenge unreasonable limitations on the use and value
of land.
Nor does the justification of notice take into account the effect on owners
at the time of enactment, who are prejudiced as well. Should an owner
attempt to challenge a new regulation, but not survive the process of ripening
his or her claim (which, as this case demonstrates, will often take years),
under the proposed rule the right to compensation may not be asserted by an
heir or successor, and so may not be asserted at all. The State’s rule would
work a critical alteration to the nature of property, as the newly regulated
landowner is stripped of the ability to transfer the interest which was
possessed prior to the regulation. The State may not by this means secure a
windfall for itself.
We have no occasion to consider the precise circumstances when a
legislative enactment can be deemed a background principle of state law or
whether those circumstances are present here. It suffices to say that a
regulation that otherwise would be unconstitutional absent compensation is
not transformed into a background principle of the State’s law by mere virtue
of the passage of title.

Because the lower court had found that this was not a 100 percent
taking of the property’s value, the Lucas rule did not apply. However, the
general multifactor Penn Central test did apply and the Supreme Court
remanded the case to be addressed under that standard.
Justice O’Connor concurred, agreeing that the acquisition of title after
a regulatory law was passed did not protect the state from a takings claim.
She explained, id. at 632-633 (O’Connor, J., concurring):

The more difficult question is what role the temporal relationship between
regulatory enactment and title acquisition plays in a proper Penn Central
analysis. Today’s holding does not mean that the timing of the regulation’s
enactment relative to the acquisition of title is immaterial to the Penn Central
analysis. Indeed, it would be just as much error to expunge this consideration
from the takings inquiry as it would be to accord it exclusive significance.
Our polestar instead remains the principles set forth in Penn Central itself
and our other cases that govern partial regulatory takings. Under these cases,
interference with investment-backed expectations is one of a number of
factors that a court must examine. Further, the regulatory regime in place at
the time the claimant acquires the property at issue helps to shape the
reasonableness of those expectations.
If investment-backed expectations are given exclusive significance in the

1594
 Penn Central analysis and existing regulations dictate the reasonableness of
those expectations in every instance, then the State wields far too much
power to redefine property rights upon passage of title. On the other hand, if
existing regulations do nothing to inform the analysis, then some property
owners may reap windfalls and an important indicium of fairness is lost. As I
understand it, our decision today does not remove the regulatory backdrop
against which an owner takes title to property from the purview of the Penn
Central inquiry. It simply restores balance to that inquiry. Courts properly
consider the effect of existing regulations under the rubric of investment-
backed expectations in determining whether a compensable taking has
occurred. As before, the salience of these facts cannot be reduced to any “set
formula.” The temptation to adopt what amount to per se rules in either
direction must be resisted. The Takings Clause requires careful examination
and weighing of all the relevant circumstances in this context.

Justice Scalia concurred but disagreed strongly with Justice O’Connor

on this point, id. at 636 (Scalia, J., concurring):

In my view, the fact that a restriction existed at the time the purchaser took
title (other than a restriction forming part of the “background principles of
the State’s law of property and nuisance”) should have no bearing upon the
determination of whether the restriction is so substantial as to constitute a
taking. The “investment-backed expectations” that the law will take into
account do not include the assumed validity of a restriction that in fact
deprives property of so much of its value as to be unconstitutional.

Justices Ginsburg, Souter, and Breyer dissented, disagreeing with the

majority’s conclusion that the state agency had come to a final ruling with
regard to the extent of development permitted on the property.
On remand, the Rhode Island trial court found that development of
Palazzolo’s salt marsh land south of a shallow, tidal pond would constitute
a public nuisance because it would inhibit the “valuable filtering system
regarding water runoff containing pollutants and nitrogen from adjacent
land.” Palazzolo v. State, No. WM 88-0297, 2005 WL 1645974, at *3 (R.I.
Super. Ct. 2005). The court also found that half of the property was below
the mean high water line, making it tidal land subject to the public trust
doctrine, which defines such lands as owned by the public and not subject
to private development at all. Finally, the court found that although one
upland site could be developed, almost no lower lots could ever have been
profitably developed because of the extraordinary engineering costs
involved in draining the site and preparing the site to support structures.
Thus, there was no taking of property.

1595
 Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional
Planning Agency, 535 U.S. 302 (2002). A regional planning agency
placed a temporary moratorium on construction around Lake Tahoe. The
moratorium officially lasted for 32 months, but a court injunction
effectively extended the ban on construction for as much as 6 years. The
construction ban was intended to allow the agency time to develop a plan
to limit construction around the lake to prevent the loss of Lake Tahoe’s
“exceptional clarity.” Unlike most lakes, Lake Tahoe lacked algae that
obscures the water clarity; the district court found that undue development
could change runoff patterns in a manner that would not only destroy this
clarity, but that it would be impossible to fix for 700 years, if at all.
Petitioners were owners of land around the lake who claimed that the
temporary building moratorium took all economically viable use of their
property for the period in which it was in effect and that this amounted to a
categorical (although temporary) taking of their property for which they
were entitled to compensation under the rule in Lucas.
The Court disagreed, refusing to find that a temporary building
moratorium was a per se taking of property. Justice Stevens explained that,
despite the attempts in Loretto and Lucas to develop some rules that could
identify categorical takings, the Court has “ ‘generally eschewed’ any set
formula” for identifying regulatory takings, instead engaging in
“essentially ad hoc, factual inquiries.” Id. at 326. “Indeed,” wrote Justice
Stevens, “we still resist the temptation to adopt per se rules in our cases
involving partial regulatory takings, preferring to examine ‘a number of
factors’ rather than a simple ‘mathematically precise’ formula.” Id. The
majority opinion went on to quote Justice O’Connor’s concurring opinion
in Palazzolo at some length, agreeing with her inclination to “resist[] the
temptation to adopt what amount to per se rules in either direction.” Id. at
321.
The Court acknowledged that a prior case, First English Evangelical
Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304
(1987), had held that owners are entitled to sue for compensation for
temporary takings of their property. When a regulation is determined to be
a taking, the government may either enforce the regulation and pay
compensation for the loss of property rights or decide to forgo enforcing
the regulation and pay compensation for the temporary loss of property
rights during the time the regulation limited the use of the property.
However, Justice Stevens explained that First English merely held that
compensation should be paid when a taking is found; it did not hold that a
temporary limit on construction necessarily constituted a taking.
The Court clarified that it meant what it said in Lucas: only a 100

1596
percent diminution in value of the property — a “complete elimination of
value” — triggered the Lucas rule. Id. at 330. Any lesser deprivation of
value is governed by the multifactor Penn Central test. See also Lingle v.
Chevron U.S.A., 544 U.S. 528, 538 (2005) (Lucas applies to regulations
that “completely deprive an owner of all economically beneficial use of
her property”). Because ownership extends over time as well as space, a
temporary moratorium, by definition, does not result in a complete
elimination of value, id. at 334-335:

[T]he extreme categorical rule that any deprivation of all economic use, no
matter how brief, constitutes a compensable taking surely cannot be
sustained. [Such a rule] would apply to numerous “normal delays in
obtaining building permits, changes in zoning ordinances, variances, and the
like,” as well as to orders temporarily prohibiting access to crime scenes,
businesses that violate health codes, fire-damaged buildings, or other areas
that we cannot now foresee. Such a rule would undoubtedly require changes
in numerous practices that have long been considered permissible exercises
of the police power. As Justice Holmes warned in Mahon, “government
hardly could go on if to some extent values incident to property could not be
diminished without paying for every such change in the general law.” 260
U.S. at 413. A rule that required compensation for every delay in the use of
property would render routine government processes prohibitively expensive
or encourage hasty decisionmaking. Such an important change in the law
should be the product of legislative rulemaking rather than adjudication.

Chief Justice Rehnquist dissented, along with Justices Scalia and

Thomas. They argued that the development ban, as extended by court
injunction, had actually lasted for six years and that such a long
moratorium was not reasonably related to legitimate land use planning
needs. The functional effect of the moratorium was to temporarily deny the
owners all economically viable use of their land, id. at 348 (Rehnquist,
C.J., dissenting):

The regulation in Lucas was the “practical equivalence” of a long-term

physical appropriation, i.e., a condemnation, so the Fifth Amendment
required compensation. The “practical equivalence,” from the landowner’s
point of view, of a “temporary” ban on all economic use is a forced
leasehold. For example, assume the following situation: Respondent is
contemplating the creation of a National Park around Lake Tahoe to preserve
its scenic beauty. Respondent decides to take a 6-year leasehold over
petitioners’ property, during which any human activity on the land would be
prohibited, in order to prevent any further destruction to the area while it was
deciding whether to request that the area be designated a National Park.

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 Surely that leasehold would require compensation.

Notes and Questions

1. Rules, standards, and the “denominator” problem. The Lucas
rule applies when an owner has been deprived of “economically viable
use,” but this seemingly bright line rule raises a variation on the
denominator problem that first emerged in the debate between Justice
Holmes and Justice Brandeis in Mahon. Consider a developer who seeks to
develop 50 acres. Does a regulation prohibiting development of 5 acres
constitute a 100 percent taking of the 5 acres or only a 10 percent taking of
the 50 acres? Is the denominator 5 or 50? This can have a great deal of
practical significance, because a regulation that falls within the Lucas rule
is generally more vulnerable than one that is evaluated based on Penn
Central’s ad hoc approach.
The Supreme Court has emphasized that the inquiry “must focus on
‘the parcel as a whole,’” 535 U.S. at 327. But what does this mean? In
Loveladies Harbor, Inc. v. United States, 28 F.3d 1171 (Fed. Cir. 1999),
the Federal Circuit held that the courts must use a “flexible approach,
designed to account for factual nuances” to determine the appropriate
“denominator” for calculating whether a Lucas total deprivation has
occurred. See also Dunes W. Golf Club, LLC v. Town of Mount Pleasant,
737 S.E.2d 601, 614-618 (S.C. 2013) (discussing the “Gordian Knot” of
the denominator question).
One possibility is the “whole property” owned by the developer — in
this case, the entire 50 acres. The trial judge on remand in Palazzolo used
this measure: “This Justice finds that the denominator or ‘parcel as a
whole’ is that property in which Palazzolo invested that is subject to the
regulations.” 2005 WL 1645974, at *3. Another possibility is the
“developable tract” or the area that could have been developed under
reasonable zoning laws — in this case the five acres. When air rights are at
issue, the courts have consistently held that a height limit does not
constitute a 100 percent taking of air rights over that limit; the
denominator is the tract as a whole. However, the Federal Circuit has
sometimes held that, in the context of wetlands regulations, the
denominator is the developable tract. Palm Beach Isles Associates v.
United States, 208 F.3d 1374 (Fed. Cir. 2000) (relevant parcel was a 50.7-
acre tract out of an original 311.7-acre purchase); Loveladies Harbor, Inc.
v. United States, supra (relevant parcel was a 12.5-acre tract out of an
original 51-acre purchase). The Federal Circuit continues to vacillate on
this issue. Compare Norman v. United States, 429 F.3d 1081, 1091 (Fed.
Cir. 2005) (proper denominator is the entire 2,280 acres held for

1598
development purposes, not the individual parcels), with Lost Tree Village
Corp. v. United States, 707 F.3d 1286, 1294 (Fed. Cir. 2013) (citing
Loveladies and finding that an individual plat rather than the larger
property originally purchased as one contiguous lot that included that plat,
was the relevant parcel). Should the denominator be the individual lots that
zoning and land use law allow to be separately developed? Which
definition of the “denominator” is correct?
The Supreme Court has granted certiorari in Murr v. Wisconsin, 136 S.
Ct. 890 (2016), to examine again the contours of the parcel-as-a-whole
rule. In 1960, William and Dorothy Murr purchased a parcel of land along
the St. Croix River in Wisconsin, on which they built a vacation cabin; in
1963, the couple bought an adjacent parcel, which remained undeveloped.
In 1994 and 1995, the couple transferred both parcels in turn to their
children. In 2004, the children decided to sell the empty parcel to raise
money to upgrade the cabin. A county ordinance passed in 1975, however,
required that parcels contain at least an acre of buildable land before
buildings could be constructed on them. The law permits building on
undeveloped lots under one acre created before 1976, but because the
Murrs own both lots, and there is already a residence on the combined lots,
their property does not qualify for the exception. Because the parcel the
Murr children wanted to sell had only half a buildable acre, it could not be
developed separately from the developed lot. The Murr children asserted
that the ordinance deprived them of “all, or practically all, of the use” of
the empty parcel, but a Wisconsin appellate court disagreed, upholding the
county’s treatment of the contiguous lots. See Murr v. State, 359 Wis. 2d
675, 859 N.W.2d 628 (Table), at *1-*2 (2014). Before the Supreme Court,
the case raises questions about the role of state law in defining property
interests for purposes of federal regulatory takings analysis and the
relevance of the timing of the transfers and the ordinance addressing the
treatment of contiguous parcels, among other issues. How would you
resolve Murr?
2. Background principles of property law. Many owners have
brought inverse condemnation cases challenging the application of
environmental protection statutes to their property. Many statutes designed
to protect the environment also severely restrict the development of
particular types of land, such as wetlands and habitats for endangered
species. The courts have traditionally upheld these regulations, even when
they have severely limited land development, by analogy to nuisance laws,
which prevent owners from using their land in a way that will injure the
community. See, e.g., Gardner v. N.J. Pinelands Commission, 593 A.2d

1599
251 (N.J. 1991); Presbytery of Seattle v. King County, 787 P.2d 907
(Wash. 1990); Just v. Marinette County, 201 N.W.2d 761 (Wis. 1972). The
Federal Circuit and the Court of Federal Claims have suggested or ruled
that compensation is required when wetlands or endangered species act
regulations have prevented all development of land. Palm Beach Isles
Associates v. United States, 231 F.3d 1354 (Fed. Cir. 2000) (wetlands);
Laguna Gatuna, Inc. v. United States, 50 Fed. Cl. 336 (2001) (Clean
Water Act regulations); Tulare Lake Basin Water Storage District v.
United States, 49 Fed. Cl. 313 (2001) (Endangered Species Act); Florida
Rock Industries, Inc. v. United States, 45 Fed. Cl. 21 (1999) (wetlands).
The question in these cases is whether laws that deprive owners of
“economically viable use” are constitutional because they “inhere in the
title itself, in the restrictions that background principles of the State’s law
of property and nuisance already place upon land ownership background
principles of the State’s law of property and nuisance” and thus regulate
conduct that was never part of the owner’s title in the first place? On
remand in Palazzolo, the court found that development of Palazzolo’s salt
marsh land south of a shallow, tidal pond would constitute a public
nuisance because it would inhibit the “valuable filtering system regarding
water runoff containing pollutants and nitrogen from adjacent land” and
thus his property rights never included the power to engage in this
proposed development. Palazzolo v. State, No. WM 88-0297, 2005 WL
1645974, at *3 (R.I. Super. Ct. 2005). In contrast, on remand in Lucas, the
South Carolina Supreme Court held that construction of housing on the
coast would not have constituted a public or private nuisance under the
common law existing before the regulatory laws limited such
development. Lucas v. South Carolina Coastal Council, 424 S.E.2d 484
(S.C. 1992).
Can “background principles” evolve? Justice Stevens, in his Lucas
dissent, argued that the decision “effectively freezes the State’s common
law,” but is there any reason why judges in evaluating common law
nuisances cannot recognize new harms? In Prah v. Maretti, 321 N.W.2d
182 (Wis. 1982), the Wisconsin Supreme Court recognized that
interference with solar panels can be a private nuisance, see Chapter 6, §3.
Does this suggest that the harm principle is no longer relevant?
3. Public nuisance and legislative latitude to define “background
principles.”
Legislatures have traditionally had wide latitude to define public nuisance
in order to address harms that would not necessarily constitute private
nuisances. In his Lucas concurrence and again in his majority opinion in

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Palazzolo, Justice Kennedy raised — but did not answer — the question
whether and in what way a legislative enactment can become a
“background principle” of a state’s law of property. One way this may
happen is when regulatory regimes become widespread enough that they
become part of the reasonable expectations of most owners.
Comprehensive zoning codes were considered innovative at the time the
Supreme Court validated that approach to regulating property in Village of
Euclid v. Ambler Realty Co., 272 U.S. 365 (1926). Today few owners
would question the idea that zoning is not a part of the background
principles of every state. Cf. Tahoe-Sierra Preservation Council, Inc. v.
Tahoe Regional Planning Agency, 535 U.S. 302, 351 (2002) (Rehnquist,
C.J., dissenting) (noting that legislative zoning regulations are background
principles of property law).
Public nuisance has also become increasingly important in the context
of criminal activity, which again raises the question of the latitude allowed
for abating public nuisances without compensation. In City of Seattle v.
McCoy, 4 P.3d 159 (Wash. Ct. App. 2000), the court found a regulatory
taking when a restaurant was temporarily closed as a drug nuisance when
the owner had acted reasonably and done as much as possible to prevent
the drug use. The court found a total taking under Lucas and that the
nuisance exception to Lucas did not apply because it interpreted state law
not to impose absolute liability for nuisance on an owner who took all
reasonable steps to prevent illegal activity on the property. The court held
that abatement of a business could not be based on illegal acts of business
patrons when the owners were not aware of or involved in the illegal
activity.
4. Destruction and necessity. In a footnote in Lucas, Justice Scalia
indicated that the destruction of “real and personal property, in cases of
actual necessity” need not be compensated. This issue arises commonly
when property is damaged pursuant to police activities. A car may be hit in
a chase; a building may be damaged in pursuit of a criminal. Most courts
hold that no compensation is required when such injuries occur. In
Eggleston v. Pierce County, 64 P.3d 618 (Wash. 2003), the court found no
taking when a home was rendered uninhabitable because of damage that
occurred when police executed a search of the house pursuant to a valid
search warrant. The police came to the house to arrest the owner’s son for
drug dealing; he engaged in an exchange of fire with the police and killed
a police officer. The search warrant authorized the police to take evidence
from the home; that evidence included two walls, one of which was load
bearing. Its removal made the house unstable and uninhabitable. The court

1601
held that the seizure of evidence for a criminal trial can never be a taking;
nor was the damage to the home pursuant to the police efforts to
apprehend a criminal. Accord, Kam-Almaz v. United States, 682 F.3d 1364
(Fed. Cir. 2012) (finding no taking from seizure and examination of laptop
at an airport immigration and customs station resulting in damage to the
hard drive and the loss of irretrievable business records); Johnson v.
Manitowoc County, 635 F.3d 331 (7th Cir. 2011) (destruction of a concrete
garage floor with a jackhammer during a murder investigation was not a
taking). In contrast, in Steele v. City of Houston, 603 S.W.2d 786 (Tex.
1980), the court found a taking when police had burned down an innocent
person’s home to eject suspects. Accord, Wegner v. Milwaukee Mutual
Insurance Co., 479 N.W.2d 38 (Minn. 1991).
Are governments liable for takings of property when they inadvertently
or negligently cause damage to property? Pumpelly v. Green Bay Co., 80
U.S. 166, 179, 181 (1872), holds that a taking has occurred if government
constructs a dam that floods property, thereby invading it and inflicting “a
serious interruption to the common and necessary use of property” in a
manner that “effectually destroy[s] or impair[s] its usefulness.” In Pacific
Bell v. City of San Diego, 96 Cal. Rptr. 2d 897 (Ct. App. 2000), the court
held that a city had taken property when a pipe leading to a fire hydrant
corroded and burst, flooding a house, because the “city’s water delivery
system was deliberately designed, constructed, and maintained without any
method or program for monitoring the inevitable deterioration of cast iron
pipes other than waiting for a pipe to break.” And in Richards v.
Washington Terminal Co., 233 U.S. 546 (1914), the Supreme Court held
that government may legislatively authorize a railroad to commit what
would otherwise be a nuisance without any requirement of paying
compensation for the lost value of property but that if a particular owner
suffers “special and peculiar damage” then compensation may be due. See
Carlos A. Ball, The Curious Intersection of Nuisance and Takings Law, 86
B.U. L. Rev. 819 (2006).
Hurricane Katrina led to the destruction of much of New Orleans, and
it has been argued that the damage was partly caused by negligent
construction of levees and the water drainage system, as well as design
flaws in the canal system in the city that caused the erosion of wetlands
and channeled water into particular areas of the city. If the homeowners in
New Orleans could prove that the flooding that destroyed most of the
property in the city would not have occurred if the flood control system
had been designed, built, and maintained better, do they have a takings
claim against the federal government that designed the flood control
system in the city? Nicholson v. United States, 77 Fed. Cl. 605 (2007),

1602
answered this question in the negative on the ground that a taking occurs
only if the government intends to invade a property interest or the harm is
the “direct, natural, or probable result of an authorized activity and not the
incidental or consequential injury inflicted by the action.” Id. at 617. Do
you agree with that approach?
5. Temporary takings and the temporal denominator. As Tahoe-
Sierra notes, the Court in First English Evangelical Lutheran Church of
Glendale v. County of Los Angeles, 482 U.S. 304 (1987), held that owners
might be able to obtain damages for a temporary taking if they were
prevented from using their property for any period. A court judgment that
a regulation constitutes a taking of property leaves the regulatory body
with the choice of enforcing the regulation (in which case compensation
must be paid for a permanent taking) or rescinding the regulation (in which
case the owner may have a claim for damages for a temporary taking for
the period when the regulation was enforced against him). However,
Tahoe-Sierra explained that a building ban does not necessarily constitute
a taking, especially if it is temporary. Tahoe-Sierra approached the
question of how long the period of a ban must be to give rise to a taking
the same way that the Court had approached the question of the
appropriate physical “denominator” for takings claims. Just as the owner
of Grand Central in the Penn Central case could not legitimately isolate
the physical area over which it had air rights as a distinctive “parcel,” the
Court in Tahoe-Sierra held that an owner cannot isolate the slice of time
over which it had the right to build as a distinctive (temporal) piece of
property. The parcel-as-a-whole rule prohibits this kind of conceptual
severance.

Problems
1. Justice Blackmun, in his Lucas dissent, notes that cases such as
Miller v. Schoene, 276 U.S. 272 (1928), have traditionally held that a state
could destroy property to prevent harm without paying compensation
without regard to whether it was a common law nuisance. After Lucas,
does it matter whether the property would have constituted a common law
private nuisance or not?
2. A developer who owns 50 acres of property subdivides it and sells
45 single-family homes on single-acre lots. One 5-acre parcel remains but
is designated as wetlands; under state law, the owner is prohibited from
building anything on it. The developer sues the state, arguing that the
wetlands regulation deprives her of any economically viable use for the 5
acres of wetlands; the diminution in value for this parcel is 100 percent.

1603
The state claims that the parcel represents 10 percent of the total area that
the developer had owned and that since the developer had sold 45 homes,
she was not deprived of economically viable use for her property. How
should the court analyze this question? Is this a 100 percent taking of the 5
acres or a 10 percent taking of the 50 acres? Should the owner be entitled
to compensation for her inability to develop the 5-acre parcel?
3. In Hunziker v. State, 519 N.W.2d 367 (Iowa 1994), a lot owner was
prevented from building a house on his lot when excavators discovered an
American Indian burial mound made between 1,000 and 2,500 years ago
in the middle of his property. A state statute in effect at the time the
developer purchased the land authorized the state archeologist to prohibit
owners from disinterring human remains found on private land if they had
historic significance. The archeologist so found and required a buffer zone
around the mound to protect its continued existence. The original
developers of the subdivision refunded the purchase price and took back
title and then sued the state, claiming that their inability to develop the lot
deprived them of all economically viable use and that the statute, as
applied to the lot, constituted a taking of property. The court held that the
Lucas rule did not apply because the restriction on developing property
where human beings are buried was part of the law of Iowa at the time the
owner purchased the land and thus “inhered in the title.” Because state law
did not allow development in these circumstances, the owner could not
have had a legitimate expectation of being able to so develop the property.
The case is appealed to the Supreme Court. Should it affirm or reverse? It
should be noted that state laws have traditionally regulated and required
the preservation of marked cemeteries but only recently have states passed
laws protecting older unmarked graves of American Indians. See Chapter
3, §7.2. Does this historical fact matter?

A Note on Regulatory Takings Procedures

Facial versus “as applied” challenges to regulations. A facial
challenge to a regulation is a claim that enforcement of the regulation
would necessarily constitute a taking of private property in every case;
thus, under no circumstances would the application of the statute be
constitutional. In contrast, a challenge to a regulation “as applied” argues
that the effect of the regulation on a particular parcel or parcels of property
owned by the plaintiff constitutes a taking of the plaintiff’s property.
Facial challenges are likely to succeed only in cases where a law imposes a
permanent physical invasion of property, Loretto v. Teleprompter
Manhattan CATV Corp., 458 U.S. 419 (1982), or completely extinguishes

1604
a core property right, such as the right to pass on fee simple property at
death, Babbitt v. Youpee, 519 U.S. 234 (1997). Otherwise, the owner must
demonstrate the individual impact on a particular parcel of property to
show that a law effects a taking as applied to that property.
Ripeness and preclusion. As the Supreme Court noted in Palazzolo v.
Rhode Island, 533 U.S. 606 (2001), a claim that one’s property has been
unconstitutionally taken without just compensation is premature (not
“ripe”) if the agency empowered to regulate the land use has not made a
final decision on the scope of the permitted development. In general, this
means that an owner must apply for a permit to develop the land and be
denied that right in a manner that suggests that further applications will be
fruitless. MacDonald, Sommer & Frates v. Yolo County, 477 U.S. 340
(1986); Williamson County Regional Planning Commission v. Hamilton
Bank of Johnson City, 473 U.S. 172 (1985). Moreover, the owner must
exhaust all appeals and administrative remedies available under state law
before challenging the state’s development limitation as a taking. Suitum v.
Tahoe Regional Planning Agency, 520 U.S. 725 (1997). Accord, City of
Monterey v. Del Monte Dunes at Monterey, Ltd., 526 U.S. 687, 721 (1999)
(a takings claim is not ripe until the owner has “been denied an adequate
postdeprivation remedy”).31
An owner who wishes to make a facial challenge to a regulatory law
may do so by choosing to sue in federal court; however, owners may not
bring “as-applied” takings claims in federal court before exhausting all
state remedies, and those remedies include bringing suit in state court to
argue that the regulation constitutes a taking of property. Moreover, once
an owner goes to state court to argue that a regulatory law constitutes a
taking of property as applied to that owner’s property, and the state courts
rule on the owner’s takings claim, the only way to attain federal court
review is by appealing through the state court system and then seeking a
writ of certiorari from the Supreme Court. The owner is not entitled to
bring an action in federal district court to challenge the ruling of a state
supreme court as effecting an unconstitutional taking because the federal
full faith and credit statute, 28 U.S.C. §1738, requires federal courts to
give preclusive effect to final state court judgments. San Remo Hotel L.P.
v. City & County of San Francisco, 545 U.S. 323 (2005). As a practical
matter, this means that almost all takings claims against states and local
governments are brought in state court in the first instance.
In City of Monterey, supra, the Supreme Court found that a city could
not avoid a takings challenge by repetitive and unfair procedures that
never seem to result in a final determination of the scope of the permitted

1605
land use. Palazzolo reaffirmed the conclusion that, when a local
government has repeatedly denied development permits, a court may
conclude that further applications would have been fruitless and that the
scope of the permitted development is known with sufficient finality and
certainty to entertain the takings challenge.
Civil rights. Section 1983 authorizes a party who has been deprived of
a federal right under the color of state law to seek relief through “an action
at law, suit in equity, or other proper proceeding for redress.” 42 U.S.C.
§1983. City of Monterey, supra, held that an owner may sue the city under
§1983 for violating its civil rights by taking its property through repeatedly
rejecting development proposals over a five-year period, thus arguably
denying the owner economically viable use of the property. The Supreme
Court affirmed the trial court’s finding that the city had both taken the
owner’s property and denied plaintiff equal protection by treating the
owner differently from other similarly situated owners without adequate
reason. City of Monterey approved the use of §1983 as a remedy for a
takings claim even though the effect of the ruling was to allow a jury
rather than the judge to decide whether a taking had occurred. The
Supreme Court held that this was permissible in that the jury’s discretion
was constrained by proper instructions limiting them to determining
whether the “the city’s particular decision to deny Del Monte Dunes’ final
development proposal was reasonably related to the city’s proffered
justifications.” Id. at 706. But see Wilkie v. Robbins, 551 U.S. 537 (2007)
(holding that the plaintiff could not assert a constitutional claim seeking
damages from the government for its decade-long harassment and
retaliation against him for not granting it an easement over his property).

§5 SPECIAL CASES
§5.1 Deprivation of Core Property Rights
In the United States, individuals are generally free to write a will
determining who will own their property when they die. Statutes require
wills to be in writing and to be witnessed (generally by two persons).
Individuals are free to sell or give away their property before death so as to
leave nothing to their family members when they pass on. Family
members have no right to inherit property. U.S. law generally allows
parents to disinherit their children. Every state does provide some
protection for surviving spouses, however. Most states allow a surviving
spouse to reject the will and recover a set portion of the decedent’s estate

1606
(statutory forced share statutes). Many states also protect the right of a
surviving spouse to continue living in the marital homestead. Other states
provide for joint ownership of property acquired during marriage and give
the surviving spouse half the community property acquired during the
marriage on the death of the spouse. The property of those who die without
a valid will is distributed to the decedent’s heirs as specified in the state
intestacy statute. Some intestacy laws divide the decedent’s property
between a surviving spouse and the children, while others leave everything
to the surviving spouse. If the decedent leaves no spouse and no children,
then other relatives are entitled to inherit, such as parents, uncles and
aunts, and cousins. If the decedent leaves no heirs, the property will
escheat to the state.
Could the state completely abolish the power to pass on one’s property
when one dies? Consider the following case.

Babbitt v. Youpee

519 U.S. 234 (1997)

Justice RUTH BADER GINSBURG delivered the opinion of the Court.
In this case, we consider for a second time the constitutionality of an
escheat-to-tribe provision of the Indian Land Consolidation Act (ILCA).
96 Stat. 2519, as amended, 25 U.S.C. §2206. Specifically, we address
§207 of the ILCA, as amended in 1984. Congress enacted the original
provision in 1983 to ameliorate the extreme fractionation problem
attending a century-old allotment policy that yielded multiple ownership of
single parcels of Indian land. Amended §207 provides that certain small
interests in Indian lands will transfer — or “escheat” — to the tribe upon
the death of the owner of the interest. In Hodel v. Irving, 481 U.S. 704
(1987), this Court held that the original version of §207 of the ILCA
effected a taking of private property without just compensation, in
violation of the Fifth Amendment to the United States Constitution. We
now hold that amended §207 does not cure the constitutional deficiency
this Court identified in the original version of §207.

I
In the late Nineteenth Century, Congress initiated an Indian land
program that authorized the division of communal Indian property.
Pursuant to this allotment policy, some Indian land was parceled out to
individual tribal members. Lands not allotted to individual Indians were
opened to non-Indians for settlement. See Indian General Allotment Act of

1607
1887, ch. 119, 24 Stat. 388. Allotted lands were held in trust by the United
States or owned by the allottee subject to restrictions on alienation. On the
death of the allottee, the land descended according to the laws of the State
or Territory in which the land was located. In 1910, Congress also
provided that allottees could devise their interests in allotted land.
The allotment policy “quickly proved disastrous for the Indians.”
Irving, 481 U.S. at 707. The program produced a dramatic decline in the
amount of land in Indian hands. And as allottees passed their interests on
to multiple heirs, ownership of allotments became increasingly
fractionated, with some parcels held by dozens of owners. A number of
factors augmented the problem: Because Indians often died without wills,
many interests passed to multiple heirs; Congress’ allotment Acts
subjected trust lands to alienation restrictions that impeded holders of
small interests from transferring those interests; Indian lands were not
subject to state real estate taxes, which ordinarily serve as a strong
disincentive to retaining small fractional interests in land. The
fractionation problem proliferated with each succeeding generation as
multiple heirs took undivided interests in allotments.
The administrative difficulties and economic inefficiencies associated
with multiple undivided ownership in allotted lands gained official
attention as early as 1928. See L. Meriam, Institute for Government
Research, The Problem of Indian Administration 40-41 (1928).
Governmental administration of these fractionated interests proved costly,
and individual owners of small undivided interests could not make
productive use of the land. Congress ended further allotment in 1934. See
Indian Reorganization Act, 25 U.S.C. §§461 et seq. But that action left the
legacy in place. As most owners had more than one heir, interests in lands
already allotted continued to splinter with each generation. In the 1960’s,
congressional studies revealed that approximately half of all allotted trust
lands were held in fractionated ownership; for over a quarter of allotted
trust lands, individual allotments were held by more than six owners to a
parcel.
In 1983, Congress adopted the ILCA in part to reduce fractionated
ownership of allotted lands. Section 207 of the Act — the “escheat”
provision — prohibited the descent or devise of small fractional interests
in allotments. Instead of passing to heirs, such fractional interests would
escheat to the tribe, thereby consolidating the ownership of Indian lands.
Congress defined the targeted fractional interest as one that both
constituted 2 percent or less of the total acreage in an allotted tract and had
earned less than $100 in the preceding year. Section 207 made no
provision for the payment of compensation to those who held such

1608
interests.
In Hodel v. Irving, this Court invalidated §207 on the ground that it
effected a taking of property without just compensation, in violation of the
Fifth Amendment. The appellees in Irving were, or represented, heirs or
devisees of members of the Oglala Sioux Tribe. But for §207, the
appellees would have received 41 fractional interests in allotments; under
§207, those interests would escheat to the Tribe. This Court tested the
legitimacy of §207 by considering its economic impact, its effect on
investment-backed expectations, and the essential character of the
measure. Turning first to the economic impact of §207, the Court in Irving
observed that the provision’s income-generation test might fail to capture
the actual economic value of the land. The Court next indicated that §207
likely did not interfere with investment-backed expectations. Key to the
decision in Irving, however, was the “extraordinary” character of the
Government regulation. As this Court noted, §207 amounted to the “virtual
abrogation of the right to pass on a certain type of property.” Such a
complete abrogation of the rights of descent and devise could not be
upheld.

II
In 1984, while Irving was still pending in the Court of Appeals for the
Eighth Circuit, Congress amended §207. Amended §207 differs from the
original escheat provision in three relevant respects. First, an interest is
considered fractional if it both constitutes 2 percent or less of the total
acreage of the parcel and “is incapable of earning $100 in any one of the
five years [following the] decedent’s death” — as opposed to one year
before the decedent’s death in the original §207. 25 U.S.C. §2206(a). If the
interest earned less than $100 in any one of five years prior to the
decedent’s death, “there shall be a rebuttable presumption that such
interest is incapable of earning $100 in any one of the five years following
the death of the decedent.” Id. Second, in lieu of a total ban on devise and
descent of fractional interests, amended §207 permits devise of an
otherwise escheatable interest to “any other owner of an undivided
fractional interest in such parcel or tract” of land. 25 U.S.C. §2206(b).
Finally, tribes are authorized to override the provisions of amended §207
through the adoption of their own codes governing the disposition of
fractional interests; these codes are subject to the approval of the Secretary
of the Interior. 25 U.S.C. §2206(c). In Irving, “we express[ed] no opinion
on the constitutionality of §207 as amended.” 481 U.S. at 710, n.1.
Under amended §207, the interests in this case would escheat to tribal

1609
governments. The initiating plaintiffs, respondents here, are the children
and potential heirs of William Youpee. An enrolled member of the Sioux
and Assiniboine Tribes of the Fort Peck Reservation in Montana, William
Youpee died testate in October 1990. His will devised to respondents, all
of them enrolled tribal members, his several undivided interests in allotted
trust lands on various reservations in Montana and North Dakota. These
interests, as the Ninth Circuit reported, were valued together at $1,239.
Each interest was devised to a single descendant. Youpee’s will thus
perpetuated existing fractionation, but it did not splinter ownership further
by bequeathing any single fractional interest to multiple devisees.

III
In determining whether the 1984 amendments to §207 render the
provision constitutional, we are guided by Irving.32 The United States
maintains that the amendments, though enacted three years prior to the
Irving decision, effectively anticipated the concerns expressed in the
Court’s opinion. As already noted, amended §207 differs from the original
in three relevant respects: It looks back five years instead of one to
determine the income produced from a small interest, and creates a
rebuttable presumption that this income stream will continue; it permits
devise of otherwise escheatable interests to persons who already own an
interest in the same parcel; and it authorizes tribes to develop their own
codes governing the disposition of fractional interests. These
modifications, according to the United States, rescue amended §207 from
the fate of its predecessor. The Government maintains that the revisions
moderate the economic impact of the provision and temper the character of
the Government’s regulation; the latter factor weighed most heavily
against the constitutionality of the original version of §207.
The narrow revisions Congress made to §207, without benefit of our
ruling in Irving, do not warrant a disposition different from the one this
Court announced and explained in Irving. Amended §207 still trains on
income generated from the land, not on the value of the parcel. The Court
observed in Irving that “even if . . . the income generated by such parcels
may be properly thought of as de minimis,” the value of the land may not
fit that description. The parcels at issue in Irving were valued by the
Bureau of Indian Affairs at $2,700 and $1,816, amounts we found “not
trivial.” The value of the disputed parcels in this case is not of a different
order; as the Ninth Circuit reported, the value of decedent Youpee’s
fractional interests was $1,239. In short, the economic impact of amended
§207 might still be palpable.

1610
 Even if the economic impact of amended §207 is not significantly less
than the impact of the original provision, the United States correctly
comprehends that Irving rested primarily on the “extraordinary” character
of the governmental regulation. Irving stressed that the original §207
“amount[ed] to virtually the abrogation of the right to pass on a certain
type of property — the small undivided interest — to one’s heirs.” 481
U.S. at 716. The Irving Court further noted that the original §207
“effectively abolish[ed] both descent and devise [of fractional interests]
even when the passing of the property to the heir might result in
consolidation of property.” 481 U.S. at 716. As the United States construes
Irving, Congress cured the fatal infirmity in §207 when it revised the
section to allow transmission of fractional interests to successors who
already own an interest in the allotment.
Congress’ creation of an ever-so-slight class of individuals equipped to
receive fractional interests by devise does not suffice, under a fair reading
of Irving, to rehabilitate the measure. Amended §207 severely restricts the
right of an individual to direct the descent of his property. Allowing a
decedent to leave an interest only to a current owner in the same parcel
shrinks drastically the universe of possible successors. And, as the Ninth
Circuit observed, the “very limited group [of permissible devisees] is
unlikely to contain any lineal descendants.” Moreover, amended §207
continues to restrict devise “even in circumstances when the governmental
purpose sought to be advanced, consolidation of ownership of Indian
lands, does not conflict with the further descent of the property.” Irving,
481 U.S. at 718.
The third alteration made in amended §207 also fails to bring the
provision outside the reach of this Court’s holding in Irving. Amended
§207 permits tribes to establish their own codes to govern the disposition
of fractional interests; if approved by the Secretary of the Interior, these
codes would govern in lieu of amended §207. See 25 U.S.C. §2206(c). The
United States does not rely on this new provision to defend the statute. Nor
does it appear that the United States could do so at this time: Tribal codes
governing disposition of escheatable interests have apparently not been
developed.

Justice JOHN PAUL STEVENS, dissenting.

Section 207 of the Indian Land Consolidation Act, 25 U.S.C. §2206,
did not, in my view, effect an unconstitutional taking of William Youpee’s
right to make a testamentary disposition of his property. As I explained in
Hodel v. Irving, 481 U.S. 704 (1987) (opinion concurring in judgment), the
Federal Government, like a State, has a valid interest in removing legal

1611
impediments to the productive development of real estate. For this reason,
the Court has repeatedly “upheld the power of the State to condition the
retention of a property right upon the performance of an act within a
limited period of time.” Texaco, Inc. v. Short, 454 U.S. 516, 529 (1982). I
remain convinced that “Congress has ample power to require the owners
of fractional interests in allotted lands to consolidate their holdings during
their lifetimes or to face the risk that their interests will be deemed to be
abandoned.” Hodel, 481 U.S. at 732 (Stevens, J., concurring in judgment).
The federal interest in minimizing the fractionated ownership of Indian
lands — and thereby paving the way to the productive development of
their property — is strong enough to justify the legislative remedy created
by §207, provided, of course, that affected owners have adequate notice of
the requirements of the law and an adequate opportunity to adjust their
affairs to protect against loss.
In my opinion, William Youpee did have such notice and opportunity.
More than six years passed from the time §207 was amended until Mr.
Youpee died on October 19, 1990 (this period spans more than seven years
if we count from the date §207 was originally enacted). During this time,
Mr. Youpee could have realized the value of his fractional interests
(approximately $1,239) in a variety of ways, including selling the
property, giving it to his children as a gift, or putting it in trust for them. I
assume that he failed to do so because he was not aware of the
requirements of §207. This loss is unfortunate. But I believe Mr. Youpee’s
failure to pass on his property is the product of inadequate legal advice
rather than an unconstitutional defect in the statute.

