Property 8- Rights and things PDF

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Property Law: Rights and Things (1) •

Presentation originally prepared by Dr Andrew Simpson formerly of University of Aberdeen School of Law, now Professor Andrew Simpson of University of Edinburgh School of Law

Introduction (1) 1. The aim of this course is to introduce you to the principles of Scots Property law. But what is “Property law”, as we understand it? With what sorts of rights is it concerned? 2. It is necessary to begin by exploring one core distinction. That is the difference between real and personal rights. 1. Strictly speaking, the rules concerning the creation, transfer and extinction of the recognised real rights – rights that are enforceable against the whole world - constitute the law of Property. 2. By contrast, the rules concerning the creation, transfer and extinction of personal rights – only enforceable against a specific person or persons - constitute the law of Obligations. Examples include claims arising from contracts, such as the contracts of sale or hire. Introduction (2) 1. We will explore this distinction first, together with various criticisms that it faces. 2. In addition, the main recognised real rights will be discussed in some detail. 3. Having considered this point, we will then proceed to examine two further distinctions that exist within Property law itself. 1. Heritable and moveable 2. Corporeal and incorporeal Real and Personal Rights Distinguished (1) 1. The origins of the distinction between real and personal rights can be traced to reflection on ancient Roman law. 2. In ancient Rome, the key distinction was not between rights but rather actions in rem and in personam. Here is what the jurist Gaius (d. ca.161 A.D.) said about that distinction in his Institutes at IV.2-3: 1. “An action in personam is one in which we proceed against someone who is under contractual or delictual obligation to us, an action, that is, in which we claim ‘that he ought to convey, do, or answer for’ something. An action in rem is one in which we claim either that some corporeal thing is ours, or that we are entitled to some right [ius aliquod], such as that of use or usufruct, of foot- or carriage-way, of aqueduct, of raising a building or of view.” Real and Personal Rights Distinguished (2) 1. Some lawyers working within the Civilian tradition – the tradition of ideas that grew from Roman legal thought – took this line of reasoning further. 1. They maintained that claims enforced through actions in personam were based on rights (iura) in personam. In other words, those claims

arose from a right – perhaps to a debt – that was not directly enforceable in relation to a specific thing, but rather only against a specific person, such as a debtor. 2. By contrast, claims enforced through actions in rem were based on rights (iura) in rem. In other words, those claims arose from rights such as ownership, or servitude, or security that were held directly in a specific thing. Real and Personal Rights Distinguished (3) 1. Consider what the Institutional Writer James Dalrymple, Viscount Stair wrote in 1693 (Institutions, I.1.22): “… the proper and formal object of law are the rights of men. A right is a power, given by law, of disposing of things, or exacting from persons that which they are due. This will be evident, if we consider the several kinds of rights: which are three, our personal liberty [not to be considered in these lectures], dominion and obligation… Dominion is the power of disposal of the creatures [i.e. all created things, not just animals] in their substance, fruits, and use. Obligation is that which is correspondent to a personal right… and it is nothing else but a legal tie, whereby the debtor may be compelled to pay or perform something, to which he is bound by obedience to God, or by his own consent and engagement.” Real and Personal Distinguished (4) 1. Stair later explained that instead of using the word “dominion” here one could use the term “real right” (Stair, Institutions, II.1.pr.). 2. In other words, a real right is a power of disposal of “the creatures” in their substance, fruits and use. 3. The rules concerning the creation, transfer and extinction of “dominion”, or “real rights”, would today be called the law of Property. Real and Personal: A Problematic Boundary? (1) 1. Thus far we have said that Property law is the law concerning the creation, transfer and extinction of real rights. 2. Furthermore, real rights are powers of disposal over things in their substance, fruits or use. In addition, it has been seen that for a right to be real, as opposed to purely personal, it must be held in a specific thing, as opposed to against a specific person. 3. That way of classifying the distinction between real and personal rights is sometimes called the classical theory. It focuses on the object or individual against which the right is enforceable – i.e. a specific thing or a person. Real and Personal: A Problematic Boundary? (2) 1. Nonetheless, this classical theory has been criticised. See Professor Reid’s article in 1997 Acta Juridica 225-245. 2. To explain, to say, as a matter of definition, that real rights are about rights in things, and that personal rights are about rights against persons, seems to result in a problem. Real and Personal: A Problematic Boundary? (3)

