Comparative Analysis of Legal Concepts of Ownership & Possession

The article 'Comparative Analysis of Legal Concepts of Ownership & Possession' by Nilanjana Banerjee expounds in depth on the correlation between ownership and possession. It is a thorough study of the subject matter, modes and types of the requisite legal concepts.

Introduction

Possession and ownership are vital concepts in law as well as in everyday life. It is a legal as well as a factual concept which makes it a difficult task to define. On a day-to-day basis, layman believes that possession and ownership are synonymous terms, hence they can be used interchangeably. However, in the legal domain, these are two different concepts. This paper aims at analysing the two concepts and presents the differences between them.

Possession means holding physical control over any property and it is strong evidence of ownership, however, it does not necessarily signify ownership. A person can be in possession of a car because he is a mechanic repairing the car and not because he is the owner. There are different elements of ownership and possession, which will be deliberated upon subsequently.

These two concepts are deeply interrelated, but they should not be misunderstood as being the same thing. Both these concepts work together to determine the ambit of rights of an individual over the property. Hence clear understanding of both these concepts is significant as their correct application will help to solve the problem accurately.

Ownership: Definition and Characteristics

Ownership denotes the relation between a person and any object forming its subject matter. This relation consists of rights in rem i.e., the right existing against the whole world and not any specific person. Though these rights are rights over such objects, they are like other rights which exist against other persons. Several jurists have defined ownership in their way. Following are a few such definitions-

Austin’s definition of ownership talks about three different aspects-

a. Indefinite use - the owner is free to use the object as he likes, subject to restrictions as imposed by law.

b. Unrestricted disposition - the owner has absolute freedom in determining how he will dispose off the property.

c. Unlimited duration - the owner can hold the property for unlimited time.

Though, the third clause stands against law in the contemporary world as the state reserves with itself, the right of taking over property in the public interest.

Holland’s concept of ownership is alike to Austin’s. He says ownership gives plenary control over the subject matter, unrestricted by law. However, he acknowledges three rights. They are-

a. Possession

b. Enjoyment

c. Disposition

While Hibbert gives a wider definition and includes four rights. Those are-

a. Right to use a thing

b. Right to exclude others from using it

c. Right to dispose of the thing

d. Right to destroy it

In normal cases of ownership, the following incidents are expected to be displayed. Firstly, the owner will have the right to possess the thing, though there are chances that he is wrongfully deprived of it.

Secondly, the owner has the right to use and enjoy the property i.e., the subject matter of ownership. It means that the owner will have the right to decide who will use it, possess it, how it will be used etc.

Thirdly, the owner can consume the property, destroy it and even transfer it to someone else. The right to consume and destroy are quite simple and straightforward rights, but the right to transfer or alienate has some degree of complication. As per English law, an owner can alienate the property either during a lifetime (like by sale or gift) or after death by will. In normal circumstances, only an owner can transfer the property and the principle governing this is Nemo Dat Quod Non-Habet. As per this, a person can’t give more than what he has, which implies, a person who doesn’t have the right to transfer cannot pass it on to others.

Fourthly, ownership is indeterminate in duration. Non-owner rights come to an end after the stipulated time period is elapsed, like a tenant loses its right to possess after the contract of lease terminates. However, the position of the owner is quite different from this. Not even death can determine the end of ownership, as the property will pass on to the next-gen. Hence, the ownership right continues.

Fifthly, it has a residuary character. It implies that after the owner has let the non-owners use the property, the remaining rights are still with the owner. The owner is not divested of those rights which he didn’t give to anyone. For example- the owner leases the land to A and gives easement rights to B. But the owner still has the right to alienate the property, and re-enter the land.

English law says that there is no absolute concept of ‘ownership’. It argues that the party has to prove that it has a better title over it than other parties. Suppose A finds a ring and B dispossesses A of it. Here A does not have to prove his ownership to get the ring. He will have to just show that he has a better title than B. Basically, it says that several independent titles to a property can exist, while this is in contrast to Roman Law. It says at one time only one title can exist and from it, all other titles are to be derived.

As per Roman Law, no new title can be acquired independent of the old title except by divesting the old title/previous owner of its rights. From 1925, when land registration started, English law also started giving absolute title to property. But this absolute right of ownership can be limited by the adverse dominant rights of an encumbrancer or by the state under public interest. An encumbrancer is one who has rights over another’s a property like easement rights and they limit the right of ownership.