Notes and Questions

1. Was allotment a taking of property? As Justice Ginsburg notes,
the General Allotment Act of 1887 provided for the breakup of
communally held tribal property into allotments held by individual tribal
members. Congress took property owned by Indian nations and transferred
title over that land to individual tribal members, who then owned bits of
what had been tribal land. The act was intended to destroy tribal culture,
and eventually tribal sovereignty, and to speed the assimilation and
Christianization of American Indians by giving them individual property
rights. The allotment acts provided compensation to the tribes, but the
compensation was frequently far below market value.
In Lone Wolf v. Hitchcock, 187 U.S. 553 (1903), the Supreme Court
upheld allotment of Kiowa, Comanche, and Apache land against
challenges based on the fifth amendment and prior treaties. “We must

1612
presume that Congress acted in perfect good faith in the dealings with the
Indians,” the Court declared, and “as Congress possessed full power in the
matter, the judiciary cannot question or inquire into the motives which
prompted the enactment of this legislation.” Id. at 568. But cf. United
States v. Sioux Nation of Indians, 448 U.S. 371 (1980) (permitting a
limited takings claim for taking treaty land without a good faith attempt to
give compensation).
Was it fair for the Supreme Court to uphold the legislation that created
the problem of fractionated shares (the General Allotment Act) but to strike
down the legislation passed to correct the problems created by the act? If
the original allotment policy effected an unconstitutional taking of tribal
property, should this have affected the result in Babbitt?
2. Another attempt to address fractionation. The first two versions
of the Indian Land Consolidation Act (ILCA) were held unconstitutional in
Hodel v. Irving and Babbitt v. Youpee. Congress tried again, passing a
third version of the law in 2000, which it then amended in the American
Indian Probate Reform Act of 2004. See 25 U.S.C. §2206. It authorizes the
Indian nations to pass their own probate laws, and it prescribes a federal
probate code to determine devise and descent if the tribe does not enact its
own code. In general, the property of an allottee who dies intestate will go
to the decedent’s surviving spouse, with the remainder in the decedent’s
children, grandchildren, or great-grandchildren, or the decedent’s parents
or siblings, and if the decedent leaves no such relatives, the interest will go
to the tribe (unless a co-owner buys the interest for its fair market value).
If the interest is less than 5 percent of the total undivided ownership of the
property, the remainder can go only to one person — the oldest eligible
child, grandchild, great-grandchild, parent, or sibling, with the tribe as heir
of last resort. The allottee can get around these restrictions by writing a
valid will. If there is no tribal probate code regulating devise, the allottee
may devise the interest to lineal descendants, any co-owner of the
allotment, the tribe, or any Indian. The owner may also give a life estate to
any person (such as a non-Indian spouse or child), with the remainder
interest to be held by the tribe. The statute also gives the Secretary of the
Interior the power to partition highly fractionated allotments (with more
than 100 owners or 50 to 99 owners if none owns more than a 10 percent
interest). At such a partition sale, the only eligible buyers would be the
tribe, the tribe’s members, descendants of the original allottee, or co-
owners of the interest if they are members of another tribe.
3. Right to alienate property. Can the law prohibit an owner from
alienating her property without compensation? Consider the following

1613
cases.
Buchanan v. Warley, 245 U.S. 60 (1917). Twenty-one years after the
Supreme Court approved “separate but equal” public accommodations,
thereby approving state-mandated racial segregation in Plessy v. Ferguson,
163 U.S. 537 (1896), it struck down a local zoning law that promoted
racial segregation in housing. The Louisville city ordinance in Buchanan
prohibited both white persons and African Americans from purchasing
homes on a street that included a majority of owners of the opposite race.
Justice Day explained: “Property is more than the mere thing which a
person owns. It is elementary that it includes the right to acquire, use, and
dispose of it. The Constitution protects these essential attributes of
property.” Id. at 74. While reaffirming state-mandated racial segregation in
public accommodations, id. at 81, the Court found zoning laws that
prohibit the sale of real property on the basis of race deny “property rights
. . . by due process of law” and therefore are “not a legitimate exercise of
the police power” because they “annul[] . . . the civil right of a white to
dispose of his property if he saw fit to do so to a person of color and of a
colored person to make such disposition to a white person,” id. at 81-82.
Thus, although the Court mentioned the “right to acquire” property, its
focus in striking down the ordinance was denial of the “right to sell.”
Andrus v. Allard, 444 U.S. 51 (1979). The Eagle Protection Act and
the Migratory Bird Treaty Act were designed to protect various species of
birds from extinction. The statutes prohibited the sale of eagle feathers,
including those acquired before the act was passed. The Court held that the
statute did not effect a taking of property without just compensation
despite the total ban on sale, id. at 65-66:

The regulations challenged here do not compel the surrender of the artifacts,
and there is no physical invasion or restraint upon them. Rather, a significant
restriction has been imposed on one means of disposing of the artifacts. But
the denial of one traditional property right does not always amount to a
taking. At least where an owner possesses a full “bundle” of property rights,
the destruction of one “strand” of the bundle is not a taking, because the
aggregate must be viewed in its entirety. Regulations that bar trade in certain
goods have been upheld against claims of unconstitutional taking. For
example, the Court has sustained regulations prohibiting the sale of alcoholic
beverages despite the fact that individuals were left with previously acquired
stocks.

Is Andrus v. Allard consistent with Babbitt? Cf. Lucas v. South Carolina

Coastal Council, 505 U.S. 1003, 1027-1028 (1992), (citing Andrus as a
case about the high degree of state control over personal property as

1614
opposed to land).
4. Future interests and covenants. Courts and legislatures have often
changed the rules regulating the estates system. Some of these changes
have allowed individuals to create future interests that had previously been
illegal. For example, the Uniform Statutory Rule Against Perpetuities,
adopted in more than half the states, validates some future interests that
violate the traditional rule against perpetuities. Other changes have
invalidated future interests that had previously been lawful. For example,
some states limit possibilities of reverter and options to purchase property
to a set period, such as 30 years. Other states require future interests to be
re-recorded every 30 or 40 years to remain viable. Can these changes in
law be applied retroactively to property interests created before they were
passed?
Some courts allow time limits to be placed on contingent future
interests created before passage of the statute on the ground that the owner
had “no more than an expectation, a possibility” that an interest might
accrue in the future. Trustees of Schools of Township No. 1 v. Batdorf, 130
N.E.2d 111 (Ill. 1955) (upholding a marketable title act that retroactively
limited possibilities of reverter and rights of entry created before passage
of the act to 50 years). However, these courts usually find it important that
owners of previously created interests are given a limited time to re-
register the interest. See id. (one year to re-record interest was sufficient to
permit retroactive application of statute). Accord, Black Mountain Energy
Corp. v. Bell County Board of Education, 467 F. Supp. 2d 715 (D. Ky.
2006); Town of Brookline v. Carey, 245 N.E.2d 446 (Mass. 1969); see also
Walton v. City of Red Bluff, 3 Cal. Rptr. 2d 275 (Ct. App. 1991)
(upholding retroactive application of a statute converting a possibility of
reverter into a right of entry when owner had five years to re-record the
interest). However, some courts have held that some statutory changes in
the rule against perpetuities cannot constitutionally be retroactively applied
to property interests created before passage of the statute. Lake of the
Woods Association, Inc. v. McHugh, 380 S.E.2d 872 (Va. 1989) (holding
that the statutory wait and see test could not retroactively be applied to
preserve a preemptive right invalid under the traditional rule against
perpetuities).
Most of the cases abolishing male privileges associated with tenancy
by the entirety apply the statutes retroactively to tenancies created before
the effective date of the statute. Retroactive application is arguably
legitimate here because the unequal property rights associated with
tenancies by the entirety probably violate the equal protection clause.

1615
Kirchberg v. Feenstra, 450 U.S. 455 (1981). But see West v. First
Agricultural Bank, 419 N.E.2d 262 (Mass. 1981) (refusing to apply
retroactively a change in tenancy by the entirety law granting women
equal management powers over property).
Courts ordinarily do not find a taking when statutes retroactively alter
the enforceability of covenants by modifying the changed conditions or
relative hardship doctrines. Blakeley v. Gorin, 313 N.E.2d 903 (Mass.
1974); see also Barrett v. Dawson, 71 Cal. Rptr. 2d 899 (Ct. App. 1998)
(statute that retroactively precluded enforcement of restrictive covenants
limiting family day care homes in residential neighborhoods was not a
taking). However, some courts have found takings when a statute
retroactively increases or decreases the time period during which a
covenant will be enforceable. Compare Appalachee Entertainment v.
Walker, 463 S.E.2d 896 (Ga. 1995) (unconstitutional to apply a statute
allowing covenants to last for 30 years when the developer purchased the
property in reliance on a prior statute that limited covenants to 20 years),
with Bickford v. Yancey Development Co., 585 S.E.2d 78 (Ga. 2003)
(statute can apply to property purchased after the statute was in effect and
the covenants had been in existence for 20 years).

Problems
1. A state adopts a statute extending the rule against perpetuities to
possibilities of reverter and rights of entry on the ground it never made any
sense to strike down an executory interest in a third party under the rule
against perpetuities while enforcing an identical possibility of reverter held
by a descendant of the grantor. If the statute applies to conveyances made
prior to the effective date of the statute, would this constitute a taking of
property without just compensation?
2. Does the state have to compensate an owner if it acquires the
owner’s property by adverse possession? What are the arguments on both
sides of this question? Compare Pascoag Reservoir & Dam, L.L.C. v.
Rhode Island, 217 F. Supp. 2d 206 (D.R.I. 2002), aff’d on other grounds,
337 F.3d 87 (1st Cir. 2003) (holding that compensation is constitutionally
required), with Weidner v. State, 860 P.2d 1205 (Alaska 1993); Stickney v.
City of Saco, 770 A.2d 592, 2001 ME 69 (Me. 2001) (both holding that no
compensation is due).
3. In Bormann v. Board of Supervisors in and for Kossuth County, 584
N.W.2d 309 (Iowa 1998), a state law authorized the creation of
“agricultural areas” in which particular owners were entitled to immunity
from certain nuisance claims by neighbors. Similar “right-to-farm” statutes

1616
have been enacted in many states. Neighbors challenged the statute
because it deprived them of rights they had under prior law to be protected
against nuisances committed on neighboring property. The Iowa Supreme
Court held the statute unconstitutionally took the right to be free from
nuisances from owners in the affected areas and granted farmers a kind of
easement — a right to commit a nuisance affecting neighboring property.
Because property law traditionally gave owners the right to be free from
unreasonable and substantial interferences with their use or enjoyment of
their property, the Iowa Supreme Court concluded that the statute
authorizing farmers to commit nuisances effectuated an unconstitutional
taking of the property rights of those affected by what would otherwise
have constituted an actionable nuisance. Assume the Supreme Court
agrees to hear the case on appeal. Should the court’s ruling be affirmed or
reversed?
4. Massachusetts has a statute that gives the municipality where
property is located a right of first refusal to purchase land of five acres or
more used and zoned for agricultural purposes. The municipality has the
right to match a bona fide third-party offer and take title to the land for that
price. It also has the option to purchase the land for its fair market value if
the owner discontinues the agricultural use. The act applies only if the
owner has applied to the municipality and been granted the right to have
the land assessed as agricultural land for property tax purposes, resulting in
much lower than normal property taxes on the land. Mass. Gen. Laws ch.
61A, §14. Does the statute violate the takings clause?
A local condominium conversion ordinance gives tenants a right of
first refusal to purchase their units if the landlord chooses to convert the
apartment building to condominiums. Does the ordinance violate the
takings clause? If so, on what grounds?

§5.2 Vested Rights and Transitional Relief

A lot is zoned for institutional use and, in reliance on that zoning
designation, a university obtains a building permit, complying with all
applicable construction regulations, and builds a classroom building. Two
years after the building is completed, the city completes a “downzoning”
project and rezones much of the land in the city to limit the placement and
development of institutional and commercial uses and increase areas zoned
for housing. The land on which the classroom building sits is now placed
in a district limited to residential uses. Is the university obligated to tear
down the building and construct an apartment building in its place? The
answer is no, partly because it is likely the state zoning enabling act and

1617
the city zoning ordinance itself have provisions to grandfather prior
nonconforming uses and partly because any such requirement would
almost certainly constitute a taking of property without just compensation.
Once an owner invests substantially in reliance on applicable zoning
and building requirements, the owner acquires a “vested right” to the
existing use that cannot be changed retroactively unless the regulatory law
is designed to prevent the owner from committing a nuisance or otherwise
harming individuals or the public. In Dobbins v. Los Angeles, 195 U.S.
223 (1904), the Supreme Court held that a zoning law prohibiting the use
of a parcel of land for a gasworks could not be retroactively applied to an
owner unless just compensation was paid when the use was lawful at the
time the owner bought the property, the owner had already invested
substantially in the project, and the owner had begun construction.
However, it also held that retroactive regulations are lawful without
compensation when the legislating body could have rationally believed
that the regulation was needed to prevent the owner from committing a
public or private nuisance or otherwise causing harm to individuals or to
property. In Dobbins, however, the Court found that, because the property
was located in an industrial district, there was no indication that the law
had been changed to prevent a nuisance or other harm to neighboring
owners or the public.
In contrast, Mugler v. Kansas, 123 U.S. 623 (1887), upheld a state
constitutional amendment prohibiting the manufacture and sale of
alcoholic beverages on the ground that it promoted the public health,
welfare, safety, and morals by outlawing a public nuisance and thus did
not unconstitutionally take the property of a brewery owner. See also
Keystone Bituminous Coal Association v. DeBenedictis, 480 U.S. 470
(1970) (upholding a regulatory law requiring substantial amounts of coal
to be left in place under the ground to support the surface and prevent
subsidence of surface structures); Goldblatt v. Hempstead, 369 U.S. 590
(1962) (upholding a law that prevents continued operation of a quarry in
residential area); Miller v. Schoene, 276 U.S. 272 (1928) (upholding an
order to destroy diseased cedar trees to prevent infection of nearby
orchards); Hadacheck v. Sebastian, 239 U.S. 394 (1915) (upholding a law
barring operation of brick mill in a residential area).
The vested rights principle was applied in Kaiser Aetna v. United
States, 444 U.S. 164 (1979), when the Supreme Court found that a private,
fee-paying marina club could not be forced to provide free public access to
its lagoon when it invested in an expensive construction project to connect
the lagoon to public navigable waters. The Supreme Court held that
requiring the club to allow access to its property by non-paying members

1618
of the public would interfere with its “reasonable investment backed
expectations” as well as imposing a forced physical invasion by strangers
to its land. Id. at 175, 179-180.33 Laws that adjust the burdens of economic
life, such as consumer protection laws, workplace regulations, and changes
in tort laws that require compensation when one causes harm to others,
have almost never been ruled to be unconstitutional takings of property.
However, some such changes so alter established expectations that they
have been challenged as unconstitutional takings of property; although
such claims generally fail, the courts do take them seriously. Retroactivity
is also an issue under the due process clause. See Chapter 14, §3.1.

Problems
1. In Mann v. Georgia Department of Corrections, 653 S.E.2d 740
(Ga. 2007), the Georgia Supreme Court held that a state statute prohibiting
registered sex offenders from living or working within 1,000 feet of any
facility where minors congregate, see Ga. Code §42-1-15, constituted a
taking of property as applied to a sex offender who was forced to move
after a child care center opened a facility within 1,000 feet of his home.
The court noted that “it is apparent that there is no place in Georgia where
a registered sex offender can live without being continually at risk of being
ejected.” 653 S.E.2d at 755. Moreover, the effect of the statute “is to
mandate appellant’s immediate physical removal from his . . . residence.”
The court noted “the strong governmental interests that are advanced by
the residency restriction” on sex offenders, but also found that the law
effectively allowed “private third parties” to establish child-centered uses
and thereby “force a registered sex offender . . . to forfeit valuable property
rights in his legally-purchased home.” Was the case correctly decided?
2. In the 1960s, the federal government promoted the construction of
low-income housing by private developers by providing mortgage
insurance that allowed the developers to obtain funds from private lenders
for 40-year low-interest mortgages. In return, the developers consented to
extensive government regulation of the properties. The terms of the
mortgages provided that they could be prepaid without government
approval after 20 years and that doing so would lift the restrictions arising
from the regulations. In 1990, to stop a mass withdrawal of properties from
the program through prepayment, Congress enacted statutes that
effectively nullified the prepayment right. Although Congress reinstated
the prepayment rights in 1996, in Cienega Gardens v. United States, 331
F.3d 1319 (Fed. Cir. 2003), the Federal Circuit held that the developers
had a vested property right to “buy out” of the program. The repeal of this

1619
right constituted a temporary taking under the ad hoc test for the four
plaintiffs for whom the trial court had made findings of fact. However,
when on remand the trial court held that the measure took property of the
other developers, the Federal Circuit reversed, holding that the court had to
consider the impact of the measure on the value of the property as a whole,
the benefits that the developers received from participation in the program,
and the extent of reliance on the prepayment option. Cienega Gardens v.
United States, 503 F.3d 1266 (Fed. Cir. 2007). How should the court on
remand analyze the question of whether denying prepayment rights
constituted a taking of property that interfered with the owner’s reasonable
investment-backed expectations? See CCA Associates v. United States, 667
F.3d 1239, 1244-1248 (Fed. Cir. 2011).
3. Massachusetts passed a law requiring tobacco companies to reveal
the components in their cigarette products. Such disclosure was intended
to ensure that potential users knew what ingredients they would be
ingesting. However, those ingredients were also trade secrets, and the First
Circuit held the state law to constitute a taking of property without just
compensation. What are the arguments on both sides of this case? Philip
Morris, Inc. v. Reilly, 312 F.3d 24 (1st Cir. 2002).
4. Assume a community property state has a law that allows courts to
grant alimony on divorce. The law divides property acquired during the
marriage equally and in a mechanical fashion, with half going to each
spouse. The legislature adopts a statute providing for “equitable
distribution of the property” acquired during the marriage on the ground
that mechanical division does not account for a number of factors relevant
to the property distribution, as the overwhelming majority of states now
recognize. A court awards a wife 60 percent of the property acquired
during the marriage rather than 50 percent pursuant to its determination
that this is the most equitable result. The husband argues that the statute
cannot be constitutionally applied to marriages that were celebrated before
the statute was passed; to do so would constitute a taking of 10 percent of
the property from the husband to be transferred to the wife. How should
the case be decided? Cf. In re Marriage of Heikes, 899 P.2d 1349 (Cal.
1995) (statute allowing a divorcing spouse to be reimbursed for the value
of separate property used during marriage to purchase community property
jointly owned by both spouses cannot be constitutionally applied to
divorces filed before passage of the statute).

§5.3 Judicial Takings

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 Stop the Beach Renourishment, Inc. v. Florida Department of
Environmental Protection, 560 U.S. 702 (2010). In Florida, beachfront
property is generally divided into private (“littoral”) ownership of dry land
and public ownership of what is called the foreshore, the land between the
low-tide line and the mean high-water line. When dry land is added to a
beach in a slow, gradual way (called an accretion), that new land is added
to the littoral owner’s property. When new land is added suddenly (a
transition called an avulsion), that new land becomes the property of the
state. Beachfront owners traditionally also had a right of access to the
water, among other “littoral” rights.
In 1961, Florida established a process for local governments to deposit
sand to restore beaches eroded after storms and to maintain those restored
beaches. For projects that involve depositing sand on submerged land
owned by the state, the state sets an “erosion control line,” which then
replaces the traditional fluctuating boundary between private ownership
and the state’s property in the foreshore. Once that fixed line is set, private
owners lose the right to add to their land through accretions when the
mean high-water line moves seaward.
In 2003, the city of Destin and Walton County began the process of
restoring 6.9 miles of beach damaged by hurricanes, planning to add
roughly 75 feet of dry sand seaward of the erosion control line. A
nonprofit formed by beachfront property owners called Stop the Beach
Renourishment, Inc. sued to stop the project, asserting that the restoration
project eliminated the littoral owners’ rights to receive accretions to their
property and to have contact between their property and the water. The
Florida Supreme Court concluded that the restoration fell under the
doctrine of avulsion, albeit an avulsion caused by the state, with right to
accretions being a future contingent interest rather than a vested property
right, and found there was no independent right of contact with the water.
Stop the Beach Renourishment, Inc. then unsuccessfully sought rehearing
on the argument that the decision itself constituted a taking.
Before the Supreme Court, the threshold question was whether the
decision of a state high court could take property. In answering in the
affirmative for a four-Justice plurality, Justice Scalia argued that:

The Takings Clause (unlike, for instance, the Ex Post Facto Clauses, see
Art. I, §9, cl. 3; §10, cl. 1) is not addressed to the action of a specific branch
or branches. It is concerned simply with the act, and not with the
governmental actor (“nor shall private property be taken” (emphasis added)).
There is no textual justification for saying that the existence or the scope of a
State’s power to expropriate private property without just compensation

1621
 varies according to the branch of government effecting the expropriation.
Nor does common sense recommend such a principle. It would be absurd to
allow a State to do by judicial decree what the Takings Clause forbids it to
do by legislative fiat.
To be sure, the manner of state action may matter: Condemnation by
eminent domain, for example, is always a taking, while a legislative,
executive, or judicial restriction of property use may or may not be,
depending on its nature and extent. But the particular state actor is irrelevant.
If a legislature or a court declares that what was once an established right of
private property no longer exists, it has taken that property, no less than if the
State had physically appropriated it or destroyed its value by regulation.

Having decided that a “judicial taking” is a constitutional possibility,

however, Justice Scalia concluded that no such taking had occurred,
finding that Stop the Beach Renourishment, Inc. failed to meet its burden
of demonstrating that the Florida Supreme Court’s interpretation of the
right to accretions and the right to have littoral property touch the water
was inconsistent with prior state law.
In a concurrence, Justice Kennedy, joined by Justice Sotomayor,
agreed with the plurality that there are constitutional limits to the
judiciary’s ability to redefine an “established property right,” but argued
that this would be a violation of due process that can be enjoined rather
than a taking of property that can be accomplished with just compensation.
Thus, six Justices agree, in some fashion, that judicial infringement of
property rights raises constitutional problems. In a separate concurrence,
Justice Breyer, joined by Justice Ginsburg, agreed that no taking had
occurred, but would not have reached the question whether a judicial
decision can violate the takings clause.

Notes and Questions

1. Judiciary as the state actor for takings. Almost all claims that
property has been unlawfully “taken” without compensation involve
challenges to legislative or administrative actions. Barton H. Thompson,
Jr., in a well-known article, Judicial Takings, 76 Va. L. Rev. 1449 (1990),
argued that judicial interpretations of the common law or changes in
common law rules could constitute a taking of property, and Justice Scalia
embraced this proposition in his plurality opinion in Stop the Beach
Renourishment. The plurality’s approach raises important questions about
takings law and the role of the judiciary.
On one hand, there is no inherent reason why a state supreme court’s
interpretation of the common law could not unfairly divest owners of

1622
rights they had assumed belonged to them, thereby unjustly interfering
with investment-backed expectations. And it is certainly not unheard of for
the Supreme Court to recognize the judiciary as the relevant state actor in
constitutional cases. See, e.g., Shelley v. Kraemer, 334 U.S. 1 (1948).
On the other hand, interpreting the law is not necessarily the same
thing as enforcing private agreements, and courts often define the rights
that go along with property ownership through the common law process. If
changes in common law rules can represent takings of property, the courts
could be significantly curtailed in modernizing the law. They might even
be disempowered from holding that a prior case was distinguishable from
the current case.
2. Takings versus due process, again. Justice Kennedy had earlier
stated a view similar to the position he took in concurrence in Stop the
Beach Renourishment as the deciding Justice in a concurrence in Eastern
Enterprises v. Apfel, 524 U.S. 498 (1998). Apfel involved a statute that
required Eastern Enterprises to contribute funds for health benefits for
retired coal miners who had worked for it before 1966 even though the
company had left the coal business in 1966. The company had previously
signed labor agreements obligating it to contribute certain amounts to trust
funds established for this purpose, but the statute obligated it to contribute
an additional $50 to $100 million. A four-Justice plurality would have held
this to be a taking of property, arguing that legislation is unconstitutional
“if it imposes severe retroactive liability on a limited class of parties that
could not have anticipated the liability, and the extent of that liability is
substantially disproportionate to the parties’ experience.” 524 U.S. at 528-
529. The plurality found this standard met because Eastern Enterprises’
new liability was not proportional to its experience with the plan and
substantially interfered with its investment-backed expectations by
imposing obligations based on events that had happened 30 years earlier.
In addition, no pattern of regulation would have placed Eastern on notice
that such large, disproportionate, retroactive obligations might be
forthcoming.
However, a five-Justice majority took a different approach, all
agreeing that the case should not be resolved under the takings clause.
Justice Kennedy voted with the four-Justice plurality to hold the statute
unconstitutional as applied to Eastern, but did so under the due process
clause, arguing that the problem with the law was not that it “took”
property but was unfairly retroactive. “If retroactive laws [of great
severity] change the legal consequences of transactions long closed, the
change can destroy the reasonable certainty and security which are the

1623
very objects of property ownership.” Id. at 548-549. (Kennedy, J.,
concurring in the judgment and dissenting in part). The four other
dissenting Justices agreed that the statute should be evaluated under the
due process clause, but would have held that it was not unfair retroactive
legislation both because Eastern had led its employees to expect that it
would take care of them and because it was not unfair to require Eastern to
compensate its own workers for medical problems caused by their
exposure to coal dust on the job.
Is due process a better constitutional framework than the takings clause
for evaluating state actions that retroactively upset investment-backed
expectations? What are the arguments on both sides? For one approach,
see Eduardo Moisés Peñalver & Lior Jacob Strahilevitz, Judicial Takings
or Due Process?, 97 Cornell L. Rev. 305 (2012) (arguing that the takings
clause is more appropriate where judicial decisions intentionally seize
private property to achieve legitimate public ends, but due process better
serves to analyze cases where there is no intent to appropriate or the
judicial action is claimed to serve no legitimate public purpose).
3. Practical difficulties with judicial takings. Because only four
members of the Court endorsed the theory of judicial takings, it may not be
necessary to work out the range of difficult procedural questions the
doctrine poses any time soon. Those questions include how to join the
state if the suit initially involves only private parties; what remedies should
be available and, if compensation is required, how to compel the state to
pay for the results of a judicial decision; and how to address the claims of
owners whose property may be “taken” by a judicial decision to which
they are not a party, among others. See generally D. Benjamin Barros, The
Complexities of Judicial Takings, 45 U. Rich. L. Rev. 903 (2011).
4. Custom and beach access. One area where judicial takings has
been an issue is in public access to beaches. See Chapter 1, §4. In McBryde
Sugar Co. v. Robinson, 504 P.2d 1330 (Haw. 1973), the Hawai`i Supreme
Court overruled a Territorial Court decision holding that two sugar
plantation owners possessed certain water rights in their land. Territory v.
Gay, 31 Haw. 376, 387-388, aff’d, 52 F.2d 356 (9th Cir. 1930). The
Hawai`i Supreme Court held that this pre-statehood decision had
unlawfully divested native Hawaiians of their traditional customary rights
of access to water and that the state had the exclusive right to control the
flow of the river in question. The property owners whose water rights were
divested sued state officials, claiming that the court’s decision in McBryde
effectuated a taking of their property rights. The state defended on the
grounds that the McBryde court overruled a prior decision in an effort to

1624
correct an error, that the overruled decision had itself effectuated a taking
of native Hawaiians’ property, and that the sugar companies never had
rights to the land free of preexisting water easements. The Ninth Circuit
ruled, in Robinson v. Ariyoshi, 753 F.2d 1468 (9th Cir. 1984), aff’g 441 F.
Supp. 559 (D. Haw. 1977), vacated on other grounds, 477 U.S. 902
(1986), that the McBryde decision unconstitutionally took the “vested”
property rights of the plantation owners without compensation.
By comparison, in Stevens v. City of Cannon Beach, 854 P.2d 449 (Or.
1993), Oregon beachfront owners unsuccessfully charged that the Oregon
Supreme Court had effected a taking of their property when it applied the
common law doctrine of custom to rule that the public had a right of
access to dry sand areas of beaches for recreational purposes in State ex
rel. Thornton v. Hay, 462 P.2d 671 (Or. 1969). The U.S. Supreme Court
denied certiorari, 510 U.S. 1207 (1994), but Justices Scalia and O’Connor
dissented from that denial, Justice Scalia writing that although “the
Constitution leaves the law of real property to the States,” a state may not
“deny” property rights “by invoking nonexistent rules of state substantive
law.” Justice Scalia argued that the Oregon Supreme Court had misapplied
the English doctrine of custom. “It is by no means clear that the facts —
either as to the entire Oregon coast, or as to the small segment at issue here
— meet the requirements for the English doctrine of custom.” See also
Esplanade Properties, L.L.C. v. City of Seattle, 307 F.3d 978 (9th Cir.
2002) (restriction on construction in tidelands area is not a taking because
the public trust doctrine had always prohibited such uses to preserve public
access).
What does it mean to say that the Oregon Supreme Court misapplied
the English doctrine of custom? Isn’t the issue the definition of the Oregon
doctrine of custom? How could the Oregon Supreme Court get that wrong,
if it is the final arbiter of what Oregon law is? Does it matter that the
Oregon Supreme Court viewed the case as one of first impression?

§6 EXACTIONS AND LINKAGE REQUIREMENTS

Koontz v. St. Johns River Water Management District

133 S. Ct. 2586 (2013)

Justice SAMUEL A. ALITO delivered the opinion of the Court.
In 1972, petitioner purchased an undeveloped 14.9-acre tract of land on
the south side of Florida State Road 50, a divided four-lane highway east
of Orlando. The property is located less than 1,000 feet from that road’s

1625
intersection with Florida State Road 408, a tolled expressway that is one of
Orlando’s major thoroughfares.
A drainage ditch runs along the property’s western edge, and high-
voltage power lines bisect it into northern and southern sections. The
combined effect of the ditch, a 100-foot wide area kept clear for the power
lines, the highways, and other construction on nearby parcels is to isolate
the northern section of petitioner’s property from any other undeveloped
land. Although largely classified as wetlands by the State, the northern
section drains well; the most significant standing water forms in ruts in an
unpaved road used to access the power lines. The natural topography of
the property’s southern section is somewhat more diverse, with a small
creek, forested uplands, and wetlands that sometimes have water as much
as a foot deep. A wildlife survey found evidence of animals that often
frequent developed areas: raccoons, rabbits, several species of bird, and a
turtle. The record also indicates that the land may be a suitable habitat for
opossums.
The same year that petitioner purchased his property, Florida enacted
the Water Resources Act, which divided the State into five water
management districts and authorized each district to regulate “construction
that connects to, draws water from, drains water into, or is placed in or
across the waters in the state.” 1972 Fla. Laws ch. 72-299, pt. IV, §1(5),
pp. 1115, 1116 (codified as amended at Fla. Stat. §373.403(5) (2010)).
Under the Act, a landowner wishing to undertake such construction must
obtain from the relevant district a Management and Storage of Surface
Water (MSSW) permit, which may impose “such reasonable conditions”
on the permit as are “necessary to assure” that construction will “not be
harmful to the water resources of the district.” 1972 Fla. Laws §4(1), at
1118 (codified as amended at Fla. Stat. §373.413(1)).
In 1984, in an effort to protect the State’s rapidly diminishing
wetlands, the Florida Legislature passed the Warren S. Henderson
Wetlands Protection Act, which made it illegal for anyone to “dredge or
fill in, on, or over surface waters” without a Wetlands Resource
Management (WRM) permit. 1984 Fla. Laws ch. 84-79, pt. VIII,
§403.905(1), pp. 204-205. Under the Henderson Act, permit applicants are
required to provide “reasonable assurance” that proposed construction on
wetlands is “not contrary to the public interest,” as defined by an
enumerated list of criteria. See Fla. Stat. §373.414(1).
Petitioner decided to develop the 3.7-acre northern section of his
property, and in 1994 he applied to the District for MSSW and WRM
permits. Under his proposal, petitioner would have raised the elevation of
the northernmost section of his land to make it suitable for a building,

1626
graded the land from the southern edge of the building site down to the
elevation of the high-voltage electrical lines, and installed a dry-bed pond
for retaining and gradually releasing stormwater runoff from the building
and its parking lot. To mitigate the environmental effects of his proposal,
petitioner offered to foreclose any possible future development of the
approximately 11-acre southern section of his land by deeding to the
District a conservation easement on that portion of his property.
The District considered the 11-acre conservation easement to be
inadequate, and it informed petitioner that it would approve construction
only if he agreed to one of two concessions. First, the District proposed
that petitioner reduce the size of his development to 1 acre and deed to the
District a conservation easement on the remaining 13.9 acres. In the
alternative, the District told petitioner that he could proceed with the
development as proposed, building on 3.7 acres and deeding a
conservation easement to the government on the remainder of the property,
if he also agreed to hire contractors to make improvements to District-
owned land several miles away. When the District asks permit applicants
to fund offsite mitigation work, its policy is never to require any particular
offsite project, and it did not do so here. Instead, the District said that it
“would also favorably consider” alternatives to its suggested offsite
mitigation projects if petitioner proposed something “equivalent.” App. 75.
Believing the District’s demands for mitigation to be excessive in light
of the environmental effects that his building proposal would have caused,
petitioner filed suit in state court. Among other claims, he argued that he
was entitled to relief under Fla. Stat. §373.617(2), which allows owners to
recover “monetary damages” if a state agency’s action is “an unreasonable
exercise of the state’s police power constituting a taking without just
compensation.”
After considering testimony from several experts who examined
petitioner’s property, the trial court found that the property’s northern
section had already been “seriously degraded” by extensive construction
on the surrounding parcels. App. to Pet. for Cert. D-3. In light of this
finding and petitioner’s offer to dedicate nearly three-quarters of his land
to the District, the trial court concluded that any further mitigation in the
form of payment for offsite improvements to District property lacked both
a nexus and rough proportionality to the environmental impact of the
proposed construction. It accordingly held the District’s actions unlawful
under our decisions in Nollan v. California Coastal Comm’n, 483 U.S. 825
(1987) and Dolan v. City of Tigard, 512 U.S. 374 (1994).
The Florida District Court affirmed, but the State Supreme Court
reversed. Recognizing that the majority opinion rested on a question of

1627
federal constitutional law on which the lower courts are divided, we
granted the petition for a writ of certiorari, and now reverse.

II

A
We have said in a variety of contexts that “the government may not
deny a benefit to a person because he exercises a constitutional right.”
Regan v. Taxation With Representation of Wash., 461 U.S. 540, 545. In
Perry v. Sindermann, 408 U.S. 593 (1972), for example, we held that a
public college would violate a professor’s freedom of speech if it declined
to renew his contract because he was an outspoken critic of the college’s
administration. And in Memorial Hospital v. Maricopa County, 415 U.S.
250 (1974), we concluded that a county impermissibly burdened the right
to travel by extending healthcare benefits only to those indigent sick who
had been residents of the county for at least one year. Those cases reflect
an overarching principle, known as the unconstitutional conditions
doctrine, that vindicates the Constitution’s enumerated rights by
preventing the government from coercing people into giving them up.
Nollan and Dolan “involve a special application” of this doctrine that
protects the Fifth Amendment right to just compensation for property the
government takes when owners apply for land-use permits. Our decisions
in those cases reflect two realities of the permitting process. The first is
that land-use permit applicants are especially vulnerable to the type of
coercion that the unconstitutional conditions doctrine prohibits because the
government often has broad discretion to deny a permit that is worth far
more than property it would like to take. By conditioning a building permit
on the owner’s deeding over a public right-of-way, for example, the
government can pressure an owner into voluntarily giving up property for
which the Fifth Amendment would otherwise require just compensation.
So long as the building permit is more valuable than any just compensation
the owner could hope to receive for the right-of-way, the owner is likely to
accede to the government’s demand, no matter how unreasonable.
Extortionate demands of this sort frustrate the Fifth Amendment right to
just compensation, and the unconstitutional conditions doctrine prohibits
them.
A second reality of the permitting process is that many proposed land
uses threaten to impose costs on the public that dedications of property can
offset. Where a building proposal would substantially increase traffic
congestion, for example, officials might condition permit approval on the

1628
owner’s agreement to deed over the land needed to widen a public road.
Respondent argues that a similar rationale justifies the exaction at issue
here: petitioner’s proposed construction project, it submits, would destroy
wetlands on his property, and in order to compensate for this loss,
respondent demands that he enhance wetlands elsewhere. Insisting that
landowners internalize the negative externalities of their conduct is a
hallmark of responsible land-use policy, and we have long sustained such
regulations against constitutional attack. See Village of Euclid v. Ambler
Realty Co., 272 U.S. 365 (1926).
Nollan and Dolan accommodate both realities by allowing the
government to condition approval of a permit on the dedication of property
to the public so long as there is a “nexus” and “rough proportionality”
between the property that the government demands and the social costs of
the applicant’s proposal. Dolan, supra, at 391; Nollan, 483 U.S., at 837.
Our precedents thus enable permitting authorities to insist that applicants
bear the full costs of their proposals while still forbidding the government
from engaging in “out-and-out . . . extortion” that would thwart the Fifth
Amendment right to just compensation. Ibid. Under Nollan and Dolan the
government may choose whether and how a permit applicant is required to
mitigate the impacts of a proposed development, but it may not leverage
its legitimate interest in mitigation to pursue governmental ends that lack
an essential nexus and rough proportionality to those impacts.

B
The principles that undergird our decisions in Nollan and Dolan do not
change depending on whether the government approves a permit on the
condition that the applicant turn over property or denies a permit because
the applicant refuses to do so. We have often concluded that denials of
governmental benefits were impermissible under the unconstitutional
conditions doctrine. In so holding, we have recognized that regardless of
whether the government ultimately succeeds in pressuring someone into
forfeiting a constitutional right, the unconstitutional conditions doctrine
forbids burdening the Constitution’s enumerated rights by coercively
withholding benefits from those who exercise them.
A contrary rule would be especially untenable in this case because it
would enable the government to evade the limitations of Nollan and Dolan
simply by phrasing its demands for property as conditions precedent to
permit approval. [A] government order stating that a permit is “approved
if” the owner turns over property would be subject to Nollan and Dolan,
but an identical order that uses the words “denied until” would not. Our

1629
unconstitutional conditions cases have long refused to attach significance
to the distinction between conditions precedent and conditions subsequent.
To do so here would effectively render Nollan and Dolan a dead letter.
The Florida Supreme Court puzzled over how the government’s
demand for property can violate the Takings Clause even though “ ‘no
property of any kind was ever taken,’ ” 77 So. 3d, at 1225, but the
unconstitutional conditions doctrine provides a ready answer. Extortionate
demands for property in the land-use permitting context run afoul of the
Takings Clause not because they take property but because they
impermissibly burden the right not to have property taken without just
compensation. As in other unconstitutional conditions cases in which
someone refuses to cede a constitutional right in the face of coercive
pressure, the impermissible denial of a governmental benefit is a
constitutionally cognizable injury.
Nor does it make a difference, as respondent suggests, that the
government might have been able to deny petitioner’s application outright
without giving him the option of securing a permit by agreeing to spend
money to improve public lands. See Penn Central Transp. Co. v. New York
City, 438 U.S. 104 (1978). Virtually all of our unconstitutional conditions
cases involve a gratuitous governmental benefit of some kind. Yet we have
repeatedly rejected the argument that if the government need not confer a
benefit at all, it can withhold the benefit because someone refuses to give
up constitutional rights. Even if respondent would have been entirely
within its rights in denying the permit for some other reason, that greater
authority does not imply a lesser power to condition permit approval on
petitioner’s forfeiture of his constitutional rights. See Nollan, 483 U.S., at
836-37 (explaining that “[t]he evident constitutional propriety” of
prohibiting a land use “disappears . . . if the condition substituted for the
prohibition utterly fails to further the end advanced as the justification for
the prohibition”).
That is not to say, however, that there is no relevant difference between
a consummated taking and the denial of a permit based on an
unconstitutionally extortionate demand. Where the permit is denied and
the condition is never imposed, nothing has been taken. While the
unconstitutional conditions doctrine recognizes that this burdens a
constitutional right, the Fifth Amendment mandates a particular remedy —
just compensation — only for takings. In cases where there is an excessive
demand but no taking, whether money damages are available is not a
question of federal constitutional law but of the cause of action — whether
state or federal — on which the landowner relies. Because petitioner
brought his claim pursuant to a state law cause of action, the Court has no

1630
occasion to discuss what remedies might be available for a Nollan/Dolan
unconstitutional conditions violation either here or in other cases.

C
Respondent contends that we should affirm because petitioner sued for
damages but is at most entitled to an injunction ordering that his permit
issue without any conditions. But we need not decide whether federal law
authorizes plaintiffs to recover damages for unconstitutional conditions
claims predicated on the Takings Clause because petitioner brought his
claim under state law. Florida law allows property owners to sue for
“damages” whenever a state agency’s action is “an unreasonable exercise
of the state’s police power constituting a taking without just
compensation.” Fla. Stat. §373.617. Whether that provision covers an
unconstitutional conditions claim like the one at issue here is a question of
state law that the Florida Supreme Court did not address and on which we
will not opine.
For similar reasons, we decline to reach respondent’s argument that its
demands for property were too indefinite to give rise to liability under
Nollan and Dolan. The Florida Supreme Court did not reach the question
whether respondent issued a demand of sufficient concreteness to trigger
the special protections of Nollan and Dolan. It relied instead on the Florida
District Court of Appeals’ characterization of respondent’s behavior as a
demand for Nollan/Dolan purposes. Whether that characterization is
correct is beyond the scope of the questions the Court agreed to take up for
review. If preserved, the issue remains open on remand for the Florida
Supreme Court to address.
Finally, respondent argues that we need not decide whether its demand
for offsite improvements satisfied Nollan and Dolan because it gave
petitioner another avenue for obtaining permit approval. Specifically,
respondent said that it would have approved a revised permit application
that reduced the footprint of petitioner’s proposed construction site from
3.7 acres to 1 acre and placed a conservation easement on the remaining
13.9 acres of petitioner’s land. We agree with respondent that, so long as a
permitting authority offers the landowner at least one alternative that
would satisfy Nollan and Dolan, the landowner has not been subjected to
an unconstitutional condition. But respondent’s suggestion that we should
treat its offer to let petitioner build on 1 acre as an alternative to offsite
mitigation misapprehends the governmental benefit that petitioner was
denied. Petitioner sought to develop 3.7 acres, but respondent in effect told
petitioner that it would not allow him to build on 2.7 of those acres unless

1631
he agreed to spend money improving public lands. Petitioner claims that
he was wrongfully denied a permit to build on those 2.7 acres. For that
reason, respondent’s offer to approve a less ambitious building project
does not obviate the need to determine whether the demand for offsite
mitigation satisfied Nollan and Dolan.

III
We turn to the Florida Supreme Court’s alternative holding that
petitioner’s claim fails because respondent asked him to spend money
rather than give up an easement on his land. A predicate for any
unconstitutional conditions claim is that the government could not have
constitutionally ordered the person asserting the claim to do what it
attempted to pressure that person into doing. For that reason, we began our
analysis in both Nollan and Dolan by observing that if the government had
directly seized the easements it sought to obtain through the permitting
process, it would have committed a per se taking.
We note as an initial matter that if we accepted this argument it would
be very easy for land-use permitting officials to evade the limitations of
Nollan and Dolan. Because the government need only provide a permit
applicant with one alternative that satisfies the nexus and rough
proportionality standards, a permitting authority wishing to exact an
easement could simply give the owner a choice of either surrendering an
easement or making a payment equal to the easement’s value. Such so-
called “in lieu of” fees are utterly commonplace, Rosenberg, The
Changing Culture of American Land Use Regulation: Paying for Growth
with Impact Fees, 59 S.M.U. L. Rev. 177, 202-03 (2006), and they are
functionally equivalent to other types of land use exactions. For that reason
and those that follow, we reject respondent’s argument and hold that so-
called “monetary exactions” must satisfy the nexus and rough
proportionality requirements of Nollan and Dolan.

