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Creation Of Property Rights Notes

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Creation of Property Rights in
Respect of Goods
Introduction
There are 2 basic means by which B can acquire a property right:
A. Independent acquisition: B acquires a new property right as a result of his own conduct
 Formality rules are never relevant in these cases
B. Dependent acquisition: B acquires an existing property right as a result of another party exercising a power to give B that right. As there is only one type of property right to things other than land (Ownership), it is impossible for B to acquire a new property right by means of a dependent acquisition.
 Formality rules may be relevant in controlling A's power
In the topic of creation, we are concerned with independent acquisition and the creation of new property rights. Dependent acquisition is relevant to the topic of transfer of property rights.

1.Taking Possession
The core principle is that B can acquire Ownership by taking physical control of a thing. This is the familiar notion in English law of 'finder's keepers'. That B's act of taking physical control gives him an independent property right is clear from Armory v Delamirie.
Armory v Delamirie (1722)- Court of Kings Bench
Facts: C, a chimney sweeper's boy found a jewel and carried it to D (goldsmith)'s shop to find out what it was. He gave it to the hands of the apprentice who took out the stones to weigh them.
After discovering its worth the master offered the boy some money but he refused it, insisting on having back the jewel again. The apprentice delivered him back the socket without the stones.
Held:

1. 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 consequently may maintain trover.

2. The action well lay against the master, who gives a credit to his apprentice and is answerable for his neglect

What is the nature of the title acquired?


Armory v Delamirie (1722): a right good against all but the rightful owner
Strictly speaking should be a right good against all except those who have a better title
Even if B commits a wrong by doing so, B's act of taking physical control imposes a prima facie duty on the rest of the world not to interfere with any use B may choose to make of that thing (i.e. gives a right to exclusive possession)
It made no difference that someone other than B may have had a prior property right to the ring. To protect B and promote stability, C, along with the rest of the world, was under a prima facie duty towards B not to interfere with his use of the ring.

Subsistence of Title

Once B acquires that right, his right will continue even if B ceases to have physical control of the thing. It is not dependent on continued possession (Costello v CC of Derbyshire) Costello v Chief Constable of Derbyshire (2001)- CA
Facts: Police force seized from C a motor car which they believed was stolen and retained it since the owner was unknown. C brought action against CC for delivery up and damages for unlawful detention of the car.
Held (Lightman J): C was entitled to the return of the car and damages
 "Three general propositions of law are clearly established by Webb v CC of Merseyside
Police (2000):

1. The fact of possession of a chattel of itself gives to the possessor a possessory title and the possessor is entitled to rely on such title without reference to the circumstances in which such possession was obtained: his entitlement to do so is not prejudiced by the fact that he obtained such possession unlawfully or under an illegal transaction. His claim can only be defeated by proof of a title superior to his possessory title.

2. In the case of competing claims to ownership (in the case of personalty as in the case of realty), titles are relative and the issue falls to be determined by reference to the relative strengths of the two claims and the party with the better title (however frail it may be) is entitled to succeed.

3. The statutory power of the police conferred by section 19 of the 1984 Act to seize goods and by section 22 of the 1984 Act to retain them so long as is necessary in all the circumstances places in suspension or temporarily divests all existing rights to possession over the period of the detention, but does not otherwise affect those rights or vest in the police any permanent entitlement to retain the property in the police. The limited right of the police to retain property for the statutory purpose and their obligation thereupon to return it to the "owner" are unaffected by any perceived public policy consideration that the fruits of his criminal activities ought to be withheld from a criminal."
 "In my view, as a matter of principle and authority possession means the same thing and is entitled to the same legal protection, whether or not it has been obtained lawfully or by theft or by other unlawful means. It vests in the possessor a possessory title which is good against the world save as against anyone setting up or claiming under a better title. In the case of a theft the title is frail, and of likely limited value, but none the less remains a title to which the law affords protection."
The result in a simple case is therefore that a dispute between two claimants as to who has the better right to possession will be resolved in favour of the person whose possession is earlier in time.

What is the nature of possession in this context?
2 elements of
(1) Corpus possedendi- physical control or power over the object

possession:

(2) Animus possidendi- an intention to possess

Wilson v Lombank referred to the right to possession, not factual possession. It therefore seems that possession can consist of both factual and legal possession.

A sufficient degree of physical control is necessary and this has been taken strictly by the courts:

No possession of fish in Young v Hichens because he did not have control over it
Pierson v Post- mere pursuit it not enough, need to have control over the animal to acquire possession/title Held in The Tubantia that a contextual approach is necessary to possession. What amount to possession will depend on the thing in question.

