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Thursday, February 28, 2013

Boundary: What Can Be Owned? Part 4

As we have seen, it is a reflection of the social nature of property that each of us can freely negotiate with one another to redefine our boundaries, a practice which has even been observed in the territorial behavior of animals. While territorial claimants will be the most aggressive when a trespasser intrudes to the center of another’s claim, a greater tendency for boundary negotiation occurs at the periphery, where one animal’s territorial claim abuts a neighbor’s.29 Even on an informal level, our personal boundaries can have a flexible quality to them. We have each had the experience of being on a crowded elevator, with strangers shoving and pressing against us without a sense of being trespassed. But suppose that you are alone on an elevator, and a stranger gets on and presses up against you. You will now likely regard your boundaries to be trespassed, and even treat his intrusion as a personal threat.
In addition to self-ownership and real property interests, there are other tangible, personal property interests called chattels. Automobiles, clothing, furniture, cameras, computers, and books have spatial boundaries that are synonymous with the chattel itself (e.g., the boundary of a chair or a watch is the chair or watch itself). The physical nature of land is such that it is continuous and, thus, if we wish to claim ownership of some parcel we must create artificial boundaries as to what is ours, such as by putting a fence around it. With a chattel, on the other hand, the chattel and its boundaries are self-defining. They are one and the same unless, as we saw in the example of the car encumbered with a chattel mortgage, a bank also has a property interest. We can thus think of the boundaries of the car, itself, as self-defining while, at the same time, the boundaries of the respective ownership interests are more abstractly described.
It is when we are considering those interests that do not have a visible, material nature to them—what we call intangible property—that the boundaries are much more abstract and, therefore, more difficult to conceptualize and identify. Nevertheless, the same principles are at work here as they are with more tangible forms of property. Intangible property consists of such interests as patents, copyrights, contract rights, mortgages, bank accounts, corporate stock, promissory notes, computer systems and programs, electronically transmitted information, and the like. Does a bank, having secured a promissory note from you with a mortgage on your house, have a property interest in this arrangement? Yes, both as to the note and the mortgage.
As mentioned earlier, technological change has, for centuries, been creating new forms and systems that challenge the prevailing definitions of what can be owned. Computers are making their contributions to the uncertainties of the boundaries separating the tangible from the intangible. The ownership of computer programs was fairly easy to resolve in terms of traditional copyright principles. But the emergence of what is known as “virtual property” is forcing a rethinking of the boundary lines between what is “real” and what is “fantasy.”
Various complex online computer games make use of an intricate array of characters, objects, currencies, memberships, and other interests, with which a multitude of players compete to accomplish the game’s objective. In the course of doing so, players accumulate certain of the above categories of assets. Like the board-game of “Monopoly,” these assets might consist of the equivalent of a hotel on “Boardwalk.” Unlike the board-game, however, these online games create the unintended opportunity for players to go to a website, such as eBay, and auction one or more of their assets for real money. This practice has raised such questions as whether income taxes must be paid on the revenues so generated or whether, if the game should be discontinued before the purchaser of one of these assets has been able to exploit it in the game, a cause of action might lie against either (a) the seller of the asset, and/or (b) those responsible for shutting down the game.30
Because our industrialized culture places such an emphasis on material interests, we have a tendency to objectify intangible property interests by equating them with some physical manifestation, or memorandum, of their existence. But since the purpose of boundaries is to define the scope of the property interests we claim as our own, and since many of these interests have no three-dimensional quality to them, it should not confuse us to discover that the boundaries of intangible interests are, themselves, intangible. They consist almost entirely of words which, as we have seen, have an inherent fuzziness to them that must be interpreted.
Even the boundaries of our property interests in a bank account—one of our most valued assets—are difficult to identify in any material way. When, as a nine-year old, I opened a savings account for earnings from my paper-route, I imagined that the currency I deposited with the bank was being placed in a personal drawer or box, and should I wish to withdraw any of these funds, the bank would take the money from this container. Modern bank accounts consist largely of a series of “1” and “0” entries in a computer, with secondary evidence of such property provided by periodic bank statements.
Because of our fixation on materiality, it is a common mistake to assume that the stock certificate, or the signed contract, or the patent certificate, or the deed to real estate, is the property interest. While such documents are important, in a legal sense, as evidence of a property interest, they do not constitute the interest itself. Our common law system recognizes this fact. For instance, the loss of an insurance policy, or the destruction of a stock certificate or warranty deed, does not extinguish the underlying interest that such documents represent. A lost stock certificate, for instance, will be replaced by the issuing corporation. On the other hand, if the ownership interest were synonymous with the written instrument, it would be correct to classify the document as a chattel (e.g., old gold mining stock certificates of now defunct corporations may have collectors’ value, even though they no longer represent an ownership interest in the corporation). If a chattel is destroyed (e.g., a painting), the ownership interest is also destroyed, even though one may retain a property claim against the insurance company that had insured the value of that interest. Likewise, currency or a “bearer bond” is treated as an item of property in itself, which will not be replaced if it becomes lost or stolen.
The boundaries of our claims may also be defined temporally. A leasehold interest is of a fixed duration; a life estate terminates upon the death of its owner; while so-called “determin-able estates” may last until the happening of a specific event or, in the absence of such limiting occurrence, may run indefinitely. The Shasta Indian tribes of northern California allowed families to claim exclusive rights to tobacco plots, but for only one season.31 Likewise, among the Somalis, a herdsman who is the first to bring his animals to a pasture or watering site is entitled to the exclusive possession of same until such time as he leaves that location.32 In this same temporal vein, courts have awarded commodities investment firms property claims in the information they wire to their clients for a period of a few minutes33 The underlying assumption of such a holding was that, by the end of that time period, the information would have spread throughout the market, depriving it of its unique, exclusive boundaries.