A
In Eastern Enterprises v. Apfel, 524 U.S. 498 (1998), the United States
retroactively imposed on a former mining company an obligation to pay
for the medical benefits of retired miners and their families. A four-Justice
plurality concluded that the statute’s imposition of retroactive financial
liability was so arbitrary that it violated the Takings Clause. Id. at 529-37.
Although Justice Kennedy concurred in the result on due process grounds,
he joined four other Justices in dissent in arguing that the Takings Clause
does not apply to government-imposed financial obligations that “d[o] not

1632
operate upon or alter an identified property interest.” Id. at 540 (opinion
concurring in judgment and dissenting in part); see id. at 554-56 (Breyer,
J., dissenting) (“The ‘private property’ upon which the [Takings] Clause
traditionally has focused is a specific interest in physical or intellectual
property”). Relying on the concurrence and dissent in Eastern Enterprises,
respondent argues that a requirement that petitioner spend money
improving public lands could not give rise to a taking.
Respondent’s argument rests on a mistaken premise. Unlike the
financial obligation in Eastern Enterprises, the demand for money at issue
here did “operate upon . . . an identified property interest” by directing the
owner of a particular piece of property to make a monetary payment. Id. at
540 (opinion of Kennedy, J.). In this case, unlike Eastern Enterprises, the
monetary obligation burdened petitioner’s ownership of a specific parcel
of land. In that sense, this case bears resemblance to our cases holding that
the government must pay just compensation when it takes a lien — a right
to receive money that is secured by a particular piece of property. See
Armstrong v. United States, 364 U.S. 40, 44-49 (1960); Louisville Joint
Stock Land Bank v. Radford, 295 U.S. 555, 601-02 (1935); United States v.
Security Industrial Bank, 459 U.S. 70, 77-78 (1982). The fulcrum this case
turns on is the direct link between the government’s demand and a specific
parcel of real property.34 Because of that direct link, this case implicates
the central concern of Nollan and Dolan: the risk that the government may
use its substantial power and discretion in land-use permitting to pursue
governmental ends that lack an essential nexus and rough proportionality
to the effects of the proposed new use of the specific property at issue,
thereby diminishing without justification the value of the property.
In this case, moreover, petitioner does not ask us to hold that the
government can commit a regulatory taking by directing someone to spend
money. As a result, we need not apply Penn Central’s “essentially ad hoc,
factual inquir[y],” 438 U.S., at 124, at all, much less extend that “already
difficult and uncertain rule” to the “vast category of cases” in which
someone believes that a regulation is too costly. Eastern Enterprises, 524
U.S., at 542 (opinion of Kennedy, J.). Instead, petitioner’s claim rests on
the more limited proposition that when the government commands the
relinquishment of funds linked to a specific, identifiable property interest
such as a bank account or parcel of real property, a “per se [takings]
approach” is the proper mode of analysis under the Court’s precedent.
Brown v. Legal Foundation of Wash., 538 U.S. 216 (2003).

1633
 Respondent and the dissent argue that if monetary exactions are made
subject to scrutiny under Nollan and Dolan, then there will be no
principled way of distinguishing impermissible land-use exactions from
property taxes. We think they exaggerate both the extent to which that
problem is unique to the land-use permitting context and the practical
difficulty of distinguishing between the power to tax and the power to take
by eminent domain.
It is beyond dispute that “[t]axes and user fees . . . are not ‘takings.’”
Brown v. Legal Foundation of Wash., 538 U.S. 216, 243 n.2 (2003)
(Scalia, J., dissenting). This case therefore does not affect the ability of
governments to impose property taxes, user fees, and similar laws and
regulations that may impose financial burdens on property owners. At the
same time, we have repeatedly found takings where the government, by
confiscating financial obligations, achieved a result that could have been
obtained by imposing a tax. Most recently, in Brown, supra, at 232 we
were unanimous in concluding that a State Supreme Court’s seizure of the
interest on client funds held in escrow was a taking despite the
unquestionable constitutional propriety of a tax that would have raised
exactly the same revenue. Our holding in Brown followed from Phillips v.
Washington Legal Foundation, 524 U.S. 156 (1998), and Webb’s
Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (1980), two earlier
cases in which we treated confiscations of money as takings despite their
functional similarity to a tax. Perhaps most closely analogous to the
present case, we have repeatedly held that the government takes property
when it seizes liens, and in so ruling we have never considered whether the
government could have achieved an economically equivalent result
through taxation. Armstrong, 364 U.S. 40; Louisville Joint Stock Land
Bank, 295 U.S. 555.
Two facts emerge from those cases. The first is that the need to
distinguish taxes from takings is not a creature of our holding today that
monetary exactions are subject to scrutiny under Nollan and Dolan.
Rather, the problem is inherent in this Court’s long-settled view that
property the government could constitutionally demand through its taxing
power can also be taken by eminent domain.
Second, our cases show that teasing out the difference between taxes
and takings is more difficult in theory than in practice. Brown is
illustrative. Similar to respondent in this case, the respondents in Brown
argued that extending the protections of the Takings Clause to a bank
account would open a Pandora’s Box of constitutional challenges to taxes.
But also like respondent here, the Brown respondents never claimed that
they were exercising their power to levy taxes when they took the

1634
petitioners’ property. Any such argument would have been implausible
under state law; in Washington, taxes are levied by the legislature, not the
courts.
The same dynamic is at work in this case because Florida law greatly
circumscribes respondent’s power to tax. See Fla. Stat. §373.503
(authorizing respondent to impose ad valorem tax on properties within its
jurisdiction); §373.109 (authorizing respondent to charge permit
application fees but providing that such fees “shall not exceed the cost . . .
for processing, monitoring, and inspecting for compliance with the
permit”). If respondent had argued that its demand for money was a tax, it
would have effectively conceded that its denial of petitioner’s permit was
improper under Florida law. Far from making that concession, respondent
has maintained throughout this litigation that it considered petitioner’s
money to be a substitute for his deeding to the public a conservation
easement on a larger parcel of undeveloped land.
We need not decide at precisely what point a land-use permitting
charge denominated by the government as a “tax” becomes “so arbitrary . .
. that it was not the exertion of taxation but a confiscation of property.”
Brushaber v. Union Pacific R. Co., 240 U.S. 1, 24-25 (1916). For present
purposes, it suffices to say that despite having long recognized that “the
power of taxation should not be confused with the power of eminent
domain,” Houck v. Little River Drainage Dist., 239 U.S. 254, 264 (1915),
we have had little trouble distinguishing between the two.

C
Finally, we disagree with the dissent’s forecast that our decision will
work a revolution in land use law by depriving local governments of the
ability to charge reasonable permitting fees. Numerous courts — including
courts in many of our Nation’s most populous States — have confronted
constitutional challenges to monetary exactions over the last two decades
and applied the standard from Nollan and Dolan or something like it. See,
e.g., Northern Ill. Home Builders Assn. v. County of Du Page, 649 N.E.2d
384, 388-389 (Ill. 1995); Home Builders Assn. v. Beavercreek, 729 N.E.2d
349, 356 (Ohio 2000); Flower Mound v. Stafford Estates Ltd. P’ship, 135
S.W.3d 620, 640-641 (Tex. 2004). Yet the “significant practical harm” the
dissent predicts has not come to pass. That is hardly surprising, for the
dissent is correct that state law normally provides an independent check on
excessive land use permitting fees.
The dissent’s argument that land use permit applicants need no further
protection when the government demands money is really an argument for

1635
overruling Nollan and Dolan. After all, the Due Process Clause protected
the Nollans from an unfair allocation of public burdens, and they too could
have argued that the government’s demand for property amounted to a
taking under the Penn Central framework. See Nollan, 483 U.S., at 838.
We have repeatedly rejected the dissent’s contention that other
constitutional doctrines leave no room for the nexus and rough
proportionality requirements of Nollan and Dolan. Mindful of the special
vulnerability of land use permit applicants to extortionate demands for
money, we do so again today.

Justice ELENA KAGAN, with whom Justice GINSBURG, Justice BREYER,

and Justice SOTOMAYOR join, dissenting.
Claims that government regulations violate the Takings Clause by
unduly restricting the use of property are generally “governed by the
standards set forth in Penn Central Transp. Co. v. New York City, 438 U.S.
104 (1978).” Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 538. Our
decisions in Nollan and Dolan are different: They provide an independent
layer of protection in “the special context of land-use exactions.” Lingle,
544 U.S., at 538. In that situation, the “government demands that a
landowner dedicate an easement” or surrender a piece of real property “as
a condition of obtaining a development permit.” Id. at 546. If the
government appropriated such a property interest outside the permitting
process, its action would constitute a taking, necessitating just
compensation. Id. at 547. Nollan and Dolan prevent the government from
exploiting the landowner’s permit application to evade the constitutional
obligation to pay for the property. They do so, as the majority explains, by
subjecting the government’s demand to heightened scrutiny: The
government may condition a land-use permit on the relinquishment of real
property only if it shows a “nexus” and “rough proportionality” between
the demand made and “the impact of the proposed development.” Dolan,
512 U.S., at 386, 391. Nollan and Dolan thus serve not to address
excessive regulatory burdens on land use (the function of Penn Central),
but instead to stop the government from imposing an “unconstitutional
condition” — a requirement that a person give up his constitutional right to
receive just compensation “in exchange for a discretionary benefit” having
“little or no relationship” to the property taken. Lingle, 544 U.S., at 547.
Accordingly, the Nollan-Dolan test applies only when the property the
government demands during the permitting process is the kind it otherwise
would have to pay for — or, put differently, when the appropriation of that
property, outside the permitting process, would constitute a taking. Only if
that is true could the government’s demand for the property force a

1636
landowner to relinquish his constitutional right to just compensation.
Here, Koontz claims that the District demanded that he spend money to
improve public wetlands, not that he hand over a real property interest. I
assume for now that the District made that demand (although I think it did
not.) The key question then is: Independent of the permitting process, does
requiring a person to pay money to the government, or spend money on its
behalf, constitute a taking requiring just compensation? Only if the answer
is yes does the Nollan-Dolan test apply.
But we have already answered that question no. Eastern Enterprises v.
Apfel, 524 U.S. 498 (1998), as the Court describes, involved a federal
statute requiring a former mining company to pay a large sum of money
for the health benefits of retired employees. Five Members of the Court
determined that the law did not effect a taking, distinguishing between the
appropriation of a specific property interest and the imposition of an order
to pay money. Justice Kennedy acknowledged in his controlling opinion
that the statute “impose[d] a staggering financial burden” (which
influenced his conclusion that it violated due process). Id. at 540 (opinion
concurring in judgment and dissenting in part). Still, Justice Kennedy
explained, the law did not effect a taking because it did not “operate upon
or alter” a “specific and identified propert[y] or property right[ ].” Id. at
540-41. Justice Breyer, writing for four more Justices, agreed. He stated
that the Takings Clause applies only when the government appropriates a
“specific interest in physical or intellectual property” or “a specific,
separately identifiable fund of money”; by contrast, the Clause has no
bearing when the government imposes “an ordinary liability to pay
money.” Id. at 554-55 (dissenting opinion).
Thus, a requirement that a person pay money to repair public wetlands
is not a taking. Such an order does not affect a “specific and identified
propert[y] or property right[ ]”; it simply “imposes an obligation to
perform an act” (the improvement of wetlands) that costs money. Id. at
540-41 (opinion of Kennedy, J.). To be sure, when a person spends money
on the government’s behalf, or pays money directly to the government, it
“will reduce [his] net worth” — but that “can be said of any law which has
an adverse economic effect” on someone. Id. at 543.
The majority tries to distinguish Apfel by asserting that the District’s
demand here was “closely analogous” (and “bears resemblance”) to the
seizure of a lien on property or an income stream from a parcel of land.
But the majority’s citations succeed only in showing what this case is not.
When the government dissolves a lien, or appropriates a determinate
income stream from a piece of property — or, for that matter, seizes a
particular “bank account or [the] accrued interest” on it — the government

1637
indeed takes a “specific” and “identified property interest.” Apfel, 524
U.S., at 540-41 (opinion of Kennedy, J.). But nothing like that occurred
here. The District did not demand any particular lien, or bank account, or
income stream from property. It just ordered Koontz to spend or pay
money (again, assuming it ordered anything at all). Koontz’s liability
would have been the same whether his property produced income or not —
e.g., even if all he wanted to build was a family home. And similarly,
Koontz could meet that obligation from whatever source he chose — a
checking account, shares of stock, a wealthy uncle; the District was
“indifferent as to how [he] elect[ed] to [pay] or the property [he] use[d] to
do so.” Id. at 540.
The majority thus falls back on the sole way the District’s alleged
demand related to a property interest: The demand arose out of the
permitting process for Koontz’s land. But under the analytic framework
that Nollan and Dolan established, that connection alone is insufficient to
trigger heightened scrutiny. As I have described, the heightened standard
of Nollan and Dolan is not a freestanding protection for land-use permit
applicants; rather, it is “a special application of the doctrine of
unconstitutional conditions, which provides that the government may not
require a person to give up a constitutional right — here the right to
receive just compensation when property is taken” — in exchange for a
land-use permit. Lingle, 544 U.S., at 547. As such, Nollan and Dolan
apply only if . . . the demand would have constituted a taking when
executed outside the permitting process. And here, under Apfel, it would
not.35
The majority’s approach, on top of its analytic flaws, threatens
significant practical harm. By applying Nollan and Dolan to permit
conditions requiring monetary payments — with no express limitation
except as to taxes — the majority extends the Takings Clause, with its
notoriously “difficult” and “perplexing” standards, into the very heart of
local land-use regulation and service delivery. 524 U.S., at 541. Cities and
towns across the nation impose many kinds of permitting fees every day.
Some enable a government to mitigate a new development’s impact on the
community, like increased traffic or pollution — or destruction of
wetlands. Others cover the direct costs of providing services like sewage
or water to the development. Still others are meant to limit the number of
landowners who engage in a certain activity, as fees for liquor licenses do.
All now must meet Nollan and Dolan’s nexus and proportionality tests.
The Federal Constitution thus will decide whether one town is
overcharging for sewage, or another is setting the price to sell liquor too
high. And the flexibility of state and local governments to take the most

1638
routine actions to enhance their communities will diminish accordingly.
That problem becomes still worse because the majority’s distinction
between monetary “exactions” and taxes is so hard to apply. The majority
acknowledges, as it must, that taxes are not takings. But once the majority
decides that a simple demand to pay money — the sort of thing often
viewed as a tax — can count as an impermissible “exaction,” how is
anyone to tell the two apart? How to separate orders to pay money from . .
. well, orders to pay money, so that a locality knows what it can (and
cannot) do. Because “[t]here is no set rule” by which to determine “in
which category a particular” action belongs, Eastern Diversified
Properties, Inc. v. Montgomery Cty., 570 A.2d 850, 854 (Md. 1990),
courts often reach opposite conclusions about classifying nearly identical
fees. Compare, e.g., Coulter v. Rawlins, 662 P.2d 888, 901-904 (Wyo.
1983) (holding that a fee to enhance parks, imposed as a permit condition,
was a regulatory exaction), with Home Builders Assn. v. West Des Moines,
644 N.W.2d 339, 350 (Iowa 2002) (rejecting Coulter and holding that a
nearly identical fee was a tax). Nor does the majority’s opinion provide
any help with that issue: Perhaps its most striking feature is its refusal to
say even a word about how to make the distinction that will now determine
whether a given fee is subject to heightened scrutiny. [T]he majority’s
refusal “to say more” about the scope of its new rule now casts a cloud on
every decision by every local government to require a person seeking a
permit to pay or spend money.36
By extending Nollan and Dolan’s heightened scrutiny to a simple
payment demand, the majority threatens the heartland of local land-use
regulation and service delivery, at a bare minimum depriving state and
local governments of “necessary predictability.” Apfel, 524 U.S., at 542
(opinion of Kennedy, J.). That decision is unwarranted — and deeply
unwise. I would keep Nollan and Dolan in their intended sphere and affirm
the Florida Supreme Court.

II

A
Nollan and Dolan apply only when the government makes a “demand[
]” that a landowner turn over property in exchange for a permit. Lingle,
544 U.S., at 546. A Nollan-Dolan claim therefore depends on a showing of
government coercion, not relevant in an ordinary challenge to a permit
denial. Before applying Nollan and Dolan, a court must find that the
permit denial occurred because the government made a demand of the

1639
landowner, which he rebuffed. And unless Nollan and Dolan are to wreck
land-use permitting throughout the country — to the detriment of both
communities and property owners — that demand must be unequivocal. If
a local government risked a lawsuit every time it made a suggestion to an
applicant about how to meet permitting criteria, it would cease to do so;
indeed, the government might desist altogether from communicating with
applicants. That hazard is to some extent baked into Nollan and Dolan;
observers have wondered whether those decisions have inclined some
local governments to deny permit applications outright, rather than
negotiate agreements that could work to both sides’ advantage. See W.
Fischel, Regulatory Takings 346 (1995). But that danger would rise
exponentially if something less than a clear condition — if each idea or
proposal offered in the back-and-forth of reconciling diverse interests —
triggered Nollan-Dolan scrutiny. At that point, no local government
official with a decent lawyer would have a conversation with a developer.
[Here,] the District never made a demand or set a condition — not to
cede an identifiable property interest, not to undertake a particular
mitigation project, not even to write a check to the government. Instead,
the District suggested to Koontz several non-exclusive ways to make his
applications conform to state law. The District’s only hard-and-fast
requirement was that Koontz do something — anything — to satisfy the
relevant permitting criteria. Koontz’s failure to obtain the permits therefore
did not result from his refusal to accede to an allegedly extortionate
demand or condition; rather, it arose from the legal deficiencies of his
applications, combined with his unwillingness to correct them by any
means. Nollan and Dolan were never meant to address such a run-of-the-
mill denial of a land-use permit. As applications of the unconstitutional
conditions doctrine, those decisions require a condition; and here, there
was none.

B
And finally, a third difficulty: Even if (1) money counted as “specific
and identified propert[y]” under Apfel (though it doesn’t), and (2) the
District made a demand for it (though it didn’t), (3) Koontz never paid a
cent, so the District took nothing from him. The majority remands that
question to the Florida Supreme Court, and given how it disposes of the
other issues here, I can understand why. As the majority indicates, a State
could decide to create a damages remedy not only for a taking, but also for
an unconstitutional conditions claim predicated on the Takings Clause.
And that question is one of state law, which we usually do well to leave to

1640
state courts.
But as I look to the Florida statute here, I cannot help but see yet
another reason why the Florida Supreme Court got this case right. That
statute authorizes damages only for “an unreasonable exercise of the
state’s police power constituting a taking without just compensation.” Fla.
Stat. §373.617 (2010). In what legal universe could a law authorizing
damages only for a “taking” also provide damages when (as all agree) no
taking has occurred? I doubt that inside-out, upside-down universe is the
State of Florida. Certainly, none of the Florida courts in this case
suggested that the majority’s hypothesized remedy actually exists; rather,
the trial and appellate courts imposed a damages remedy on the mistaken
theory that there had been a taking (although of exactly what neither was
clear). So I would, once more, affirm the Florida Supreme Court, not make
it say again what it has already said — that Koontz is not entitled to money
damages.

Notes and Questions

1. Linkage ordinances and exactions. Municipalities regularly enact
ordinances that require developers to mitigate the impact of new
development, or authorize local agencies to negotiate for such mitigation
in the permitting process. This mitigation can come either through specific
improvements or dedications or through payments in lieu of such
mitigation, also called impact fees.
For example, new construction may exacerbate local shortages in low-
income housing by increasing employment, and therefore the demand for
housing, in the locality. If the increased demand is not entirely met by new
construction, competition for existing housing both raises rents and pushes
out lower-income tenants. It is not profitable to build low-income housing
in the absence of governmental subsidies since poor persons cannot afford
to pay even the minimum costs for housing; for this reason, the market
does not respond to housing shortages by constructing new low-income
housing. New development is therefore thought to create externalities —
exacerbating shortages in low-income housing or pushing low-income
persons out of the city or into undesirable neighborhoods. Linkage
programs are intended to internalize these costs by requiring developers to
account to the community for those externalities, again either by
dedicating a portion of new development to affordable housing or by
paying for such development off site. Linkage programs and exactions
have been applied to a wide variety of negative externalities from
development, including child care shortages, new demand for public

1641
education, increased use of public infrastructure such as roads and transit,
and other burdens on existing community amenities.
Land use regulation in recent years has increasingly shifted to a model
of negotiation, see Chapter 7, §1.5, and exactions that seek to mitigate the
negative impact of new development have been an important aspect of
such negotiations. Koontz suggests that a proposal by a local agency in the
context of negotiations over permit approval can give rise to liability under
the doctrine announced in Nollan v. California Coastal Commission, 483
U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994). As
Justice Kagan’s dissent in Koontz points out, this has the potential to deter
what might be mutually beneficial agreements between developers and
public officials and may lead local governments to make permitting a less
discretionary, and thus more blunt, process.
2. Impact fees and individualized determinations. Prior to Koontz,
some courts had held that the Nollan-Dolan unconstitutional conditions
doctrine did not apply to impact fees because both cases had involved
required dedications of land. See, e.g., Garneau v. City of Seattle, 147 F.3d
802 (9th Cir. 1998). Koontz has now settled the general question whether
Nollan-Dolan applies to monetary exactions, but leaves open whether it
applies only to individualized decisions or also applies to general
legislative judgments about impact.
In Koontz, Nollan, and Dolan, a government agency made an
individualized determination about a particular owner in the context of
permit review. There was no general law or regulation requiring all owners
to take similar steps. Many linkage laws, however, provide pre-set
conditions that developers must meet. Such general laws may mitigate
some concern over the risk of abuse by local officials and may also
represent a general law affecting many or all parcels of land in an area.
They may therefore create an “average reciprocity of advantage” like a
general zoning law rather than an expropriation of property from an
individual owner that is out of proportion to any harms caused by that
owner.
Some courts have held that it is sufficient for a local government to
make a general determination that particular types of development have
particular impacts and impose fees reasonably related to those impacts. For
example, a city might commission a study that demonstrates that new
commercial development increases the need for housing and this need
increases demand on the existing housing supply, bidding up prices and
pushing out low-income families who cannot find affordable housing
because the market does not find it profitable to build low-income housing.

1642
San Remo Hotel L.P. v. City & County of San Francisco, 41 P.3d 87, 102-
103 (Cal. 2002), aff’d on other grounds, 545 U.S. 323 (2005) (Nollan-
Dolan test applies to a housing replacement fee that is determined on an ad
hoc or individualized or “adjudicative” basis but not to general
legislatively determined fees); Home Builders Association of Dayton &
Miami Valley v. City of Beaver Creek, 729 N.E.2d 349 (Ohio 2000)
(upholding legislatively determined impact fee under Nollan-Dolan test);
Holmdel Builders Association v. Holmdel, 583 A.2d 277 (N.J. 1990) (“We
find a sound basis to support a legislative judgment that there is a
reasonable relationship between unrestrained nonresidential development
and the need for affordable residential development.”).
Other courts have disagreed, noting that, because Dolan requires
individualized determinations that impact fees bear a “rough
proportionality” to the externalities of the development, studies might have
to be conducted for each parcel subjected to the exaction. They have struck
down impact fees that could not be shown to be related to the particular
impacts of the development of particular parcels of land. See, e.g., Volusia
County v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126 (Fla. 2000)
(uniform impact fee to fund schools was unconstitutional as applied to
mobile home park only open to persons over 55).
In California Building Industry Association v. City of San Jose, 351
P.3d 974 (2015), cert. denied, 136 S. Ct. 928 (2016), the California
Supreme Court upheld San Jose’s inclusionary housing law that required
developers of residential project of 20 or more units to sell at least 15
percent of those units at prices affordable to low- or moderate-income
households. The court found this requirement to be a regulation of
property that did not trigger exaction analysis and the plaintiff
unsuccessfully sought review by the United States Supreme Court. Justice
Thomas concurred in the denial of certiorari to note that for “at least two
decades . . . lower courts have divided over whether the Nollan/Dolan test
applies in cases where the alleged taking arises from a legislatively
imposed condition rather than an administrative one.” 136 S. Ct. 928, 928
(2016). Because the case was a poor vehicle to resolve this issue, Justice
Thomas concurred, but signaled that the Court should resolve the issue. Id.
at 928-929 (“Until we decide this issue, property owners and local
governments are left uncertain about what legal standard governs
legislative ordinances and whether cities can legislatively impose
exactions that would not pass muster if done administratively. These
factors present compelling reasons for resolving this conflict at the earliest
practicable opportunity.”).

1643
 3. Essential nexus and rough proportionality. Nollan and Dolan
established two central federal constitutional requirements for any
exaction: that there be an “essential nexus” between the exaction and the
mitigation sought by the government and, if that threshold is crossed, that
the mitigation have some reasonable relationship to the impact of the new
development. Because the phrase “reasonable relationship,” which had
been common in the state courts, was too similar to the term “rational
basis” used in equal protection cases, the Supreme Court in Dolan adopted
the phrase “rough proportionality.” 512 U.S. at 391. In Nollan, the Court
found no essential nexus between the government’s interest in protecting
the public’s view of a beach and the beach access that would facilitate and
a requirement that beachfront owners applying for a building permit
provide a right of way for the public to reach the beach. 483 U.S. at 836-
837. In Dolan, a city was able to satisfy the threshold nexus requirement
when it sought to condition an expansion of an owner’s commercial
property on requirements that the owner dedicate land in a flood plain for a
public greenway to facilitate storm drainage and allow a bike and
pedestrian path on her property to offset the increased traffic the
development would generate. 512 U.S. at 387. However, the owner
prevailed because the city could not demonstrate the required relationship
between the impact of the new building and the specific conditions
imposed.
It can be difficult to evaluate “proportionality,” which, as the Utah
Supreme Court has pointed out, is a term that does not suggest any
particular ratio of harm and mitigation. B.A.M. Development, L.L.C. v. Salt
Lake County, 196 P.3d 601 (Utah 2008) (“Of course, the [U.S. Supreme]
Court did not mean rough proportionality at all. While 1 to 1 is a
proportion, so is 1 to 1000, as any fifth-grade student will be happy to tell
you. Any two numbers, measured by the same units, form a proportion. So
to be roughly proportional literally means to be roughly related, not
necessarily roughly equivalent, which is the concept the Court seemed to
be trying to describe.”). As a result, exactions are often accompanied by
studies, sometimes quite extensive, about the relationship between
development impact and required mitigation.
4. Unconstitutional conditions and takings. Most unconstitutional
conditions cases involve situations where someone is being asked to give
up a constitutional right in exchange for some government benefit. See,
e.g., United States Agency for International Development v. Alliance for
Open Society International, Inc., 133 S. Ct. 2321 (2013) (requirement that
aid recipients have an anti-prostitution policy was an unconstitutional

1644
burden on free speech). However, the Koontz majority does not hold,
although it appears to assume, that the underlying suggestion regarding
funding offsite improvements to mitigate the harm of the proposed
development would necessarily have been a taking if the District had
imposed it directly as a regulatory requirement. This may signal an attempt
by the Court to expand takings doctrine. The Court may alternatively have
viewed its holding as a preventative measure to forestall even the threat of
potentially unconstitutional action. If so, is that an appropriate role for the
Court to take?
5. Money and takings. The Koontz majority and dissent disagree
about whether an obligation to pay a fungible amount of money can give
rise to takings liability. The Court had previously addressed takings cases
involving specific and identifiable funds. In Webb’s Fabulous Pharmacies,
Inc. v. Beckwith, 449 U.S. 155 (1980), for example, a company called
Eckerd’s of College Park, Inc., had agreed to purchase Webb’s Fabulous
Pharmacies, Inc. for over $1.8 million. When it came time to close on the
purchase, however, it appeared that the pharmacy’s debts were greater than
the purchase price. Eckerd’s filed an interpleader, which is an action to
resolve claims to a limited pool of funds, bringing in the pharmacy and its
numerous creditors. Eckerd’s deposited the amount of the purchase price
with the court, which the court’s clerk then deposited in an interest-bearing
account. Nearly a year later, the court appointed a receiver to process
claims against this fund, which the court ordered transferred to the
receiver. Interest on the fund by that point totaled more than $100,000, but
was not included in the transfer. The receiver filed a motion seeking to
have the court clerk transfer the interest, which the court granted. On
appeal, however, the Florida Supreme Court reversed, relying on a state
statute that provided that “[a]ll interest accruing from moneys deposited
shall be deemed income of the office of the clerk of the circuit court
investing such moneys,” Fla. Stat. §28.33.
The Supreme Court in turn reversed, reasoning that:

The principal sum deposited in the registry of the court plainly was private
property, and was not the property of Seminole County. The deposited fund
was the amount received as the purchase price for Webb’s assets. It was
property held only for the ultimate benefit of Webb’s creditors, not for the
benefit of the court and not for the benefit of the county. And it was held
only for the purpose of making a fair distribution among those creditors.
Eventually, and inevitably, that fund, less proper charges authorized by the
court, would be distributed among the creditors as their claims were
recognized by the court. The creditors thus had a state-created property right

1645
 to their respective portions of the fund.
What would justify the county’s retention of that interest? It is obvious
that the interest was not a fee for services, for any services obligation to the
county was paid for and satisfied by [a separate] fee and described
specifically in that statute as a fee “for services” by the clerk’s office. Section
28.33, in contrast, in no way relates the interest of which it speaks to
“services rendered.” Indeed, if the county were entitled to the interest, its
officials would feel an inherent pressure and possess a natural inclination to
defer distribution, for that interest return would be greater the longer the fund
is held; there would be, therefore, a built-in disincentive against distributing
the principal to those entitled to it.
This Court has been permissive in upholding governmental action that
may deny the property owner of some beneficial use of his property or that
may restrict the owner’s full exploitation of the property, if such public
action is justified as promoting the general welfare. Here, however, Seminole
County has not merely “adjust[ed] the benefits and burdens of economic life
to promote the common good.” [Penn Central Transportation Co. v. New
York City, 438 U.S. 104, 125-129 (1978).] Rather, the exaction is a forced
contribution to general governmental revenues, and it is not reasonably
related to the costs of using the courts. No police power justification is
offered for the deprivation. Neither the statute nor appellees suggest any
reasonable basis to sustain the taking of the interest earned by the
interpleader fund.
Neither the Florida Legislature by statute, nor the Florida courts by
judicial decree, may accomplish the result the county seeks simply by
recharacterizing the principal as “public money” because it is held
temporarily by the court. The earnings of a fund are incidents of ownership
of the fund itself and are property just as the fund itself is property. The state
statute has the practical effect of appropriating for the county the value of the
use of the fund for the period in which it is held in the registry. To put it
another way: a State, by ipse dixit, may not transform private property into
public property without compensation, even for the limited duration of the
deposit in court. This is the very kind of thing that the Taking Clause of the
Fifth Amendment was meant to prevent. That Clause stands as a shield
against the arbitrary use of governmental power.

449 U.S. at 160-164.

In Phillips v. Washington Legal Foundation, 524 U.S. 156 (1998), a
public interest organization challenged a Texas practice, used by almost
every state, that requires lawyers to place client funds held by lawyers into
a common pool managed by the state in order to generate interest on those
funds so that the interest (so-called Interest on Lawyers’ Trust Accounts or
IOLTAs) could be used to help fund legal services for the poor. Texas had
argued that the interest earned on the pooled account was not the client’s

1646
“property” because it was only earned as a result of the state mandating the
pooling of funds and thus the client lost nothing that she would ever have
earned. The Supreme Court held that interest earned on such accounts was
“property” belonging to the client whose funds generated the interest even
if the client’s account was so small and held for so short a time that it
would not have generated any interest unless it were pooled with other
such accounts.
In a follow-up case several years later, Brown v. Legal Foundation of
Washington, 538 U.S. 216 (2003), the Supreme Court addressed the issue
of whether IOLTA programs constitute unconstitutional takings of
property. On remand in Phillips, the trial court had held that, even though
the interest was property of the client, the IOLTA program did not
constitute a taking of property because the program applied only to client
funds that would not have earned interest absent the program and that the
clients therefore “lost nothing of economically realizable value.”
Washington Legal Foundation v. Texas Equal Access to Justice, 86 F.
Supp. 2d 624, 643 (D. Tex. 2000). The Supreme Court affirmed but on a
different theory. It held by a 5-4 vote that the IOLTA program had indeed
“taken property” belonging to the clients; on the other hand, the Court
ruled that it had not done so “without just compensation.” Justice Stevens
explained that no compensation was due because the clients would not
have earned any interest on their funds absent the IOLTA program; thus
their loss of this interest caused them no economic loss and just
compensation is measured “by the property owner’s loss rather than the
government’s gain,” id. at 235-236. Further, no compensation is due for
the “nonpecuniary consequences” of using the interest for purposes other
than those that might have been chosen by the owner. Id. at 236-237.
These cases all involve some identifiable fund but, as the Koontz
majority and dissent both note, Eastern Enterprises v. Apfel, 524 U.S. 498
(1998), had seemed to resolve the question whether the takings clause
applies to the obligation to pay money beyond that context. Five members
of the Court agreed that the takings clause applies only to takings of
specific property interests, such as interests in real property or interests in
a particular identifiable fund of money; it does not apply to general
obligations to pay money from whatever funds one possesses. Justice Alito
distinguishes this approach by arguing that the demand for money in
Koontz in fact operated on an identifiable property interest — not the funds
themselves, but “petitioner’s ownership of a specific parcel of land.” Is
that a meaningful distinction or is the Koontz dissent more convincing
when it comes to Apfel?
If takings claims are not limited to specific funds, courts will be

1647
required to adjudicate not only the point at which a fee violates Nollan-
Dolan, but also when fees and taxes more generally might constitute a
taking. All taxation by its very nature arguably can be thought to “take”
property by requiring payments of money to the government but if every
tax were a taking of property then the taxing power would be meaningless.
The Court in Koontz argued that it will not be difficult to distinguish
between taxes and claims for fund that trigger takings liability. Is that
argument convincing?
6. The denominator in another guise? Koontz does not explicitly
discuss the Court’s varying approaches since Mahon to determining the
relevant parcel for purposes of the takings clause. The majority, however,
appears to find that the right to build on a 3.7-acre portion of Koontz’s
property to be a distinct property interest. The Court indicates that:

respondent’s suggestion that we should treat its offer to let petitioner build on
1 acre as an alternative to offsite mitigation misapprehends the governmental
benefit that petitioner was denied. Petitioner sought to develop 3.7 acres, but
respondent in effect told petitioner that it would not allow him to build on 2.7
of those acres unless he agreed to spend money improving public lands.
Petitioner claims that he was wrongfully denied a permit to build on those
2.7 acres.

If this were a straightforward takings claim, would the denial of the

right to build on a portion of an owner’s property be treated as a distinct
property interest?
7. Government benefits. Koontz holds that Nollan-Dolan applies even
where the underlying governmental benefit is entirely discretionary, given
that the Water District would have been entitled to deny the permit
outright. In Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984), the
Supreme Court held that the takings clause was not violated by a federal
law requiring that businesses applying for government permission to use
an insecticide disclose trade secrets to the government and consent to
government use and disclosure of those trade secrets. In a footnote in
Nollan, Justice Scalia distinguished Monsanto by arguing that a right to
register and sell an insecticide was a “valuable government benefit” and
not an established property right, whereas the “right to build on one’s own
property — even though its exercise can be subjected to legitimate
permitting requirements — cannot remotely be described as a ‘government
benefit.’” Nollan, 483 U.S. at 833 n.2. Thus, Justice Scalia concluded, the
“announcement that the application for (or granting of) the permit will
entail the yielding of a property interest cannot be regarded as establishing

1648
the voluntary ‘exchange,’ that we found to have occurred in Monsanto.”
Id. Justice Brennan disagreed, arguing that Nollan was indistinguishable
from Monsanto, 483 U.S. at 860 n.10:

Both Monsanto and the Nollans hold property whose use is subject to
regulation; Monsanto may not sell its property without obtaining government
approval and the Nollans may not build new development on their property
without government approval. Obtaining such approval is as much a
“government benefit” for the Nollans as it is for Monsanto. If the Court is
somehow suggesting that “the right to build on one’s own property” has
some privileged natural rights status, the argument is a curious one. By any
traditional labor theory of value justification for property rights. See, e.g., J.
Locke, The Second Treatise of Civil Government 15-26 (1947 ed.), Monsanto
would have a superior claim, for the chemical formulae which constitute its
property only came into being by virtue of Monsanto’s efforts.

Does Koontz change this analysis?

Problems
1. Imagine that you are counsel to a local agency charged with
reviewing a permit application for development that did not meet existing
state requirements, but that could do so with some modifications to
mitigate the impacts of the development. After Koontz, what advice would
you give your client about whether and how to negotiate permit
conditions? If you were representing the developer, how would you
approach such negotiations?
2. In Wyman v. James, 400 U.S. 309 (1971), the Supreme Court held
that the fourth amendment’s prohibition against unreasonable searches and
seizures was not violated by a New York law requiring that welfare
recipients agree, as a condition of receiving benefits, to home inspections.
The Court concluded that the home visits were not coerced because the
family could avoid them by declining to agree to accept welfare benefits.
See Sanchez v. San Diego, 464 F.3d 916 (9th Cir. 2006) (mandated home
visits are reasonable under fourth amendment). Suppose Barbara James,
the public assistance recipient in Wyman, had characterized the home visits
as a taking of her property rights rather than a violation of the fourth
amendment. Is Wyman covered by Monsanto or by the Nollan-Dolan line
of cases? Is welfare simply a “government benefit” rather than a vested
property right or does the condition in Wyman constitute a physical
invasion of property (the home visit)? Consider further than the
“permanent” invasion of the cable box in Loretto was required by law only

1649
so long as the property was held for residential rental purposes. Is greater
coercion involved in Wyman or in Dolan? Is the intrusion greater in
Wyman or in Loretto? Can you reconcile all these cases? See Steven D.
Schwinn, Reconstructing the Constitutional Case Against Mandatory
Welfare Home Visits, Clearinghouse Rev., May-June 2008, at 42 (arguing
that such visits violate the takings clause).
3. In Home Builders Association of Northern California v. City of
Napa, 108 Cal. Rptr. 2d 60 (Ct. App. 2001), the court upheld a city’s
inclusionary zoning law against the claim that it violated the takings clause
when it required 10 percent of all newly constructed residential units to be
“affordable.” What are the arguments on both sides of this question and
who should have won the case?
4. In San Remo Hotel L.P. v. City & County of San Francisco, 41 P.3d
87, 102-103 (Cal. 2002), aff’d on other grounds, 545 U.S. 323 (2005), the
California Supreme Court upheld against a takings challenge the
application of an ordinance that required the San Remo Hotel in San
Francisco to pay a $567,000 fee for converting rooms that had been rented
to longer-term residents to rooms for tourists (with stays of seven days or
less) and daily renters. The ordinance prohibited the conversion of
residential hotels to tourist hotels without replacing the lost units on a one-
for-one basis or paying a fee to the city to allow it to replace the lost units.
The ordinance was intended to “benefit the general public by minimizing
adverse impact on the housing supply and on displaced low-income,
elderly, and disabled persons resulting from the loss of residential hotel
units through their conversion and demolition.” It was accompanied by
findings that the city had recently lost thousands of such units, that many
low-income, elderly, and disabled persons reside in such units, and these
conversions had created a low-income housing “emergency” in San
Francisco.
Upholding the law against a takings claim, Justice Kathryn Mickle
Werdegar wrote for the court that the ordinance was not subject to Nollan-
Dolan analysis because it constituted generally applicable legislation with
set terms that gave owners the choice of one-to-one replacement of
converted units or payment of a legislatively determined fee to offset the
costs of the lost units. Id. at 102-103. She further noted that the taking of
money is always treated differently under the takings clause because all
taxes constitute takings of money and the courts defer to legislative
determinations of appropriate taxes. Id. at 106. She finally noted that even
if the Nollan-Dolan test applied, the law would be constitutional because
“the housing replacement fees bear a reasonable relationship to loss of

1650
housing.” Id. at 107.
Justice Janice Rogers Brown wrote a blistering dissent, id. at 120-128.

Americans are a diverse group of hard-working, confident, and creative

people molded into a nation not by common ethnic identity, cultural legacy,
or history; rather, Americans have been united by a dream — a dream of
freedom, a vision of how free people might live. The dream has a history.
The idea that property ownership is the essential prerequisite of liberty has
long been “a fundamental tenet of Anglo-American constitutional thought.”
(Ely, The Guardian of Every Other Right (1998) p. 43.) “Indeed, the framers
saw property ownership as a buffer protecting individuals from government
coercion. Arbitrary redistribution of property destroyed liberty, and thus the
framers hoped to restrain attacks on property rights.” (Ibid.) “Property must
be secured, or liberty cannot exist” (Adams, A Balanced Government (1790)
in Discourses on Davila (1805), reprinted in 6 The Works of John Adams
(1851 ed.) p. 280), because property and liberty are, upon examination, one
and the same thing.
But private property, already an endangered species in California, is now
entirely extinct in San Francisco. The City and County of San Francisco has
implemented a neo-feudal regime where the nominal owner of property must
use that property according to the preferences of the majorities that prevail in
the political process or, worse, the political powerbrokers who often control
the government independently of majoritarian preferences. San Francisco has
redefined the American dream. Where once government was closely
constrained to increase the freedom of individuals, now property ownership
is closely constrained to increase the power of government. Where once
government was a necessary evil because it protected private property, now
private property is a necessary evil because it funds government programs.
The express purpose of the [ordinance] was to preserve the City’s stock of
low-income residential housing by requiring hotel owners to continue leasing
their rooms as residences, or to replace those residential units if they chose to
convert the rooms to tourist use. Obviously, the [ordinance] is facially
unconstitutional. If a person took my car and asked a ransom for its return, he
or she would be guilty of theft. But what if the City, seeking to provide
transportation to the poor, orders me to operate an informal carpool, or if I
prefer, to buy the City a replacement car?
Here, the City has essentially said to 500 unlucky hotel owners: We lack
the public funds to fill the need for affordable housing in San Francisco, so
you should solve the problem for us by using your hotels to house poor
people. The City might as well have ordered the owners of small grocery
stores to give away food at cost.
Once again a majority of this court has proved that “If enough people get
together and act in concert, they can take something and not pay for it.”
Landgate, Inc. v. California Coastal Com., 953 P.2d 1188, 1207 n.1 (Cal.

1651
 1998) (dis. opn. of Brown, J.), quoting O’Rourke, Parliament of Whores 232
(1991). But theft is still theft. Theft is theft even when the government
approves of the thievery. Turning a democracy into a kleptocracy does not
enhance the stature of the thieves; it only diminishes the legitimacy of the
government. The right to express one’s individuality and essential human
dignity through the free use of property is just as important as the right to do
so through speech, the press, or the free exercise of religion. Nevertheless,
the property right is now — in California, at least — a hollow one.

Who is right — the majority or the dissent?