Therefore, there are special rules for whales: as long as harpoon is in whale's body then possession acquired
Analysis: Does this not accord more with the dissent in Pierson: that the court ought to ask a tribunal of hunters what their opinion is on possession during a pursuit?

Pierson v Post (1805)- SC of New York
Facts: C was a hunter and was chasing a fox when the defendant shot and killed it, knowing that it was being chased. C brought an action against D for trespass. Issue was who had property rights to the fox.
Held (Tompkins J): Pursuit alone gives no right of property in wild animals.
 The mere pursuit gave Post no legal right to the fox, but that he became the property of
Pierson, who intercepted and killed him
 £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 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"
Livingston J (dissent)
 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.
 Property in animals feroe naturoe 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.
Young v Hichens (1844)- Court of Queen's Bench
Facts: C, while fishing for pilchards, had nearly encompassed the fish with a net; but D, by rowing his boat to the opening, disturbed the fish and prevented the capture. C brought a claim in trespass.
Held (Lord Denman CJ):
 It does appear almost certain that the plaintiff would have had possession of the fish but for the act of the defendant: but it is quite certain that he had not possession

I think it is impossible to say that it had, until the party had actual power over the fish. It may be that the defendant acted unjustifiably in preventing the plaintiff from obtaining such power: but that would only shew a wrongful act, for which he might be liable in a proper form of action.
Wilson v Lombank Ltd (1963)- Assizes
Facts: C bought a motor car from a vendor who had no title to sell. He took it to a garage for repairs. When the repairs were done it was left on the forecourt of the garage for collection by C.
A representative of D visited the garage and took the car away, thinking it belonged to them. D
discovered that the car was not theirs and delivered it to the true owner. C brought an action for damages for trespass against D. Held (Hinchcliffe J): Plaintiff was in possession of the car and is entitled to recover damages
 "In my judgment the plaintiff was in possession of the car; not only did he have the right to immediate possession, but I do not think that in the circumstances of this case he ever lost possession of the car. In my view the plaintiff at all times could have demanded the return of the car, and I would, with respect, like to adopt the words of Lord Porter in his speech which I have just quoted"
The Tubantia (1924)- Probate, Divorce & Admiralty Div
Facts: C fitted out an expedition to salvage cargo from a wreck of a steamship. C worked at the scene of the wreck whenever weather permitted and had succeeded in extracting some portions of cargo of little value at a large cost. D, British subjects in a rival salvage company sent down their own divers and, interfering with C's diving operations, tried to secure possession of the wreck and cargo. C brought action against D, seeking declaration of possessory rights, an injunction to restrain interference by D with their possession, and damages.
Held (Sir Henry Duke): Plaintiffs were sufficiently in occupation of the wreck to exclude 3 rd parties from interfering with the property. Injunction granted
 "There was animus possidendi in the plaintiffs. There was the use and occupation of which the subject matter was capable. There was power to exclude strangers from interfering if the plaintiffs did not use unlawful force. The plaintiffs did with the wreck what a purchaser would prudently have done. Unwieldy as the wreck was, they were dealing with it as a whole."

Can B ever acquire independent Ownership without taking physical control?
In this section, we will consider the circumstances in which there can be independent acquisition of a pre-existing thing where B does not have physical control. See sections below for the circumstances surround newly created things.

A. A's physical control also counts as B's physical control
In some cases, a party is treated as having taken physical control of a thing even if he has not taken control of that thing himself:
(i)
(ii)

The physical control of A, B's employee or agent, can be attributed to B and so allow B to acquire Ownership
A can have physical control of a thing both (a) in his own right, and (b) on behalf of B; so that both A and B acquire Ownership of the thing. This happens where A attorns to B
(i.e. undertakes to hold the goods for him)
 It is possible to attorn by means of a bill of lading

B. The rights of a landowner to things on or in his land
It was suggested by the CoA in Waverley BC v Fletcher that if a thing is in land, then B has physical control of that thing even if he has not actually taken control of it and even if he does not know about its presence in or on his land. Therefore, the council obtained a property right in the brooch as soon as it became submerged in the soil. However, there are problems with the reasoning of the
CoA (from McFarlane, Personal Property):

1. It is said that once the brooch was submerged, it became part and parcel of B2's land so that
B2, as an owner of the land, also had Ownership of the brooch

Analysis: It is true that if one thing loses its physical identity and becomes subsumed into another thing, the first thing loses its physical identity and becomes subsumed into another thing, the first thing ceases to have an independent existence
(accession)
o However, if the brooch had acceded to the land, then all pre-existing property rights in the brooch would have ceased to exist. On that view, the person who originally lost the brooch would lose his Ownership of the brooch.
 This would be inconsistent with the CoA's conclusion that the person who dropped the brooch (A) retained Ownership and, if he came forward, could assert his right against each of
D or the council.