I am fond of asking my students if they have ever “seen” or “signed” a contract, and almost all answer affirmatively. I then inform them that none of them has ever seen, or will ever see, or draft, or sign a contract, because a contract is a nonmaterial account of some presumed identical states of mind between or among two or more persons. While the contract, as an agreement, is real, it has no material nature to it, except as one can identify its electro-chemical constituency in the brain. But as a “thing” to be signed, or photocopied, or locked away in a safe, a contract has no physical existence. The written forms that we write up, sign, and have notarized are what lawyers themselves, often call a “memorandum of agreement,” and a memorandum is generally understood to be “an informal record of something that one wishes to remember.”34 The written memorandum becomes a chattel interest, but not the agreement itself. The boundary of a contract, then, is the presumed coalescence of the states of mind of the parties agreeing to it. It is this distinction that allows courts to “reform” the written expression of the contract where drafting mistakes have occurred that do not reflect the actual intentions of the parties.
Just as we strive for as much clarity as possible in defining the boundaries of the words we employ, we try to describe our property interests with great precision. Nevertheless, boundaries are simply another information system, an abstraction of reality. As such, they are as subject to Korzybski’s admonition as any of the other expressions of our mind. Still, the inherent haziness of all boundaries—particularly at the edges of what we seek to define—should not dissuade us from our efforts to make clear descriptions. We are creatures of language, and are bound to relate to and negotiate with our fellow humans through the use of words. Increased clarity in language is important in our efforts to reduce conflict. The inherent imprecision in such undertakings should, however, impress upon us the importance of a sense of humility, particularly when we are staring across the boundaries of what we regard as ours, into the face of another.
A number of years ago, in the city in which I live, two neighbors got into a boundary dispute. One man was trimming a hedge along the property line separating their respective lands. The second man thought the first was trimming rose bushes that were on his side of the boundary line. It is not clear whether this was so or not but, if true, it would have amounted to a trespass. What is clear is that, in a flash of anger, one man pushed the other to the ground, which was a trespass (battery) upon the man so attacked. The man who had been pushed called the police and had his neighbor arrested for criminal assault. The man, so charged, was later found guilty and given a fine. The man who had been pushed to the ground organized a neighborhood party to celebrate the conviction of the attacker, at which the attacker showed up with a rifle and shot a number of the revelers, killing some.
While one can find a number of boundary trespasses in this incident, including the killings, and while an insistence upon one’s inviolability is a worthy stance to take, the more important lesson for both men—as well as the neighbors—would have been to be a bit more humble in insisting upon the micro-measured specificity of their respective boundaries. Perhaps, if we can learn to have respect for one another’s ownership interests, we can also learn to more easily tolerate the errors and miscalculations of others.
Boundaries express both the divisions that separate us from one another, as well as the respect for our separatism that minimizes the conflict that would otherwise result therefrom. As such, boundaries represent a paradox that disguises deeper patterns of harmonizing truth. It is not just our ideas or motives that inject a sense of differentiation among us, but the entropic nature of our existence. Each of us must be able to exclude others from the use and consumption of resources necessary for our survival. This fact of nature includes the ability to consume other living things. Perhaps in being sensitive to the fact that what we have in common are our individual needs for negentropic behavior, we may discover why respecting one another’s boundaries may be the only peaceful—and most productive—way of resolving this dilemma.
It is well to remember the dualistic nature of property boundaries. When respected, individuals will be free not only from the trespasses of others, but to do as they will, regarding what is theirs. When disrespected, however, conflict and violence ensue and liberty is diminished. We should also heed Fritz Perls’s warnings about the potential for disputes to arise along boundary lines. If we fail to pay attention to the conflict-generating implications of our actions, we may find ourselves in deadly conflicts even as we go about trimming our rose bushes.

Boundaries of Order: Private Property as a Social System

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