1. While this litigation was pending before the Superior Court, the NLDC
announced that it would lease some of the parcels to private developers in
exchange for their agreement to develop the land according to the terms of the
development plan. Specifically, the NLDC was negotiating a 99-year ground lease
with Corcoran Jennison, a developer selected from a group of applicants. The
negotiations contemplated a nominal rent of $1 per year, but no agreement had yet
been signed.
2. From upholding the Mill Acts (which authorized manufacturers dependent on
power-producing dams to flood upstream lands in exchange for just
compensation), to approving takings necessary for the economic development of
the West through mining and irrigation, many state courts either circumvented the
“use by the public” test when necessary or abandoned it completely. See Nichols,
The Meaning of Public Use in the Law of Eminent Domain, 20 B.U. L. Rev. 615,
619-24 (1940) (tracing this development and collecting cases).
3. See also Clark v. Nash, 198 U.S. 361 (1905) (upholding a statute that
authorized the owner of arid land to widen a ditch on his neighbor’s property so as
to permit a nearby stream to irrigate his land).
4. Cf. Vill. of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926).
5. It is a misreading of Berman to suggest that the only public use upheld in that
case was the initial removal of blight. The public use described in Berman
extended beyond that to encompass the purpose of developing that area to create
conditions that would prevent a reversion to blight in the future. See 348 U.S., at
34-35 (“It was not enough, [the experts] believed, to remove existing buildings that
were insanitary or unsightly. It was important to redesign the whole area so as to
eliminate the conditions that cause slums. . . . The entire area needed redesigning
so that a balanced, integrated plan could be developed for the region, including not
only new homes, but also schools, churches, parks, streets, and shopping centers.
In this way it was hoped that the cycle of decay of the area could be controlled and
the birth of future slums prevented”). Had the public use in Berman been defined
more narrowly, it would have been difficult to justify the taking of the plaintiff’s
nonblighted department store.
6. Notably, as in the instant case, the private developers in Berman were

1652
required by contract to use the property to carry out the redevelopment plan.
7. Nor do our cases support Justice O’Connor’s novel theory that the
government may only take property and transfer it to private parties when the
initial taking eliminates some “harmful property use.” There was nothing
“harmful” about the nonblighted department store at issue in Berman; nothing
“harmful” about the lands at issue in the mining and agriculture cases, see, e.g.,
Strickley; and certainly nothing “harmful” about the trade secrets owned by the
pesticide manufacturers in Monsanto. In each case, the public purpose we upheld
depended on a private party’s future use of the concededly nonharmful property
that was taken. By focusing on a property’s future use, as opposed to its past use,
our cases are faithful to the text of the Takings Clause. See U.S. Const., Amdt. 5.
(“Nor shall private property be taken for public use, without just compensation”).
Justice O’Connor’s intimation that a “public purpose” may not be achieved by the
action of private parties, confuses the purpose of a taking with its mechanics, a
mistake we warned of in Midkiff, 467 U.S., at 244. See also Berman, 348 U.S., at
33-34 (“The public end may be as well or better served through an agency of
private enterprise than through a department of government”).
8. Courts have viewed such aberrations with a skeptical eye. See, e.g., 99 Cents
Only Stores v. Lancaster Redevelopment Agency, 237 F. Supp. 2d 1123 (C.D. Cal.
2001); cf. Cincinnati v. Vester, 281 U.S. 439, 448 (1930) (taking invalid under
state eminent domain statute for lack of a reasoned explanation). These types of
takings may also implicate other constitutional guarantees. See Vill. of
Willowbrook v. Olech, 528 U.S. 562 (2000) (per curiam).
9. A parade of horribles is especially unpersuasive in this context, since the
Takings Clause largely “operates as a conditional limitation, permitting the
government to do what it wants so long as it pays the charge.” Eastern Enters. v.
Apfel, 524 U.S. 498, 545 (1998) (Kennedy, J., concurring in judgment and
dissenting in part). Speaking of the takings power, Justice Iredell observed that “it
is not sufficient to urge, that the power may be abused, for, such is the nature of all
power — such is the tendency of every human institution: and, it might as fairly be
said, that the power of taxation, which is only circumscribed by the discretion of
the Body, in which it is vested, ought not to be granted, because the Legislature,
disregarding its true objects, might, for visionary and useless projects, impose a tax
to the amount of nineteen shillings in the pound. We must be content to limit
power where we can, and where we cannot, consistently with its use, we must be
content to repose a salutory confidence.” Calder v. Bull, 3 U.S. 386, 400 (1798)
(opinion concurring in result).
10. See, e.g., Cnty. of Wayne v. Hathcock, 684 N.W.2d 765 (Mich. 2004).
11. Under California law, for instance, a city may only take land for economic
development purposes in blighted areas. Cal. Health & Safety Code §§33030-
33037. See, e.g., Redevelopment Agency of Chula Vista v. Rados Bros., 115 Cal.
Rptr. 2d 234 (Ct. App. 2002).
12. For example, some argue that the need for eminent domain has been greatly
exaggerated because private developers can use numerous techniques, including

1653
secret negotiations or precommitment strategies, to overcome holdout problems
and assemble lands for genuinely profitable projects. Others argue to the contrary,
urging that the need for eminent domain is especially great with regard to older,
small cities like New London, where centuries of development have created an
extreme over division of land and thus a real market impediment to land assembly.
13. Recall that Hawai`i Housing Authority v. Midkiff, 467 U.S. 229 (1984),
involved a program that allowed tenants to convert their leasehold interest into fee
title. See also D.C. Stat. §42-3401.01 et seq. (District of Columbia’s Tenant
Opportunity to Purchase Act, which gives tenants a right of first refusal when their
landlord is selling their building); cf. Mass. Gen. Laws ch. 40L, §5 (granting the
state a right of first refusal in certain agricultural lands in the state to prevent
conversion of agricultural lands to residential or commercial use).
14. Takings that involve the appropriation of funds or requirements to pay
money raise special challenges that we will explore below. See §6, below.
15. “That ‘possessory rights’ as used in this resolution shall mean all rights, if
any should exist, which are based upon aboriginal occupancy or title, or upon [the
Organic Act for Alaska of 1884 and the Acts of 1891 and 1900].”
16. © 2008 Free Software Foundation, Inc. http://fsf.org/. Photoshop work by
Mira Singer.
17. Appellants attempt to distinguish these cases on the ground that, in each,
government was prohibiting a “noxious” use of land and that in the present case, in
contrast, appellants’ proposed construction above the Terminal would be
beneficial. We observe that the uses in issue in Hadacheck, Miller, and Goldblatt
were perfectly lawful in themselves. They involved no “blameworthiness, . . .
moral wrongdoing or conscious act of dangerous risk-taking which [induced
society] to shift the cost to a [particular] individual.” Sax, Takings and the Police
Power, 74 Yale L.J. 36, 50 (1964). These cases are better understood as resting not
on any supposed “noxious” quality of the prohibited uses but rather on the ground
that the restrictions were reasonably related to the implementation of a policy —
not unlike historic preservation — expected to produce a widespread public benefit
and applicable to all similarly situated property.
Nor, correlatively, can it be asserted that the destruction or fundamental
alteration of a historic landmark is not harmful. The suggestion that the beneficial
quality of appellants’ proposed construction is established by the fact that the
construction would have been consistent with applicable zoning laws ignores the
development in sensibilities and ideals reflected in landmark legislation like New
York City’s.
18. In Penn Central, the Court described this element of the analysis as focusing
on interference with “distinct investment-backed expectations,” 438 U.S. at 124,
but as the analysis has developed, the Court has at times uses the phrase
“reasonable investment-backed expectations.” See, e.g., Palazzolo v. Rhode Island,
533 U.S. 606, 617 (2001) (emphasis added). This is in recognition that not all
expectations are necessary reasonable in light of existing understandings of
property law.

1654
 19. In 1988, President Reagan issued an executive order that is still in effect that
requires all federal agencies to conduct a “takings impact analysis” of all
regulations that may affect the use of private property to avoid government actions
that might result in an unconstitutional taking of property. Exec. Order No. 12,630,
3 C.F.R. §554 (1988), reprinted in 5 U.S.C. §601.
20. Moreover, it is not clear that governmental actors weigh costs and benefits in
the same way that private actors do — or that they necessarily should. Daryl J.
Levinson, Making Government Pay: Markets, Politics, and the Allocation of
Constitutional Costs, 67 U. Chi. L. Rev. 345 (2000).
21. It is true that the landlord could avoid the requirements of §828 by ceasing to
rent the building to tenants. But a landlord’s ability to rent his property may not be
conditioned on his forfeiting the right to compensation for a physical occupation.
Teleprompter’s broad “use-dependency” argument proves too much. For example,
it would allow the government to require a landlord to devote a substantial portion
of his building to vending and washing machines, with all profits to be retained by
the owners of these services and with no compensation for the deprivation of
space. It would even allow the government to requisition a certain number of
apartments as permanent government offices. The right of a property owner to
exclude a stranger’s physical occupation of his land cannot be so easily
manipulated.
22. In Arkansas Game and Fish Commission v. United States, 133 S. Ct. 511
(2012), the Court faced the question whether the fact that a physical invasion was
temporary created an exemption from takings liability, and held that there is no
such exemption. Temporary physical invasions, the Court held, must be evaluated
under the Penn Central test, with the duration of the invasion “a factor in
determining the existence vel non of a compensable taking.” Id. at 522. The Court
also clarified that “the degree to which the invasion is intended or is the
foreseeable result of authorized government action” can influence the Penn Central
analysis. Id.
23. Regrettably, the rhetorical force of our “deprivation of all economically
feasible use” rule is greater than its precision, since the rule does not make clear
the “property interest” against which the loss of value is to be measured. When, for
example, a regulation requires a developer to leave 90% of a rural tract in its
natural state, it is unclear whether we would analyze the situation as one in which
the owner has been deprived of all economically beneficial use of the burdened
portion of the tract, or as one in which the owner has suffered a mere diminution in
value of the tract as a whole. The answer to this difficult question may lie in how
the owner’s reasonable expectations have been shaped by the State’s law of
property — i.e., whether and to what degree the State’s law has accorded legal
recognition and protection to the particular interest in land with respect to which
the takings claimant alleges a diminution in (or elimination of) value. In any event,
we avoid this difficulty in the present case, since the “interest in land” that Lucas
has pleaded (a fee simple interest) is an estate with a rich tradition of protection at
common law, and since the South Carolina Court of Common Pleas found that the

1655
Beachfront Management Act left each of Lucas’s beachfront lots without economic
value.
24. In Justice Blackmun’s view, even with respect to regulations that deprive an
owner of all developmental or economically beneficial land uses, the test for
required compensation is whether the legislature has recited a harm-preventing
justification for its action. Since such a justification can be formulated in
practically every case, this amounts to a test of whether the legislature has a stupid
staff. We think the Takings Clause requires courts to do more than insist upon
artful harm-preventing characterizations.
25. After accusing us of “launch[ing] a missile to kill a mouse,” Justice
Blackmun expends a good deal of throw-weight of his own upon a noncombatant,
arguing that our description of the “understanding” of land ownership that informs
the Takings Clause is not supported by early American experience. That is largely
true, but entirely irrelevant. The practices of the States prior to incorporation of the
Takings and Just Compensation Clauses, see Chicago, B. & Q. R. Co. v. Chicago,
166 U.S. 226 (1897) — which, as Justice Blackmun acknowledges, occasionally
included outright physical appropriation of land without compensation — were out
of accord with any plausible interpretation of those provisions. Justice Blackmun is
correct that early constitutional theorists did not believe the Takings Clause
embraced regulations of property at all, but even he does not suggest (explicitly, at
least) that we renounce the Court’s contrary conclusion in Mahon. Since the text of
the Clause can be read to encompass regulatory as well as physical deprivations (in
contrast to the text originally proposed by Madison) (“No person shall be . . .
obliged to relinquish his property, where it may be necessary for public use,
without a just compensation”), we decline to do so as well.
26. The principal “otherwise” that we have in mind is litigation absolving the
State (or private parties) of liability for the destruction of “real and personal
property, in cases of actual necessity, to prevent the spreading of a fire” or to
forestall other grave threats to the lives and property of others. Bowditch v. Boston,
101 U.S. 16, 18-19 (1880).
27. Of course, the State may elect to rescind its regulation and thereby avoid
having to pay compensation for a permanent deprivation. See First English
Evangelical Lutheran Church of Glendale v. Cnty. of Los Angeles, 482 U.S. 304,
321 (1987). But “where the [regulation has] already worked a taking of all use of
property, no subsequent action by the government can relieve it of the duty to
provide compensation for the period during which the taking was effective.” Id.
28. Justice Blackmun decries our reliance on background nuisance principles at
least in part because he believes those principles to be as manipulable as we find
the “harm prevention benefit”/ “conferral” dichotomy. There is no doubt some
leeway in a court’s interpretation of what existing state law permits — but not
remotely as much, we think, as in a legislative crafting of the reasons for its
confiscatory regulation. We stress that an affirmative decree eliminating all
economically beneficial uses may be defended only if an objectively reasonable
application of relevant precedents would exclude those beneficial uses in the

1656
circumstances in which the land is presently found.
29. On remand, the California court found no taking in part because the zoning
regulation “involves this highest of public interests — the prevention of death and
injury.” First Lutheran Church v. Los Angeles, 258 Cal. Rptr. 893 (Ct. App. 1989),
cert. denied, 493 U.S. 1056 (1990).
30. Even measured in terms of efficiency, the Court’s rule is unsound. The Court
today effectively establishes a form of insurance against certain changes in land-
use regulations. Like other forms of insurance, the Court’s rule creates a “moral
hazard” and inefficiencies: In the face of uncertainty about changes in the law,
developers will overinvest, safe in the knowledge that if the law changes adversely,
they will be entitled to compensation. See generally Farber, Economic Analysis
and Just Compensation, 12 Int’l Rev. of Law & Econ. 125 (1992).
31. Takings claims against the federal government, as opposed to claims against
states or local governments, can be brought in the Court of Federal Claims under a
statute called the Tucker Act, 28 U.S.C. §1491(a)(1). Generally, such claims must
be brought in the Court of Federal Claims, unless Congress has withdrawn Tucker
Act jurisdiction in the context of another statutory regime. See Horne v.
Department of Agriculture, 133 S. Ct. 2053 (2013) (slip op. at 2062).
32. In Irving we relied on Penn Central Transp. Co. v. New York City, 438 U.S.
104 (1978). Because we find Irving dispositive, we do not reach respondents’
argument that amended §207 effects a “categorical” taking, and is therefore subject
to the more stringent analysis employed in Lucas v. South Carolina Coastal
Council, 505 U.S. 1003 (1992).
33. This topic is further explored in Chapter 7 in the sections discussing prior
nonconforming uses (§2.1) and vested rights in zoning law (§2.2).
34. Thus, because the proposed offsite mitigation obligation in this case was tied
to a particular parcel of land, this case does not implicate the question whether
monetary exactions must be tied to a particular parcel of land in order to constitute
a taking. That is so even when the demand is considered “outside the permitting
process.” Post (Kagan, J., dissenting). The unconstitutional conditions analysis
requires us to set aside petitioner’s permit application, not his ownership of a
particular parcel of real property.
35. The majority’s sole response is that “the unconstitutional conditions analysis
requires us to set aside petitioner’s permit application, not his ownership of a
particular parcel of real property.” That mysterious sentence fails to make the
majority’s opinion cohere with the unconstitutional conditions doctrine, as anyone
has ever known it. That doctrine applies only if imposing a condition directly —
i.e., independent of an exchange for a government benefit — would violate the
Constitution. Here, Apfel makes clear that the District’s condition would not do so:
The government may (separate and apart from permitting) require a person —
whether Koontz or anyone else — to pay or spend money without effecting a
taking. The majority offers no theory to the contrary: It does not explain, as it must,
why the District’s condition was “unconstitutional.”
36. Our Penn Central test protects against regulations that unduly burden an

1657
owner’s use of his property: Unlike the Nollan-Dolan standard, that framework fits
to a T a complaint (like Koontz’s) that a permitting condition makes it inordinately
expensive to develop land. And the Due Process Clause provides an additional
backstop against excessive permitting fees by preventing a government from
conditioning a land-use permit on a monetary requirement that is “basically
arbitrary.” Eastern Enters. v. Apfel, 524 U.S. 498, 557-58 (1998) (Breyer, J.,
dissenting).

1658
 TABLE OF CASES

Principal cases appear in italics.

Abbey Rd. Grp., LLC v. City of Bonney Lake, 444

Abo Petroleum Corp. v. Amstutz, 754
Ackaa v. Tommy Hilfiger, 48
Ackerman v. Abbott, 1004
Ackerman v. Food-4-Less, 48
Acton v. Blundell, 422, 510
Adams v. Cleveland-Cliffs Iron Co., 370
Adams v. Freeman, 28
Adams v. Kimberley One Townhouse Owner’s Ass’n, Inc., 647
Adams v. Star Enters., 354
Adams Outdoor Adver., L.P. v. Board of Zoning Appeals, 440
Adkins v. Morgan Stanley, 1101, 1103
Adoption of Baby Girl, L.J., In re, 261
Adoption of Greta, In re, 128
Adoption of N.J.A.C. 5:96 & 5:97, In re, 473
Agins v. City of Tiburon, 1189, 1191
A.G.R. v. D.R.H., 264
Agua Fria Save the Open Space Ass’n v. Rowe, 576
Aimco Props. LLC v. Dziewisz, 850
AKG Real Estate, LLC v. Kosterman, 535-536
Albinger v. Harris, 135
Albrecht v. Clifford, 948
Albro v. Allen, 669
Albuquerque Commons P’ship v. City Council of Albuquerque, 453
Alby v. Banc One Fin., 646, 805
Alderwood Assocs. v. Washington Envtl. Council, 69
Alexander v. Boyer, 683
Algermissen v. Sutin, 320

1659
Alice Corp. Pty. v. CLS Bank Int’l, 218
Alires v. McGehee, 946
Allemong v. Frendzel, 654
Allman v. Snyder, 851
Almota Farmers Elevator & Warehouse v. United States, 1172
Amalgamated Food Emps. Union v. Logan Valley Plaza, Inc., 67, 634
Amaral v. Cuppels, 370
Amazon.com, Inc. v. Barnesandnoble.com, Inc., 219
Ambler Realty Co. v. Village of Euclid, 430
America Online v. AT&T Corp., 181
American Elec. Power Co. v. Connecticut, 355
American Express Travel Related Servs., Inc. v. Sidamon-Eristoff, 1131
American Geophysical Union v. Texaco Inc., 206
American Standard Life & Accident Ins. Co. v. Speros, 683
American Trading Real Estate Props., Inc. v. Town of Trumbull, 299
American Transmission, Inc. v. Channel 7 of Detroit, Inc., 21
Ames Rental Prop. Ass’n v. City of Ames, 1140
Anderson v. Anderson, 1000
Anderson v. City of Issaquah, 475, 480, 481, 482
Anderson v. Joseph, 672
Andrus v. Allard, 1255-1256
Ansin v. Craven-Ansin, 703, 704
The Antelope, 253
Anti-Discrimination Ctr. of Metro N.Y., Inc., United States ex rel., v.
Westchester Cnty., 1048, 1072
Appalachee Entm’t v. Walker, 1257
Appel v. Presley Cos., 594, 597, 656
Apple Valley Gardens Ass’n v. MacHutta, 623, 647
Application for Water Rights in Rio Grande Cnty., In re, 511
Arbern Realty Co. v. Clay Craft Planters Co., 872
Archuleta v. Gomez, 512
Arguello v. Conoco, Inc., 48
Ark Land Co. v. Harper, 691, 695, 696
Arkansas Game & Fish Comm’n v. United States, 1217, 1218
Arlington Heights, Vill. of, v. Metropolitan Hous. Dev. Corp., 1082, 1117

1660
Armory v. Delamirie, 156, 157, 158, 163
Armstrong v. Francis Corp., 392, 397, 398, 399, 403, 422
Armstrong v. Roberts, 599
Armstrong v. United States, 1176, 1189
Aronow v. Silver, 135
Arundel Corp. v. Marie, 802
Arvada Urban Renewal Auth. v. Columbine Prof’l Plaza Ass’n, 1167
Asbury v. Brougham, 1032, 1036, 1037, 1039, 1040
Ashford, Application of, 81
Assilzadeh v. California Fed. Bank, 941
Association for Molecular Pathology v. Myriad Genetics, Inc., 209, 213,
218
Astralis Condo. Ass’n v. Secretary, U.S. Dep’t of Hous. & Urban Dev.,
1087
Astrue v. Capato, 747
Atlanta Dev. Auth. v. Clark Atlanta Univ., Inc., 647
Ator v. Ator, 751
Aurora Bus. Park Ass’n v. Albert, Inc., 863
Austin Hill Country Realty v. Palisades Plaza, 860
Authors Guild v. Google, Inc., 195
Autocephalous Greek-Orthodox Church of Cyprus v. Goldberg & Feldman
Fine Arts, Inc., 166, 334
Aviva USA Corp. v. Vazirani, 186
A.Z. v. B.Z., 268

Babbitt v. Sweet Home Chapter of Cmtys. for a Great Or., 501

Babbitt v. Youpee, 1190, 1248, 1250, 1254, 1255, 1256
Baby M, In re, 254, 260, 262, 264
Baehr v. Miike, 699
Bailey v. Delta Trust & Bank, 769
Bailey v. Myers, 1166
Bain v. Metropolitan Mortg. Grp., Inc., 993
Baker v. Speaks, 670
Baker v. Weedon, 768
Baldwin v. Baldwin, 715
B.A.M. Dev., L.L.C. v. Salt Lake Cnty., 1280

1661
Bank of Am. Corp. v. City of Miami, Fla., 1104
Banner v. United States, 324, 329
Banning, In re, 81
Barash v. Pennsylvania Terminal Real Estate Corp., 870
Barber v. Bryant, 55
Barchowsky v. Silver Farms, Inc., 319
Barclays Capital Inc. v. Theflyonthewall.com (650 F.3d 876), 123-124
Barclays Capital Inc. v. Theflyonthewall.com (700 F. Supp. 2d 310), 124
Bargmann v. Soll Oil Co., 339
Barnes v. Glen Theatre, Inc., 484
Barrett v. Dawson, 1257
Barrett Japaning, Inc. v. Bialobroda, 831
Barron v. Kipling Woods, LLC, 936
Barrow v. Barrow, 673
Barrows v. Jackson, 636
Baskurt v. Beal, 979, 984
Bassett v. Harrison, 533
Batchelder v. Allied Stores Int’l, Inc., 69
Bateman v. Board of Appeals of Georgetown, 536
Bauermeister v. Waste Mgmt. Co. of Neb., 803-804
Baughman v. Walt Disney World Co., 64
Bauman v. Ross, 1174
Bayliss v. Bayliss, 129, 133
Bayview Loan Servicing, L.L.C. v. Nelson, 977
B.C.E. Dev., Inc. v. Smith, 599
Beal Bank, SSB v. Almand & Assocs., 670, 690
Bean v. Walker, 990
Becker v. IRM, 903, 904
Beckert v. Our Lady of Angels Apartments, Inc., 1093
Beeren & Barry Invs., L.L.C. v. AHC, Inc., 570, 576
Behrens v. Behrens, 713
Bell v. Town of Wells, 79
Belle Terre, Village of, v. Boraas, 1132, 1140, 1141
Belleville, Town of, v. Parrillo’s, Inc., 436, 440, 445
Bellwood, Vill. of, v. Dwivedi, 1050

1662
Benassi v. Back & Neck Pain Clinic, Inc., 135
Bender v. Bender, 792
Benjamin v. Lindner Aviation, 157
Bennett v. Charles Corp., 569
Bennett v. Commissioner of Food & Agric., 567
Bennis v. Michigan, 1142, 1146, 1147
Benz v. D.L. Evans Bank, 949
Berg v. Wiley, 853
Berge v. State, 558
Berger v. Berger, 715
Berman v. Parker, 481, 1165, 1166
Berman & Sons, Inc. v. Jefferson, 882
Bernstein v. New Beginnings Tr., L.L.C., 994
Bickford v. Yancey Dev. Co., 1257
Bigelow v. Bullard, 825
Biggers v. Crook, 684
Billings v. Wilson, 817
Bilski, In re, 219
Bilski v. Kappos, 219
Bishop v. Reinhold, 323
Black Jack, Mo., City of; United States v., 1082
Black Mountain Energy Corp. v. Bell Cnty. Bd. of Educ., 796, 1256
Blackett v. Olanoff, 872
Blakeley v. Gorin, 658, 661, 1257
Blancett v. Blancett, 953
Blaylock v. Cary, 941
Bleecker St. Tenants Corp. v. Bleeker Jones, LLC, 803
Bloch v. Frischholz, 637, 1041
Block v. Hirsch, 1200, 1220
Board of Adjustment v. Verleysen, 460
Board of Educ. v. Miles, 796
Board of Managers of Old Colony Vill. Condo. v. Preu, 636
Board of Regents v. Roth, 1127, 1128
Bocchini v. Gorn Mgmt. Co., 872
Boerne, City of, v. Flores, 490

1663
Bogner v. Villiger, 244
Boissy v. Chevron, 559
Bonnco Petrol, Inc. v. Epstein, 944
Bonner v. City of Brighton, 1117, 1127, 1130
Bonnichsen v. United States Dep’t of Army, 246
Boomer v. Atlantic Cement Co., 358, 361, 362, 380, 381, 387
Bormann v. Board of Supervisors in & for Kossuth Cnty., 353, 1257
Borough of. See name of borough
Bortolotti v. Hayden, 802, 804
Bosarge v. State ex rel. Price, 355
Bosley Med. Inst., Inc. v. Kremer, 186
Boston Taxi Owners Ass’n, Inc. v. City of Boston, 1204
Bouley v. Young-Sabourin, 1056
Bowdoin Square, L.L.C. v. Winn-Dixie Montgomery, Inc., 861
Bowen v. Public Agencies Opposed to Soc. Sec. Entrapment, 1127
Bowers v. Hardwick, 698
Bowers, State ex rel., v. Elida Rd. Video & Books, Inc., 355
Bowie, City of, v. MIE Props., Inc., 575, 654
Bowles v. Mahoney, 903
Bowman v. Presley, 940, 946
Boy Scouts of Am. v. Dale, 53, 54
Boykin v. Gray, 1028
Bozeman, City of, v. Vaniman, 1166
BP Prods. N. Am., Inc. v. Stanley, 648
Bradley v. American Smelting & Ref. Co., 339, 370
Bradwell v. Illinois, 932
Bragdon v. Abbott, 1017
Brandrup v. ReconTrust Co., N.A., 978
Brandt v. Chebanse, 1092
Braschi v. Stahl Assocs., 864, 1067
Breene v. Plaza Tower Ass’n, 644
Brenner v. New Richmond Reg’l Airport Comm’n, 16
Britton v. Town of Chester, 473
Brock v. Yale Mortgage Corp., 1008, 1013
Brookline, Town of, v. Carey, 1256

1664
Brooks v. Chicago Downs Ass’n, Inc., 30, 31
Brotherton v. Cleveland, 276
Brown v. Board of Educ., 635, 1049, 1093
Brown v. Branch, 936
Brown v. Clemens, 297
Brown v. Gobble, 287, 294, 309
Brown v. Legal Found. of Wash., 1282
Brown v. State Cent. Bank, 824
Brown v. Voss, 536
Brush Grocery Kart, Inc. v. Sure Fine Mkt., Inc., 919
Bucci v. Lehman Bros. Bank, FSB, 978
Buchanan v. Warley, 430, 633, 1255
Buck v. Banks, 803
Bugsy’s, Inc. v. City of Myrtle Beach, 440
Building Monitoring Sys., Inc. v. Paxton, 900
Bunker v. Peyton, 670
Burch v. University of Kan., 824
Burley Brick & Sand Co. v. Cofer, 556
Burlington N. & Santa Fe Ry. Co. v. United States, 495
Burns v. McCormick, 927, 932, 933, 935
Burton v. Scherpf, 28-29
Bushmiller v. Schiller, 948
Butler; Doe v., 1094
Butte Creek Island Ranch v. Crim, 695
B.W.S. Invs. v. Mid-Am Rest., Inc., 882
Byerly v. Connor, 905

Cain v. Finnie, 761

California Bldg. Indus. Ass’n v. City of San Jose, 1279
California Mobile Home Park Mgmt. Co.; United States v., 1089
Cambridge Co. v. East Slope Inv. Corp., 804
Camino Gardens Ass’n, Inc. v. McKim, 646
Candela v. Port Motors, Inc., 167
Cannata v. Berkshires Natural Res. Council, 532
Capital Fin. Co. Del. Valley, Inc. v. Asterbadi, 676, 689

1665
Capitol Fed. Sav. & Loan Ass’n v. Smith, 778
Capitol Records, LLC v. Vimeo, 194
Caremark Int’l Inc. Derivative Litig., In re, 623
Carlsen v. Rivera, 167
Carma Dev. (Cal.), Inc. v. Marathon Dev. Cal., Inc., 837
Carparts Distribution Ctr., Inc. v. Automotive Wholesalers Ass’n of New
England, 64
Carpenter v. Ruperto, 298
Carr v. Deking, 678, 682, 683
Carter v. Hemsley-Spear, Inc., 208
Cartoon Network LP v. CSC Holdings, Inc., 194
Caruso v. Blockbuster-SONY Music Entm’t Centre at the Waterfront, 63
Casa D’Angelo v. A & R Realty Co., 835
Casteel v. Town of Afton, 369
Castlebrook, Ltd. v. Dayton Props. Ltd. P’ship, 573
Castle Rock, Town of, v. Gonzales, 1127, 1128
Cathedral Church of the Intercessor v. Village of Malverne, 491
Cathedral of the Incarnation in the Diocese of Long Island, Inc. v. Garden
City Co., 750, 762, 763
Causby; United States v., 16, 1218
Causey v. Sewell Cadillac-Chevrolet, Inc., 48
Cayuga Indian Nation of N.Y. v. Cuomo, 102
Cayuga Indian Nation of N.Y. v. Pataki, 103
CCA Assocs. v. United States, 1260
Cell S. of N.J., Inc. v. Zoning Bd. of Adjustment, 461
Central Del. Cnty. Auth. v. Greyhound Corp., 803
Centro Familiar Cristiano Buenas Nuevas v. City of Yuma, 493
Certain Land in Cape Girardeau; United States v., 763
Certain Scholarship Funds, In re, 777
Certified Question, In re, 747
Chaplin v. Sanders, 294, 298
Chapman v. Higbee, 48
Charash v. Oberlin Coll., 333
Charlotte Park & Recreation Comm’n v. Barringer, 778
Charping v. J.P. Scurry & Co., 570

1666
Charrier v. Bell, 158
Charter Twp. of Delta v. Dinolfo, 1140, 1141
Cheek v. Wainwright, 294
Chesapeake Ranch Club, Inc. v. C.R.C. United Members, Inc., 573
Chevy Chase Land Co. v. United States, 533
Chicago, Burlington & Quincy R.R. Co. v. Chicago, 1149
Chicago Flood Litig., In re, 339
Chicago Lawyers’ Comm. for Civil Rights Under the Law, Inc. v.
Craigslist, Inc., 1029
Chinese Staff & Workers Ass’n v. City of New York, 498
Chiodini v. Fox, 881
Christensen v. City of Pocatello, 536
Christian v. Wal-Mart Stores, Inc., 48
Christian Louboutin S.A. v. Yves Saint Laurent Am. Holding, Inc., 187
Christiansen v. Casey, 599
Christopher, Ex parte, 131, 133
Christy v. Scott, 163, 165
Chryar v. Wolf, 905
Chun Quan Yee Hop, In re Estate of, 793
Cienega Gardens v. United States (503 F.3d 1266), 1260
Cienega Gardens v. United States (331 F.3d 1319), 1260
Citibank, N.A. v. Plapinger, 946
Citizens for Covenant Compliance v. Anderson, 568, 587
City League of Urban Believers v. Chicago, 491
City of. See name of city
City Wide Assocs. v. Penfield, 1089
The Civil Rights Cases, 47, 633
Clackamas Co. v. Holmes, 444
Clay v. Hanson, 934
Cleaver v. Kundiff, 546
Cleburne, City of, v. Cleburne Living Ctr., 1115
Clippard v. Pfefferkorn, 135
Coastal Oil & Gas Corp. v. Garza Energy Trust, 17, 150
Coffee v. William Marsh Rice Univ., 777
Coffin v. Left Hand Ditch, 512

1667
Cohen v. Cohen, 678
Coker v. JPMorgan Chase Bank, N.A., 973
Coleman, Ex parte, 881
College Block v. Atlantic Richfield Co., 832, 833
College Sav. Bank v. Florida Prepaid Postsecondary Educ. Expense Bd.,
1127, 1128
Collins v. Guggenheim, 724
Colorado Springs, City of, v. SecurCare Self Storage, Inc., 462
Columbia Cmty. Bank v. Newman Park, LLC, 1008
Columbia E. Assocs. v. Bi-Lo, Inc., 833, 834
Columbia Pictures Indus., Inc. v. Fung, 194
Comcast of Fla. v. L’Ambiance Beach Condo. Ass’n, Inc., 598
Comedy III Prods., Inc. v. Gary Saderup, Inc., 232
Comer v. Murphy Oil USA, Inc., 355
Commercial Real Estate Inv., L.C. v. Comcast of Utah II, Inc., 863
Committee for a Better Twin Rivers v. Twin Rivers Homeowners Ass’n,
623, 624, 635
Commons v. Westwood Zoning Bd. of Adjustment, 460
Commonwealth v. See name of defendant
Communities for a Better Env’t v. South Coast Air Quality Mgmt. Dist.,
498
Community Feed Store, Inc. v. Northeastern Culvert Corp., 315, 319, 320,
321
CompuServe v. Cyber Promotions, Inc., 22
Conahan v. Fisher, 941
Concerned Citizens of Brunswick Cnty. Taxpayers Ass’n v. Rhodes, 80
Conklin v. Davi, 947
Connell v. Francisco, 723
Conway v. Miller, 568, 574
Cook v. University Plaza, 824
Cooper v. Smith, 135
Cooper & Co. v. Lester, 940-941
Cope v. Inhabitants of Brunswick, 462
Corin v. Glenwood Cemetery, 633
Corliss v. Wenner, 158

1668
Cornelius v. Benevolent Protective Order of the Elks, 49
CoStar Grp., Inc. v. LoopNet, Inc., 194
Cote v. Cote, 1223
Cottonwood Duplexes, LLC v. Barlow, 536
Country Cmty. Timberlake Vill. v. HMW Special Util. Dist. of Harris, 588
Countrywide Fin. Corp. Mortg. Lending Practices Litig., In re, 1100
Countrywide Home Loans, Inc. v. First Nat’l Bank of Steamboat Springs,
1008
Countrywide Home Loans, Inc. v. Kentucky Bar Ass’n, 915
Countrywide Home Loans, Inc. v. Reed, 684
County of. See name of county
Covenant Christian Ministries, Inc. v. City of Marietta, 492
Cowles v. Shaw, 34
Cox, In re, 47
Cox v. Commonwealth Land Title Ins. Co., 1015
Cox v. Glenbrook Co., 524, 533, 535, 536
Craddock, In re, 954
Craft; United States v., 670, 689
Crichfield Trust, In re, 777
Cricklewood on the Bellamy Condo. Ass’n v. Cricklewood on the Bellamy
Trust, 523
Crimi v. Rutger’s Presbyterian Church, 208
Crippen v. Campbell, 135
CS-Lakeview at Gwinnett, Inc. v. Simon Prop. Grp., Inc., 793
Cullen v. Netflix, Inc., 64
Cumberland Farms v. Town of Groton, 444
Cummings Props., L.L.C. v. National Commc’ns Corp., 862
Cunney v. Board of Trs. of Vill. of Grand View, N.H., 1130
Cunningham v. City of Greensboro, 570, 574
Curry v. Thornsberry, 948
Curtis v. Anderson, 135
Curtis v. Dorn, 676
Cutter v. Wilkinson, 490
Cuyahoga Falls, City of, v. Buckeye Cmty. Hope Found., 1083
Cwynar v. City & Cnty. of S.F., 1221

1669
Dacy v. Village of Ruidoso, 453
Dahl, In re Marriage of, 267
Dale v. Boy Scouts of Am., 53
Danann Realty Corp. v. Harris, 944, 946
Daniel G. Kamin Kilgore Enters. v. Brookshire Grocery Co., 834
Dargis v. Paradise Park, Inc., 825
David v. May, 19
Davidow v. Inwood N. Prof’l Grp., 882
Davidson Brothers, Inc. v. D. Katz & Sons, Inc., 602, 613, 614, 616, 648
Davis v. Barnfield, 936
Davis v. Bruk, 533
Davis v. Davis, 264, 265, 266
Davis v. St. Joe Sch. Dist., 763
Davison v. City of Tucson, 85
Daytona Beach, City of, v. Tona-Rama, Inc., 80, 321
De Bruyn Produce Co. v. Romero, 825
De Peyster v. Michael, 600, 645
Dean v. Hill, 817
Deane v. Kahn, 523
DeCecco v. Beach, 350, 379
DeCoster; State v., 24, 825, 831
Deep Water Brewing, LLC v. Fairway Res. Ltd., 574
DeNardo v. Corneloup, 357
Denial of Reg’l Contribution Agreement Between Galloway Twp. & City
of Bridgeton, In re, 472-473
Denny v. Elizabeth Arden Salons, Inc., 47
Department of Agric. & Consumer Servs. v. Mid-Florida Growers, Inc.,
1113
Department of Hous. & Urban Dev. v. Rucker, 1147
Department of Transp. v. Rowe, 1174
Deptula v. Simpson, 942
DeSario v. Industrial Excess Land Fill Inc., 354
Desnick v. American Broad. Cos., 19-20, 21, 24
Detling v. Edelbrock, 881
Deutsche Bank Nat’l Ass’n v. First Am. Title Ins. Co., 1015

1670
Develop Don’t Destroy (Brooklyn), Inc. v. Empire State Dev. Corp., 498
Devins v. Borough of Bogota, 299
Diamond v. Chakrabarty, 218
Diamond v. State Bd. of Land & Natural Res., 81
DiCenso v. Cisneros, 1056
Dick Broad. Co. v. Oak Ridge FM, Inc., 846
Dierberg v. Wills, 654
Diessner v. Mortgage Elec. Registration Sys., Inc., 979
DiLiddo v. Oxford Street Realty, Inc., 1069
Dobbins v. Los Angeles, 1258-1259
Dobbs v. Wiggins, 340, 358
Doe v. See name of opposing party
Dolan v. City of Tigard, 1190, 1278, 1279, 1280, 1283, 1284, 1285
Donnellan v. Rocks, 916
Dred Scott v. Sanford, 248, 252
Dressell v. Ameribank, 915
Duff v. Morgantown Energy Assocs., 352
Duke of Norfolk’s Case, 805
Dunafon v. Delaware McDonald’s Corp., 649
Dunes W. Golf Club, LLC v. Town of Mount Pleasant, 1243
Dunning v. Buending, 574
Durand v. IDC Bellingham, L.L.C., 447, 453
Durham v. Red Lake Fishing & Hunting Club, Inc., 49
Duvall v. Ford Leasing Dev. Corp., 588
Dworkin v. Paley, 357
Dwyer v. Skyline Apartments, Inc., 905
Dyar v. Martinez, 1003

E-470 Pub. Highway Auth. v. Revenig, 1174

East Haven Assocs., Inc. v. Gurian, 870
Eastern Enters. v. Apfel, 1128, 1131, 1165, 1263, 1283
Eastern Sav. Bank, FSB v. CACH, LLC, 985
Eastside Exhibition Corp. v. 210 E. 86th St. Corp., 869
eBay, Inc. v. Bidder’s Edge, Inc., 22
eBay Inc. v. MercExchange, L.L.C., 220, 223

1671
Edgar A. Levy Leasing Co. v. Siegel, 1220
Edmonds v. Oxford House, Inc., 1094
Edouard v. Kozubal, 1055
Edwards, In re, 1006
Edwards v. Bradley, 758, 761, 763
Edwards v. Mortgage Elec. Registration Sys., Inc., 978
Edwards Aquifer Auth. v. Day, 511
Eggleston v. Pierce Cnty., 1245
El Di, Inc. v. Town of Bethany Beach, 650, 654, 655
El Paso Refinery, LP v. TRMI, 575, 577
Elane Photography, L.L.C. v. Willock, 55
Elizabeth J.K.L. Lucas Charitable Gift, In re, 776
Elkus v. Elkus, 714
Eller, Estate of, v. Bartron, 916
Elliff v. Texon Drilling Co., 146, 150, 151
Ellsworth Dobbs, Inc. v. Johnson, 914, 916
Employment Div. v. Smith, 489, 491
Erie, City of, v. Pap’s A.M., 483
Erie R.R. Co. v. Tompkins, 122
Erier v. Creative Fin. & Invs., L.L.C., 1013
Esplanade Props., L.L.C. v. City of Seattle, 1264
Estate of. See name of decedent
Estes, Estate of, v. Central United Methodist Church, 777
Esteves v. Esteves, 673
ETW Corp. v. Jireh Publ’g, Inc., 232, 233
Euclid, Village of, v. Ambler Realty Co., 351, 424, 430, 431, 432, 433,
471, 492, 1129, 1183, 1245
Evans v. Abney, 634, 770, 776, 777, 778
Evans v. Newton, 634
Evans v. Pollock, 581, 587, 590
Evergreen Highlands Ass’n v. West, 616
Exxon Valdez v. Hazelwood, 151
Eyerman, Estate of, v. Mercantile Trust Co., 769

Fair Housing Council of San Fernando Valley v. Roommate.com, LLC

(666 F.3d 1216), 1024, 1028, 1029, 1030, 1031, 1067

1672
Fair Hous. Council of San Fernando Valley v. Roommates.com, LLC (521
F.3d 1157), 1030
Fallon v. Triangle Mgmt., 1013
Familystyle of St. Paul, Inc. v. City of St. Paul, 1090, 1093, 1094, 1095
Fasano v. Board of Cnty. Comm’rs of Wash. Cnty., 454
Faulkner Literary Rights, LLC v. Sony Pictures Classics, 206
Fears v. YJ Land Corp., 321
Feeley v. Andrews, 547
Feemster v. BSA Ltd. P’ship, 1072
Feinberg, In re Estate of, 809
Feist Publications, Inc. v. Rural Telephone Service Co., 189
Fellows v. Blacksmith, 96
Fernandes v. Rodriguez, 695
Ferrick v. Bianchini, 861
Fialka-Feldman v. Oakland Univ. Bd. of Trs., 1089
Fierro v. Hoel, 135
Fifth Ave. Presbyterian Church v. City of N.Y., 494
50 Acres of Land; United States v., 1173
Fike v. Sharer, 696
Finley v. Astrue, 747
Finn v. Williams, 554
Firebaugh v. Whitehead, 804
Firma, Inc. v. Twillman, 950
First Citizens Nat’l Bank v. Sherwood, 1004
First English Evangelical Lutheran Church of Glendale v. County of L.A.,
1241, 1246
First Fed. Sav. Bank of Ind. v. Key Mkts., 847
First Lady, LLC v. JMF Props., LLC, 397
First Nat’l Bank in Albuquerque v. Enriquez, 1012
Fisk Univ., In re, 779
Fitzpatrick v. Michael, 933
509 Sixth Ave. Corp. v. New York City Transit Auth., 16
564.54 Acres of Land, More or Less; United States v., 1173
Flack v. McClure, 993
Flaig v. Gramm, 546