1. It seems to imply that real rights are not enforceable against persons. We have said that it is personal rights that are so enforceable. Furthermore, the classical distinction also implies that personal rights are not concerned with things. We have said that it is real rights that are concerned with things. 1. Yet real rights are enforceable against persons; my right in my car is enforceable against all of you. 2. Furthermore, personal rights are indeed concerned with things – albeit not directly, as real rights are. If I enforce my personal right to a debt against my debtor, then that right is classified as an incorporeal thing. Real and Personal: A Problematic Boundary? (4) 1. The personalist theory explains the distinction differently. 2. It emphasises that while real rights are rights enforceable against everyone – i.e. against the whole world – personal rights are not. They are only enforceable against those particular individuals bound by the obligation in question. 3. And yet, as Professor Reid notes, this way of explaining the distinction is also open to criticism. 4. He notes that a “mere difference in numbers does not seem sufficient to support a boundary between two entirely different countries [“countries” here being a metaphor for real and personal rights]”. Real and Personal Rights: A Problematic Boundary? (5) 1. However, Reid goes on to defend the boundary, using the personalist approach (at 1997 Acta Juridica 227):  “If there really is a continuum of rights, calibrated by numbers of people against whom enforcement can be made, it would be rash to assume that the rights are evenly distributed. On the contrary, rights founded on obligation lie wholly on one side of the continuum and rights founded on property fall wholly on the other. In between there is a wasteland which is largely empty. A right is either enforceable against a small and determinate number of persons or it is enforceable against everyone (or almost everyone). In other words, it is either a personal right or it is a real right. The distinction represents the way rights really are in the living law.” Real and Personal Rights: A Problematic Boundary? (6) 1. Put another way, all patrimonial rights are either enforceable against everyone or a limited group of individuals. 2. There are no patrimonial rights that exist between the two ends of the continuum. 3. Thus it can be said that the distinction between real and personal rights does actually map on to legal reality. At least, that is so when it is understood through the lens of the personalist theory. Real and Personal Rights: A Problematic Boundary? (7) 1. Note the importance of the distinction, with reference to bankruptcy.

2. Suppose a debtor becomes bankrupt, meaning that their liabilities – what they owe – exceeds their assets – what they have. Suppose the creditor has nothing other than a personal, contractual claim against that debtor. In that case, the creditor’s claim is only against the debtor. It is not held in relation to any specific thing in the debtor’s patrimony. 3. Given that the debtor is bankrupt, there are probably many other creditors, and all of whom might stand to be disappointed. But let us change the scenario. Suppose that, in security for the loan, my debtor originally gave the creditor a real security in some asset owned by the debtor. That real security will be a real right. On the debtor’s bankruptcy, the security-holder would be able to assert my real right in that asset, and sell it to satisfy the debt owed to the security-holder, this being a right that the secured creditor could enforce that right against the world – including, crucially, the debtor’s other creditors 4. Note that this leads some to the conclusion that a real right is “stronger” than a personal right. Is this strictly speaking accurate? Consider a personal right enforceable against a solvent debtor as opposed to a real right in a deteriorating thing (see Reid, Property, para.3). The List of Real Rights (1) 1. Property law, then, is concerned with real rights. Real rights are held directly in things, and are enforceable against everyone in the world. 2. Now it is necessary to add to these comments that Scots law is often said to recognise what is called a numerus clausus of real rights. What does this mean? 3. One reason for this rule is that it is generally thought that real rights are of such importance that they should be publicly recognised and publicly recognisable. This is thought necessary because they can, of their very nature, be enforced against everyone, and so everyone should be able to work out that they are in operation. 4. Note the resulting “publicity” principle. The List of Real Rights (2) What, then, are the recognised real rights? See Reid, Property, at paragraphs 4-5; Gretton and Steven, Property Trusts and Succession (3rd edn), para.2.8. 1. Ownership. The Scottish Institutional Writer Erskine defined ownership as “the right of using and disposing of a subject as our own, except in so far as we are restrained by law or paction” (see Erskine, Institute, II.1.1, as cited in Reid, Property, para.5). The List of Real Rights (3) 2. The real right in security. This is described by Reid as “the right held by a creditor in property in security of a debt owed to him.” (Reid, Property, para.5) 3. The servitude. A servitude allows the owner of one piece of land – we call this the “benefited tenement” – to make some positive use of neighbouring land – we call this the “burdened tenement”. The classic example is the servitude of access, whereby the owner of a benefited tenement (A) has the right to cross the burdened tenement so as to enter A’s property. In English law, the term is easement. The List of Real Rights (4)

