Doctrines of waste in a landscape of waste.

Author:Lovett, John A.
Position:Symposium: A Festschrift in Honor of Dale A. Whitman
 
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  1. INTRODUCTION

    One of the virtues of William Stoebuck and Dale Whitman's seminal hornbook, The Law of Property, is its extensive treatment of the subject of waste. (1) Using half of a chapter, Stoebuck and Whitman introduce their readers to one of the great subjects of the common law of property, one that attracted the attention of Coke, (2) Blackstone, (3) Kent, (4) and many others. Their detailed analysis of the subject, which provides a general historical overview, a discussion of the seminal voluntary waste cases, Melms v. Pabst Brewing Co., (5) and Brokaw v. Fairchild, (6) and a presentation of the legal and equitable remedies for waste, may strike some readers as old-fashioned.

    Although one recent law review article has called attention to several early nineteenth century waste cases, (7) relatively little contemporary academic scholarship has addressed waste doctrine in depth. That does not mean, however, that the subject has completely gone out of fashion. Practice-oriented treatises, such as the latest edition of Powell on Real Property, still give considerable attention to waste. (8) And virtually every property law hornbook or case book will offer some treatment of waste. Some only devote a few short paragraphs to the subject, as typified by a popular student-oriented treatise. (9) Others offer one complete waste case (often the chestnut Baker v. Weedon (10)) and notes about the doctrine in other contexts. (11) And some casebooks attempt much more detailed treatments of waste and offer two, and sometimes even three or four, full cases and weave discussions of waste throughout their presentations of other traditional doctrinal categories. (12)

    What do the casebook authors say about waste? Typically they make three kinds of observations. First, they suggest that waste conflicts (and the difficult fact intensive and subjective inquiries they require) are generally a thing of the past, a problem that well-trained and attentive lawyers can easily avoid for their clients by creating trusts rather than legal life estates. (13) Second, and almost as commonly, they use waste cases to begin teaching students basic law and economics principles. For example, a waste conflict will be staged as a dispute between a present estate holder and future interest holder, with the former seeking to maximize short term economic value and impose externalities on the latter either by depleting resources like timber or neglecting to make necessary repairs. Or a waste conflict will emerge when a future interest holder seeks to use a bilateral monopoly position to extort inefficient concessions from the present interest holder, a situation that the ameliorative waste doctrine should ideally remedy. 14 Third, and much less frequently, casebook authors raise questions about how a grantor of a temporally limited possessory estate and a future interest might have intended for the parties to resolve a waste conflict. (15) As important as these pedagogical statements may be, more questions arise. What do law professors and jurists say to each other when they write about waste in other settings? And how do courts explain their waste decisions to parties? I will return to these questions later.

    While I do not deny that classic waste cases--conflicts between life tenants and future interest holders over alleged instances of voluntary waste--are less common today than they used to be (but perhaps not as uncommon as some might think), (16) my goals in this article are to reawaken readers to the importance of waste doctrine, to suggest that the great days of waste may not be completely in the past, to recommend some new uses for waste cases as teaching tools, and generally to urge a renewed appreciation for waste--an appreciation that Dale Whitman, for one, never lost. Although I do not deny the urge to review all of the great moments in the development of waste doctrine, in this article I will focus only on what a few leading interpreters (legal academics and other law professionals) say about waste when they talk to each other and comment on two recent clusters of eases where waste doctrines and other closely related rules are currently at play. My primary but not exclusive focus is on voluntary or commissive waste cases because they tend to reveal the most difficult problems and the sharpest conflicts.