1673
Fleet v. Hegeman, 141
Florida v. Jardines, 23
Florida Rock Indus., Inc. v. United States, 1244
Flowers v. TJX Cos., 49
Flureau v. Thornhill, 949
Flynn v. City of Cambridge, 1221
Flynn v. Holder, 277, 283
Fogerty v. State, 331
Foley v. Harris, 353
Foley v. Wilson, 838
Fontainebleau Hotel Corp. v. Forty-Five Twenty-Five, Inc., 370, 379, 381,
391
Food Lion, Inc. v. Capital Cities/ABC, Inc., 20, 24
Ford v. Schering-Plough Corp., 65
Fordham v. Butera, 462
Fore L Realty Trust v. McManus, 851
Forest Hills Gardens Corp. v. Baroth, 321
Forster v. Hall, 587
Fortyune v. American Multi-Cinema, Inc., 63
Foster v. Back Bay Spas, Inc., 54
Fountain Valley Chateau Banc Homeowner’s Ass’n v. Department of
Veterans Affairs, 615
Franklin v. Durgee, 394
Frederick v. Consolidated Waste Servs., Inc., 557
Freeman v. Quicken Loans, Inc., 920
Fremont Investment & Loan; Commonwealth v., 961, 968
French v. Estate of Gutzan, 523
Frenchtown Square P’ship v. Lemstone, Inc., 860
Frenchtown Villa v. Meadors, 901
Friends of Mammoth v. Board of Supervisors, 497
Friends of Yamhill Cnty., Inc. v. Board of Comm’rs of Yamhill Cnty., 444
Friendswood Development Co. v. Smith-Southwest Industries, Inc., 412,
419, 420, 421
F.T.R., In re, 261
Futura Realty v. Lone Star Bldg. Ctrs. (E.) Inc., 943

1674
Galkin v. Town of Chester, 766
Gallagher v. Magner, 1074
Gallenthin Realty Dev., Inc. v. Borough of Paulsboro, 1167, 1169
Gallo, People ex rel., v. Acuna, 1146
Gandolfo v. Hartman, 633
Garcia v. Sanchez, 320
Gardner v. N.J. Pinelands Comm’n, 1244
Garland v. Rosenshein, 573, 598
Garneau v. City of Seattle, 1278
Garner v. Gerrish, 783
Garrett v. Tandy Corp., 49
Gaskill v. Robbins, 715
GENC Realty LLC v. Nezaj, 825
General Auto Serv. Station v. Maniatis, 332
General Credit Co. v. Cleck, 684
General Motors Corp.; United States v., 1171
Generalow v. Steinberger, 324
George v. George, 683
Georgia v. Randolph, 677
Georgiacarry.org, Inc. v. Georgia, 71
Geragosian v. Union Realty Co., 323
Gerber v. Longboat Harbour Condo., Inc., 636
Gershwin Publ’g Corp. v. Columbia Artists Mgmt., 193
Gertz v. Estes, 350, 379
Ghen v. Rich, 140
Gideon v. Wainwright, 854
Giessow Rests., Inc. v. Richmond Rests., Inc., 834
Gill v. LDI, 370
Gilpin v. Jacob Ellis Realties, 324
Gion v. City of Santa Cruz, 80, 332
Gittleman v. Woodhaven Condo. Ass’n, Inc., 636, 638
Glaser v. Bayliff, 299
Glass v. Goeckel, 78
Glassboro, Borough of, v. Vallorosi, 1141
Glavin v. Eckman, 34

1675
Glazer v. Chase Home Fin. LLC, 979
Goebel v. Glover, 949
Goggin v. Goggin, 546
Goldberg v. 400 E. Ohio Condo. Ass’n, 636
Goldberg v. Kelly, 1128
Goldblatt v. Hempstead, 1259
Golden v. Planning Bd. of Ramapo, 474
Gonzalez v. Rakkas, 1041
Good Neighbors of S. Davidson v. Town of Denton, 453
Gordon v. Gordon, 809
Gorgone v. District of Columbia of Zoning Adjustment, 441
Gorski v. Troy, 1063
Goss v. Lopez, 1128
Goulding v. Cook, 324
Grady v. Narragansett Elec. Co., 523
Granite Properties Limited Partnership v. Manns, 547
Graoch Assocs. #33, L.P. v. Louisville/Jefferson Cnty. Metro Human
Relations Comm’n, 1078
Grapin v. Grapin, 134
Grappo v. Blanks, 294, 297
Graves v. Allan, 101
Gray Line Bus Co. v. Greater Bridgeport Transit Dist., 1171
Greater Bible Way Temple v. City of Jackson, 491
Greater New Orleans Fair Hous. Action Ctr. v. St. Bernard Parish, 1084
Greater Providence Chamber of Commerce v. Rhode Island, 78
Green v. Dixon, 299
Green v. Lupo, 519, 520, 523, 533
Greenpoint Mortg. Funding, Inc. v. Schlossberg, 1003
Gregory v. Dillard’s Inc., 48
Griggs v. Allegheny Cnty., 16
Griggs v. Duke Power Co., 1075
Grombone v. Krekel, 990
Groucho Marx Prods., Inc. v. Day & Night Co., 233
Gruen v. Gruen, 134
Guidotti, Estate of, 806, 808

1676
Gulledge, Estate of, 683
Gym-N-I Playgrounds, Inc. v. Snider, 882

Hack v. President & Fellows of Yale Coll., 1079

Hadacheck v. Sebastian, 1183, 1259
Haddad v. Gonzalez, 905
Hairston v. General Pipeline Constr., Inc., 162
Haith v. Atchison Cnty., 397
Hall v. Phillips, 351
Halley v. Harden Oil Co., 825
Halprin v. Prairie Single Family Homes of Dearborn Park Ass’n, 1041
Halverson v. Skagit Cnty., 397
Haman, State ex rel., v. Fox, 79
Hampton v. Dillard Dep’t Stores, Inc., 48
Hankins v. Lyght, 490
Hannabalson v. Sessions, 16
Hannah v. Sibcy Cline Realtors, 1050
Harambasic v. Owens, 320
Harber v. Jensen, 546
Harding v. Ja Laur Corp., 1013
Hardy, In re Estate of, 953
Harkins v. Win Corp., 823
Harkness v. Butterworth Hunting Club, 558
Harms v. Sprague, 684
Harper v. Coleman, 881
Harris v. Forklift Sys., Inc., 1056
Harris v. Lynch, 294
Harrison v. Morrow, 761
Hart v. Ticor Title Ins. Co., 1015
Hartnett v. Jones, 804
Harvey v. Dow, 935
Harvey Cedars, Borough of, v. Karan, 1174
Haslem v. Lockwood, 163
Hastings v. Hastings, 133
Haugan v. Haugan, 714

1677
Havens Realty Corp. v. Coleman, 1039, 1040
Hawai`i, Cnty. of, v. C & J Coupe Family LP, 1166
Hawai`i Hous. Auth. v. Midkiff, 1165, 1165, 1166, 1168
Hayes v. Aquia Marina, Inc., 533
HealthSouth Rehab. Corp. v. Falcon Mgmt. Co., 862-863
Heart of Atlanta Motel, Inc. v. United States, 47-48, 1219
Hecht v. Superior Court, 277
Heffernan v. Missoula City Council, 435
Heikes, In re Marriage of, 1261
Heins Implement Co. v. Missouri Highway & Transp. Comm’n, 398
Helena Sand & Gravel, Inc. v. Lewis & Clark Cnty. Planning & Zoning
Comm’n, 453
Hemmings v. Pelham Wood LLP, 905
Hempstead, Town of, v. Lynne, 444
Henley v. Continental Cablevision of St. Louis County, Inc., 529, 532
Hensley-O’Neal v. Metropolitan Nat’l Bank, 804
Hermansen v. Tasulis, 941
Hermitage Methodist Homes of Va., Inc. v. Dominion Trust Co., 779
Hernandez v. Stabach, 817
Herren v. Pettengill, 535
Hess v. Canberra Dev. Co., LC, 942
Hess v. Chase Manhattan Bank, USA, 941
Hester v. United States, 23
Hewitt v. Hewitt, 721
Heydon v. MediaOne, 532
Hickey v. Green, 929, 935-936
Hilder v. St. Peter, 881, 884, 905
Hill v. Colorado, 1130
Hill v. Community of Damien Malokai, 638
Hills Dev. Co. v. Bernards Twp. (Mount Laurel III), 472
Hillview Associates v. Bloomquist, 891, 902
Hinman v. Pacific Air Transp., 16
Historic Charleston Found. v. City of Charleston, 453
Hoak v. Hoak, 714
Hodel v. Irving, 1255

1678
Hodge v. Ginsberg, 110
Hodgins v. Sales, 319
Hoery v. United States, 370
Hoffman v. Freeman Land & Timber, LLC, 297
Hoffman v. United Iron & Metal Co., 318
Holbrook v. Taylor, 545
Holley v. Crank, 1037
Holmdel Builders Ass’n v. Holmdel, 1279
Holt v. Holt, 714
Holterman v. Holterman, 714
Holy Props., Ltd. v. Kenneth Cole Prods., Inc., 861
Home Builders Ass’n of Dayton & Miami Valley v. City of Beaver Creek,
1279
Home Builders Ass’n of N. Cal. v. City of Napa, 1285
Home Bldg. & Loan Ass’n v. Blaisdell, 986, 1220
Home for Incurables of Balt. City v. University of Md. Med. Sys. Corp.,
777
Horizon House Developmental Servs., Inc. v. Town of Upper
Southampton, 1093, 1094
Horne v. Department of Agric., 1222, 1248
Hornell Brewing Co. v. Rosebud Sioux Tribal Court, 234
Houghton v. Johnson, 321
Houle v. Adams State Coll., 824
Houle v. Quenneville, 901
Housing & Redevelopment Auth. v. Naegele Outdoor Adver. Co., 1172
Housing Auth. v. S.R., 1172
Housing Auth. of Lake Charles v. Pappion, 1089
Houston & T.C. Ry. Co. v. East, 422
Hovendick v. Ruby, 293
Howard v. Kunto, 295
Howard Opera House Ass’n v. Urban Outfitters, Inc., 339
Howson v. Crombie St. Congregational Church, 761
Hoyts Cinemas Corp.; United States v., 62
Hubbard v. Curtiss, 303
Hudgens v. National Labor Relations Bd., 5, 67, 70

1679
Hudson v. Vandiver, 993
Hudson View Props. v. Weiss, 864, 1064
Hughes v. Krueger, 676
Hughes v. New Life Dev. Corp., 590, 597
Hughes Mem’l Home; United States v., 777
Human Rights Commission v. LaBrie, Inc., 1058
Huntington v. Riggs, 331
Huntington Branch, NAACP v. Town of Huntington (844 F.2d 926), 1082
Huntington, Town of, v. Huntington Branch, NAACP (488 U.S. 15), 1082
Hunziker v. State, 1247

Illinois Cent. R.R. Co. v. Illinois, 78

Imperial Colliery Co. v. Fout, 895
Inle v. Association of Apartment Owners of 2987 Kalakaua, 1088
Intel Corp. v. Hamidi, 22
Intermountain Fair Hous. Council v. Boise Rescue Mission Ministries,
1028
International Church of the Foursquare Gospel v. City of San Leandro, 492
International News Service v. Associated Press, 112, 121, 122
Irrevocable Trust Agreement of 1979, In re, 134
Isbell v. Commercial Inv. Assocs., 903

Jackowski v. Borchelt, 916

Jackson v. City of Auburn, 532
Jackson v. Scheible, 919
Jackson; United States v., 1041
Jacque v. Steenberg Homes, Inc., 38, 42
Janush v. Charities Housing Development Corp., 1084, 1086, 1088
Jardines; Florida v., 23
Jarvis v. Gillespie, 294
Javins v. First National Realty Corp., 874, 881, 882, 885
J.B. v. M.B., 265, 266, 268
JCB, Inc. v. Union Planters Bank, NA, 24
Jenkins v. CSX Transp., Inc., 353
Jiggetts v. Grinker, 110
John W. Carson v. Here’s Johnny Portable Toilets, Inc., 233

1680
Johnson, In re Estate of, 668
Johnson v. Calvert, 261, 262
Johnson v. Cherry, 994
Johnson v. City of Dallas, 84
Johnson v. Coshatt, 320
Johnson v. Davis, 936
Johnson v. M’Intosh, 88, 95, 97, 98, 99, 100, 108, 253
Johnson v. Manitowoc Cnty., 1245
Johnson v. Paynesville Farmers Union Cooperative Oil Co., 363, 370
Johnson v. Stanley, 320
Johnson v. Whiton, 781
Jones, In re Estate of, 769
Jones v. Alfred Mayer Co., 46, 49, 1039
Jones v. City of L.A., 84
Jones v. Cullen, 319, 320
Jones v. Stamper, 546
Jones v. Wagner, 320
Jones; United States v., 22-23, 24
Joplin Enters. v. Allen, 232
Jordache Enters., Inc. v. Levi Strauss & Co., 181
Joslin v. Pine River Dev. Corp., 575
Joyce Livestock Co. v. United States, 511
Juicy Whip, Inc. v. Orange Bang, Inc., 214, 218
Just v. Marinette Cnty., 1244

Ka Pa`akai O Ka`aina v. Land Use Comm’n, 81

Kahnovsky v. Kahnovsky, 676
Kaiser Aetna v. United States, 17, 1189, 1190, 1200, 1219, 1259
Kaltenbach v. Richards, 979
Kam-Almaz v. United States, 1245
Karo; United States v., 24
Kass v. Kass, 265, 266, 267
Katz v. United States, 22, 23
Katzenbach v. McClung, 48
Keffalas, In re Estate of, 809, 810

1681
Keller v. Southwood N. Med. Pavilion, Inc., 825
Kelley; Doe v., 260
Kellner v. Capelini, 354
Kelo v. City of New London (545 U.S. 469), 1150, 1165, 1166, 1167, 1168,
1169
Kelo v. City of New London (843 A.2d 500), 1169
Kendall v. Ernest Pestana, Inc., 839, 847, 848
Kenney v. Morgan, 646
Kentucky Dep’t of Fish & Wildlife Res. v. Garner, 19
Keshbro, Inc. v. City of Miami, 1147
Kesler v. Marshall, 950
Keystone Bituminous Coal Ass’n v. DeBenedictis, 1188, 1259
Kiehm v. Adams, 828
Kiekel v. Four Colonies Homes Ass’n, 623, 647
Kiernan v. Creech, 935
Kimball Laundry Co. v. United States, 1170, 1171, 1189
Kinder v. Wescott, 523
King, In re Marriage of, 713
King v. Lang, 524
Kingdom Ministries v. Village of Hazel Crest, 493
Kirchberg v. Feenstra, 688, 810, 1257
Kitchen v. Kitchen, 545
Kitras v. Town of Aquinnah, 557
Klebs v. Yim, 409, 410
Klein v. Unidentified Wrecked & Abandoned Sailing Vessel, 157
Kluger v. Kubick, 545
Knight v. Hallsthammar, 882
Knost v. Knost, 808
Knudsen v. Lax, 873
Knuth v. Vogels, 324
Kobayashi v. Orion Ventures, Inc., 650
Kobobel v. Department of Natural Res., 510
Koenig v. Van Reken, 992, 994
Koeppen v. Bolich, 535
Kohl v. PNC Bank Nat’l Ass’n, 871

1682
Kolacy, Estate of, 747
Kolb v. City of Storm Lake, 776
Koontz v. St. Johns River Water Management District, 1190, 1265, 1278,
1280, 1281, 1283, 1284
Kopp v. Kopp, 697
Koresko v. Farley, 320
Kosalka v. Town of Georgetown, 462, 1130
Kracl v. Loseke, 941
Krosmico v. Pettit, 293
Krummenacher v. Minnetonka, 455, 459, 460, 461
Kysar v. Amoco Prod. Co., 869

Ladue, City of, v. Gilleo, 481

Laguna Gatuna, Inc. v. United States, 1244
Laguna Royale Owners Ass’n v. Darger, 646
Lake of the Woods Ass’n, Inc. v. McHugh, 1256
Lakeside Resort Enters., LP v. Board of Supervisors of Palmyra Twp.,
1028
Lakewood Racquet Club, Inc. v. Jensen, 573
Lamar Adver. v. Larry & Vicki Nicholls, LLC, 646
Lamden v. La Jolla Shores Clubdominium Homeowners Ass’n, 623
Lamparello v. Falwell, 186
Lamprecht v. Tiara at the Abbey Homeowners Ass’n, 636
Lane v. Cole, 1039
Lane v. W.J. Curry & Sons, 320
Lange v. Scofield, 656
Langlois v. Abington Hous. Auth., 1082
Lara v. Cinemark USA, Inc., 62
Large v. Clinchfield Coal Co., 420
Larson Operating Co. v. Petroleum, Inc., 803
Lavan v. City of L.A., 85, 172
Lawrence v. Texas, 698
Lawrence v. Town of Concord, 294
Lawson v. State, 533
League of Residential Neighborhood Advocates v. City of L.A., 452
Leardi v. Brown, 817

1683
Lechmere v. National Labor Relations Bd., 70
Leffingwell v. Glendenning, 324
Leist v. Tugendhaft, 935
Lerman v. Levine, 677
Levandusky v. One Fifth Ave. Apartment Corp., 623
Levin v. Yeshiva Univ., 1080
Lew v. Superior Court, 353, 356
Lewey v. H.C. Fricke Coke Co., 16
Lewis v. Premium Inv. Corp., 990
Lewis v. Searles, 809
Lewis v. Town of Rockport, 460
Leydon v. Town of Greenwich, 79
Libeau v. Fox, 697
Lighthouse Inst. for Evangelism, Inc. v. City of Long Branch, 493
Limestone Dev. Corp. v. Village of Lemont, 321
Lindh v. Surman, 135
Lindsay v. Yates, 1037
Lindsey, In re Marriage of, 723
Lindsey v. Normet, 853
Lingle v. Chevron U.S.A. Inc., 1190, 1191, 1200, 1241
Lingvall v. Bartmess, 319
Linn Valley Lakes Prop. Owners Ass’n v. Brockway, 635-636
Lipton v. Lipton, 135
Litchfield v. Spielberg, 207
Litowitz, In re, 267
Litowitz v. Litowitz, 267
Littlefield v. Mack, 1039
LivingWell (N.) Inc. v. Pennsylvania Human Relations Comm’n, 54
Lloyd Corp. v. Tanner, 5, 65, 69
Lobato v. Taylor (71 P.3d 938), 537, 544, 546, 553
Lobato v. Taylor (70 P.3d 1152), 545
Locklin v. City of Lafayette, 398
Logan v. Zimmerman Brush Co., 1128
Logue v. Flanagan, 941
Lone Wolf v. Hitchcock, 1254

1684
Long Branch, City of, v. Anzalone, 1169
Long Branch, City of, v. Liu, 333
Loren v. Marry, 825
Loretto v. Teleprompter Manhattan CATV Corp., 17, 1190, 1212, 1218,
1222, 1223, 1241, 1248, 1284
Los Angeles, City of, v. Alameda Books, 482, 483
Los Angeles Cnty. v. Continental Dev. Corp., 1174
Los Angeles Gas & Elec. Corp. v. Railroad Comm’n, 1171
Los Osos Valley Assocs. v. City of San Luis Obispo, 419
Lost Tree Vill. Corp. v. United States, 1243
Loughhead v. 1717 Bissonnet, L.L.C., 351, 362
Louis Vuitton Malletier, S.A. v. Haute Diggity Dog, LLC, 123
Love v. Associate Newspapers, Inc., 736
Love v. Mail on Sunday, 736
Loveladies Harbor, Inc. v. United States, 1242, 1243, 1245
Lucas v. Hamm, 784
Lucas v. Rawl Family Ltd. P’ship, 397
Lucas v. South Carolina Coastal Council (505 U.S. 1003), 1190, 1200,
1202, 1223, 1237, 1239, 1241, 1242, 1243, 1244, 1245, 1247, 1256
Lucas v. South Carolina Coastal Council (424 S.E.2d 484), 1244
Lugosi v. Universal Pictures, 227
Lynch v. Town of Pelham, 575
Lynch v. United States, 1176

M & I First Nat’l Bank v. Episcopal Homes Mgmt., Inc., 825-826

M & T Mortgage Corp. v. Foy, 1095, 1100
MacDonald, Sommer & Frates v. Yolo Cnty., 1238, 1248
MacNeil v. Time Ins. Co., 65
Macon & W. R.R. Co. v. Lester, 18
Madden v. Queens Cnty. Jockey Club, Inc., 28, 29
Madox v. Madox, 809
Maeker v. Ross, 722
Magadini; Commonwealth v., 9, 15, 24
Magner v. Gallagher, 1074
Mahoney v. Mahoney, 714
MAI Sys. Corp. v. Peak Computer, Inc., 194

1685
Maioriello v. Arlotta, 350, 379
Mallock v. Southern Mem’l Park, Inc., 244
Mamot v. Mamot, 703
Manhattan Mansions v. Moe’s Pizza, 871
Mann v. Georgia Dep’t of Corr., 1259
Manufactured Hous. Cmtys. of Wash. v. Washington, 1167
Marbury v. Madison, 252
Marcus Cable Assocs. v. Krohn, 532
Marriage of. See name of party
Marsh v. Alabama, 634
Marshall v. Hollywood, Inc., 1014
Martin v. City of Seattle, 751
Martin B., In re, 747
Martin Luther King, Jr. Center for Social Change v. American Heritage
Products, 224, 232, 235
Marvin v. Marvin, 722
Marvin M. Brandt Revocable Trust v. United States, 533, 1222
Marya v. Warner/Chappell Music, Inc., 194
Maryland Heights, City of, v. Heitz, 1174
Massachusetts v. Environmental Prot. Agency, 499
Massachusetts Coalition for the Homeless v. Secretary of Human Servs.,
110
Massachusetts Comm’n Against Discrimination v. Capitol Coffee House,
50
Massey v. City of Charlotte, 453
Matrix Fin. Servs. Corp. v. Frazer, 915
Matteson v. Walsh, 767
Matthews v. Bay Head Improvement Association, 72, 81, 82
Matthews v. Eldridge, 1116
Matthews v. Wozencraft, 232
May v. May, 715
Mayo Collaborative Servs. v. Prometheus Labs., Inc., 218
Mayor & Council of Rockville v. Rylyns Enters., Inc., 452
Mazdabrook Commons Homeowners’ Ass’n v. Khan, 625, 636
McBryde Sugar Co. v. Robinson, 1264

1686
McCaleb v. Pizza Hut of Am., Inc., 48
McCall, City of, v. Seubert, 1172
McCarver v. Blythe, 767
McClain v. Octagon Plaza, L.L.C., 946
McClure; United States Jaycees v., 53
McCoy v. Love, 1011
McCoy v. Union Elevated R.R. Co., 1174
McCrea v. Marsh, 28
McCready v. Hoffius, 1062
McCully, Inc. v. Baccaro Ranch, 914
McDonald v. Halvorson, 81
McDonald v. Harris, 319
McGee; State v., 792
McGill v. Wahl, 320
McIntyre v. Scarbrough, 764, 766
McKean v. Warburton, 704
McLeroy v. McLeroy, 668
McMaster v. Columbia Bd. of Zoning Appeals, 1140
McMaster; Doe v., 915
McMinn v. Town of Oyster Bay, 1141
McNairy v. C.K. Realty, 905
McReath v. McReath, 715
McSparron v. McSparron, 714
Meadowland Apartments v. Schumacher, 1088
Medical Lab. Mgmt. Consultants v. ABC, Inc., 21
Melms v. Pabst Brewing Co., 767, 768
Mendoza v. Licensing Bd. of Fall River, 484
Meritor Sav. Bank, FSB v. Vinson, 1055
MERSCORP, Inc. v. Romaine, 978
Metro-Goldwyn Mayer Studios, Inc. v. Grokster, Ltd., 193
Metromedia, Inc. v. City of San Diego, 482
Meyer v. Holley, 1037
MHANY Management v. County of Nassau, 1041, 1048, 1080, 1082
Miami, City of, v. Bank of Am. Corp., 1104
Miami, City of, v. Keshbro, Inc., 355

1687
Midlake on Big Boulder Lake Condo. Ass’n v. Cappuccio, 636
Midler v. Ford Motor Co., 231
Midrash Sephardi, Inc. v. Town of Surfside, 493
Midsouth Golf v. Fairfield Harbourside Condo. Ass’n, 574
Mid-Valley Res., Inc. v. Engelson, 297
Mihalczo v. Borough of Woodmont, 321
Mill River Club, Inc. v. New York State Div. of Human Rights, 56
Millennium Park Joint Venture, LLC v. Houlihan, 824
Miller v. California Speedway Corp., 63
Miller v. Schoene, 1111, 1112, 1113, 1247, 1259
Milliken v. Jacono, 942
Minjak Co. v. Randolph, 865, 866, 870, 884, 889
Mississippi Dep’t of Revenue v. Pikco Fin., Inc., 958
Mississippi Power Co. v. Fairchild, 558
Mitchel v. United States, 97, 1181
Mitchell v. Helms, 494
Mitchell v. United States, 1171
Mitchell; United States v., 1040
Modder E. Squatters v. Modderklip Boerdery (PTY), Ltd., 104
Modic v. Modic, 677
Moloney, People ex rel., v. Pullman’s Palace Car Co., 741
Monterey, City of, v. Del Monte Dunes at Monterey, Ltd., 1248, 1249
Montgomery v. Callison, 954
Montgomery Cnty. v. Butler, 462
Moore v. City of East Cleveland, 1135, 1140, 1141, 1146
Moore v. Phillips, 767
Moore v. Regents of the University of California, 268, 276, 277
Moorman v. Blackstock, Inc., 934
Morone v. Morone, 723
Morris v. Cizek, 1041
Morris v. Nease, 657
Morris v. Office Max, Inc., 48
Morrison & Foerster v. Wick, 186
Morrissey v. Haley, 331
Mortgage Elec. Registration Sys., Inc. v. Saunders, 978

1688
Mortgage Elec. Registration Sys., Inc. v. White, 978
Mount Holly Gardens Citizens in Action, Inc. v. Township of Mount
Holly, 1074, 1082
M.P.M. Builders, LLC v. Dwyer, 535
Mr. Sign Sign Studios, Inc. v. Miguel, 804
Mugler v. Kansas, 1183, 1188, 1259
Mulkey v. Waggoner, 946
Mulligan v. Panther Valley Prop. Owners Ass’n, 616
Municipal Elec. Auth. of Ga. v. Gold-Arrow Farms, Inc., 532
Murr v. State (359 Wis. 2d 675), 1243
Murr v. Wisconsin (136 S. Ct. 890), 1243
Muskatell v. City of Seattle, 419

Nabisco, Inc. v. PF Brands, Inc., 185

Nahrstedt v. Lakeside Village Condominium Association, Inc., 589, 607,
613, 614, 615, 616
NAMN, LLC v. Morello, 553
Nash v. City of Santa Monica, 1221
Nashville & Chattanooga R.R. Co. v. Peacock, 18
National Ass’n of Realtors; United States v., 917
National Ass’n of the Deaf v. Netflix, Inc., 64
National Basketball Ass’n v. Motorola, Inc., 122
National Cathedral Neighborhood Ass’n v. District of Columbia Bd. of
Zoning Adjustment, 461
National Fed’n of the Blind v. Target Corp., 64
Nectow v. City of Cambridge, 1117, 1128, 1130
Nelson; Commonwealth v., 24
Neponsit Property Owners’ Association v. Emigrant Industrial Savings
Bank, 563, 566, 569, 570, 573
Neptune City, Borough of, v. Borough of Avon-by-the-Sea, 79
Neufairfield Homeowners Ass’n v. Wagner, 575
Neuman v. Grandview at Emerald Hills, Inc., 620
New Bar P’ship v. Martin, 804
New Cingular Wireless PCS v. Sussex Cnty. Bd. of Adjustment, 462
New England Estates, LLC v. Town of Branford, 1176
New Hampshire Dep’t of Transp. v. Franchi, 1173

1689
New Haverford P’ship v. Stroot, 903
New Jersey Coalition Against War in the Middle E. v. J.M.B. Realty
Corp., 69, 71
New York v. Fermenta ASC Corp., 351, 370
New York, City of, v. Utsey, 825
Newman v. Sathyavaglswaran, 276
Nicholson v. United States, 1246
Nickens v. Mount Vernon Realty Grp. LLC, 986
Nickerson v. Green Valley Athletic Ass’n, 575
Nickerson v. Green Valley Recreation, Inc., 573
Nitschke v. Doggett, 782
Nobrega v. Edison Glen Assocs., 943
Nollan v. California Coastal Comm’n, 1190, 1278, 1279, 1280, 1283,
1284, 1285
Nome 2000 v. Fagerstrom, 303, 309, 310
Noone v. Price, 404, 409
Nordbye v. BRCP/GM Ellington, 570
Norman v. United States, 1243
North Country Villas Homeowners Ass’n v. Kokenge, 597
Northwest Real Estate Co. v. Serio, 638, 640, 646
Norton v. Southern Utah Wilderness Alliance, 503
Norwood, City of, v. Horney, 1167
Nwakpuda v. Falley’s Inc., 48
NYCTL 1998-1 Trust & the Bank of N.Y. v. Ibrahiem, 1003

Oakland, City of, v. Oakland Raiders, 1176

Oakwood Vill. LLC v. Albertsons, Inc., 834
Obde v. Schlemeyer, 942
Obergefell v. Hodges, 699-700, 725, 726, 1141
O’Brien v. O’Brien, 705, 706, 714, 715, 717
O’Buck v. Cottonwood Village Condominium Association, Inc., 617, 619,
623
Oceanside, City of, v. McKenna, 647
Oceanside Cmty. Assocs. v. Oceanside Land Co., 579
O’Connor v. Laroque, 677
Okanogan Wilderness League, Inc. v. Town of Twisp, 511

1690
O’Keeffe v. Snyder, 333
Old Port Cove Holdings v. Old Port Cove Condo. Ass’n, 804
Olin v. Goehler, 869
Olivas v. Olivas, 673
Oliver v. Quynn, 649
Olmstead v. L.C., 1092-1093
OMV Assocs., L.P. v. Clearway Acquisition, Inc., 855
100 Inv. LP v. Columbia Town Ctr. Title Co., 1015
111-38 Mgmt. Corp. v. Benitez, 947-948
119-121 E. 97th St. Corp., Application of, v. New York City Comm’n on
Human Rights, 1068
170 W. 85 St. HDFC v. Jones, 1067
Oneida, Cnty. of, v. Oneida Indian Nation (470 U.S. 226) (Oneida II), 102
Oneida Indian Nation of N.Y. v. County of Oneida (414 U.S. 661) (Oneida
I), 102
Oneida Indian Nation of N.Y. v. County of Oneida (617 F.3d 114), 103
Oneida Indian Nation of N.Y. v. County of Oneida (719 F.2d 525), 102
Oneida Indian Nation of N.Y. v. County of Oneida (199 F.R.D. 61), 103
Opening a Private Rd. ex rel. O’Reilly, In re, 558, 1166
Opinion No. 26 of the Comm’n on Unauthorized Practice of Law, In re,
915
Opinion of the Justices (649 A.2d 604), 79
Opinion of the Justices (313 N.E.2d 561), 79
Optivision, Inc. v. Syracuse Shopping Ctr. Assocs., 648
Oregon v. Fullerton, 1174
Oregon Paralyzed Veterans of Am. v. Regal Cinemas, Inc., 62
O’Reilly, In re Opening Private Rd. ex rel., 558, 1166
Osborne v. Power, 353
Osterhaus v. Toth, 941
Ostlund, Estate of, 669
Owen, In re Estate of, 810
Oxford House-C v. City of St. Louis, 1092

Pace, In re Will of, 769

Pacific Bell v. City of San Diego, 1246
Padilla v. Lawrence, 339

1691
Page County Appliance Center, Inc. v. Honeywell, Inc., 346, 351, 353
Palanza v. Lufkin, 672
Palazzolo v. Rhode Island (533 U.S. 606), 1188, 1202, 1237, 1241, 1244,
1248, 1249
Palazzolo v. State (2005 WL 1645974), 1240, 1243, 1244
Palm Beach Isles Assocs. v. United States (231 F.3d 1354), 1244
Palm Beach Isles Assocs. v. United States (208 F.3d 1374), 1243
Palmer v. Protrka, 676
Park W. Mgmt. Corp. v. Mitchell, 885
Park W. Vill. v. Lewis, 832
Parker v. Metropolitan Life Ins. Co., 64
Parker v. Shecut, 676
Parks v. La Face Records, 232, 233, 234
Parks Hiway Enters., LLC v. CEM Leasing, Inc., 351
Pascale v. Pascale, 133, 716
Pascoag Reservoir & Dam, L.L.C. v. Rhode Island, 1257
Patterson v. McLean Credit Union, 46
Paul v. Blakeley, 517
Paulino v. Wright, 824
Payne v. TK Autowholesalers, 157
Pecos Cnty. Water Control & Improvement Dist. 1 v. Williams, 415
Penn Central Transportation Co. v. New York City (438 U.S. 104), 1189,
1190, 1192, 1200, 1202, 1203, 1218, 1239, 1242, 1246
Penn Cent. Transp. Co. v. New York City (366 N.E.2d 1271), 1200-1202
Pennell v. City of San Jose, 1117, 1200
Pennsylvania Coal Co. v. Mahon, 1184, 1187, 1188, 1189, 1200, 1202,
1242, 1283
People ex rel. See name of relator
Percheman; United States v., 97
Perry v. Command Performance, 47
Perry v. Heirs at Law & Distributees of Gadsden, 297
Perry v. Sindermann, 1128
Perryman v. County of L.A., 276
PETA v. Doughney, 186
Petch v. Widger, 310

1692
Petersen v. Beekmere, Inc., 587
Petersen v. Hartell, 990
Peterson v. Superior Court, 903, 904
Peterson v. Town of Oxford, 533
Petitions for Rulemaking, In re, 110
Petsch v. Widger, 297
Pfaff v. HUD, 1078
PGA Tour, Inc. v. Martin, 63
Philip Morris, Inc. v. Reilly, 1260
Phillip v. University of Rochester, 48
Phillips v. Blazier-Henry, 984
Phillips v. Pembroke Real Estate, Inc. (288 F. Supp. 2d 89), 209
Phillips v. Pembroke Real Estate, Inc. (819 N.E.2d 579), 209
Phillips v. Washington Legal Found., 1176, 1282
Pickens v. Pickens, 723
Pierce v. Casady, 320
Pierson v. Post, 136, 141, 151
Piesco v. Hollihan, 440
Pike Indus., Inc. v. Woodward, 441
Pinzon v. A & G Props., 882
Pirone v. MacMillan, 227
Piscopo v. Piscopo, 715
Planned Parenthood of Mid-Iowa v. Maki, 34
Platts v. Sacramento N. Ry., 420
Plessy v. Ferguson, 1255
Ploof v. Putnam, 15
PMZ Oil Co. v. Lucroy, 569
Polanski v. Town of Eagle Point, 303
Polar Bear Endangered Species Act Listing & Section 4(d) Rule Litig. —
MDL No. 1993, In re, 501
Poletown Neighborhood Council v. City of Detroit, 1167
Polhemus v. Cobb, 554
Popov v. Hayashi, 142
Portola Hills Cmty. Ass’n v. James, 615
Posik v. Layton, 722

1693
Pottinger v. City of Miami, 82, 84, 85
Powell v. Pennsylvania, 1183, 1188
Powell v. Washburn, 575
Powers v. Judd, 397
Poyck v. Bryant, 873
Prah v. Maretti, 373, 398, 400, 513, 1244
Presbytery of Seattle v. King Cnty., 1244
Price ex rel. Estate of Price v. City of Seattle, 410
Price Waterhouse v. Hopkins, 1057
Prieskorn v. Maloof, 763
Primetime Hospitality, Inc. v. Albuquerque, 1171
Professional Realty Corp. v. Bender, 916
Propst v. McNeill, 882
Prospect Dev. Co. v. Bershader, 569
Prue v. Royer, 989
PruneYard Shopping Center v. Robins, 69, 72, 1209, 1218, 1219
Public Access Shoreline Haw. (PASH) v. Hawaii Cnty. Planning Comm’n,
81
Public Serv. Co. of Colo. v. Van Wyck, 370
Puerto v. Chieppa, 16
Puget Sound Serv. Corp. v. Dalarna Mgmt. Corp., 941
Pumpelly v. Green Bay Co., 1218, 1245

Qualitex Co. v. Jacobson Products Co., 182, 187

Quality Built Constr., Inc.; United States v., 638
Quarles v. Arcega, 299
Quick, In re Estate of, 683
Quigley v. Winter, 1050, 1055, 1057
Quinnipiac Council, Boy Scouts of Am., Inc. v. Commission on Human
Rights & Opportunities, 53

Ragin v. New York Times Co., 1030

Raleigh Ave. Beach Ass’n v. Atlantis Beach Club, Inc., 79, 81, 82
Ramsey v. Ramsey, 713
Rands; United States v., 1175
Rase v. Castle Mountain Ranch, Inc., 547

1694
Rattigan v. Wile, 353, 354
Rawlings v. Rawlings, 936
Ray v. Mayor & City Council of Balt., 434
Ray v. Montgomery, 940
Raybro Elec. Supplies, Inc. v. Barclay, 689
Reagan v. Brissey, 576
Real Estate Bar Ass’n for Mass., Inc. v. National Real Estate Info. Servs.,
920
Realmark Devs., Inc. v. Ranson, 329
RealPro, Inc. v. Smith Residual Co., 914
Recording Indus. Assocs. of Am. v. Diamond Multimedia Sys., 207
Reed v. King, 942
Reed v. Town of Gilbert, 481-482
Regions Bank v. Deluca, 1003
Renton v. Playtime Theatres, Inc., 482, 483
Resident Advisory Bd. v. Rizzo, 1082
Reyes v. Fairfield Props., 1087
R.H. Macy & Co. v. May Dep’t Stores Co., 645
Rhaney v. University of Md., E. Shores, 824
Rhine, Town of, v. Bizzell, 1117
RHN Corp. v. Veibell, 331
Rhodes v. Cahill, 294
Rhone v. Loomis, 47
Rialto Citizens for Responsible Growth v. City of Rialto, 499
Rice v. Sioux City Mem’l Park Cemetery (349 U.S. 70), 635
Rice v. Sioux City Mem’l Park Cemetery (348 U.S. 880), 635
Rice v. Sioux City Mem’l Park Cemetery (60 N.W.2d 110), 635
Rich v. Emerson-Dumont Distrib. Corp., 916
Richards v. Washington Terminal Co., 1246
Rickard v. Du Bon, 218
Riley v. Bear Creek Planning Comm., 585, 587, 588
Rilley v. Quinlan, 331
Rios v. Carillo, 861
Riss v. Angel, 615
River Heights Assocs. L.P. v. Batten, 654

1695
Riya Finnegan LLC v. Township Council of S. Brunswick, 446
Roaring Fork Club L.P. v. St. Jude’s Co., 535
Robarge v. Willett, 296
Roberts v. Estate of Barbagallo, 942
Roberts v. Rhodes, 761
Roberts v. United States Jaycees, 53
Robertson, In re Estate of, 808
Robins v. PruneYard Shopping Ctr., 69
Robinson v. Ariyoshi, 1264
Robinson v. Code, 905
Robinson v. Diamond Hous. Corp., 898, 902
Robinson v. Trousdale Cnty., 689
Roccamonte, In re Estate of, 725
Rodgers v. Wright, 946
Rodrigue v. Copeland, 353
Rodriguez v. Cambridge Hous. Auth., 905
Rodriguez v. Montalvo, 1090
Roe; Doe v., 261
Roels v. United States, 808
Rogers v. Grimaldi, 233, 234
Rogers v. Marlin, 318
Roman v. Roman, 267
Romer v. Evans, 1115
Romero v. Garcia, 299, 300
Roper v. Camuso, 587
Rose Acre Farms, Inc. v. United States, 1113
Roussalis v. Wyoming Med. Ctr., 935
R.R. v. M.H., 260
Ruckelshaus v. Monsanto Co., 1128, 1176, 1283, 1284
Runyon v. McCrary, 46
Runyon v. Paley, 570, 572
Russakoff v. Scruggs, 554

Sabo v. Horvath, 1001, 1004

Salmon v. Peterson, 410

1696
Salsitz v. Nasser, 732
Salter v. Hamiter, 953
Sambo’s Rests., Inc. v. City of Ann Arbor, 50
San Antonio Indep. Sch. Dist. v. Rodriguez, 1072
San Diego Gas & Elec. Co. v. Superior Court, 339
San Remo Hotel L.P. v. City & Cnty. of S.F., 1248, 1279, 1285
Sanborn v. McLean, 569, 584, 587
Sanchez v. San Diego, 1284
Sanchez v. Taylor, 544
Sanford v. Vinal, 244
Santa Barbara, City of, v. Adamson, 1141
Santa Fe Pac. R.R. Co.; United States v., 1181
Santa Monica, People ex rel. City of, v. Gabriel, 817
Sathoff v. Sutterer, 668, 669
Savanna Club Worship Serv., Inc. v. Savanna Club Homeowners Ass’n,
Inc., 637
Sawada v. Endo, 670, 684, 688
Sawyer v. Robson, 817
Saxony Prods., Inc. v. Guerlain, Inc., 123
Schaefer v. Peoples Heritage Sav. Bank, 684
Schaefer v. Schaefer, 717
Scheg v. Agway, Inc., 354
Schmid; State v., 69
Schneider Nat’l Carriers, Inc. v. Bates, 339, 352
Schnell v. Schnell, 696
Schultz; United States v., 235, 241
Schwab v. Timmons, 558
Schwab; State v., 817
Schware v. Board of Bar Exam’rs of N.M., 1128
Sciacca v. Caruso, 460
Scott & Williams v. Aristo Hosiery Co., 218
Scott Hudgens, 70
Scottish Rite Cathedral v. City of L.A., 491
Seattle, City of, v. McCoy, 356, 1245
Seattle-First Nat’l Bank v. National Labor Relations Bd., 70