The Subject Matter of Ownership

The general understanding of the subject matter of ownership consists of materialistic things like land, and chattels, but by no means ownership can be limited to it. It is wide enough to include debts due to him, shares in companies, interest in funds, patents etc. These are non-materialistic things, in fact, some of them are rights, like the right to recover debt, and the exclusive right of the patent. A temporary transfer of these rights is possible but the transferee does not acquire permanent ownership rights. Every subject matter of ownership basically forms a right, whether it is a material or a non-material thing. Moreover, it seems quite natural when we talk about ownership rights, but the reverse is not so.

What is meant here is that it seems unreasonable when we say, we own this right (like the right to free speech). Though it is the right which we have, the law does not provide for such transactions. If such transactions are allowed then rights would become a marketable item, hence they are restricted. Similarly, there are certain categories of things which are not capable of being owned, like living persons, corpses other than anatomical specimens, air, sea, sun, moon etc. Nothing in logic or law prevents us from owning these but still, it seems unnatural to call it a subject matter of ownership. The reason is that human beings have accepted certain value judgements concerning them.

Earlier laws permitted slavery but making a man a subject matter of ownership in the contemporary world is not acceptable. Charging for breathing in air, and using sunlight might seem feasible if allowed by law but our instinct and value judgement calls it inappropriate. We believe these are res communes (for the whole community).

The valid mode for acquisition differs from one legal system to other. Strict rules have been made to the exempt fraudulent acquisition of property from the scope. In Indian society, (during the British raj) the zamindars used to acquire property from the peasants in the guise of repayment of debt. If the mode of acquisition is not valid in law, then the whole transaction can stand void. Hence, the subject matter and mode of acquisition are significant.

Types of Ownership

1. Sole & Co-ownership

As a general rule of ownership, a thing can be owned by one person only (at one time). However, two or more persons can also have ownership over the same subject matter at the same time. The simplest example is of partnership firm, where the properties are co-owned by the partners. Though each party has their own share, it would be incorrect to say that they are divided and separately owned. It is an undivided unit. As soon as each of the partners are owning the property separately, it is believed that the partnership is dissolved. Co-ownership was distinguished into two types i.e., in common and joint ownership. In the former case, the right of the dead person can descend to his successors but in joint ownership, it dies with the death of the owner.

2. Fragmentation in respect of Time

There are two types of this. They are simultaneous ownership and life interest i.e., one after another. To understand this, it is better to take an example. A want to provide land to his son X and Y. There are two ways he can do so. Firstly, he can divide the land into two parts and they will be considered co-owners of it. Secondly, A may convey the land to X till he is alive and thereafter to Y. In this manner, both have a separate vested interest in land. It enables the land to remain intact and still, provision is made for both sons. The second type connects us to another type of ownership- trust and beneficial ownership, which is discussed subsequently.

3. Trust & Beneficial Ownership

A trusted property is that which is owned by two persons at the same time and the relation between such two persons is that one is obligated to use his ownership for the other’s benefit. The former is called a trustee and later beneficiary. Ownership of the trustee is more nominal than real. In essence, a trustee is not an owner at all, rather he has the responsibility of administering the property to another person. Law recognises that the property actually belongs to the beneficiary (when it is a comparison between them), while in any dealing with a third party, it is the trustee who is assumed to hold the property. A trust is not any mere contractual obligation, rather it is an obligation to use a property which is already vested in another. Moreover, it needs to be distinguished from an agency. In an agency, the agent needs to consult the principal before selling off, but a trustee can offer a good title to the purchaser without notice of the trust.

Trust and beneficial ownership are independent of each other, which implies one can be altered with the other remaining unaffected. Basically, there are four classes of persons who require a trustee for themselves. They are

a. Unborn person

b. Infant, lunatic

c. The property where a large number of persons are interested

d. In case of conflicting interest over the property.

4. Legal & Equitable Ownership

Legal ownership is that which has its origin in the rules of common law while equitable ownership is that which is developed from rules of equity. Common law has refused to accept equitable ownership and claimed that such owners are no owners at all. However, in some instances, the legal owner is also given equal status as the equitable owner. Law and equity are considered discordant with each other in the case of ownership rights. A legal owner is always a trustee for the equitable owner, but the reverse may not always be true.

5. Vested & Contingent Ownership

Ownership is vested when it is complete, already perfect and absolute, while it is contingent when there are chances that ownership will become absolute. It’s becoming absolutely dependent on any uncertain future event. The happening of that event would convert the contingent interest into a vested interest. However, it is more than a mere chance or possibility of becoming an owner. The event on which the contingent interest is dependent is called condition precedent, which when fulfilled leads to the conferral of vested ownership. The condition subsequent, however, does not make an ownership contingent one, rather it makes a vested ownership as the commencement of it is not dependent on any condition.