    In the end I hope to show not only that doctrines of waste still matter, but also that they matter especially in what I call "landscapes of waste," that is, in settings in which some kind of dramatic, and relatively sudden physical, environmental or economic transformation has taken place. In other words, I claim that waste doctrine becomes particularly important in moments of radical change when patterns of land use and development are under intense pressure because the physical, environmental, social and economic circumstances affecting the underlying property relationship are changing dramatically. Put simply, we tend to think of waste doctrine as a relatively stable background principle in property law that lends certainty to property relationships and is susceptible to and generative of efficient private ordering. Yet I suggest that in moments of rapid and profound change courts and legislators not only confront difficult questions about waste, but are often tempted to abandon bright line versions of waste doctrine and muddy it in spasms of doctrinal transformation. (17)

  2. INTERPRETATIONS OF WASTE DOCTRINE

    1. Of Life Estates: The Restatement of the Law of Property (1936), Stoebuck & Whitman, and Merryman

      There has always been a tension in waste doctrine between a purely economic understanding of what constitutes waste--one that measures waste by looking for a diminution in the market value of the property--and an understanding based more on the normative prerogative of the future interest holder to decide what kind of changes can be made to the property. We might say this tension is between a purely utilitarian understanding of waste and a social understanding of waste. (18) In 1936, at the time the first Restatement of Property was crafted, this tension was especially apparent because of the then recent and much criticized decision in Brokaw v. Fairchild. (19) In this case, a New York court, pointing in part to the exclusive prerogative of several contingent remaindermen to exercise "acts of dominion or ownership," enjoined a life tenant from demolishing a palatial residence on Manhattan's Upper East Side and erecting in its place an apartment building that promised to increase the market value of the land and inheritance.

      Not surprisingly, the first Restatement of Property reflected this tension by adopting two seemingly conflicting definitions of actions that could constitute voluntary waste. (20) First, in section 138 the Restatement declares that a life tenant has a duty not to diminish the "market value" of the subsequent interests. (21) Then section 140 imposes on the life tenant "a duty not to change the premises, as to which the estate for life exists, in such a manner that the owners of the interests limited after the estate for life have reasonable ground for objection thereto." (22) The conflict arises because a literal reading of these two sections might suggest that a subsequent interest holder can object to and block changes in the use of the property proposed by a life tenant, even if those changes do not diminish the property's market value, as long as the objections to the changes are "reasonable." In other words, the "reasonable objection" standard in section 140 might override, or at least undermine, the market value measurement of waste in section 138. (23)

      These two conflicting Restatement rules on voluntary waste can be reconciled, however, by focusing on changed circumstances. As Professors Stoebuck and Whitman explain in their treatise, the Restatement's drafters were trying not only to state the general rule for changes to premises articulated by the Wisconsin Supreme Court in Melms but also to respond to the facts presented in Brokaw and its much derided result. (24) Thus, the backbone of these provisions is found in comment (f) to Section 140, which, synthesizing Melms and the dissent in Brokaw, states that subsequent owners should have "no reasonable ground for objection" to a proposed alteration or replacement of a structure (or presumably some other change in the premises):

      when a substantial and permanent change in the conditions of the neighborhood in which the land is located has deprived the land in its existent form, of reasonable productivity or usefulness; and the proposed alteration or replacement is one which the owner of an estate in fee simple absolute normally would make; and the owners of the interests limited after the estate for life are either not subject to financial liability or are adequately protected against financial liability arising from the proposed construction operations. (25) It is important to recollect here the key holding in Melms v. Pabst Brewing Co., (26) in which the Wisconsin Supreme Court rejected several reversioners' damage claim for waste arising from the destruction of a once fine residence whose surrounding neighborhood was transformed into an industrial zone of Milwaukee. In Melms, the court specifically held that a life tenant is entitled to make substantial alterations in a structure or even to demolish it, absent a contractual obligation to restore the property to the condition in which it was received, "when ... there has occurred a complete and permanent change of surrounding conditions, which has deprived the property of its value and usefulness." (27) In other words, the key factor that reconciles the conflicting Restatement provisions is the phenomenon of changing conditions in the neighborhood. Put differently, a mere increase in market value alone might not justify allowing a life tenant to make fundamental changes in the form or use of...

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