1697
Seawall Assocs. v. City of N.Y., 1221
Sebastian v. Floyd, 988, 989
Seizure of $82,000, In re, 157
Selig v. State Highway Admin., 804
Sellers v. Philip’s Barber Shop, 47
Sengul v. CMS Franklin, Inc., 869
Severance v. Patterson, 79
Severns v. Union Pac. R.R. Co., 796
Shack; State v., 4, 15, 80
Shalimar Ass’n v. D.O.C. Enters., Inc., 579, 656
Shapira v. Union Nat’l Bank, 809
Shapiro v. Sutherland, 941
Sharp v. Sumner, 935
Shaw Family Archives Ltd. v. CMG Worldwide, Inc., 227
Sheehan v. Flynn, 394
Shelley v. Kraemer, 591, 626, 633, 634, 635, 636, 637, 778, 779, 1262,
1263
Shelton v. Strickland, 295
Sherrill v. Oneida Indian Nation of N.Y., 103
Shiffman v. Empire Blue Cross & Blue Shield, 21, 24
Shirley Wayside Ltd. P’ship v. Board of Appeals of Shirley, 440
Shiver v. Benton, 804
Shivers; United States v., 157
Short v. Manhattan Apartments, Inc., 1072
Shoshone Tribe v. United States, 1182
Shultz v. Johnson, 331
Shutes v. Platte Chem. Co., 339
Sierad v. Lilly, 869
Simms v. First Gibraltar Bank, 1078
Simon v. Solomon, 905
Simplex Techs. v. Town of Newington, 460
Simpson v. Kollasch, 352
Singleton v. Donalson, 769
Sioux Nation of Indians; United States v., 1182, 1183, 1254
Skelly Oil Co. v. Ashmore, 919

1698
Skendzel v. Marshall, 991
Slavin v. Rent Control Board of Brookline, 844, 848
Sligh v. Plair, 751
Smith v. Bank of Am., 684
Smith v. Butler Mountain Estates Prop. Owners Ass’n, 615
Smith v. First Sav. of La., 598
Smith v. Hayden, 293, 294, 295
Smith v. Kansas Gas Serv. Co., 354
Smith v. Lockridge, 954
Smith v. Mitchell, 646
Smith v. Smith ex rel. Clarke, 791
Smith v. Tippett, 294, 295, 297
Smith ex rel. Koss v. Lagow Constr. & Developing Co., 905
Snider v. Arnold, 546
Snow v. Van Dam, 588
Snyder v. Lovercheck, 946
Solomon R. Guggenheim Found. v. Lubell, 334
Somerville v. Jacobs, 325, 329
Sommer v. Kridel, 856, 860, 863
Songbyrd, Inc. v. Estate of Albert B. Grossman, 333
Sony Corp. v. Universal City Studios, 193
Sossamon v. Texas, 493
Southern Burlington Cnty. NAACP v. Township of Mount Laurel (456
A.2d 390) (Mount Laurel II), 471, 472
Southern Burlington County NAACP v. Township of Mount Laurel (336
A.2d 713) (Mount Laurel I), 463, 467, 471, 472, 473, 474, 1072, 1083
Southwestern Ill. Dev. Auth. v. National City Envtl., 1167
Sowder v. McMillan’s Heirs, 165
Space Hunters, Inc.; United States v., 1029
Spall v. Janota, 409
Spann v. Dallas, 480
Sparks v. Fiduciary Nat’l Title Ins. Co., 914
Sparling v. Fon du Lac Twp., 319
Special Prop. VI v. Woodruff, 1012
Spencer’s Case, 560

1699
Spinnell v. Quigley, 135
Sprague, State ex rel., v. City of Madison, 1064, 1067
Sprecher v. Adamson, 410
Spur Indus. v. Webb, 352
St. Mary’s Med. Ctr. v. McCarthy, 762, 763
Stallworth, In re Marriage of, 713
Stambovsky v. Ackley, 943
Stanley v. Moore, 817
Starrett City Assocs.; United States v., 1049, 1093, 1094
State v. See name of defendant
State Department of Ecology v. Grimes, 503, 511
State ex rel. See name of relator
State St. Bank & Trust Co. v. Signature Fin. Grp., 219
Statham v. Kelly, 645
Stauffer; Commonwealth v., 808
Steele v. City of Houston, 1245
Steffens; United States v., 180
Steger v. Muenster Drilling Co., 769
Stevens v. City of Cannon Beach, 1264
Stevenson v. E.I. DuPont de Nemours, 370
Stickney v. City of Saco, 299, 1257
Stiefel v. Lindemann, 319
Stockwell v. Stockwell, 953
Stolow v. Stolow, 713
Stone v. City of Wilton, 441, 443
Stonebraker v. Zinn, 990
Stoner v. Zucker, 546
Stop the Beach Renourishment, Inc. v. Florida Dep’t of Envtl. Prot., 1218,
1261, 1262
Storey v. Patterson, 324
Strawn v. Canuso, 942
Sturges v. Bridgman, 338
Suitum v. Tahoe Reg’l Planning Agency, 1248
Sullivan v. Porter, 935
Sullivan v. Rooney, 723, 724

1700
Summers v. Crestview Apartments, 862
Summit Town Ctr., Inc. v. Shoe Show of Rocky Mount, Inc., 833
Sun Oil Co. v. Trent Auto Wash, Inc., 570
Suntrust Bank v. Houghton Mifflin Co., 195
Surrogate Parenting Assocs. v. Commonwealth ex rel. Armstrong, 261
Sutter, In re, 1012
Swaby v. Northern Hills Reg’l R.R. Auth., 751
Swan v. Hill, 557
Swanson v. Swanson, 1004
Swecker v. Swecker, 736
Swetland v. Curtiss Airports Corp., 16
Swift v. Gifford, 140
Symphony Space, Inc. v. Pergola Properties, Inc., 797, 802, 803, 804
Szafranski v. Dunston, 266

T & E Indus. v. Safety Light Corp., 351

Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 1241,
1245, 1246
Tasunke Witko, Estate of, v. G. Heileman Brewing Co., 234
Tauber v. Quann, 949
Taylor v. Canterbury, 668
Taylor v. Rapp, 809
Taylor; State v., 245
Tee-Hit-Ton Indians v. United States, 97, 98, 1127, 1176, 1181, 1182
Teer v. Johnston, 941, 946
Tenet Healthsystem Surgical, L.L.C. v. Jefferson Parish Hosp. Serv. Dist.
No. 1, 847
Tenhet v. Boswell, 679, 683
Tenn v. 889 Assocs., Ltd., 379
Tennsco Corp. v. Attea, 570
Terrien v. Zwit, 616
Territory v. Gay, 1264
Terry v. Adams, 634
Terry v. Lock Hospitality, Inc., 157
Texaco Ref. & Mktg., Inc. v. Samowitz, 803
Texas Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc.,

1701
 1036, 1073-1074
Theros v. Phillips, 34
Thomann, In re Estate of, 668
Thomas v. Board of Supervisors of Panola Cnty., 454
Thomas v. Goudreault, 905
Thomas v. Thomas, 767
Thompson v. Baxter, 783
Thompson v. Whinnery, 558
Thornton, State ex rel., v. Hay, 81, 1264
3000 B.C. v. Bowman Properties Ltd., 868
Thurston v. Hancock, 409
Tien Tao Ass’n Inc. v. Kingsbridge Park Cmty. Ass’n, Inc., 637
Timm v. Clement, 941
Tioga Coal Co. v. Supermarkets Gen. Corp., 311
Tobe v. City of Santa Ana, 85
Toledo Bar Ass’n v. Chelsea Title Agency of Dayton, Inc., 915
Tolksdorf v. Griffith, 558
Toll Bros., Inc. v. Township of W. Windsor, 473
Tortorelli, In re, 500
Totman v. Malloy, 310
Town of. See name of town
The Trade-Mark Cases, 180
Traders, Inc. v. Bartholomew, 557
Traster, In re Marriage of, 703
Tresemer v. Albuquerque Pub. Sch. Dist., 331
Triple A Supplies, Inc. v. WPA Acquisition Corp., 917
Tristram’s Landing, Inc. v. Wait, 914
Troy v. Renna, 1222
Trustees of Schs. of Twp. No. 1 v. Batdorf, 1256
Trustees of Zion Baptist Church v. Conservators of Estate of Peay, 919
Tucker v. Toia, 110
Tulare Lake Basin Water Storage Dist. v. United States, 1244
Tulk v. Moxhay, 560
Turner v. Rogers, 854
Turner v. Wong, 48

1702
21 Merchs. Row Corp. v. Merchants Row, Inc., 848
Twitchell; Commonwealth v., 128
Tyne v. Time Warner Entm’t Co., 233

UMG Recordings v. Shelter Capital Partners LLC, 194

Umphres v. J.R. Mayer Enters., Inc., 535
United Food & Commercial Workers Union, Local 919 v. Crystal Mall
Assocs., L.P., 69
United States v. See name of defendant
United States Agency for Int’l Dev. v. Alliance for Open Soc’y Int’l, Inc.,
1280
United States ex rel. See name of relator
United States Jaycees v. Massachusetts Comm’n Against Discrimination,
53
United States Jaycees v. McClure, 53
Universal Commc’ns Network, Inc. v. 229 W. 28th Owner, LLC, 882
Uno Rests., Inc. v. Boston Kenmore Realty Corp., 846
Upton v. JWP Businessland, 127
Urban League of R.I. v. Sambo’s of R.I., Inc., 50
Urban Site Venture II Ltd. P’ship v. Levering Assocs. Ltd. P’ship, 323
Urman v. South Bos. Sav. Bank, 941
U.S. Bank National Association v. Ibanez, 973, 977, 978
U.S. Bank Nat’l Ass’n v. Gordon, 1003
Uston v. Airport Casino, Inc., 29
Uston v. Resorts International Hotel, Inc., 25, 28, 29, 30, 31, 80
Utah Dep’t of Transp. v. Admiral Beverage Corp., 1173
Uzan v. 845 UN Ltd. P’ship, 950

Valatie, Vill. of, v. Smith, 440

Valenti v. Hopkins, 615
Van Horn; People v., 243
Vargas v. Esquire, 208
Vásquez v. Glassboro Service Association, Inc., 818, 824, 825
Ventron Corp.; State v., 351
Viacom Int’l, Inc. v. YouTube, 194
Vigilant Ins. Co. of Am. v. Housing Auth. of El Paso, 333

1703
Viking Props., Inc. v. Holm, 575
Villa Nova Resort, Inc. v. State, 321
Village of. See name of village
Villancourt v. Motta, 553
Villar, In re, 792
Villas W. II of Willowridge Homeowners Ass’n v. McGlothin, 1076, 1079
Vincent v. Lake Erie Transp. Co., 15
Vinson v. Johnson, 697
Virtual Works, Inc. v. Volkswagen of Am., Inc., 186
Vision Church v. Village of Long Grove, 491
Volusia Cnty. v. Aberdeen at Ormond Beach, L.P., 1279
Vulcan Materials Co. v. Miller, 572

Waddle v. Elrod, 934

Waikiki Malia Hotel, Inc. v. Kinkai Props. Ltd. P’ship, 567
Waits v. Frito-Lay, Inc., 231
Walgreen Co. v. Sara Creek Prop. Co., 577
Walker Drug Co. v. La Sal Oil Co., 3
Walker Rogge, Inc. v. Chelsea Title & Guar. Co., 1015
Wallender v. Wallender, 723
Wal-Mart Stores, Inc. v. Dukes, 1100
Walton v. City of Red Bluff, 1256
Wana the Bear v. Community Construction, Inc., 241, 243, 246
Warnack v. Coneen Family Trust, 320
Warner v. Konover, 847
Warner Bros. Entm’t, Inc. & J.K. Rowling v. RDR Books, 208
Warsaw v. Chicago Metallic Ceilings, Inc., 320, 321, 322, 324
Washington v. Davis, 1083
Washington v. Duty Free Shoppers, Ltd., 47
Washington v. Glucksberg, 1131
Washington Legal Found. v. Texas Equal Access to Justice, 1282
Washington State Grange v. Brandt, 805
Wasserman v. Three Seasons Ass’n No. 1, Inc., 1063
Watson, Ex parte, 915
Watson v. Fraternal Order of Eagles, 47, 49

1704
Watters v. Wachovia Bank, N.A., 958
Watts, In re Marriage of, 676
Watts v. Oak Shores Cmty. Ass’n, 647
Watts v. Watts, 717, 723, 726
Wayne Cnty. v. Hathcock, 1167
Weatherby Lake Improvement Co. v. Sherman, 616
Weaver, In re Estate of, 787
Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 1281
Weeks v. Wolf Creek Indus., Inc., 532
Wegner v. Milwaukee Mut. Ins. Co., 1245
Weidner v. State, 321, 1257
Weiswasser; State v., 1173
Welch v. Swasey, 424
Weller; State v., 817
Wendover Rd. Prop. Owners Ass’n v. Kornicks, 616
Wendt v. Host Int’l, 232
Wesley v. Don Stein Buick, Inc., 48
Wesson v. Leone Enters., Inc., 815, 882
West v. First Agric. Bank, 1257
West Des Moines, City of, v. Engler, 69
West River Bridge Co. v. Dix, 1176
Westchester Day School v. Village of Mamaroneck, 484, 490, 491
Westland Skating Ctr. v. Gus Machado Buick, Inc., 398
Wetlands Am. Trust, Inc. v. White Cloud Nine Ventures, 575
Weyer v. Twentieth Century Fox Film Corp., 64
Whaley v. County of Tuscola, 276
White v. Samsung Elecs. Am., Inc., 231
White v. U.S. Dep’t of Hous. & Urban Dev., 1062
Whitinsville Plaza v. Kotseas, 571, 648
Whittier Terrace Assocs. v. Hampshire, 1089
Wicks v. Conroy, 672
Wilkie v. Robbins, 1249
Wilkinson v. Chiwawa Cmtys. Ass’n, 647
Will of. See name of party
Willcox v. Stroup, 151

1705
Williams v. Mason, 724
Williams v. Poretsky Mgmt., Inc., 1055
Williams v. South & S. Rentals, Inc., 323
Williams Island Country Club, Inc. v. San Simeon at the Cal. Club, Ltd.,
554
Williams Natural Gas Co. v. Perkins, 1174
Williamson Cnty. Reg’l Planning Comm’n v. Hamilton Bank of Johnson
City, 1238
Willowbrook, Village of, v. Olech, 1114, 1116
Wilmington, City of, v. Hill, 1131
Wilson, In re Estate of, 778
Wilson v. Handley, 350
Windsor; United States v., 699
Winn-Dixie Stores, Inc. v. Dolgencorp, Inc. (964 So. 2d 261), 569
Winn-Dixie Stores, Inc. v. Dolgencorp, LLC (746 F.3d 1008), 571
Witten, In re, 268
Wood v. Board of County Commissioners of Fremont County, 756, 762
Wood v. State, 69
Woods v. Libby, 546
Woodside Village Condominium Association, Inc. v. Jahren, 640, 647
Woodward v. Commissioner of Soc. Sec., 747
Worcester v. Georgia, 97, 109
Wykeham Rise, LLC v. Federer, 575, 646
Wyman v. James, 1284

X17, Inc. v. Lavandeira, 124

Yeakel v. Driscoll, 324

Yee v. City of Escondido, Cal., 864, 1200, 1220
Yellowstone River, LLC v. Meriwether Land Fund, LLC, 557
Young v. Morrisey, 904, 905
Yourik v. Mallonee, 296
Yunker v. Nichols, 511

Zanes v. Lehigh Transit Co., 782

Zelman v. Simmons-Harris, 493

1706
0.073 Acres of Land; United States v., 1171
Zhang v. Omnipoint Commc’n Enters., 532
Zuckerman v. Town of Hadley, 475
Zuni Tribe of N.M., United States ex rel., v. Platt, 319

1707
 SELECTED STATUTES

United States Constitution

21, 50, 53, 54, 55, 70, 186,
232, 233, 235, 481, 489, 490,
amend. I
494, 634, 635, 636, 1029,
1062, 1110
amend. II 70
amend. III 1110
amend. IV 22, 23, 24, 677, 1284, 1110
97, 1110, 1116, 1127, 1149,
amend. V 1170, 1181, 1222, 1254,
1267
amend. XIII 1039
47, 276, 489, 490, 591, 626,
633, 688, 778, 853, 1039,
amend. XIV
1083, 1110, 1113, 1116,
1130, 1149, 1170

United States Code

12 U.S.C. §§2601-2617 (Real Estate
912, 970
Settlement and Procedures Act (RESPA))
12 U.S.C. §§2801 et seq. (Home Mortgage
958-959, 1096, 1100
Disclosure Act of 1975 (HMDA))
12 U.S.C. §§2901-2908 (Community
959
Reinvestment Act of 1977)
12 U.S.C. §25b (Dodd-Frank Wall Street
958
Reform and Consumer Protection Act)
12 U.S.C. §5481(13) (Dodd-Frank Wall
Street Reform and Consumer Protection 1100
Act)
15 U.S.C. §§1051-1127 (Trademark Act of

1708
 1946 (Lanham Act))
15 U.S.C. §1125(d) (Anticybersquatting
186
Consumer Protection Act (ACPA))
15 U.S.C. §1639 (Truth in Lending Act) 970
15 U.S.C. §1639c(a)(1), (a)(3), (b) (Dodd-
Frank Wall Street Reform and Consumer 969
Protection Act)
15 U.S.C. §§1691-1691f (Equal Credit
970, 1017, 1099, 1105
Opportunity Act of 1974 (ECOA))
15 U.S.C. §§7001-7031 (Electronic
Signatures in Global and National 934
Commerce Act (E-Sign Act))
17 U.S.C. §§101 et seq. (Copyright Act) 123, 187-188, 193, 194, 207
25 U.S.C. §§70 et seq. (Indian Claims
1181
Commission Act (ICCA))
25 U.S.C. §177 (Trade and Intercourse Act
101, 102
or Nonintercourse Act)
25 U.S.C. §2206 (Indian Land
1255
Consolidation Act (ILCA))
25 U.S.C. §§3001-3013 (Native American
162-163, 244-245, 246
Graves Protection and Repatriation Act)
28 U.S.C. §1738C (Defense of Marriage
699
Act (DOMA))
33 U.S.C. §§1251-1376 (Clean Water Act) 355, 396, 501
35 U.S.C. §§101 et seq. (Patent Act) 123, 209, 219
42 U.S.C. §274e (National Organ
277, 284
Transplant Act)
42 U.S.C. §§601-619 (Personal
Responsibility and Work Opportunity Act 110, 128
of 1996)
42 U.S.C. §1981 (Civil Rights Act of 1866) 45, 46, 47, 48, 49, 633, 1017
45, 46, 47, 48, 49, 633, 780,
42 U.S.C. §1982 (Civil Rights Act of 1866) 1017, 1032, 1039, 1040,
1041
42 U.S.C. §1983 1249
42 U.S.C. §§2000a et seq. (Civil Rights Act 44, 46, 47, 49, 50, 51, 52, 56,
of 1964, Title II) 1219

1709
42 U.S.C. §§2000bb-1 to 2000bb-3
(Religious Freedom Restoration Act 489
(RFRA))

42 U.S.C. §§2000cc to 2000cc-5 (Religious

Land Use and Institutionalized Persons 490, 491, 492, 493, 494
Act of 2000 (RLUIPA))
56, 471, 601, 616, 633, 636-
637, 638, 777, 947, 970,
1017, 1018-1024, 1028,
1029, 1030, 1031, 1037,
1038, 1039, 1040, 1041,
1048, 1049, 1050, 1055,
42 U.S.C. §§3601-3631 (Fair Housing Act
1056, 1057, 1062, 1063,
(FHA))
1066, 1072, 1073, 1076,
1077, 1078, 1079, 1083,
1086, 1088, 1089, 1090,
1091, 1092, 1093, 1094,
1095, 1099, 1101, 1103,
1104, 1105, 1219, 1223
42 U.S.C. §§12102-12211 (Americans with 56, 57, 58, 59, 60, 61, 62, 63,
Disabilities Act of 1990, Title III) 1092
43 U.S.C. §§1601 et seq. (Alaska Native
1181
Claims Settlement Act of 1971)

Public Laws
Pub. L. No. 111-203, 124 Stat. 1376 (2010)
(Dodd-Frank Wall Street Reform and 968, 1100
Consumer Protection Act)
Pub. L. No. 99-499, 100 Stat. 1613
(Superfund Amendments and 355, 495
Reauthorization Act of 1986 (SARA))

Code of Federal Regulations

12 C.F.R. pt. 1024 969
12 C.F.R. pt. 1026 969
1036, 1075, 1077, 1087,
24 C.F.R. §§100.1-100.500
1103

1710
 Accessibility Guidelines) 62, 63, 1099

Selected Uniform Laws

Revised Uniform Residential Landlord and Tenant Act (RURLTA)

§103(c) 824
§104 860
§105 846
§301 830
§302(a) 886
§§401-409 882
§405 830
§604 860
§604(d)(4) 861
§801(b)(2) 814
§901 900
§901(c) 901
§902 901
§1102 849
§1104 849
§1108 850

Uniform Electronic Transactions Act (UETA)

§7 934

Uniform Residential Landlord and Tenant Act (URLTA)

§1.105 860
§1.202 824
§1.302 846
§§1.403-1.404 886
§1.403 886, 890
§1.404 886, 890
§2.101 864, 888

1711
§2.103 830
§2.104 886, 888, 889, 897
§2.104(a) 886
§2.104(d) 890
§3.101 887
§3.101(7) 871
§3.103 830
§4.101 888, 889
§4.101(a) 888
§4.101(b) 888
§4.102 830
§4.103 888, 889
§§4.104-4.105 882
§4.104 889
§4.105 889
§4.107 901
§4.202 831
§4.203(b) 831
§4.203(c) 860, 861
§4.301(b) 814
§5.101 900
§5.101(b) 901
§5.101(c) 901

Uniform Statutory Rule Against Perpetuities (USRAP)

generally 792, 793, 794, 803, 1256
§9 803

Selected State Laws Arizona Revised Statutes

§12-1134 (Private Property Rights
1206
Protection Act)

Massachusetts General Laws

ch. 40B, §§20-23 (Anti-Snob Zoning Act) 473

1712
ch. 40B, §§20-23 (Anti-Snob Zoning Act) 473

New Jersey Statutes

§§52:27D-301 to 52:27D-329 (Fair
472, 473
Housing Act of 1985)

Oregon Revised Statutes

Measure 37, §195:305 1206
Measure 49 1206

International Laws
U.N. Convention on the Means of
Prohibiting and Preventing the Illicit
Import, Export and Transfer of 238
Ownership of Cultural Property, Nov. 14,
1970, 823 U.N.T.S. 231

1713
 INDEX
A

Abandonment
adverse possession, 314
of child, 256
constructive possession and, 146
covenants, 652, 656-657
easements, 244, 533, 559, 1221
finders, 155, 156
by lessee, 842, 858-859
nonconforming uses, 438, 440-441
by tenant, 842, 858-859
of trademark, 181
of water rights, 511-512
zoning codes, 441
Absolute ownership rule, 510
Acceleration clauses in leases, 862-863
Access rights. See Public accommodation laws; Trespass
Accounting, 672
Accretion, 332
Acquiescence, 319, 331
covenants, 656-657
Actual possession, 152, 293
ADA. See Americans with Disabilities Act (ADA)
Adaptation, 499
Adjustable rate mortgages (ARMs), 957, 959, 960, 962
Adult entertainment establishments, 482-484
Adverse possession, 39, 41, 153, 287-315, 320
abandonment, 314
acquiescence, 319, 331
adverse possessor’s state of mind, 296-298
border disputes, 287-299, 309
color of title, 294, 299-303, 320
co-tenants, 677

1714
 dedication, 332
easements, 559
elements, 293
actual possession, 293-294
adverse or hostile possession, 295-298
continuous possession, 295
exclusivity, 294-295
open and notorious, 294
privity, 295
estoppel, 331
good faith possession, 309
government, claims against, 298-299
justifications for, 310-315
laches, 331-332
oral agreements, 331
personal property, 333-335
quiet title, 293
repose, 314
rural land, 309-310
squatters, 105-107, 303-310
statute of limitations, 298, 299, 333
statutory period, 298, 299, 333
stolen artworks, 334-335
tacking, 295
title vs. possession, 287
true owner, protection of, 299
true owner’s state of mind, 295-296
of water right, 512
Advertising, 1024-1032
on-line, 1029-1030
Affirmative covenants. See Covenants
Affirmative easements, 315, 408, 515, 560
Affirmative servitudes, 513
Age Discrimination in Employment Act of 1967, 1074
Aggrieved persons, 1018, 1037-1038, 1063, 1104
AIDS, 1068
Air, right to, 370-380
Airplane overflights, 15-17, 18

1715
Alaska Native Claims Settlement Act of 1971 (ANCSA), 1181
Alaskan Recording Act, 1003
Alien land laws, 101
Alienability, 740, 744
Alienation, restraints on
charities, 647
consent clauses, 638-639
consent to sell clauses, 646-647
cooperatives, 647
covenants, 638-648
fee simple, 645
indirect, 646
leaseholds, 647
low-income housing, 647-648
public policy limitations, 601-616
right of owner to alienate property, 1255-1256
short-term rentals, 647, 828-829
unreasonable, 646, 647, 648
Alimony, 701, 709, 714, 715, 716, 717
Ambiguity
concurrent tenancies, 666-667
covenants, 575
easements, 520-524
leaseholds, 826
present estates and future interests, 756-780
changed conditions, 763, 770
precatory language, 762
presumption against forfeiture, 756, 761-762
purpose language, 762-763
Ameliorating waste, 767-768
American Indian human remains, 241-246
on federal land, 244, 245-246
in museums, 243, 244
on private property, 243-244
state laws, 243-244, 246
on tribal lands, 244
American Indian property, 88-98
aboriginal title, 1181-1182

1716
 adverse possession, 309
artifacts, 244-245
burial grounds, 241-246
conquest, 93, 96-97
cultural objects found, 163, 241-246
discovery doctrine, 96, 97
funerary objects found on federal and tribal land, 244
modern Indian land claims, 101-104
original Indian title, 1177-1180
recognized title, 1181, 1182-1183
sports logos, 50
title of occupancy, 93, 95, 96, 1177-1178
tribal law, 234
U.S. acquisition of, 88-98
forced seizure of property, 1176-1183
Americans with Disabilities Act of 1990 (ADA), 56-65, 1088
attendants, 62
disability, defined, 57
homosexuality and bisexuality not included, 61
discrimination against persons with disabilities, 56-65, 1088
historic landmarks, 63
illegal use of drugs, 61
policies, modification of, 63-64
private clubs, 61
public accommodation, defined, 57-58
public accommodations provisions, 62
religious organizations, 61
renovations, 62, 63
stadium seating, 62-63
virtual “places,” 64-65
Web sites, 64-65
Anchor stores, 833-834
Ancient lights doctrine, 372, 374
Animals
as assistance animals for individuals with disabilities, 1084-1088
as pets, 607-613, 614
wild animals, 136-141
Antenuptial agreements, 703-704

1717
Anticompetitive covenants, 648-650
Anticybersquatting Consumer Protection Act (ACPA), 186
Anti-eviction laws, 850, 1219-1221
Anti-loitering policies, 33
Antiquities Act of 1906, 502
Antiterrorism clauses, 912n, 921
Antitrust law, 648-650
Appurtenant easements, 518, 520-524, 524-529
Architectural review committees, 598, 599, 615
ARMs. See Adjustable rate mortgages (ARMs)
Artists’ moral rights, 175-176, 208-209
“As is” clauses, 943, 944, 946
Assignment of leased property, 837
Associational interests, 53-54, 1028, 1029, 1032
Attendants
ADA public accommodations provisions, 62
Attorneys
access to justice gap, 854
FHA violations, court-appointed attorneys, 1022
indigent tenants in landlord-tenant disputes, representation for, 854
interest on layers’ trust accounts (IOLTAs), 1282-1283
role in real estate transactions, 911-912
tenant representation, lack of, 854
Authorship. See Copyright
Avulsion, 333

Baby-selling, 254-264
Back rent, 851, 854, 855, 861, 880
Balloon payments, 957
Bank accounts
convenience, 669
joint, 667, 669, 670
Bargaining costs, 384-385
Baseball, possession of, 135, 142-146
Battered women’s shelters, 1094
Beaches

1718
 access, 72-82, 1264-1265
custom, doctrine of, 1264-1265
replenishment and littoral owner’s property, 1261-1262
Beneficiaries, 546, 740, 972
Bequeathing property, 739, 771
Betterment statutes, 329
Billboards, 426, 440, 480, 483, 646, 825
Blight, 1167, 1169
Blockbusting, 1031
Body parts, 247, 268-284
cell lines and rights of descendants, 276
informed consent, 277
markets in, 277-284
relatives as owners of deceased family-members’ bodies and parts, 276
Bona fide purchasers, 1000, 1006
Border disputes, 287-299, 309
Boundary settlement, 331-333
Breach of contract, 936-948
Breach of warranties, 921, 955-956
Brokers, 913-917
buyer’s broker, 916
buyer’s duties to, 916
commissions, 913-916
consumer protection and, 916-917
designated agency, 916
dual agency, 916
duties to buyer, 915-916
ethics concerns, 917
exclusive agency, 913
exclusive right to sell, 913
listing agreements, types of, 913-914
mortgage brokers, 959n
multiple listing services, 914
nonexclusive listings, 914
open listings, 914
transaction brokers, 916
unlicensed practice of law, 915
Brownfield redevelopment, 496-497

1719
Brownfields Act, 495
Building and housing codes, 411-412, 816, 880, 881
administrative enforcement, 884
criminal penalties for noncompliance, 884
greenhouse gas emission reduction, 499
international, 411
private rights of action, 411-412
weather events, 499
Burden of proof
FHA claims, 1037
mitigation of damages, 863
Burial grounds, American Indian, 241-246
Business judgment rule, 623-624, 732-735
Business methods, 219-220
Business property. See also Entity property; Shopping centers and malls
anchor stores, 833-834
ground leases, 591-592
Buzzer systems, 31, 50-51

California
Art Preservation Act, 208
covenants, 613
deficiency judgments, 973
Environmental Quality Act, 497, 499
Global Warming Solutions Act, 499
Homeowners Bill of Rights, 986
Solar Shade Control Act, 380
statute of frauds, 517-518
Casinos and gambling establishments, 25-29
Categorical takings, 1189-1191
Caveat emptor, 873, 941, 948
CC&Rs (conditions, covenants, and restrictions), 590
Cell lines
descendants’ rights, 276
patents on, 268-276
Cemeteries

1720
 access right, 19
American Indian burial grounds, 241-246
on private property sold to subsequent owner, 19
on public lands, 19, 242
CERCLA. See Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 (CERCLA)
Certainty, 140
Certificate of title, 1015
Chain of title defects, 947, 954, 1001-1007
Changed conditions
covenants, 650-655
present estates and future interests, 763
Charitable trusts, 736, 762-763, 770-780
Charities, 647, 788
Chattels and trespass, 21-22
Child support, 128, 129-134
post-minority educational support, 129-134
Children, 128-135
baby-selling, 260
child care linkage packages of developers, 1278
custody, 134
discrimination against families with, 1034-1036, 1058-1064
in divorce, 704-705, 713-714, 716
lead paint laws, 906
poverty and, 704-705
surrogacy, 254-264
City council ordinances. See Ordinances; Zoning
Civil Rights Act of 1866, 629, 633, 1039
discriminatory practices, 1039
public accommodation, 45, 47, 48, 49
Section 1981 claims, 45, 46
Section 1982 claims, 45, 46, 1039
Section 1983 claims, 1249
Civil Rights Act of 1964
public accommodation, 44, 46, 48, 49
purpose of, 46, 48
Title VII, 1074
Civil Rights Act of 1991, 46

1721
Civil Rights Cases (1883), 47, 629, 633
Class gifts, 787, 789
Clean Air Act, 355, 499, 501
Clean Water Act, 355, 396, 501
Climate change, 355, 495, 499, 501
adaptation, 499
mitigation, 499
Closing, 913, 917, 920-921
Clubs. See Private clubs
Coase, Ronald, 381-382, 383, 384
Coercion, 1023, 1053-1054
Cohabitation, 1062, 1068-1069
“Collaborative consumption,” 828
Collateral, 956, 957, 969
Collateralized debt obligations (CDOs), 960
College dormitories, 824, 827-828
College education, importance of, 133
Colonial land transfers, 98
Indian land cessions superimposed on, 99
Color of title, 294, 299-303, 320
Colorado installment land contract, 990
Commercial future interests, 796
Commodification, 391-392
Common carriers, 28-30, 33, 49
Common enemy rule, 397
Common interest developments, 589-594, 726, 737. See also
Condominiums
community land trusts, 591-592
competing perspectives, 592-594
condominium associations, 590, 597
cooperatives, 591, 647, 1067-1068
homeowners associations, 590, 615, 616
limited equity cooperatives, 591, 592
relationship with developers, 594-601
residential subdivisions, 433, 590-591
Common law
ad coelum, 16
landlord-tenant relationships, 816

1722
 marriage, 670, 721, 722
mitigation of damages, 861
trespass, 16
Common nuisance. See Nuisance
Common plan or scheme of development, 580
Communications Decency Act of 1996 (CDA), 829, 1029-1030
Community development corporations (CDCs), 647
Community land trusts, 591-592
Community property, 702, 1260
Community Reinvestment Act of 1977 (CRA), 959, 961n
Company towns, 66-67
Compensatory damages, 884-885
Competition
ADA accommodations, 63-64
promotion of, 400
restraints on, 400
unfair competition, 113-119, 121, 175, 180, 391
Comprehensive Environmental Response, Compensation, and Liability Act
of 1980 (CERCLA), 355, 495-496
Computer systems, trespass to, 21-22
Concurrent tenancies. See also Common interest communities;
Leaseholds; Tenancies
ambiguities, interpretation of, 666-667
condominiums. See Condominiums
cooperatives. See Cooperatives
four unities, 667, 680
ownership in common
joint tenancy, 667-669
severance, 668-669
survivorship rights, 667, 683-684
tenancy by the entirety, 670
tenancy in common, 666-667, 678-679
partition, 667-668, 691-697
rights and obligations of co-tenants. See Co-tenants
transfer of interest, 667, 668
trespass, 677
types of, 666
Condemnation. See Takings law

1723
Condition subsequent, 750-751, 755
Conditional or contract zoning, 446-454
Conditional use, 461
Condominium and Cooperative Conversion Protection and Abuse Relief
Act, 598
Condominiums, 737
architectural controls, 598, 599, 615
business judgment rule, 623-624
covenants, 616
homeowners associations. See Homeowners associations
leasing restrictions, 623, 640-648
management contracts, 598
pets, 607-613, 614
rules and bylaws, reasonableness of, 617-625
Consent
grantor consent clauses, 638-639
landlord’s consent to sublet, 838-839
to sell, 646-647
to trespass, 19-21, 24
Consequential damages, 409
Conservation easements, 518, 567
Constitution, U.S. See also Free speech rights; specific amendments and
clauses
homelessness, property and, 171-172
intellectual property, 175
land use regulation, 424-430
regulatory takings
public use requirement, 1150-1166
takings clause, 1149
Constitutions, state. See State constitutions
Constructive delivery, 134, 954
Constructive eviction. See also Eviction
implied warranty of habitability and, 870-871
quiet enjoyment, interference with, 865-869, 870-871, 873
Constructive notice, 519, 569-570, 581, 585, 587, 1003
Constructive ouster, 674-676
Constructive possession, 146
Constructive trusts, 546-547, 724, 936

1724
Consumer protection laws, 30, 185-186, 816-817, 827, 968-969, 989-990,
1099-1100, 1259
Contingent future interests, 740
Contingent remainders
definition, 753
destructibility of, 751n, 754
Continuous possession for adverse possession, 295
Contract. See also Purchase and sale agreements
preembryos, disposition of, 267-268
privity of, 837
real estate contract, 520
real estate installment contract, 520
surrogate, 254-264
Contract or conditional zoning, 446-454
Contract rights of unmarried partners, 717-726
Contractual freedom. See Freedom of contract
Contributory infringement, 193-194
Convenience accounts, 669
Convention on the Means of Prohibiting and Preventing the Illicit Import,
Export and Transfer of Ownership of Cultural Property, 238
Conversion, 139, 144
artwork taken in World War II, 334-335
equitable conversion, 919
rule, 333
Cooperatives, 591, 592, 647, 737
limited equity cooperatives, 591, 592
sexual orientation discrimination, 1067-1068
Copyright, 122-123, 187-208
contributory infringement, 193-194
copies, defined, 194
copyfraud, 194-195
derivative works, 207-208
digital works, 194
duration, 194
exclusive rights, 188
fair use, 195-208
fan fiction, 207-208
fixed, defined, 194

1725
 infringement, 193-194
original works of authorship, 187, 189-193
orphan works, 195
public domain, 123, 187, 196
research articles, 206-207
space shifting, 207
subject matter, 187-188
Copyright Act, 187-188
Corporations, 726-735. See also Business property; Entity property
agency costs, 730
business judgment rule, 732-735
derivative suits, 732
fiduciary duties of officers and directors, 731, 732-735
governance, 731-732, 737
nexus of contracts theory of corporate governance, 731
ownership of corporation, 735
public vs. private role in corporate governance, 737
shareholder activism, 731
Correlative rights doctrine, 414n, 417, 510
Cost-benefit analysis, 380, 385, 387
Cost internalization, 380, 400
Cost of restoration, 410-411
Co-tenants. See also Leaseholds
adverse possession, 677
in common. See Tenancies
joint tenants. See Joint tenancy
ouster, 672, 674-676, 676-677
rights and obligations
constructive ouster, 674-676
divorce, 704-717
leasing, 678-679, 683
partition, 667-668, 691-697
tenant out of possession, 676, 677
Counterclaims by tenants, 865, 884
Countryside and Rights of Way Act 2000 (UK), 19
Covenants, 514, 559-589
abandonment, 657
acquiescence, 657

1726
affirmative, 564
alienability, 638-648
ambiguous, 575
anticompetitive, 648-650
architectural review committees, 598, 599, 615
changed conditions, 650-655
common interest developments, 589-594
community land trusts, 591-592
condominiums, 590-591
cooperatives, 591
creation of, 563-579
damages, 655
defined, 559
enforceability against original covenantor after land transferred, 567
enforcement of express covenants, 832-833
estoppel, 657
frustration of purpose, 559
gated communities, 592, 616
historical background, 559-562
homeowners associations, 590, 615, 616
implied reciprocal negative servitudes, 580-587
in gross, 567
injunctions, 577-579, 655
laches, 657
limited equity cooperatives, 592
marketable title acts, 657
merger, 657
modification or termination, 650-657
to pay money, 573
prescription, 657
presumptions, 575
privity of estate. See Privity
property owners associations, 589-590
public policy limitations, 601-614
racial discrimination, 626-636
reasonableness, 601-613
relative hardship, 656-657
release, 657

1727
 remedies, 577-579
requirements, formal, 567-568
actual notice, 569
constructive notice, 569-570
equitable servitudes, 567, 568
inquiry notice, 569
intent to run, 567, 577, 586
notice, 568, 569-570
privity of estate, 568, 570-572, 574, 576
real covenants, 567
running with land, 570
touch and concern, 568, 572-573, 574-575, 577, 601, 613
writing, 567, 568-569, 575-576, 586
requirements, substantive, 568
residential subdivisions, 580-589, 590-591
Restatement (Third), influence of, 573-575
restrictive and negative easements, 514
running with land, 570
statute of frauds, 568-569
successors in interest, 567-568
title, 954-956
conveyance, 954
encumbrances, 954
further assurances, 955
future covenants, 955
present covenants, 954
quiet enjoyment, 955
seisin, 954
warranty, 955
touch and concern, 568, 613
unclean hands, 657
writing, 568-569
Coverture, 697, 698, 744
Credit default swaps, 960
Creditors’ rights, 698, 700, 702, 704, 732, 736
Criminal conduct
consensual sexual conduct, criminalization of, 698n
landlord’s liability for intervening acts, 905

1728
Criminal penalties in building codes, 884
Criminal trespass, 14-15
Cryopreservation, 747
Cultural icons, 233
Cultural property, 163, 235-246
cultural nationalism, 239-240
cultural patrimony vs. cultural internationalism, 239-241
international market in, 235-241
Native American cultural property, 241-246
Curtesy, 698
Custom, doctrine of, 81, 140, 145-146, 1264-1265
Cy pres doctrine, 770-778, 794
Cybersquatting, 185-186

Damages. See Punitive damages; Remedies

Damnum absque injuria, 394, 397, 410, 415
Day care centers
child care linkage packages of developers, 1278
church-operated, 494
in residential neighborhoods, 616
Dead hand problem, 740, 769, 783
Death. See also Inheritance; Intestate succession
community property, 702
joint tenant, 679-681
marital property
community property, 702
separate property, 701-702
sales contracts, 953, 954
Declaration, 581, 590
Declaratory judgments, 293
Dedication
adverse possession, 332
public trust doctrine, 79-80
Deeds, 913, 950-1016
delivery, 920, 953-954
essential terms, 950-953

1729
 estoppel by deed, 1004
forgery, 1008-1014
form, 951-953
fraud, 1008-1014
master, 590
recording acts. See Recording acts
title insurance, 918, 1014-1015
title searches, 996-998
Torrens system, 1015
waiver of forged deeds, 1013
warranties, 921
wild deeds, 1004-1005
Deeds of trust, 325, 576, 972, 978, 980, 981, 982, 985, 993
Defamation, 21, 435
Defeasible fees, 748n, 749-752
fee simple. See Fee simple headings
laches, 751
Defective title, 294, 299
Defense of Marriage Act of 1996 (DOMA), 699
Deficiency judgments, 973
Delivery
of deeds, 920, 953-954
of gifts, 134
of possession by landlord, 830
Demand rule, 333
Depository Institutions Deregulation and Monetary Control Act
(DIDMCA), 959
Derivative works, 207-208
Developers
amending or modifying declaration, 597-598
bankruptcy, 597
control of condominium association, 597
gated communities, 592
relationship with unit owners, 594-601
Devisee, defined, 739
Disability, tolling of statute of limitations, 298
Disabled persons. See also Americans with Disabilities Act of 1990
attendants for, 62

1730
 equal protection, 1115
reasonable accommodation, 1084-1090
Rehabilitation Act of 1973, 1088-1089
residences for mentally disabled, 638
Disclosure re house sales, 916, 941-944
Discovery doctrine for land ownership, 96, 97
Discovery rule for personal property, 333-334
Discrimination. See also Civil Rights Acts; Fair housing laws
children in family, 1058-1064
covenants, 601, 626-636
disability. See Disabled persons
economic, 1069-1073
familial status, 1058-1064
intentional, 1032-1073
marital status, 1062-1063
private clubs. See Private clubs
race or national origin. See Racial or national origin discrimination
religion. See Religion
in search for housing, 1040
sex. See Sex discrimination
sexual orientation. See Sexual orientation discrimination
source of income, 1069-1073
state laws, 1017-1018
steering, 1040
Discriminatory effects, 1075-1079
Disgorgement, 988
Disinheritance, 135, 1249
Disparate impact claims, 1036, 1073-1095
doctrinal variation, 1076-1077
HUD’s discriminatory effects rule, 1075-1079
land use regulation, racially discriminatory effects in, 1080-1084
legally sufficient justification for disparate impact, 1075-1076, 1078
less discriminatory alternatives, 1078-1079
prima facie case, 1078
public actors, 1082
Disparate treatment claims, 1032-1073, 1077, 1080, 1087
defined, 1036
integration and nondiscrimination, 1041-1050