2. Another reason for the decision that was given by the court was that where something is on land rather than in the land, it is more likely for the original owner to find it.

3. Note, that the result in the case may have been influenced by the fact that D, when he found the brooch, was trespassing on B's land (was not supposed to be using the metal detector):
he was in breach of his duty to B not to interfere with B's right to exclusive control of the land.
o Analysis- However this is not correct reasoning: C's independent acquisition of a property right may often involve C committing a wrong (e.g. a thief acquires a property right when he takes physical control).
The Court ought to have chosen between two positions:

1. The brooch lost its identity and became part of the land, so that A's pre-existing property right is destroyed, OR

2. The brooch did not lose its identity and A still has a property right he can assert against each of the council and D. On this position, the brooch does not count as part of the council's land, and so that the council's position as an owner of the land does not give him Ownership of the brooch
Donaldson LJ in Parker said that a thing can become an 'internal part of the realty as against all but the true owner'. This ought to be rejected.
Waverley BC v Fletcher (1995)- CoA
Facts: D, a member of the public, was lawfully present in the council's park, unaware of the council's policy prohibiting the use of metal detectors in the park. D used his metal detector to locate a medieval brooch buried in the ground. The brooch was returned to him at the conclusion of a coroner's inquisition in which it was found not to be a treasure trove. Council brought a claim to ownership of the brooch.
Held (Auld LJ): Council acquired Ownership of the brooch as soon as it became submerged in the soil. Therefore, D committee a wrong against both the party who dropped the brooch and the council.
 "In my view, the authorities reveal a number of sound and practical reasons for the distinction between articles found in or on land.
o First, as Donaldson L.J. said in Parker v. British Airways Board, an object in land "is to be treated as an integral part of the realty as against all but the true owner" or that the finder in detaching the object would, in the absence of licence to do so,
become a trespasser.
o Second, removal of an object in or attached to land would normally involve interference with the land and may damage it

Third, putting aside the borderline case of a recently lost article which has worked its way just under the surface, in the case of an object in the ground its original owner is unlikely in most cases to be there to claim it. The law, therefore, looks for a substitute owner, the owner or possessor of the land in which it is lodged. 

Whereas in the case of an unattached object on the surface, it is likely in most cases to have been recently lost, and the true owner may well claim it. In the meantime, there is no compelling reason why it should pass into the possession of the landowner as against a finder unless he, the landowner, has manifested an intention to possess it"
The 2 main principles established by the authorities:
(1) Where an article is found in or attached to land, as between the owner or lawful possessor of the land and the finder of the article, the owner or lawful possessor of the land has the better title.
(2) Where an article is found unattached on land, as between the two, the owner or lawful possessor of the land has a better title only if he exercised such manifest control over the land as to indicate an intention to control the land and anything that might be found on it.

Which is the correct approach? Did the brooch become part of the land and belong to B?

The better view is that it did not. The brooch did not become part of B's land simply by being submerged by the topsoil. The brooch remained a distinct physical object: after all, once he found the brooch, C was easily able to remove it from B's land.
This arguably does not defeat the ordinary principle that an object found in the land will have a title in the possessor of the land. Whereas, for things, on the land, the finder will have the better claim.

This view is supported by other authorities:
B is an owner of a shop. A, a customer, finds in the shop and takes physical control of a parcel containing banknotes. A gives the notes to B for safe-keeping. Nobody claims the notes and so A asks
B to return the notes to him. B refuses.

In this case, it was held in Bridges v Hawkesworth that B commits a wrong against A. B does not have a pre-existing property right in the notes as soon as the notes are dropped on his land.

Lord Russell in Sharman did not wish to apply the decision in Bridges to the facts of that case. He said it was significant that the part of the shop in which the package was found in Bridges was the public part of the shop and suggested that the result would not be the same if it had been found in the private part.
However, in Parker, the CoA stated that if (i) a thing is found in or on B's land, and (ii) before the thing was found, B manifested an intention to exercise control over the land and things which may be upon in, then (iii) B will be deemed to have physical control of that thing. This idea is hard to support and should arguably be rejected:


Having an intention to take physical control of a thing is not the same as actually taking such control.
It is hard to see how, as a matter of fact or law, B can unilaterally turn A into his agent.
Also, the idea was unnecessary for the decision. It was found that B had not, on the facts,
acquired a property right in the ring.

Bridges v Hawkesworth (1851)- Court of Queen's Bench
Facts: A person entering a shop found on the floor a bundle of banknotes, which had accidentally been dropped there by a stranger. As soon as he found them, he handed them over to the owner

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