4. Fourth, there is the negative real burden. In principle, the holder of a negative real burden can prevent anyone in the world from carrying out acts specified in the burden in neighbouring properties (see the Title Conditions (Scotland) Act 2003 s.9(2)). In English law, the restrictive covenant. 5. Fifth, there is the proper liferent. You will recall that in Roman law this was called the usufruct. The reason for that was that the holder of a liferent had the rights to the use (usus) and the fruits (fructus) of a piece of property. But such a liferenter was not entitled to transfer the property to someone else. In English law the term is life interest. The List of Real Rights (5) 6. The lease. The tenant’s right in a lease is real vis-à-vis successors of the landlord. What does that mean? 1. Suppose A leases a flat from B. Suppose B then conveys the flat to C, before A’s lease expires. In that scenario, can C simply evict A? (See Millar v McRobbie 1949 S.C.1) 2. If a lease is simply a contract between A and B giving rise to personal rights between those parties alone, then A has no right against C to remain in the flat he leased from B. Originally this was the case in Scots law. 3. That changed in the mid-fifteenth century. The Leases Act 1449 established that leases were binding against the successors of the original landlord – albeit only in certain circumstances, as will be explained in subsequent lectures. In other words, the statute allowed certain contracts of lease to give rise to leases with real effect. The List of Real Rights (6) It is ordained for the safetie and favour of the puir people that labouris the ground, that they, and all utheris that hes taken or sall take landes in time to cum fra lordes, and hes termes and zeiris thereof, that suppose the lordes sell or annaly that land or landes, the takers sall remaine with their tackes, unto the ischew of their termes, quhais handes that ever thay landes cum to for siklike maill as they tooke them for. The List of Real Rights (7) 1. Sometimes other rights are included in the list: 1. Public rights of way; but see Gretton and Steven para.2.9 (‘since they belong to public law rather than private law they should not, strictly speaking, be classified as real rights’).. 2. Exclusive privilege (and intellectual property today); see Reid, Property, para.5(8). 3. Possession; see Reid, Property, para.5(6). Note the extent to which it may be protected erga omnes. The List of Real Rights (8) 1. It is necessary to be very familiar with the list of real rights as just given; you need to know this for the assessments.

2. In so doing, think of ownership as the first and most important real right. Stair spoke of it as the “main” real right; Erskine called it “sovereign”. None of the Institutional Writers were vulgar enough to refer to it as the ‘boss right’ but your lecturer is. 3. He also happily quotes Francis Ford Coppola’s The Godfather – capo di tutti I cappi. 4. We tend to call the other real rights “subordinate”. Q. Why? A. Only once the sovereign real right of ownership exists in a thing is it possible for the other real rights to come into being The List of Real Rights (9) 1. As Stair puts it, “property is a disjunct and separate power of disposal, which, if it be with diminution of any part of the fruits or use, it is a diminished property, and that diminution is called Servitude or Pledge” (Institutions II.1.28). 2. When discussing “servitudes”, Stair distinguishes between real and personal servitudes, the former being the servitudes with which we are already familiar, and the latter being leases and liferents. We tend not to talk about “personal servitudes” today. “Pledge” here stands for what we would call real security. The List of Real Rights (10) 1. Remembering the real rights, then, can be as simple as remembering the following. 1. There is the main real right of ownership. The effects of ownership normally include the right to the use, fruits and disposal of property. 2. But those effects can be limited by the operation of other, subordinate real rights. Stair classified the main limitations as “Pledge” and “Servitude”. 1. When you think of pledge today, think of real securities more generally. 2. When you think of Stair’s category of “servitude” today, think not of real and personal servitudes, but rather servitudes burdening land, proper liferent and lease. In the same category you may include negative real burdens, which prohibit the use of lands in certain ways. Things: Introduction 1. Now it is necessary to say a few words about the things in which they can be held, and how those things are classified in law. 2. In Property law, things are classified in two different ways. 1. They can be “corporeal” or “incorporeal” 2. They can be “moveable” or “heritable”. Corporeal or Incorporeal 1. Corporeal property is property “which has a corpus or body” and which is “tangible”. 2. By contrast, “Incorporeal things are rights, and have no physical presence” (see Reid, Property, para.11). Reid then notes “[s]o a book is corporeal and a right in contract or delict is incorporeal”. 1. Thus, broadly speaking, debts and personal rights are regarded as “things”, from the perspective of Property law.