1731
 legitimate nondiscriminatory reasons for action, 1037
pretext, 1037
prima face case, 1033-1037
Distributive justice, 87, 100, 382-383, 512, 1206, 1208-1209
Divorce
children and, 704-705, 713-714, 716. See also Child support
community property, 702
equitable distribution of property, 701, 702, 704-717
income disparity, 704-705
marital property, 701, 702
modifiability of property award, 715
Dodd-Frank Wall Street Reform and Consumer Protection Act, 968-969,
1100
Domestic partnerships, 699
Domestic violence, 832, 849-850, 1056-1057, 1094, 1223
Dormitories, 824, 827-828
Dower and curtesy, 697-698
Droit moral, 208
Drug dealers, 351, 355-356, 905-906, 1245
Drugs, illegal use, manufacture, or sale of, 351, 1147, 1245
disability not to include, 61
Dual agency, 916
Dual tracking, 986
Due diligence, 333, 334
Due process
forfeiture, 1142-1147
procedural, 630
restrictive covenants, 627, 633
substantive
equal protection, relation to, 1113-1116
takings, 1191, 1262

EA. See Environmental assessment (EA)

Earnest money, 917
Easements, 513, 515-559
abandonment, 533, 559, 1221

1732
adverse possession, 559
affirmative easements, 315, 408, 513, 515
air, 370-380
ambiguous easements, 520-524
ancient lights doctrine, 372, 374
apportionability, 534-535
appurtenant, 515, 518, 520-524, 524-529
billboards, 825
changing location of, 535-536
conservation, 518
creation by express agreement, 517-520
creation by implication, 519, 536-559
defined, 513-514, 515
divisibility, 533-534
duration, 559
by estoppel, 517, 519, 537-547
exclusive, 535
by express agreement, 517-520
extension of use, 536
formal requirements, 517-520
frustration of purpose, 559
historic preservation easements, 518
by implication, 519, 536-559
implied from prior use, 537, 547-554
in gross, 519, 520-524, 529-559
intent, 519-520, 522-523
landlocked parcels, 551, 554-558
leases compared, 516
licenses compared, 516
light, 370-380
limits on negative easements, 518
merger, 559
modifying and terminating, 559
by necessity, 537, 551, 554-559
negative easements, 408, 515, 518
nonexclusive, 534
notice, 519
oral easements, 516

1733
 by prescription, 537, 559
quasi-easements, 551, 553
rails-to-trails, 533-534, 1221-1222
release, 559
right of way, 513
running with land, 518-520
scope, 532
severability from land, 523
solar easements, 518
statute of frauds, 516, 517-518, 519, 536, 547
support rights, 403-404
transferability, 523-524
unreasonable additional burden, 533
uses encompassed by, 532
writing, 517-518, 519
Economic analysis of nuisance, 380-392
Economic discrimination
fair housing law, 1069-1073
homelessness, 82-85, 1073
Efficiency, 100, 386-392
adverse possession, 311, 312
bias inherent in, 391
definitions, 380
housing market, 908
inclusionary zoning techniques, 473-474
takings, 1206, 1207-1208
EIR. See Environmental impact report (EIR)
EIS. See Environmental impact statement (EIS)
Ejectment, 102-103, 293, 330, 853
E-mail as trespass, 22
Embryos, human, 264-268
Eminent domain, 90, 237n, 328, 1149-1183. See also Takings law
condemnation process, 1149-1150
economic development, 1168
expropriation without “taking,” 1175-1183
harms and benefits, 1166
interest on past expropriations, 1181-1182
just compensation, 1170-1175

1734
 police power and, 1165
political process failure, 1165-1166
public use requirement, 1150-1169
state laws, 1166-1168
Emotional distress damages, 905
Employers
company towns, 66-67
wrongful discharge, 127
Encroaching structures, 323-324
Encumbrances and marketable title, 947
Endangered Species Act (ESA), 501
Endless will contest, 790
Enjoyment of land, 339-351
Entertainment, places of, 28
Entitlements, 339, 357-358
Entity property, 726-737
common interest developments, 726, 737
condominiums, 737
cooperatives, 737
corporations, 726-735
limited liability companies, 726, 736
limited partnerships, 726, 736
partnerships, 735-736
property owners associations, 726, 737
real estate investment trusts, 736
trusts, 726, 736-737
Environmental assessment (EA), 497
Environmental impact report (EIR), 497
Environmental impact statement (EIS), 497, 498
Environmental protection, 355, 495-496, 1244. See also Natural resources
regulation
brownfield redevelopment, 496-497
climate change, 495, 499
defenses under CERCLA, 495-496
environmental covenants, 496
environmental impact assessment, 497-498
hazardous waste laws, 495-496
joint and several liability, 495-496

1735
 natural resources and, 501
state laws, 355, 396, 497-499
takings laws, 1244
Equal Credit Opportunity Act of 1974 (ECOA), 1097
Equal protection. See also Fourteenth amendment
intent requirement contrasted, 1082-1083
land use regulation, 1082-1083
substantive due process, relation to, 1113-1116
zoning, 426, 1082-1083, 1115, 1133, 1159
Equitable conversion, 919
Equitable distribution, 701, 702, 704-717
Equitable division, 146
Equitable estoppel, 587, 931
Equitable mortgages, 992-995
Equitable servitudes, 514, 567, 568. See also Servitudes
Equitable subrogation, 1007-1008
Equity courts, 697, 971-972
Equity of redemption, 971, 972, 973, 973n, 989
Escheat, 739, 743
Estates. See Present estates and future interests
Estoppel
adverse possession, 331
by deed, 1004
covenants, 657
easements by, 517, 519
equitable, 587, 931
sales contracts, 935-936
Ethical issues in real estate development, 435
Eviction. See also Self-help
actual, 869-870
anti-eviction laws, 850, 1219-1221
constructive, 870-871
foreclosure, eviction after, 986
holdover tenants, 852
indigent tenants, shortage of lawyers for, 854
just cause eviction and, 850-851
landlord’s right to occupy own land or stop renting altogether, 1221
landlord’s right to recover possession, 850-851

1736
 leaseholds, 815, 816, 817, 830
partial actual eviction, 869
partial constructive eviction, 870
protections against, 816-817
quiet enjoyment, interference with, 869
retaliatory, 891-892
state laws granting continued right of possession, 850
tenant’s rights, 23-24, 850-851
Ex jure naturae, defined, 405
Exactions, 1265-1280, 1282
Excessive fines, 1143
Exchange value, 121
Exclusion rights. See Public accommodation laws; Trespass
Exclusionary amenities, 49-50, 1031
“Exclusionary vibes,” 49-50, 1030-1031
Exclusionary zoning, 463-475
Exclusive possession, 294-295
Exclusive right to sell, 913
Executive Order No. 13, 224, 912n
Executory interests
fee simple subject to executory limitation, 751, 755
Executory period, 913, 918-920. See also Real estate transactions
Express covenants, enforcement of, 832-833
Express easements. See Easements
Expropriation without “taking,” 1175-1183
Externalities, 380, 452

Fact or opinion, 940

Fair Debt Collection Practices Act, 979
Fair Housing Act of 1968
advertisements, 1024-1032
aggrieved persons, 1018, 1037-1038, 1063, 1104
associational interests, 1028, 1029, 1032
blockbusting, 1031
breadth of, 1103-1104
burden of proof, 1037

1737
civil action, 1022
coercion, 1023, 1053-1054
college dormitories, 824, 827-828
communications, prohibited, 1031
covenants and common interest developments, 633, 636-638
definitions, 1018-1019
discrimination in sale or rental, 1019-1021
disparate impact claims, 1036-1037, 1073-1084, 1078-1079, 1091-1092
disparate treatment claims. See Disparate treatment claims
dwelling, defined, 1028-1029
economic discrimination, 1069-1073
enforcement by private persons, 1022-1023
exemptions, 1019, 1021-1022
families with children, 1034-1036, 1058-1064
financing and redlining, 1096, 1098-1099
freedom of speech, 1029
gender identity, discrimination on basis of, 1067
handicapped persons, 1084-1090
harassment, 1040-1041
indirectly signaling racial preference, 1030-1031
integration as goal of, 1048-1049
integration vs. nondiscrimination, 1049
intent vs. motive, 1049
intentional discrimination, 1032-1073
intimate association, 1028, 1029
intimidation, 1023, 1053-1054
liability, 1036-1037
local governments, liability to, 1103-1104
number of occupants/units, 1021, 1038, 1049
occupancy limits, 1058-1062
older persons, housing for, 1021-1022
on-line advertising, 1029-1030
prima facie case, 1033-1037, 1078
private clubs, 1021
punitive damages, 1037-1038
racial steering, 1040
reasonable accommodations, 1084-1090
refusal to deal, 1037n

1738
 relief available, 1023
religious organizations, 1021
remedies for discrimination, 1023, 1037-1038
restrictive covenants, 633
retaliation, 1040-1041
Section 1982 claims, 1039
segregation, persistence of, 1048-1049
sex discrimination, 1053-1054, 1056-1057
sexual harassment, 1056
sexual orientation, discrimination on basis of, 1066-1067
shelters for battered women, 1094
standing, 1039-1040
subtle signaling, 1030-1031
testers, 1040
tipping, 1049
vicarious liability, 1037
zone of interests, 1104
Fair Housing Amendments Act of 1988 (FHAA), 1037, 1061, 1091, 1093
Fair housing laws, 1017-1105. See also Fair Housing Act of 1968
disability discrimination, 1017, 1017n
reasonable accommodation, 1084-1090
disparate impact claims, 1073-1084, 1091-1092
economic discrimination, 1069-1073
fair lending, 1095-1105
harassment, 1040-1041
HUD’s discriminatory effects rule, 1075-1079
liability under, 1036-1037
neighbor-on-neighbor harassment or intimidation, 1051
“no welfare” policy, 1079
racial or national origin discrimination. See Racial or national origin
discrimination
remedies for discrimination, 1023
retaliation, 1040-1041
segregation, persistence of, 1048-1049
sex discrimination, 1050-1057
sexual orientation discrimination, 1066-1067, 1115
state laws, 1017-1018
unmarried couples, 1062-1063

1739
Fair lending, 1095-1105
Fair market value, 385, 1170-1171
Fair rental value, 833, 855, 856, 889
Fair use, 195-208
Families, 128-135. See also Children; Divorce
child support, 128, 129-134
defined, 1140-1141
gifts and inheritance, 134-135
marital property. See Marital property
nontraditional, 717-726, 1140-1141
same-sex partners. See Same-sex couples
social welfare and, 109-111
unmarried partners. See Unmarried partners
Fan fiction, 207-208
Fannie Mae (Federal National Mortgage Association), 958
Farmworkers, migrant, 817-823, 824, 825
Fealty, 761
Federal Home Loan Bank Act of 1932, 958
Federal Housing Administration, 958
Federal Land Policy Management Act of 1976 (FLPMA), 502
Federal Trademark Dilution Act of 1995, 185, 186
Fee simple, 97, 164, 600, 638, 645, 742-743, 747, 748-752
vs. defeasible fee, 756-758
Fee simple absolute, 669, 748-749, 755
Fee simple determinable, 748, 749, 751, 755, 756-758
Fee simple subject to condition subsequent, 748, 750-751, 755
Fee simple subject to executory limitation, 748, 751-752, 755
Fee tail, abolition of, 746-747, 783
Feme covert, 697
Fences, use of, 18
adverse possession, 288, 291, 293
spite fences, 350, 375, 377, 379
Fertile octogenarians, 790
Feudalism, 741-743
FHA. See Fair Housing Act of 1968
FHAA. See Fair Housing Amendments Act of 1988
Fiduciary obligations
broker, 915-916

1740
 community property managers, 702
officers and directors of corporations, 731-735
trustees, 769, 983
unmarried couples, 724
Fifth amendment, 97, 1110, 1116, 1149, 1170
Financial crisis. See Subprime mortgages
Financing. See Mortgages; Real estate transactions
Finders, 155-163
embedded in soil, property found, 157
landowners vs., 157
lost or abandoned property, 156
mislaid property, 156
state statutes, 158
subsequent possessors vs., 156
third parties vs., 156, 157
treasure trove, 158
trover, action in, 156
Fines, excessive, 1143
First amendment
access to private property, 66
labor laws, 70
shopping centers, 65-69
state constitutions, 69
universities, 27
aesthetics and, 481-482
antidiscrimination laws and, 55
associational rights, 53-54
content-based restrictions, 481-482
handbills and leaflets, 66, 67, 68
intellectual property, 186, 198-199, 232
land use regulation, 482-483
sex-oriented business, 482-483
offensive names, 50
political messages on t-shirts, 71-72
public accommodation laws, 65-72
publicity rights, 232
religious freedom, 490, 494, 1062-1063, 1069
signs and billboards, 481-482

1741
First refusal rights, 679n
rule against perpetuities, 785, 796, 801, 804
Flag, American, display of, 624
Floating zones, 432n
Flooding, 392-398, 1218
Forced purchases, 323
Forced sales, 323, 324-330. See also Foreclosure
Forced share statutes, 1249
Forcible entry and detainer, 825, 853
Foreclosure, 918, 960, 971-995
dual tracking, 986
eviction of tenants after, 986
installment land contracts, 987-991
reforming process, 986-987
statutory right of redemption, 973, 988
Foreseeability, 396, 397, 409
Forfeiture
due process, 1142-1147
feudalism, 743
installment land contracts, 988, 990, 991
presumption against, 756, 761-762
takings, 1260
Forgery, 1008-1014
Formal realizability or administrability, 401-402
Formation of property in everyday life, 167-172
Fourteenth amendment
due process. See Due process
equal protection. See Equal protection
state action prohibited but not private action, 47, 633-634
Fourth amendment, 1284-1285
Fracking, 16, 150
Fraud
good faith purchasers, 1006
recording system, 1008-1014
sales contracts, 946, 1008-1014
trespass, 20
Freddie Mac (Federal Home Loan Mortgage Corporation), 958
Free exercise of religion. See First amendment

1742
Free speech rights, 50, 65-72, 1029. See also First amendment
Free use rules, 422
Freed slaves, 107-108
Freedom of action vs. security, 398-399
Freedom of association, 53-54, 1028, 1029, 1032
Freedom of contract, 614, 760-761, 826-827, 907
Freedom to Display the American Flag Act, 624
Frozen sperm, eggs, or embryos, 264-268, 747
Frustration of purpose, 559
Future interests. See Present estates and future interests

Gated communities, 592, 616

Gay persons. See Homosexuality; Same-sex couples
Gender identity discrimination, 56, 1067
Gender roles, 932-933
General warranty deeds, 955
Genetic information, 209-214, 218
Gestational surrogacy, 262, 263
Gifts, 134-135
acceptance, 134
class gifts, 787, 789
conditional, 135
delivery, 134, 135
elements, 134
intent, 134, 135
inter vivos, 134
joint bank accounts, 701
marriage, in contemplation of, 135
testamentary transfers, 134
Global warming, 499. See also Climate change
Good faith
adverse possession, 298, 309
possession, 320-321, 329
purchasers, 1006
UCC, 167
Good ratables, 466

1743
Goodwill, 181, 1171-1172
Government benefits and regulatory takings, 1283-1284
Government searches and trespass, 22-23, 1245-1246
GPS tracking devices, 22-23
Graduate degrees, 706-712, 714-715, 716-717
Grantors and grantees, 517, 534-535
Graves, 19, 241-246. See also Cemeteries
Great Depression, 986
Greenhouse gases, 355, 499. See also Climate change
Ground leases, 591-592
Groundwater, 412-419, 422, 510-511
Group homes, 638, 1090-1095
Growth controls, 474-475

Habitable premises
leaseholds, 865-908. See also Leaseholds
sales contracts, 948
Handicap. See Disabled persons
Harassment, 1040-1041, 1050-1057
Hazardous waste laws, 495-496
Heirs, defined, 739
Historic landmarks, 63
Historic preservation easements, 518
HIV/AIDS, 1067
Hohfeldian terminology, 42-43
Holdover tenants, 815, 830, 852
Homage, 743
Homelessness, 33, 82-85, 166
economic discrimination, 1073
eviction of tenants and, 854
exclusion of homeless from retail businesses, 33
possessions of homeless, 171-172
shelters, 58, 491, 494, 1094
trespass, 9-14
Home Mortgage Disclosure Act of 1975 (HMDA), 958
Homeowners’ associations, 590, 615, 616

1744
Home Ownership and Equity Protection Act, 969
Home Owners’ Loan Corporation (HOLC), 1098
Homestead laws, 100, 104-105, 690, 704
Homosexuality
antidiscrimination laws, 53-54
membership organizations, exclusion from, 53-54
not included as disability under ADA, 61
public accommodation statutes, 53-54
same-sex couples, 698-700, 1141. See also Same-sex couples
Horizontal privity, 570-571, 572, 574, 576
Hot news tort, 122, 124
Housing
codes. See Building and housing codes
landlord-tenant. See Leaseholds
low-income. See Low-income housing
short-term, 647, 828-829
Housing and Urban Development Department (HUD), 1036, 1037-1038,
1048, 1067
discriminatory effects rule, 1074, 1075-1079
Human bodies, 247-253
body parts, 247, 268-284
children, 254-264
embryos, 264-268
organ transplants, 276, 277-284
slavery, 248-253
surrogacy, 254-264
Hunting and trespass, 18, 140
Hurricane Katrina, 15, 1083-1084, 1246
Hurricane Sandy, 493, 499, 590
Husband and wife. See Marriage; Surviving spouse; Tenancies, by the
entirety
Hydraulic fracturing, 16, 150

Imitators, 231-232
Impact fees, 1278-1280
Imperfectly created servitude, 320

1745
Implied covenants of continuous operation, 833
Implied reciprocal negative servitudes, 580-587
Implied warranty
of habitability, 871
new home sales, 948
Improving trespasser, 322-323
In gross easements. See Easements
Inclusionary zoning techniques, 473-474
Income disparity, 704-705
Incomplete defense of necessity, 15
Indian Claims Commission Act of 1946, 1181-1182
Indian General Allotment Act of 1887, 1250, 1254
Indian Land Consolidation Act of 1983, 1255
Inheritance, 134-135. See also Intestate succession
child born after death of parent using frozen sperm, eggs, or embryos,
747
disinheritance, 135, 1249
historical background of, 744
order of inheritance, 1249-1250
primogeniture, 744
Injunctive relief
Civil Rights Act of 1964, 46
conditional injunctions, 357
covenants, 577-579, 655
domestic violence, 1223
Fair Housing Act, 1037
landlord-tenant relationship, 838, 869, 871, 884
nuisance, 351, 352, 357, 358
purchased injunctions, 357
trade secret rights, violations of, 234
trademark infringement, 185
trespass, 21
Innkeepers, 28-31, 33
Innocent landowner defense, 495
Inquiry notice
covenants, 569
recording acts, 1004
Inspection

1746
 buyer, 918
landlord rights, 830-831
welfare recipients required to have home inspection, 1284-1285
Installment land contracts, 987-991
foreclosure protection, 989
forfeiture, 988, 990, 991
low-income buyers, 991
Insurance, title, 918, 1014
Intangible property, 175-176
Integration
nondiscrimination and, 1041-1050
promotion of, 45, 770-776, 779
Intellectual property, 111-124, 175-176, 176-235
artists’ moral rights, 175-176, 208-209
constitutional source of protection, 175
contributory infringement, 193-194
copyright, 122-123
cultural icons, 233
fair use, 195-208
patents, 123, 209-223
publicity rights, 224-235
trade secrets, 175, 1260, 1283
trademarks, 123, 175, 177n, 180-187
unfair competition, 121
Inter vivos gifts, 134
Interest on lawyers’ trust accounts (IOLTAs), 1282-1283
Internet
ADA accommodations, 64-65
advertising on-line, 1029-1030
brokers’ role, challenge to, 917
cybersquatting, 185-186
e-mail, 22
gripe web sites, 185-186
media aggregators, 123-124
real estate–related search engines, 917
Internment of Japanese during World War II, 101
Interstate Commerce Act, 49
Intestate succession, 134, 162, 667, 671, 702, 730, 739, 747, 752, 753,

1747
 1250
Intimate association, 1028, 1029, 1141
Intimidation, 1023, 1051, 1053-1054
Inverse condemnation, 1190, 1244
Investigative journalism, 19-21, 24

Joint bank accounts, 667, 669, 670

Joint costs, 381
Joint tenancy, 667-669
death of joint tenant, 679-681
formalities of creation, 667
life estate vs., 669
severance, 668-669
survivorship rights, 667, 699, 683-684
Judicial activism vs. judicial restraint, 402-403
Judicial sale, 972
Judicial takings, 1261-1265
Jurisdiction, 101-103, 234, 248
Just compensation, 97, 1170-1175
Justice and fairness, 392, 1192-1209
Justice Department, 57, 62, 917
Justified expectations, 400

Kaldor-Hicks efficiency, 380

Knight-services, 742, 743

Labor and investment, 100, 111-128

commonly owned property, 124-126
creative labor, 111-124
ownership of labor, 126-128
Labor rights, 70
Laches
adverse possession, 331-332

1748
 covenants, 657
defeasible fees, 751
Land grants, 104-105
Land use conflicts, solutions for, 421-422
Land use regulation. See also Zoning
climate change, 495, 499
constitutional rights, 424-430
environmental regulation. See Environmental protection
free speech rights, 482-484
growth controls, 474-475
low-income housing, 463-475
nuisance. See Nuisance
planning process, 431, 1166. See also Zoning
police power, 431
preexisting property rights, protection of, 436-446
prior nonconforming use, 436-441, 445
vested rights, 441-446
racially discriminatory effects, 1080-1084
religious uses, 484-495, 1110
SLAPP suits, 435
Landlocked parcels, easements for, 551, 554-559
Landlord-tenant relationships. See Leaseholds
Lanham Act, 181, 182, 233
Lateral support, 404-412
Lead paint laws, 906
Leaflets, 66, 67, 68
Leaseholds, 516, 813-908. See also Eviction; Tenancies
access to justice gap in landlord-tenant disputes, 854
alienability, 647
ambiguity, 826
caveat emptor, 873
commercial leases, 815, 846-848, 882, 889-890
as contracts, 813
co-tenants, rights and obligations of, 678-679, 683
estates. See Tenancies
fair rental value, 833, 855, 856, 889
foreclosure causing tenant eviction, 986
ground leases, 591-592

1749
habitable premises, right to, 865-908
administrative enforcement, 884
consumer protection laws, 816-817
housing codes, 880, 881, 884
implied warranty of habitability, 871
landlord’s liability for acts of other tenants, 872
lead paint laws, 906
minimum standards, 827, 906-908
quiet enjoyment, interference with, 865-873
remedies, 882-885
repair and deduct, 884
retaliatory eviction, 891-892
strict liability, 902-905
tort liability of landlord, 892-906
unfair consumer practices, 827
waiver, 890
injunctions, 838, 869, 871, 884
just cause eviction and foreclosure, 850-851
landlord’s obligations and tenant’s remedies. See also this heading:
habitable premises, right to
anti-eviction laws, 850
delivery of possession, 830
eviction. See Eviction
injunctive relief. See this heading: injunctions
maintenance and repair, 884
moving out prior to end of lease term, 882
rent abatement, 869, 870, 883-884
rent control, 864
rent withholding, 816, 830, 882-883, 885, 889, 890, 902, 907
rescission, 882
security deposits, 864
landlord’s remedies, 852-854
back rent, 851, 852, 854, 855, 861, 880
eviction. See Eviction
forcible entry and detainer, 825, 853
mitigation duty, 854-862
re-letting, 855
rent acceleration, 862-863

1750
 right to inspect and repair, 830-831
self-help. See Self-help
surrender by tenant, 854-855
for life, 782, 783
limitations on leasing, 647, 828-829
marry, tenant’s right to, 831
migrant farmworkers, 817-823, 824, 825
“no assignment” or “no subletting” clause, 165-166, 839
procedural regulations, 815-816
rent and rental agreements, 851-864
abatement, 869, 870, 883-884
back rent, 851, 852, 854, 855, 861, 880
fair rental value vs., 855, 856
rent control, 864
withholding rent, 816, 830, 882-883, 885, 889, 890, 902, 907
representation of tenants in landlord-tenant disputes, 854
rescission, 882
roommates, 165-166, 296, 828, 838n, 872, 1028, 1031-1032, 1067
sharing economy in rental housing sector, 828-829
short-term rentals, 647, 828-829
signs and billboards, 825
specialized housing courts for landlord-tenant disputes, 854
substantive regulations, 816
summary process, 816, 823, 825, 853
tenant’s obligations
implied covenants of continuous operation, 833
nuisance, duty not to cause, 832
operate, duty to, 832-833
waste, duty not to commit, 832, 873
tenant’s rights
to marry, 831
to receive visitors, 831
to terminate early, 849-850
term of years, 813-814
transfers, 835-849
reversion, landlord’s right to transfer, 835
subletting, tenant’s right of, 837-849
visitors, tenant’s right to receive, 831

1751
Leasing. See Leaseholds
Lesbians. See Homosexuality; Same-sex couples
Liability. See also Strict liability; Tort liability
landlord’s liability for intervening acts, 905
nuisance, 357, 358
third party’s criminal acts, landlord’s liability for, 355-356
vicarious liability, 1037
Licenses, 516-517. See also Easements
coupled with an interest, 516
defined, 516
entry to property, 4n, 14n
Liens
mechanics’ or materialman’s, 985
mortgages as, 972n
vendee’s, 949
vendor’s, 950
Life estates, 744, 752-755. See also Present estates and future interests
contingent remainders, 669, 752-754
defined, 752
destructibility of contingent remainders, 754
fee simple vs., 758-769
joint tenancy vs., 669
pur autre vie, 752
reversions and remainders, 752
Shelley’s Case rule, 744, 745
vested remainders, 753-754
waste, 767-768, 832, 873
worthier title doctrine, 744-745
Light
ancient lights doctrine, 372, 374
easements, 370-380
nuisance, 370-380
solar easements, 518
Limited equity coops, 591, 592
Limited liability companies, 726, 736
Limited partnerships, 726, 736
Liquidated damages, 987
Lives in being, 783, 784, 785, 786

1752
Loan servicers, 970
Locally undesirable land uses (LULUs), 498-499
Loitering, 33
Lost or abandoned property, 156
Lots
retained by grantors, 588
unrestricted, 586, 587-588
vacant land, 315, 355, 356, 426, 658, 660, 836
Lowest cost avoider, 385-386
Low-income housing, 83, 463-475, 498-499, 647-648, 850, 991, 1260,
1278
LULUs (locally undesirable land uses), 498-499

Made for hire works, 187, 208

Magna Carta, 743
Maine
Indian Claims Settlement Act, 102
Malls. See Shopping centers and malls
Management contracts, 598
Manorial courts, 742
Maps, redlined, 1098
Marital property, 697-717. See also Married Women’s Property Acts
alimony, 701, 709, 714, 715, 716, 717
community property, 702
death of spouse and, 701-702, 702
divorce, 701, 702
equitable distribution, 701, 702, 704-717
graduate degrees, 706-712, 714-715, 716-717
separate property, 700-702
tenancy by the entirety, 670
Marital status as basis for discrimination, 1062-1063
Market value. See Fair market value
Marketable title
definition, 947
sales contracts, 947
Marketable title acts

1753
 covenants, 657
deeds and title protection, 1014
rule against perpetuities, 796
Marriage. See also Marital property
common law, 670, 721, 722
divorce. See Divorce
dower and curtesy, 697-698
gifts in contemplation of, 135
remarriage, 808-809
restraints on, 806-811
same-sex, 55, 261, 698-700, 717, 722, 725, 1141
tenant’s right to, 831
Married Women’s Property Acts, 101, 698
Massachusetts
Anti-Snob Zoning Act, 473
Art Preservation Act, 209
State Building Code, 411
Water Management Act, 396
Membership organizations, 53-54
Meretricious relationships, 717-724
Merger
covenants, 657
easements, 559
real estate transactions, 921
Merger clause, 944-945
MERS (Mortgage Electronic Registration Systems), 977-978
Metes and bounds, 951
Mexican law, impact on U.S. property rights, 165, 537-539
Migrant farmworkers, 4-9, 817-823, 824, 825
Military tenures, 742
Minnesota
Mortgage Moratorium Act, 986
Misrepresentation, 940-941. See also Fraud
Mistake, 329
Mitigation duties
acceleration clauses and, 862-863
burden of proof, 863
greenhouse gas emission reduction, 499

1754
 landlord’s remedies, 854-862
Montana
Equitable Distribution Statute, 705-706
Moral rights of artists, 175-176, 208-209
Morrill Act of 1862, 105
Mortgage-backed securities (MBSs), 960
Mortgage brokers, 959n
Mortgage Electronic Registration Systems (MERS), 977-978
Mortgages, 918
adjustable rate mortgages, 957, 959, 960, 962
deeds of trust, 972
deficiency judgments, 973
elderly borrowers, 957n
equitable mortgages, 992-995
equitable subrogation, 1007-1008
equity of redemption, 971, 972, 973, 973n, 989
financing, 918
foreclosure, 918, 960, 971-987
installment land contracts’ treatment as, 987
judicial sale, 972
leased property, 836, 840n
loan agreements, 918
mortgagee, 956
mortgagor, 956
negative amortizing, 969
pooling of, 960
purchase-money, 985
reverse, 957n
right of redemption, 973, 988
securitization, 960
strict foreclosure, 972
subprime. See Subprime mortgages
survivorship rights, 684
tranches, 960
unjust enrichment, 936
Multiple listing services, 914, 917

1755
Names
offensive, 50
publicity rights, 233-234
National Association of Realtors (NAR), 917
National Conservation Areas, 502
National Environmental Policy Act of 1969 (NEPA), 497
National Forest Management Act of 1976, 502
National Historic Preservation Act of 1966 (NHPA), 63
National Housing Act of 1934, 958
National Museum of the Indian Act of 1989, 244
National Scenic Trails Act, 502
National Wild and Scenic Rivers Act, 502
National Organ Transplant Act, 277, 284
National origin discrimination. See Racial or national origin discrimination
National Trails System Act, 1221. See also Rails-to-trails
Native American Graves Protection and Repatriation Act of 1990
(NAGPRA), 162-163, 244-245
Native American property. See American Indian property
Natural conditions, harm from, 410
Natural flow rule, 397
Natural resources, capture of, 146-151
Natural resources regulation, 500-512
climate change and, 501
environmental protection and, 501
natural resources, defined, 500
public lands, management of, 502-503
state laws, 501
statutory protection, 501
water law. See Water law and rights
Necessity for trespass, 4, 7, 11-14, 15
incomplete defense of necessity, 15
Negative amortization, 969
Negative easements, 408, 514, 515, 518
Negative servitudes, 514, 515. See also Covenants
Negligence, 322, 325, 350, 892-906. See also Tort liability
Neighbors
easements. See Easements
entitlements, 339, 357-358

1756
 harassment by, 1041
intimidation by, 1041
land use conflicts, 337-392
privity, 571, 576
trespass, 3, 18
New estates, restrictions on, 781-783
New Jersey
Council on Affordable Housing, 472-473
Economic Development Authority Act, 606
Fair Housing Act of 1985, 472
Industrial Site Recovery Act, 496
Law Against Discrimination (LAD), 53
New Residential Real Estate Off-Site Conditions Disclosure Act, 943
Senior Citizens and Disabled Protected Tenancy Act, 851
Urban Enterprise Zones Act, 607
New Mexico
Human Rights Act, 554
New York
Executive Law art. 15, 51-52, 54
Landmarks Preservation Law, 1193
statute of frauds, 518
News, 112-124
NIMBY (“not in my backyard”), 498
Noise, 339
Nonconforming use, 436-441, 445
Nonintercourse Act, 101, 102
Nonobviousness, 209, 219-220
Nontraditional families, 717-726, 1140-1141
Nontrespassory interference with property rights, 337
Nonzoning land use controls. See Land use regulation
“Not in my backyard” (NIMBY), 498
Notice
actual notice, 569, 1003
constructive notice
covenants, 569-570, 581, 585, 587
deeds, 1003
covenants, 568, 569-570
actual notice, 569

1757
 constructive notice, 569-570, 581, 585, 587
inquiry notice, 569
easements, 519
from landlord, 816
inquiry notice
covenants, 569
recording acts, 1004
recording acts
inquiry notice, 1004
notice statutes, 999
race-notice statutes, 999-1000
race statutes, 998-999
Novelty, 209, 219-220
Nuisance, 339-422
administrative regulation of, 355
aesthetic, 353-354
air, 370-380
climate change as public nuisance, 355
coming to the nuisance, 352
common enemy rule, 397
defenses, 352-353
definition, 339
drug dealers, 351, 355-356
elements, 339
entitlements, 339, 357-358
free use rules, 422
lateral support, 404-412
liability, 357, 358
light, 370-380
litigation, 355
market value, 381, 385
natural conditions, harm from, 410
negligence vs., 350
noise, 339
odors, 339
per se, 351
public, 354-355
reasonableness, 348, 349, 350, 351, 422

1758
 remedies, 357-363
conditional injunctions, 357
damages, 357, 410-411
forced purchases, 323
forced sales, 323, 324-330
injunctions, 351, 352, 357, 358
purchased injunctions, 357
retaining walls, 410
secondhand smoke, 356-357
spite fences, 350, 375, 377, 379
statutory regulation of, 355
stigma, 353-354
strict liability, 351, 408, 419, 422
subjacent support, 412-422
substantial harm, 398
taking and, 1244, 1244-1245, 1246, 1257, 1258, 1259
temporal priority, 352
temporary vs. permanent, 352
tenant’s duty not to cause, 832
trees, 34-38
trespass vs., 363-370
types, 339
ultrahazardous activity, 351
unreasonable interference, 339-370
unusually sensitive plaintiffs, 352-353
water rights, 392-398, 422
wrong place, right thing in, 351
Numerus clausus principle, 781, 782, 783

Odors, 339
Offensive names, 50
Oil and gas, 146-151
Older persons, housing for, 957n, 1021-1022
Open and notorious possession, 294
Open listing agreement, 914
Options to purchase, 679

1759
 rule against perpetuities, 785, 791, 793, 796-805
Oral agreements
adverse possession, 331
easements, 516
promises to convey, 569, 932, 933-934, 935, 936
Oral easements, 516
Ordinances
linkage ordinances, 1278
racially discriminatory intent, 1083-1084
sexual orientation discrimination, 1067
zoning. See Zoning
Oregon
Deed of Trust Act, 978
Organ transplants, 276, 277-284
paired donations, 284
Original Indian title, 88-98, 1177-1180
Original works of authorship, 187-193
Origination, 958, 969-970
Ouster, 672, 674-676, 676-677
Owelty, 696
Ownership. See Concurrent tenancies; Present estates and future interests;
Tenancies

Paired donations, 284

Parents and children, 128-135. See also Children; Families
child support, 128, 129-134
Pareto efficiency, 380
Parks, 51, 58, 64
national, 502
Parody and fair use, 195-206, 207
Part performance, 935
Partial takings, 1173-1175
Partition, 667-668, 691-697
agreements not to, 696-697
in kind, 696
involuntary, 695

1760
 judicial, 695
by sale, 696
voluntary, 695
Partnerships, 735-736. See also Entity property
Patents, 209-223
abstract ideas and, 218
business methods, 219-220
deceptive, 214-218, 218-219
genetic information, 209-214, 218
“inventive concept,” 218
laws of nature and, 218
living things, 218
natural phenomena and, 218
patent trolls, 223
patentability, 209-220
remedies, 220-223
requirements, 209
usefulness, 214-218
Patriot Act, 921
Per se nuisance, 351
Per se takings, 1209-1242
Periodic tenancies. See Tenancies
Permission, presumptions as to, 320
Perpetuities, rule against. See Rule against perpetuities
Personal property
adverse possession, 333-335
finders, 155-163. See also Finders
physical occupancy of, 1222
takings law and, 1222
transfer of stolen property, 166-167
Personal Responsibility and Work Opportunity Act of 1996, 110, 128
Persons with disabilities. See Americans with Disabilities Act of 1990;
Disabled persons
Pets, 607-613, 614
Picketing, 67-68, 70
Planned unit developments, 432n
Planning commissions, 431
Plats, 951

1761
POAs. See Property owners associations (POAs)
Police power, 431, 1117, 1165
Policy arguments, 398-403
Political signs, 624-625
Pollution. See Environmental protection; Nuisance
Possession, 135-163
actual, 152, 291
adverse. See Adverse possession
continuous, 292
conversion, 139, 144
exclusive, 292
first possession or occupancy, 98-99
good faith possession, 298
hostile, 291
open and notorious, 291
Power of sale, 972
Power of termination, 750, 751, 755
Practical difficulties test, 461
Precatory language, 762
Preembryos. See Embryos, human; Frozen sperm, eggs, or embryos
Preemption, 52
Preemptive rights, 646, 785, 796, 804
Preexisting nonpossessory interests, 299
Preferential zoning, 452
Premarital agreements, 703-704
Prepayment penalties, 968, 969
Prescriptive easements, 315-322. See also Easements
acquiescence, 319, 331
adversity and color of title, 320
affirmative, 315
elements, 318
encroaching structures, 323-324
good faith, 320-321
negative easements, 315
permission, presumptions as to, 320
public acquisition of, 321
public trust doctrine, 79-80
trees, 320

1762
Present estates and future interests, 755
alienation. See Alienation, restraints on
ambiguous conveyances, interpretation of, 756-780
changed conditions, 763, 770
contemporary system of, 747-755
creation of, 739
cryopreservation and, 747
cy pres doctrine. See Cy pres doctrine
dead hand problem, 740, 783
defeasible fees, 748n, 749-752
fee simple. See Fee simple headings
fee tail, abolition of, 746-747, 783
forced share statutes, 1249
future interest, 739-740
regulatory takings, 1256-1257
hierarchy, 740-741
homestead laws, 104-105
leaseholds. See Leaseholds
life estates. See Life estates
marriage, restraints on, 806-811
new estates, restrictions on, 781-783
perpetuities, rule against. See Rule against perpetuities
racial restrictions, 779-780
reproductive technology and, 747
restrictions on estates, 780-811
reverter, 749, 750
trusts. See Trusts
vested remainders, 753-754
absolutely vested, 753
subject to divestment, 753-754
subject to open, 753
waste, 768, 832, 873
Presumptions
covenants, 575
forfeiture, presumption against, 756, 761-762
permission, presumption as to, 320
tenancies by the entirety, 690
Pretext, 1037, 1062, 1077, 1153

1763
Primogeniture, 744
Prior appropriation doctrine, 422, 505, 510
Prior nonconforming use, 436-441, 445
Prior use
easements implied by, 537, 540, 547-554
nonconforming, 436-441, 445
Privacy. See Publicity rights
Private clubs, 44, 49, 79
ADA, 61
FHA exemption, 1021
Private rights of action, 411-412
Privilege and nuisance, 352-353
Privileged trespass, 4
Privity
adverse possession, 295
covenants, 568, 570-572, 574, 576
earlier buyers, obligations to, 580-581
horizontal, 570-571, 572, 576
implied reciprocal negative servitudes, 586-587
instantaneous, 561, 571, 576
simultaneous, 560
subletting of leased property, 837
third-party beneficiaries, 580
vertical, 571, 572, 576
Procedural due process, 630
Proclamation of 1763, 89, 90
Profiling by businesses, 31-32
Profit, 514, 516, 524
Profit à prendre, 514
Property owners associations (POAs), 589-594, 726
Protecting Tenants at Foreclosure Act, 836, 986
Public access to property, 25-33
right to roam, 18-19
Public accommodation laws, 43-65. See also Americans with Disabilities
Act of 1990 (ADA)
Civil Rights Act of 1866, 45
Civil Rights Act of 1964, 44, 46, 47
Civil Rights Act of 1991, 46

1764
 common carriers, 28, 49
definition of place of public accommodation, 47, 51
entertainment, places of, 28
historic landmarks, 63
innkeepers, 27-30, 33
membership organizations, 53-54
new construction and alterations of public places, 60-61, 62
offensive names, 50
private clubs, exemption for, 61
prohibition of discrimination by public places, 58-60
religious organizations, exemption for, 61
restaurants, 43, 44, 46, 47, 48, 50, 51, 56, 402
restroom facilities for transgender persons, 56
same-sex weddings and, 55
stadium seating, 62-63
state laws, 51-52
Public domain, 123, 187, 196
Public forum. See First amendment
Public housing. See also Low-income housing
eviction of innocent tenants, 1147
rights of handicapped tenants, 1089
Public lands
agencies, management, 502
Alaska Native villages, 1181
American Indian lands, 104
cemetery on, 19, 242
holdings, 502
natural resource management, 502
squatters on, 107, 109
takings, 1231, 1283
Public nuisance, 166, 354-355. See also Nuisance
Public policy, 398-403
covenants, 574, 575, 577, 601-616
reasonableness review, 613-616
use restrictions, 559, 561
easements by necessity, 556, 557
freedom of action vs. security issues, 398-399
implied warranty of habitability, 906-908

1765
 judicial role and institutional competence, 402-403
preembryos, disposition of, 268
rigid rules vs. flexible standards, 401-402
social utility arguments, 350-351, 399-401, 402
trespass, 4, 24
Public trust doctrine
beach access, 72-82
custom, doctrine of, 80-81
dedication, 80
prescription, 80
Publicity rights, 224-235
cultural icons, 233
free speech, 232
Hegelian personhood theory, 179
imitators, 231-232
names and titles, 233-234
state common law, 175
titles, 233-234
Punitive damages
Fair Housing Act violations, 1037-1038
trespass, 24
Purchase and sale agreements, 913, 917
“as is” clauses, 943, 944, 946
attorney’s role, 911-912
breach, 936-948
buyer’s remedies, 948-949
caveat emptor, 941, 948
damages, 949, 950
death of party, 953, 954
description of property, 996-998
disclosure duty, 941-944
estoppel, 935
fact or opinion, 940
failure of buyer to exert good faith efforts to obtain financing, 948
financing. See Mortgages; Real estate transactions
formalities, 927-936
formality vs. informality, 936
fraud claim, 946

1766
 implied warranty, 948
intent to sell or buy, 954
marketable title, 947
merger clause, 944-945
misrepresentation, 940-941
oral promises to convey, 932, 933-934, 935, 936
part performance, 935
record title. See Recording acts
remedies for breach, 948-950
seller’s remedies, 949-950
signatures, 950
statute of frauds, 927-936
title. See Title
waiver, 944-946
warranty of habitability for new homes, 948
Purchased injunctions, 357

Quia Emptores, 743, 744

Quiet enjoyment, interference with, 865-873
Quiet title, 293
Quitclaim deeds, 955
Quotas. See Racial or national origin discrimination

