Property Class Notes 4/12/04

We’re going to do this class old-school style.

Aztec Limited, Inc. v. Creekside Investment Company

Aztec bought some property that was roughly a rectangle that stuck a little bit across a public road. A dead-end street intersected the public road. Creekside bought some property on the dead-end street. Six feet of the road is in dispute! Apparently, this street wasn’t wide enough to accommodate the 200 residential units that Creekside was going to build. They wanted to widen the part of the road that they owned and the part that had been acquired by adverse possession.

This is a hard case! What does Aztec have to lose in this case? Aztec concedes the prescriptive easement for the people who already live on the street. Let’s look at the situation solely in terms of what the easement is worth to Aztec: what’s the six foot strip of land worth? Why would you dispute that the slice of land is worth nothing? Maybe you could graze a very skinny cow there. Why does Aztec care? It’s six feet! They didn’t even know that they owned it when they bought it! Maybe it’s just the principle of the thing. Braunstein thinks that this case is just wrong. It’s not legally wrong, but this isn’t how people ought to behave! Aztec isn’t losing anything except the opportunity to extort Creekside. Braunstein opines that this isn’t the way the law really ought to be working!

The court seems mad at Creekside and remands the case to determine what punitive damages they might have to pay. But if Braunstein was sitting on the jury, he would award the punitive damages against Aztec! This is beyond the scope of the discussion, but what we really have going on is a “spite strip”. Developers will often build roads and try to get their neighbors to contribute. Say A and B each own 100 acres and A wants to build a road to get to the public road. A asks B to help pay for it and B refuses, thinking that A will build it anyway and B won’t have to pay. So A might build the road one foot over on A’s property to force B to pay for an easement. A is more or less acting out of spite.

Perhaps Idaho has a “private eminent domain” statute. Maybe that would have been the proper remedy for Creekside. But it wouldn’t have mattered how this case was decided: Creekside would get the right to the strip of land because the parties would bargain for it. This is a classic Coase Theorem situation. The assignment of rights doesn’t matter at the level of society because the parties will negotiate between themselves to divide up the property rights.

Now for some more technical issues: Creekside wants to argue that the public has acquired an easement by prescription across the dead-end road. Why do they lose on that issue? Why isn’t there a public easement across the six foot strip? What evidence supported a public easement? There was some evidence. The road was maintained by the city, but it wasn’t used long enough to satisfy the prescriptive period. The city of Pocatello opened up the road to public use.

Here’s the second issue: does the use of the dead-end road by 200 residents constitute a trespass (ignoring the increase in width issue)? Yes, but why? It is said that the burden on the servient estate is increased beyond what was reasonably foreseeable beyond when the easement was granted. What if the easement had first been used for horses and buggies, but now they want to drive cars on the road? Can they do so? The draft of the Restatement Third of Property suggests that there should be a presumption in favor of modernization. Would this case be decided differently if the court had adopted the Restatement Third? No, because there is an explicit proviso regarding “unreasonable damage to the servient estate”. How is the servient estate damaged? Why does it make a difference how many cars cross the six feet? If the six feet can’t be used for anything, then maybe you could find that Aztec couldn’t really be damaged, and thus that the case could be decided differently.

There were four houses before. What if it had been 40? Would the addition of 200 residences be a problem then? The court says that an increase of a factor of ten is okay, but that an increase of a factor of 50 is no good. There is no bright line, though! If the change in use of the dominant estate is foreseeable or doesn’t unreasonably interfere with the use and enjoyment of the servient estate, then both in the language of this court and the Restatement Third, then the use of the dominant estate can be changed. But there is a point where the use of the dominant estate could change so much that it could become unreasonable.

What if the public road was widened? That would clearly be a trespass. The remedy would be at least nominal damages for the trespass and then maybe punitive damages as well. The only reason to give punitive damages to Aztec is because they didn’t suffer any actual damages! Braunstein thinks that both sides should have been reasonable and should have come to an agreement.

Any time you have an implied easement based on prescription, preexisting use, executed license, revocable license, or anything else, you have an exception to the statute of frauds and you’ll also have problems with respect to the scope of the easement. That’s because there is no written evidence of what the parties’ intentions were. In all of these cases, we’ll have to struggle to determine how the easement ought to be used: what uses are permissible and what uses are not permissible.

Tract Development Service, Inc. v. Kepler

There’s a little strip of land in dispute. Why didn’t the reference to this “Diplomat Avenue” as “now abandoned” mean that they weren’t conveying the easement? The deed kind of suggested that the benefit of the easement didn’t run with the property. But the court says that this isn’t the same as an express exception to the easement. It’s kind of unclear! There is another abandonment issue that will come up later. The court says that these are public streets that had been platted and accepted by the county supervisors. In order to dedicate a street to the public, it must be accepted. In other words, the county gets the benefit of a street they didn’t have to build, but they also get the burden of maintaining the street (like snowplowing and such). But the streets were platted in 1924 and the Keplers made their purchase in 1988. The Keplers didn’t want it as a public street anymore! The public easement in the street might be over, but the court says that the private easement isn’t over.

Was the easement extinguished by merger? The court says no. The rule is that if the dominant and servient estates come under the same ownership, they merge, and thus the easement would terminate. However, the court finds that this isn’t applicable here because the dominant and servient estates didn’t all come under the control of one person. It’s true that some of the lots came into the ownership of one person, that doesn’t matter. You would have to have all of the lots in the subdivision come under one ownership in order to extinguish the easement. This makes sense: imagine if someone bought property on both sides of a public street. They can’t decide to end the easement and shut down the street!

Was the easement abandoned? No one has used this as a road for some time, and they had planted trees there. That seems pretty inconsistent with the use of the land as a road. What does the court say? They say that the trees could be removed in the future and the road could be made a road again. But there must be an intention by all the owners of the dominant estate to abandon (compare this to merger). Non-use by itself is not enough. There also must be intent to abandon. Planting the trees is only evidence of the Keplers’ intent!

Is there a prescriptive easement? The Keplers put up a fence, but the court claims that the fence wasn’t enough. The fence had an unlocked gate. The court takes this to mean that the Keplers didn’t really try to keep people out. This is the biggest problem for the court. The court could get around the intent issue by saying that there must be intent to abandon by all holders of the estate. But the court is working hard not to disrupt the subdivision by shutting down the central street. Braunstein says that building a fence, even with a gate, seems contrary to the notion of a public street. Recall what we said about fencing when we talked about adverse possession: it shows intent to claim land and shows the extent of the claim. In adverse possession cases, you must prove exclusivity. In prescriptive easement cases, you don’t have to prove exclusivity to create the easement, but you must prove exclusivity to terminate the easement. Fencing is not dispositive.

Exclusivity is not required to establish prescriptive easement; you can share it with the owner of the land. But it is required to terminate a prescriptive easement. When you terminate an easement, you’re ending a use.

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