2. More strictly speaking, of course, the rules governing the creation, transmission and extinction of such personal rights belong within the law of Obligations. 3. Perhaps less confusingly, Property law treats other rights – such as real rights, pensions, annuities and shares – as incorporeal. Obviously they are things, but they are intangible things. Moveable or Heritable (1) 1. Broadly speaking, as it is put in Reid, Property, para.11, “the distinction is between land on the one hand and non-land on the other”. 2. Yet this requires further explanation. Prior to 1964, when a person died intestate, his property was divided between the heir-at-law – usually his oldest son – and his executor. The property that went to the heir-at-law was described as “heritable”, while the property that went to the executor was described as “moveable”. 3. Under this system, the heir received the land owned by the deceased, and anything incorporated into that land. Moveable or Heritable (2) 1. So what, then, was classified as “moveable” property? Briefly put, all things which were not classified as “heritable” were classified as “moveable”. 2. Yet more can be said about the general characteristics of “moveable” property. So the Institutional Writer Professor Bell stated that “Whatever moves, or is capable of being moved from place to place without injury or change of nature in itself, or in the subject with which it is connected, is moveable” (see , Bell, Principles at § 1472, cited in Reid, Property, para.12). 3. Note the curious case of the mussel-scalp; see Paisley, Land Law (Edinburgh: 2000), para.1.23 and Duchess of Sutherland v Watson (1868) 6 M. 199. Moveable or Heritable (3) 1. The law of Succession was reformed in 1964. As a result, the system whereby an individual was designated as “heir-at-law” and given rights to the deceased’s “heritable” property was abolished. 2. After 1964, the deceased’s executor continued to enjoy the power to administer the distribution of his moveable estate, and also acquired the power to distribute his heritable property. 3. Nonetheless, the distinction between “heritable” and “moveable” property survived. Its principal relevance today still lies in the law of Succession, whereby a deceased individual’s surviving spouse and children have indefeasible rights to his moveable property, but not his heritable property. Yet all property is still classified as “heritable” or “moveable”. Moveable or Heritable (4) 1. The distinction continues to make sense, at least to some extent. This is because land should sometimes be treated differently from movable property. 2. So it is perfectly reasonable to say, as we do, that rights in land should generally only change hands through registration in a public register. That aids transparency and publicity.

3. Yet it would be totally unreasonable to insist that all moveable property should only be transmitted in the same way. Imagine how many practical difficulties would arise if you could only acquire ownership of a book, or an item of clothing, by registering your title in a public register. It would make no commercial sense. Combining the Distinctions 1. A thing may be corporeal and heritable; or corporeal and moveable; or incorporeal and heritable; or incorporeal and moveable. 1. Land, and tangible things incorporated into land, are both corporeal and heritable. 2. A book is corporeal and moveable, and so is a car, to name two examples. 3. Amongst incorporeal heritable things are real rights in land, and also personal rights to acquire real rights in land (e.g. missives of sale of land). See Reid, Property Law, paragraph 14. 4. Amongst incorporeal moveable things are personal rights (insofar as they are not personal rights to acquire real rights in land) and shares in limited companies. Remember, if a thing is incorporeal, and it is not also heritable, it will necessarily be moveable. Combining the Distinctions

Rights and Things (1) 1. What we have said already enables us to consider one final im...