Race statutes, 998-999. See also Recording acts

Racial or national origin discrimination. See also Civil Rights Acts
coercion, 1023, 1053-1054
covenants, 626-636
“exclusionary vibes,” 49-50
fair housing law. See Fair Housing Act of 1968
integration, promotion of, 45, 770-776, 779
intimidation, 1023, 1053-1054
present estates and future interests, 779-780
private clubs, 44, 49
profiling, 31-32

1767
 public accommodations, 43, 44, 46, 52
quotas, use of, 1049
refusal to deal, 1037n
refusal to rent based on, 1041
regulation of land use, 1080-1084
surveillance, 33, 48-49
tipping, 1049
zoning, 1080-1084
Racial steering, 1040
Railroads, 104, 105
Rails-to-trails, 533-534, 1221-1222
Rails-to-Trails Act, 533
Ratables, 466
Real actions, 742
Real covenants, 514, 567, 568, 838. See also Covenants
Real estate investment trusts (REITs), 736
Real Estate Settlement Procedures Act (RESPA), 912, 920, 921, 970
Real estate transactions, 911-1016. See also Alienation, restraints on
attorney’s role in, 911-912
brokers, 913-917. See also Brokers
chain of title, 947, 1001-1007
closing, 913, 917, 920-921
deeds. See Deeds
executory period, 913, 918-920
financing, 956-995
foreclosure, 918, 949, 957, 971-973, 986, 987
installment land contracts, 987-991
liens. See Liens
mortgages. See Mortgages
subprime mortgages. See Subprime mortgages
forms, 922-926
merger, 921
post-closing, 913
pre-contracting, 913
recording acts. See Recording acts
sales contracts. See Purchase and sale agreements
structure of, 911-927
title problems. See Title

1768
Reasonable accommodation, 1084-1090, 1091-1092
Reasonableness
covenants, 613-616
nuisance, 348, 349, 350, 351, 422
reasonable use rule, 376, 414, 415, 417, 422
Recognized title, 1181, 1182-1183
Recording acts, 995-1001
acknowledgment, 950
actual notice, 1003
chain of title problems, 947, 1001-1007
constructive notice, 1003
date of recording, 998
deed recorded too early, 1005
deed recorded too late, 1005
errors
in indexing, 1003
in name spelling, 1003
in property description, 1003
estoppel, 1013
estoppel by deed, 1004
forged deeds, 1008-1014
grantor-grantee index systems, 997
inquiry notice, 1004
misspelled names, 1003
notice statutes, 999
race-notice statutes, 999-1000
race statutes, 998-999
shelter doctrine, 1005-1006
system, how it works, 995-996
title companies and recording system, 1014-1015
title searches, 996-998
tract index, 996
wild deeds, 1004-1005
Redlining, 1098
Reformation, equitable, 770
Refusal to deal, 1037n
Regulated riparianism, 511
Regulation X, 969, 970

1769
Regulation Z, 969, 970
Regulatory takings. See Takings law
Rehabilitation Act of 1973, 1088-1089
REITs. See Real estate investment trusts (REITs)
Relativity of title, 155-167
Release
covenants, 657
easements, 559
Reliance and adverse possession, 313
Religion. See also Fair housing laws
ADA exemption for religious organizations, 61
discrimination, 44, 46, 49
FHA exemption, 1021
first amendment. See First amendment
free exercise, 486, 487, 489-492
homeless housing by churches, 494
landlord’s refusal to rent to unmarried couples based on, 1062-1063,
1068-1069
land use regulation, 484-495, 1110
Religious Freedom Restoration Act of 1993 (RFRA), 489
Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA),
485, 490-494
Remainders
contingent, 753, 754
life estates, 747
vested, 753-754
Remedies. See also specific acts
affirmative, 472
compensatory damages, 884-885
contractual renegotiation, 978
covenants, 577-579
damages, 234
compensatory, 884-885
consequential, 409
covenants, 655
emotional distress, 905
expectation, 949
liquidated, 987

1770
 nominal, 21, 39-41
nuisance, 357, 410-411
punitive, 21, 24, 39-41, 42, 1037-1038
restitution, 329n, 720, 930n
stigma, 353-354
ejectment, 102-103, 293, 330, 853
expectation damages, 949
forced purchases, 323
forced sales, 323, 324-330
injunctive relief
covenants, 577-579, 655
habitable premises, right to, 884
landlord-tenant relationship, 831, 838, 869, 871, 884
nuisance, 351, 352, 357, 358
trademarks, 185
trade secrets, 234
trespass, 21, 23, 34
leaseholds, 683, 884. See also Leaseholds
liquidated damages, 987
nominal damages, 21, 39-41
nuisance, 357-358
partition, 667-668
punitive damages, 21, 24, 39-41, 42, 1037-1038
rent abatement, 869, 870, 883-884
rent withholding, 816, 830, 882-883, 885, 889, 890, 907
repair and deduct, 884
rescission of contract, 882
restitution damages, 329n, 720, 930n
rule against perpetuities violations, 787
specific performance, 260, 884, 949, 949-950
stigma damages, 353-354
takings, 1170-1175
trade secret rights, violations of, 234
trespass, 34-42
Renovations, 62, 63
Rent. See also Leaseholds
abatement, 869, 870, 883-884
acceleration, 862-863

1771
 conflict over rent and possession, 673-678
duty to pay, 672-673, 676
withholding, 816, 830, 882-883, 885, 889, 890, 907
Rent control, 864
Repairs
landlord’s rights, 830-831
tenant’s right to repair and deduct, 884
Repose, 314
Reproductive technology, 747
Research articles and copyright, 206-207
Residential Lead-Based Paint Hazard Reduction Act, 906
Residential subdivisions, 433, 580-589, 590-591. See also Common
interest developments; Condominiums
Residential tenancies, 815-829. See also Leaseholds
Restraining orders, 151, 196, 832, 853, 1023, 1056, 1152, 1223
Restraints on alienation. See Alienation, restraints on
Restrictive covenants, 575, 581, 583-585, 587, 595-597, 610, 626-636. See
also Covenants
Restroom facilities for transgender persons, 56
Retail businesses
buzzer systems, 31, 50-51
Civil Rights Act of 1866, 47, 48
Civil Rights Act of 1964, 44
racial surveillance, 33, 48-49
right to exclude, 30, 33, 50-51
Retaining walls, 410
Retaliation, 1040-1041
Retaliatory eviction, 891-892. See also Eviction
Reverse mortgage loan, 957n
Reversion, 752
Reverter, possibility of, 749, 751, 752, 755
Review
architectural, 615
of covenants for reasonableness, 613-616
of prenuptial agreements for fairness, 703
Revised Uniform Residential Landlord and Tenant Act (RURLTA), 814,
824
domestic violence, dating violence, stalking, or sexual assault victims and

1772
 perpetrators, 849-850
good faith and fair dealing, 846
habitability, warranty of, 882, 886
landlord’s duty to deliver possession, 830
mitigation of damages, 860, 861
notice for termination of tenancy, 814, 849-850
retaliatory action by landlord, 900, 901
tenant’s remedies, 901
Rezoning. See Zoning
Rhode Island
Indian Claims Settlement Act, 102
Ridesharing, 828
Right of entry, 750
Right of way, 315, 408, 425, 513
Right to farm statutes, 353
Riparian doctrine, 511
Riparian owners, 332-333, 511. See also Water law and rights
Riparian property, 332, 511-512. See also Water law and rights
regulated riparianism, 511
Ripeness, 1248-1249
Roam, right to, 18-19
Robo-signing, 987
Roommates, 165-166, 296, 828, 838n, 872, 1024-1032, 1067
Rule against perpetuities, 783-805
abolition of, 794-795
absolutely vested remainders, 788
application of, 784-786, 787-790, 800-801
charity exception, 788
commercial future interests. See this heading: option to purchase;
preemptive rights
contingent remainders, 784, 787, 789-790
creation of interest, 784-785
cy pres doctrine, 794-795
drafting around the rule, 791-792
endless will contest, 790
executory interests, 751n, 784, 788-789
fertile octogenarians, 790
first refusal rights, 785, 796, 801, 804

1773
 grantor interests, 788
life in being, 783, 784, 785, 786
marketable title acts, 796
modern approaches, 792-795
nonvested interests, 784
option to purchase, 785, 791, 793, 796-805
perpetuities period, 786
preemptive rights, 785, 796, 804
remedy for violating, 787
reversion. See Reversion
reverter. See Reverter, possibility of
rights of entry, 784, 785
savings clauses, 791-792
state laws, 792-794, 802-803
traditional rule, 783
unborn widow, 790
vested remainders subject to divestment, 788
vesting, 785
“wait and see” test, 793
Rule in Shelley’s Case, 744, 745
Rule of reason, 648, 649
Running with land
covenants, 570
easements, 518-520
Rural land, 309-310

Sales contracts. See Purchase and sale agreements

Salvage, 143
Same-sex couples
housing discrimination, 1066, 1069, 1080
intimate association, 1141
marriage, 55, 261, 698-700, 717, 722, 725, 1141
property rights, 665, 725-726
public accommodations, 55
rent control laws, 864
surrogacy, debate over, 261

1774
 weddings, 55
Savings clauses, 791-792
Scutage, 743
Searches by government, 22-23
Secondhand smoke, 356-357, 625, 873
Section 8 housing, 850, 1041, 1044, 1050, 1054, 1072, 1089
Securitization of mortgage loans, 960
Security deposits, 864
Segregation
perpetuation of, as basis for liability, 1082
persistence of, 1048-1049. See also Fair housing laws
Seised in demesne as of fee, 163
Seisin, 95, 139, 163-164, 954, 955
Security rights, 399
Self-help
after foreclosure, 986
landlord’s, 823-825, 852-853
tenant’s, 888, 889
Separate property, 700-702
Servicing, 958, 970
Servitudes, 513-515. See also Covenants; Easements; Licenses
affirmative, 513, 515
benefited estate, 515
burdened estate, 515
defined, 513
dominant estate, 515
equitable, 514, 567, 568
imperfectly created, 320
in gross, 515
for lateral support of land, 408
negative, 514, 515
servient estate, 515
Settlor, 745, 746n
Severability from land, 523
Severance of joint tenancy, 668
Sex discrimination
fair housing law, 1050-1057
homeless shelters, 1094

1775
 quid pro quo claims, 1053
sexual harassment, 1050-1057
shelters for battered women, 1094
state laws, 51-54
stereotyping, 1057
Sexual harassment, 1050-1057. See also Harassment; Intimidation
Sexual orientation discrimination, 1064-1069. See also Same-sex couples
fair housing law, 1057, 1115
public accommodations, 55, 56
“Sharing economy,” 647, 828-829
Shelley’s Case rule, 744, 745
Shelter doctrine, 1005-1006
Shelters
for battered women, 1094
for homeless, 58, 491, 494, 1094
Sherman Antitrust Act, 648, 649
Shifting executory interests, 751n
Shipwrecks, 157-158
Shopping centers and malls, 5, 58, 65-69
anchor stores, 833-834
Short-term rentals, 647, 828-829
Signs and billboards, 426, 440, 481-482, 483, 646, 825
Single-family homes, restrictions on, 638
SLAPP (Strategic Lawsuits Against Public Participation) suits, 435
Slavery, 101, 248-253
freed slaves, 107-108
Small Business Liability Relief and Brownfields Revitalization Act, 495
Smoking and secondhand smoke, 356-357, 625, 873
Social Security Act, 100
Social utility, 350-351, 361-362, 399-401, 402, 403
Social welfare, 100, 109-111, 339, 380, 386, 400, 402, 473, 474
Solar easements, 518
Solar shade statutes, 380
Sovereign immunity, 100-101, 493
Sovereignty and property, 87-104
Space shifting, 207
Special exceptions, 461-462. See also Zoning
Special permit, 461

1776
Special warranty deeds, 955
Specific performance, 260, 884, 949, 949-950
Speech. See First amendment
Spendthrift trusts, 759, 760
Spite fences, 350, 375, 377, 379
Sports team logos, 50
Spot zoning, 452, 453
Springing executory interests, 751n
Squatters, 104, 105-109, 303-310
Stadium seating, 62-63
Standing, 162, 434-435, 1039-1040, 1063
State action. See Fourteenth amendment
State constitutions
fair housing law, 1140-1141
free speech rights, 69, 624-625, 636
handbills and leaflets, 65-69
nontraditional families, 1140-1141
regulatory takings, 1166-1168
religion, free exercise of, 1063
same-sex marriage, 699
takings, 1166-1168
universities, access to, and free speech, 69
zoning ordinances, 1140-1141
State laws
American Indian human remains, 162, 241-244, 245-246
consumer protection, 816-817, 1100
covenants, 633, 657-661
criminal trespass, 14
disclosure duty, 943
discrimination, 1017-1018
domestic violence, and lease termination, 849-850
embryos, 268
environmental protection, 355, 396, 497-499
eviction of tenants, 850
for illegal drug use, 354
exclusionary zoning, 472-473
fair housing, 1017-1018
finders, 158

1777
 forcible entry and detainer, 825, 853
foreclosure process reforms, 986-987
hazardous waste, 496
intestacy. See Intestate succession
landlocked parcels, 557-558
landlord’s right to recover possession, 850
lead paint, 906
lease restrictions, 647
light and air, 379
marketable title acts, 657
natural resources regulation, 501
preemption, 52
public accommodation laws, 47, 50, 52, 55
public use, 1166-1168
regulatory takings, 1168-1169
religious freedom, 55, 1063
right to farm, 353
rule against perpetuities, 792-794, 1256, 1257
same-sex marriage, 55, 699
sex discrimination, 52-54
sexual orientation discrimination, 55, 1066
solar shade, 380
surrogacy, 261, 264
takings, 1205-1206
tenant’s rights
to remain, 850-851
to terminate early, 849
trade secrets, 234
unmarried couples, property rights of, 725-726
usury, 959
Statute of Frauds, 322, 516, 816
easements, 519, 536, 547
mortgages, 977
periodic tenancies, 816
sales contracts, 927-936
Statute of Uses, 745
Statute of Wills, 745
Statutes of limitations

1778
 adverse possession, 298, 299, 309, 333
good faith possession, 298
repose, 314
fee simple subject to condition subsequent, 750-751, 755
Steering, 1040
Stigma damages, 353-354
Stolen artworks, 334-335
Stolen property, transfer of, 166-167
Strategic Lawsuits Against Public Participation (SLAPP suits), 435
Strict foreclosure, 972
Strict liability
habitable premises, right to, 902-905
nuisance, 351
subjacent support, 419
water rights, 397
Subdivisions
covenants in, 580-589, 590-591
planned unit development, 432n
plats or maps, 951
regulation of, 433
Subinfeudation, 742, 743
Subjacent support, 412-422
Subletting, tenant’s right of, 165-166, 837-849
Subprime mortgages, 836, 957, 971-973, 979, 986, 1096, 1098-1101, 1175
adjustable rate mortgages, 957, 959, 962
collateralized debt obligations, 960
credit default swaps, 960
defined, 962n
deregulation of usury laws, 959
dual tracking, 986
foreclosure process reform, 986-987
government intervention, 958
loan servicers, 970
mortgage-backed securities, 960
mortgage brokers, 959n
Mortgage Registration Systems, Inc. (MERS), 977-978
proof of loan ownership, 977
regulation of mortgage markets, 957-959

1779
 robo-signing, 987
securitization, 960
Subrogation, equitable, 1007-1008
Subsidized housing and rights of handicapped tenants, 1089
Substantive due process
equal protection, relation to, 1113-1116
takings, 1191
Substitution, 743
Successors in interest, 567-568
Summary process, 816, 823, 825, 853
Superfund Amendments and Reauthorization Act (SARA), 355, 495-496
Superfund law (CERCLA), 355, 495-496
Supermajority voting, 591, 597-598
Support rights
lateral support, 404-412
retaining walls, 410
subjacent support, 412-422
Supremacy clause, 6, 52
Surface water, 376, 392-398, 510, 511
Surrogacy, 254-264
gestational, 262
traditional, 262
Surveillance, racial, 33, 48-49
Surveys, 951
Surviving spouse, 134, 690, 697, 698, 702, 704. See also Intestate
succession
Survivorship rights, 667, 669, 683-684

Tacking, 291, 295

Takings clause, 97, 1110, 1149
Takings law, 1149-1286
ad hoc test, 1189-1191, 1192-1209
air rights, 370-380
business goodwill, 1171-1172
categorical takings, 1189-1191
civil rights, 1249

1780
condemnation process, 1149-1150
constitutional provision, 97, 1110, 1149
delineating the property taken, 1172-1173
deprivation of core property rights, 1249-1258
deprivation of economically viable use, 1223-1249
due process, 1191, 1263
efficiency, 1206, 1207-1208
environmental protection laws, 1244
essential nexus, 1280
exactions, 1265-1280, 1282
expropriation without “taking,” 1175-1183
facial vs. “as applied” challenges to regulations, 1247-1248
fairness and justice, 1192-1209
farming rights laws, 353
fifth amendment, 97, 1110, 1149
future interests and covenants, 1256-1257
government benefits, 1283-1284
historical background, 1183-1189
impact fees, 1278-1280
Indian title and, 97-98, 1176-1183
intangible property, 1176
interest on lawyers’ trust accounts, 1282-1283
inverse condemnation, 1190, 1244
investment-backed expectations, interference with, 1260, 1262-1263
judicial takings, 1160-1169
just compensation, 1170-1175
justifying regulatory takings, 1206-1209
lawyers’ trust accounts, interest on, 1282-1283
linkage ordinances, 1278
money and, 1281-1283
moving costs, 1171
nuisance and innocent parties, 1147
partial takings, 1173-1175
per se takings, 1209-1242
personal property, physical occupancy of, 1222
“physical invasion” rule, 1209-1223
police power, 1165
preclusion, 1248-1249

1781
 public nuisance and, 1146-1147
public use requirement, 1149, 1150-1169
reciprocity of advantage, 1185, 1187, 1188, 1199
regulatory takings, 1183-1191, 1192-1209
remedies
business goodwill, 1171-1172
just compensation, 1170-1175
partial takings, 1173-1175
relocation costs, 1171
rough proportionality, 1279
Section 1983 claims, 1249
state constitutions, 1166-1168
state laws on public use, 1168-1169
state takings statutes, 1205-1206
taxation, 1283
temporary takings, 1246
unconstitutional conditions and, 1280-1281
value taken by creating more property, 1203-1204
vested rights, 1258-1261
wetlands regulation, 1202
TANF (Temporary Assistance to Needy Families), 110
Tax liens, 689-690
Taxation and takings clause, 1283
TDR. See Transfer of development rights (TDR)
Teenagers, loitering at malls by, 33
Telephone directories, 189-193
Temporary Assistance to Needy Families (TANF), 110
Tenancies. See also Concurrent tenancies; Leaseholds
in common, 666-667
ambiguous language, 666-667
family conflict over, 678-679
co-tenants. See Co-tenants
by the entirety, 670, 684-690, 1256, 1257
creditors’ rights, 688-690
presumptions, 690
tax liens, 689-690
holdover tenants, 815
joint. See Joint tenancy

1782
 for life, 782, 783
ouster, 672, 674-676, 676-677
periodic, 814
at sufferance, 815
term of years, 813-814
types of, 813-815
at will, 782, 814-815
Tenants-in-demesne, 742
Tenures, feudal, 742-743
Testamentary transfers, 134
Testator/testatrix, 739
Testers, 1040
Texas
Private Real Property Rights Preservation Act, 1205
Third parties
criminal acts of, landlords’ liability for, 355-356
finders vs., 156, 157
future interests in, 752, 755
implied reciprocal negative servitudes, 580
third-party beneficiaries, 580, 587, 838
Threats. See Coercion; Intimidation
Tipping, 1049
Title. See also Deeds
certificate of title, 1015
chain of title doctrine, 947, 1001-1007
clear, 918
color of title, 294, 299-303
covenants, 954-956
conveyance right, 954
encumbrances, against, 954
further assurances, 955
future, 955
present, 954
quiet enjoyment, 955
seisin, 954
warranty, 955
equitable title, 950, 988
insurance, 918, 1014-1015

1783
 marketable title. See Marketable title
personal property, 166-167
real property, 163-166
registration, 1015-1016
relativity of title, 155-167
searches, 996-998
title companies and recording system, 1014-1015
void or voidable, 167, 1012
warranties of title, 954-956
worthier title doctrine, 744-745
Title insurance, 918, 1014
Title of occupancy, 93, 95, 96, 1177-1178
Title registration, 1015-1016
Torrens system, 1015
Tort liability
defamation, 21, 435
landlords, 902-906
negligence vs. nuisance, 350
trespass. See Trespass
Total institutions, property in, 168-171
Touch and concern, 568, 572-573, 574-575, 577, 613
Toxic waste sites, 496
Tract index, 996
Trade secrets, 175, 234, 1260, 1283
Trade and Intercourse Act. See Nonintercourse Act
The Trade-Mark Cases, 180
Trademarks, 175, 177n, 180-187
abandonment of, 181
commerce, use in, 181
defined, 180
dilution, 185
generic names, 181
injunctive relief, 185
Tranches, 960
Transaction costs, 381-382, 383-385
critiques of analysis, 386-392
Transfer of development rights (TDR), 1203
Transfers. See also Alienation, restraints on; Purchase and sale

1784
 agreements; specific types of estates, tenancies, and fees
adverse possession. See Adverse possession
easements, 523-524
gifts. See Gifts
leaseholds, 835-849. See also Leaseholds
licenses. See Licenses
testamentary, 134
title. See Title
Transgender persons
housing discrimination against, 1067
restroom facilities for, 56
Trash and garbage, rights in, 160
Treasure trove, 158
Treaties
with Indian tribes, 95, 97, 101-103, 109, 1182
with Mexico (Treaty of Guadalupe Hidalgo), 537-539
Trees
prescriptive easements, 320
trespass, 34-38
Trespass, 3-43
ad coelum, ad inferos, 15-17
airplane overflights, 15-17, 18
anti-loitering policies, 33
beach access, 72-82
casinos and gambling establishments, 25-29
chattels, 21-22
clear and imminent danger, 11-12
common law, 16
computer systems, 21-22
consent, 21-22, 24
co-tenants, 677
criminal trespass, 14-15
defamation, 21, 435
e-mail, 22
encroaching structures, 323-324
entertainment, places of, 28
fracking, 16
fraud, 20

1785
 free speech rights of access to private property. See First amendment
good faith, 320-321
government searches, 22-23
GPS tracking devices, 22-23
homelessness and, 9-14
hunting, 140
hydraulic fracturing, 16
improvements, 322-323
innkeepers’ rights, 27-30, 33
investigative journalism, 19-21, 24
land use conflicts and, 337-357
lawful alternatives, availability of, 12-14
necessity to enter property, 4, 7, 11-14, 15
nuisance vs., 363-370
private clubs, 44, 49
privileged, 4
public policy, 4, 24
punitive damages, 24
reasonable access to property open to public, 25-33
remedies, 34-42
retail businesses, right to exclude, 30, 33, 51
right to exclude or admit people, 3-24
right to roam, 18-19
spatial dimensions, 15-16
subterranean, 16
Tribal property. See American Indian property
Trustees, 546, 739, 746, 972
Trustor, 745
Trusts
business purposes for, 736-737
community land trusts, 591-592
constructive trusts, 546-547, 936
cy pres doctrine, 770-778
defined, 739
discriminatory charitable trusts, 770-776, 777-778, 779-780
equitable title, 950, 988
historical background of, 745
inter vivos, 134

1786
 public trust doctrine. See Public trust doctrine
real estate investment trusts, 736
spendthrift trusts, 759, 760
Truth in Lending Act of 1968 (TILA), 970

Ultrahazardous activity, 351

Unauthorized practice of law, 915
Unborn widow, 790
Unclean hands, 657
Unconscionability, 703, 721, 862, 884, 907, 936, 990
Undue hardship, variances allowed for, 456-461
Unequal bargaining power, 826-827, 906
Unfair competition, 113-119, 121, 175, 180, 391
Uniform Anatomical Gift Act, 276
Uniform Commercial Code (UCC), 167, 333
Uniform Common Interest Owners Bill of Rights, 589
Uniform Common Interest Ownership Act, 597
Uniform Conservation Easement Act, 567
Uniform Environmental Covenants Act (UECA), 496-497
Uniform Home Foreclosure Procedures Act, 987
Uniform Marriage and Divorce Act, 705
Uniform Partition of Heirs Property Act, 696
Uniform Partnership Act, 735
Uniform Premarital Agreement Act (UPAA), 703
Uniform Premarital and Marital Agreements Act (UPMAA), 703
Uniform Probate Code, 669
Uniform Residential Landlord and Tenant Act (URLTA), 814, 817, 824,
846, 861
habitable premises, right to, 882
landlord’s duty to mitigate damages, 861
landlord’s obligations, 886-889
noncompliance by landlord, 888, 889
quiet enjoyment of premises, right to, 871
rent and rental agreements, 886
retaliatory eviction, 900, 901
security deposits, 864

1787
 self-help for minor defects, 888
tenant to maintain dwelling unit, 887-888
wrongful failure to supply heat, water, hot water, or essential services,
889
Uniform Statutory Rule Against Perpetuities (USRAP), 792, 794, 803-804,
1256
Uniform Trade Secrets Act, 234
United Kingdom
Countryside and Rights of Way Act 2000, 19
Universities
dormitories, 824, 827-828
free speech rights, 27, 69
Unjust enrichment, 324-330, 936
Unmarried couples, 717-724, 1062, 1068-1069
Unreasonable interference, 339-370
Unreasonable restraints on alienation, 646, 647, 648
Unrestricted lots, 587-588
Urban enterprise zones, 607
USA Patriot Act, 921
Use, 745
Use regulations. See Land use regulation; Zoning
Use zoning, 432
Usury deregulation, 959
Utilitarian approaches, 1207

Value judgments, 399

Variances, 455-461
Vertical privity, 571, 572, 576
Vested remainders, 753
absolutely vested, 753
subject to divestment, 753-754
subject to open, 753
Vested rights, 441-446, 785, 1258-1261
Vicarious liability, 1037
Villeins, 742
Visitors, tenant’s right to receive, 831

1788
Visual Artists Rights Act (VARA), 208
Voidable contracts, 260
Voidable or void title, 167, 1012
Voluntary exchanges, 390
Voluntary partition, 695
Voluntary sale, 672

“Wait and see” test, 793

“Wait and sue” approach by landlord, 855-856
Waivers
forged deeds and, 1013
landlord-tenant relationship, 890
sales contracts and, 944-946
Warranties of title, 954-956
Warranty of habitability, 873-891
implied, 882, 948
majority rule, 881-882
Waste, 763-769
tenant’s duty not to commit, 832, 873
Water law and rights, 392-398, 503-512
abandonment of water right, 511-512
absolute ownership doctrine, 414-417, 422, 510
adverse possession, 512
appropriation doctrine, 511
beneficial use, 503, 504-505, 511, 512
correlative rights doctrine, 414n, 417, 510
free use doctrine, 422, 510
groundwater, 412-419, 422, 510-511
limitation on rights, 511-512
natural flow rule, 397
prior appropriation doctrine, 422, 505, 510, 511
reasonable efficiency test, 507-509
reasonable use rule, 376, 414, 415, 417, 422, 503, 510
stress on rights, 511-512
strict liability, 397
sufficiency principle, 512

1789
 surface water, 376, 392-398, 510, 511
waste, 507, 511-512
water duty, 506-507
Wealth distribution, 382-383
Wealth maximization, 382, 383, 386, 390
Web sites. See also Internet
ADA requirements and, 64-65
gripe web sites, 185-186
as places of public accommodation, 64-65
Welfare, 109-111
Wetlands, 396, 423, 1202
Wild animals, 136-141
Wild deeds, 1004-1005
Wilderness Act of 1964, 502
Wills and will substitutes, 134-135. See also Inheritance; Intestate
succession; Trusts
Wisconsin
Equal Rights Law, 1066
Women’s shelters, 1094
Worthier title doctrine, 744-745
Writing requirement. See also Statute of frauds
covenants, 567, 568-569, 575-576, 586
deeds and title protection, 936
express easements, 519
Wrongful discharge, 127
Z
Zoning, 423-495
aesthetic, 475-482
area zoning, 432
bilateral contract zoning, 452-454
boards, 461-462
community benefit agreements, 435
comprehensive plan requirement, 431
conditional use, 461
contract or conditional zoning, 446-454
enabling acts, 431
enacting of ordinances, 431-454
equal protection, 426, 1082-1083, 1133

1790
Euclidean zoning, 431-432
exclusionary zoning, 463-475
floating zones, 432n
form-based codes, 434
group homes, 1090-1095
inclusionary zoning techniques, 473-474
low-income housing, 463-475
New Urbanism, 434
number of unrelated persons who can live together, 1094
ordinances or by-laws, 431
performance, 434n
planning commissions, 431
planning departments, 431
preferential zoning, 452, 453
racially discriminatory effects in land use regulation, 1080-1084
rezoning, 446-454, 461
petitions for, 431
site-plan review, 433
special exceptions, 461-462
special permit, 461
spot zoning, 452, 453
use zoning, 432
variances, 455-461
zoning map, 432

1791
目录
Front Matter 2
Editorial Advisors 3
Title Page 5
Copyright Page 6
About Wolters Kluwer Legal & Regulatory U.S. 7
Dedication 8
Summary of Contents 11
Contents 13
Preface to the Seventh Edition 30
A Guide to the Book 33
How to Brief a Case and Prepare for Class 54
Acknowledgments 62
Part One Property in a Free and Democratic Society 69
Chapter 1 Trespass: The Right to Exclude and Rights of Access 70
§1 Trespass 70
§1.1 Public Policy Limits on the Right to Exclude 71
§1.2 Limits on the Right to Exclude from Property Open
95
to the Public
§1.3 Trespass Remedies 106
§1.4 Hohfeldian Terminology 116
§2 Discrimination and Access to “Places of Public
118
Accommodation”
§2.1 The Antidiscrimination Principle 118
§2.2 Discrimination Against Persons with Disabilities 134
§3 Free Speech Rights of Access to Public and Private
145
Property
§4 Beach Access and the Public Trust 154
§5 The Right to Be Somewhere and the Problem of
166
Homelessness
Chapter 2 Competing Justifications for Property Rights 174
§1 Property and Sovereignty 174
§1.1 United States and American Indian Sovereignty 175
§1.2 Competing Justifications for Property Rights 188

1792
 §1.3 Past Wrongs, Present Remedies: Modern Indian 191
Land Claims
§2 Government Grant 195
§2.1 Homestead Acts and Land Grants 195
§2.2 Squatters 197
§2.3 Freed Slaves 199
§2.4 Basic Needs Fulfillment 201
§3 Labor and Investment 204
§3.1 Creative Labor 204
§3.2 Commonly Owned Property: Tragedy or Comedy? 220
§3.3 Ownership of Labor 223
§4 Families 225
§4.1 Child Support 225
§4.2 Gifts and Inheritance 232
§5 Possession 234
§5.1 Wild Animals 234
§5.2 Baseballs 241
§5.3 Capture of Natural Resources 247
§5.4 Possession and the Presumption of Title 253
§6 Relativity of Title 258
§6.1 Finders 258
§6.2 Real Property 268
§6.3 Transfer of Stolen Property 271
§7 Property Formation in Everyday Life 273
Part Two What Can Be Owned? 281
Chapter 3 Intellectual and Cultural Property 282
§1 Introduction 282
§1.1 Intangible Property 282
§1.2 Theories of Intellectual Property 283
§2 Unfair Competition and Misappropriation 288
§3 Trademark Law 288
§4 Copyright Law 297
§4.1 Original Works of Authorship 297
§4.2 Fair Use 307
§4.3 Moral Rights 324

1793
 §5 Patent Law 325
§5.1 Patentability 325
§5.2 Patent Remedies 338
§6 Publicity Rights 343
§7 Cultural Property 357
§7.1 The International Market in Cultural Property 358
§7.2 Native American Cultural Property 364
Chapter 4 Human Beings and Human Bodies 373
§1 Property Rights in Human Beings 373
§2 Slavery 373
§3 Children 381
§4 Frozen Embryos 394
§5 Body Parts 400
§5.1 Are Body Parts Property? 400
§5.2 Markets in Body Parts 410
Part Three Relations Among Neighbors 421
Chapter 5 Adverse Possession 422
§1 Title versus Possession 422
§1.1 Border Disputes 422
§1.2 Color of Title 436
§1.3 Squatters 440
§2 Justifications for Adverse Possession: “Roots Which We
449
Should Not Disturb” or “Land Piracy”?
§3 Prescriptive Easements 455
§4 Other Informal Ways to Transfer Title to Real Property 464
§4.1 The Improving Trespasser 464
§4.2 Boundary Settlement 474
§4.3 Dedication 476
§4.4 Riparian Owners: Accretion and Avulsion 476
§5 Adverse Possession of Personal Property 477
Chapter 6 Nuisance: Resolving Conflicts Between Free Use and
483
Quiet Enjoyment
§1 Land Use Conflicts Among Neighbors 483
§2 Nuisance 485
§2.1 Defining Unreasonable Interference 485

1794
 §2.2 Nuisance Remedies 508
§2.3 Nuisance or Trespass? 515
§3 Light and Air 524
§4 Water Rights 551
§4.1 Diffuse Surface Water: Flooding Problems 551
§4.2 Ownership of Water 565
§5 Support Rights 565
§5.1 Lateral Support 566
§5.2 Subjacent Support 577
Chapter 7 Land Use and Natural Resources Regulation 591
§1 Land Use Regulation: Origins, Authority, and Process 591
§1.1 The Roots and Structure of Zoning 591
§1.2 Zoning Authority and Validity 592
§1.3 Other Land Use Regulatory Regimes 603
§1.4 Modernizing Zoning 603
§1.5 Patterns in Land Use Litigation 604
§2 Constraints on Zoning Authority to Protect Preexisting
606
Property Rights
§2.1 Prior Nonconforming Uses 607
§2.2 Vested Rights 613
§3 Rezoning and Challenges to Zoning Classifications 618
§4 Administrative Flexibility: Zoning Boards 629
§4.1 Variances 629
§4.2 Special Exceptions 637
§5 The Problem of Exclusionary Zoning 639
§6 Expression, Speech, and Religion in Land Use 654
§6.1 Aesthetic Zoning, Expression, and Discretion 654
§6.2 Restrictions on Free Speech in Land Use Regulation 663
§6.3 Freedom of Religion and Religious Land Uses 665
§7 Environmental Regulations and Land Use 678
§7.1 Owner Liability for Hazardous Wastes 679
§7.2 Environmental Impact Assessment 681
§7.3 Climate Change and Land Use Planning: Mitigation
683
and Adaptation
§8 Natural Resources Regulation 684

1795
 §8.1 Regulating Property in Natural Resources 684
§8.2 Water Law 688
Chapter 8 Servitudes: Rules Governing Contractual Restrictions
703
on Land Use
§1 Servitudes 703
§2 Easements 706
§2.1 Definition and Background 706
§2.2 Creation by Express Agreement 708
§2.3 Interpretation of Ambiguous Easements 711
§2.4 Creation of Easements by Implication 732
§2.5 Modifying and Terminating Easements 760
§3 Covenants 761
§3.1 Definition and Background 761
§3.2 Creation of Covenants 765
§4 Covenants in Residential Subdivisions, Condominiums,
786
and Other Multiple Owner Developments
§4.1 Implied Reciprocal Negative Servitudes in
787
Residential Subdivisions
§4.2 Common Interest Developments and Property
798
Owners Associations
§4.3 Relationship Between Unit Owners and Developers 804
§5 Substantive Limitations on Creation and Enforcement of
813
Covenants
§5.1 Review for Reasonableness and Public Policy
813
Violations
§5.2 Constitutional Limitations 844
§5.3 The Fair Housing Act 857
§5.4 Restraints on Alienation 859
§5.5 Anticompetitive Covenants 871
§6 Modifying and Terminating Covenants 874
§6.1 Changed Conditions 874
§6.2 Relative Hardship 881
§6.3 Other Equitable Defenses 882
§6.4 Statutes 883
Part Four Ownership in Common 891
Chapter 9 Concurrent, Family, and Entity Property 892

1796
 §1 Varieties of Common Ownership 892
§2 Concurrent Tenancies 893
§2.1 Forms of Concurrent Tenancies 893
§2.2 Sharing Rights and Responsibilities Between Co-
900
Owners
§2.3 Partition 923
§3 Family Property 931
§3.1 Marital Property: Historical Background 931
§3.2 Community Property and Separate Property 935
§3.3 Divorce: Equitable Distribution of Property 940
§3.4 Child Support 956
§3.5 Unmarried Partners 956
§4 Entity Property 967
Chapter 10 Present Estates and Future Interests 983
§1 Division of Ownership over Time 983
§2 Historical Background: Death and Taxes 986
§3 The Contemporary Estates System 993
§3.1 Fee Simple Interests 994
§3.2 Life Estates 998
§4 Interpretation of Ambiguous Conveyances 1003
§4.1 Presumption Against Forfeitures and the Grantor’s
1003
Intent
§4.2 Waste 1013
§4.3 Charitable Trusts and the Cy Pres Doctrine 1020
§5 Restrictions on Estates and Future Interests 1034
§5.1 Rule Against Creation of New Estates (The
1034
Numerus Clausus Doctrine)
§5.2 Rule Against Unreasonable Restraints on Alienation 1037
§5.3 Rule Against Perpetuities 1037
§5.4 Rule Against Unreasonable Restraints on Marriage 1065
Chapter 11 Leaseholds 1074
§1 Leasehold Estates 1074
§1.1 Categories of Tenancies 1074
§1.2 Commercial and Residential Tenancies 1076
§1.3 Regulation of Landlord-Tenant Relationships 1077

1797
 §1.4 Distinguishing Tenancies from Other Property 1079
Relationships
§1.5 The Sharing Economy in the Rental Housing Sector 1093
§2 Conflicts About Occupancy 1093
§2.1 Initial Occupancy: Landlord’s Duty to Deliver
1094
Possession
§2.2 During the Leasehold 1095
§2.3 Transfers of the Landlord’s Leasehold Interest 1101
§2.4 Assigning and Subleasing 1103
§2.5 Tenant’s Right to Terminate Early 1118
§2.6 The End of the Tenancy: Landlord’s Right to
1119
Recover Possession versus Tenant’s Right to Remain
§3 Conflicts About Rent 1121
§3.1 Landlord’s Remedies When Tenant Fails to Pay
1121
Rent
§3.2 Landlord’s Duty to Mitigate Damages 1124
§3.3 Security Deposits 1136
§3.4 Rent Control 1136
§4 Tenant’s Rights to Quiet Enjoyment and Habitable
1137
Premises
§4.1 The Covenant of Quiet Enjoyment and Constructive
1137
Eviction
§4.2 Warranty of Habitability 1148
§4.3 Retaliatory Eviction 1170
§4.4 Landlord’s Tort Liability to Tenants 1184
§4.5 Minimum Standards Revisited 1189
Part Five The Legal Framework of the Market for Real
1194
Estate
Chapter 12 Real Estate Transactions 1195
§1 Real Estate Transactions: Structure and Roles 1195
§1.1 Attorneys’ Transactional Roles 1195
§1.2 Phases of the Transaction 1196
§2 Purchase and Sale Agreements: Form, Formalities, and
1207
Remedies
§2.1 The Terms of the Agreement 1207
§2.2 Statute of Frauds versus Part Performance and

1798
 Estoppel
§2.3 What Constitutes a Breach of the Contract 1224
§2.4 Remedies for Breach of the Purchase and Sale
1239
Agreement
§3 Deeds 1241
§3.1 Essential Terms 1241
§3.2 Delivery 1245
§3.3 Title Covenants 1246
§4 Real Estate Finance 1248
§4.1 The Basic Structure of Real Estate Finance 1248
§4.2 Mortgage Regulation and the Subprime Crisis 1250
§4.3 Defaults and the Right to Foreclose 1265
§4.4 Foreclosure Sales 1274
§4.5 Alternative Financing Arrangements 1284
§5 The Recording System 1293
§5.1 Recording Acts 1293
§5.2 Chain of Title Problems 1300
§5.3 Equitable Subrogation 1308
§5.4 Fraud and Forgery 1309
§5.5 Marketable Title Acts and Other Ways to Clear Title 1316
§5.6 Title Companies and the Recording System 1317
§5.7 Title Registration 1318
Chapter 13 Fair Housing Law 1325
§1 Introduction to Fair Housing 1325
§1.1 Sources of Fair Housing Law 1325
§1.2 The Fair Housing Act 1326
§1.3 Advertising and the Reach of the Fair Housing Act 1333
§2 Intentional Discrimination or Disparate Treatment 1343
§2.1 Discrimination on the Basis of Race 1343
§2.2 Integration and Nondiscrimination 1355
§2.3 Sex Discrimination: Sexual Harassment 1366
§2.4 Discrimination Based on Familial Status 1375
§2.5 Discrimination Based on Sexual Orientation 1382
§2.6 Source of Income and Other Economic
1389
Discrimination

1799
 §3 Disparate Impact or Discriminatory Effects Claims 1394

§3.1 HUD’s Discriminatory Effects Rule 1396

§3.2 Racially Discriminatory Effects in Land Use
1402
Regulation
§4 Discrimination Against Persons with Disabilities 1407
§4.1 Reasonable Accommodations and Modifications 1407
§4.2 Integration and the Example of Group Homes for
1414
Persons with Disabilities
§5 Fair Lending 1420
Part Six Constitutional Protection for Property 1436
Chapter 14 Equal Protection and Due Process 1437
§1 Property as a Mediator Between Citizens and the State:
1437
Defining versus Defending Property Rights
§2 Equal Protection 1442
§3 Due Process 1446
§3.1 Procedural and Substantive Due Process 1446
§3.2 Property Regulations Burdening Fundamental
1462
Rights
§3.3 Forfeiture 1475
Chapter 15 Takings Law 1485
§1 Eminent Domain 1485
§1.1 The Eminent Domain Power and the Condemnation
1485
Process
§1.2 Public Use 1486
§1.3 Just Compensation 1509
§1.4 Expropriation Without “Taking” 1516
§2 An Introduction to Regulatory Takings 1526
§2.1 Historical Origins 1526
§2.2 “Categorical” Regulatory Takings and the Ad Hoc
1533
Test
§2.3 Regulatory Takings and Due Process 1535
§3 The Ad Hoc Test: Fairness and Justice 1537
§3.1 The Foundation of the Ad Hoc Test 1537
§3.2 Takings Statutes 1553
§3.3 Justifying Regulatory Takings 1555

1800
 §4.1 Physical Invasions 1558
§4.2 Deprivation of All Economically Viable Use 1576
§5 Special Cases 1606
§5.1 Deprivation of Core Property Rights 1606
§5.2 Vested Rights and Transitional Relief 1617
§5.3 Judicial Takings 1620
§6 Exactions and Linkage Requirements 1625
Table of Cases 1659
Selected Statutes 1708
Index 1714

1801