Possession

It is a legal as well as factual concept and this makes it difficult to define. The literal meaning of the term ‘possession’ is having physical control over materialistic things. Human life seems impossible without possession i.e., if we want to eat, we must get hold of it, the same is the case with other material objects. Without having anything in our possession, we cannot consume it or use it. Merely acquiring possession is not enough, as there will be a fear that the item in possession might get snatched away, hence legal protection is a must. It will make people respect individual possession. To determine whether a person is in possession of any article, we have to look into the facts mandatorily and reference may be given to law, hence unlike ownership, it is not purely a legal concept and is possible only when we try to understand the extra-legal meaning of possession and then carve out the legal meaning.

Notable jurists have defined possession in their own way. Some definitions are listed below.

Salmond says ‘possession is the continuing exercise of a claim to the exclusive use of an object.’

Savigny defines it as ‘intention coupled with physical power to exclude others from the use of the material object.’

In terms of Pollock, possession is, ‘in common speech, a man is said to possess or to be in possession of anything of which he has the apparent power of excluding others.’

Modes of Acquiring Property

Basically, there are two identified modes of acquiring possession, namely delivery and taking.

Taking is acquiring possession of any article without the consent of the previous possessor and it may be rightful or wrongful, while, delivery is the voluntary transfer of possession from one person to another. Even delivery can take two forms i.e., actual delivery and constructive delivery.

Actual delivery is an immediate transfer from the hands of one person to another. It involves a physical delivery either to the other person or to any agent so appointed by him. Constructive delivery is where things are not delivered directly but their possession is in hands of delivery. Delivery of the key of the warehouse gives possession of the items stored in the warehouse to the other party, though they are not directly delivered hand to hand.

Elements of Possession

There are two elements of possession i.e., the corpus of possession and animus. Corpus of possession refers to physical contact with the thing in a way which expresses the intention and relation of the possessor. The possessor must have power over the thing to ensure exclusive use of it. A person is said to be in possession of a thing where there is a reasonable apprehension on part of the other not to interfere with his use of it and for that certain security is needed. Another element of possession is animus i.e., the intention to possess. This is a subjective element of possession. There can be a wrongful possession too like a thief in possession of the stolen object. The claim of the possessor must be exclusive, however, it need not be absolute. A landowner may let people use his land but that does not mean he lost his own; he has merely let it into the possession of others.

Types of Possession

There are several types of possession:

a. Mediate and Immediate Possession

Immediate possession also called direct possession is something when the goods are acquired or retained personally/directly, while in mediate possession, there is a medium required to possess it. It implies that the property is in possession by his agency on his behalf. For example- I myself go to buy a book, it is immediate possession of the book and if I ask my servant to buy the book for me, it is mediate possession. Mediate possession is of three types. The first type is where the goods are acquired through an agent or a servant.

The immediate possession here is with the agent or servant, but the mediate possession is with the master (as immediate possession is held on his account). The second form is where immediate possession is in that person who holds the property on account of others as well as his own too. However, such a person recognises the superior right of others to obtain possession from him, like renting out my house to A. He is in direct possession, but A recognises my title on it and knows I have the superior right over the house. The third form is where the person who is in immediate possession claims it for himself until some condition is fulfilled or time has elapsed, but he acknowledges that he holds the title for someone else.

In the case of Marvin v. Wallace, (1856) 6 El. & B. 726, A bought a horse from B and without even change in immediate possession, kept it with the bailee for a month. The court here said that B effectually delivered it to A, and this is possession of a third kind. The court even added that in all cases of mediate possession of the same thing at the same time. Every mediate possessor is in relation to the direct possessor through whom he holds the property.

b. Corporeal and Incorporeal

Corporeal right is the continuing exercise of exclusive control over the material object. It exists more in the existence of a legal right to exercise such control than in the actual exercise of it. If I lose my necklace, I retain possession of it because, by virtue of law, I retain the right to exercise exclusive control over it. Incorporeal possession is the exercise of claim over anything else, like non-exclusive use of the material object (right to use a path as way) or it can be unrelated to material objects (like trademarks, patents). It is commonly called possession of a right, and it is distinguished from possession of a thing. ‘the Roman lawyers call them possessio juris and possessio corporis, while the Germans call them Rechtsbesitz and Sachenbesitz.’

c. Possession in law and Possession in fact

Possession is the relationship between a person and a material object. Things which are not in any way amenable to human control can never be the subject matter of possession, like the sun or moon. Our ordinary language does not restrict us from using such language, which allows us to possess the sun or moon. But nothing, in reality, allows us to gain control over such objects.

In an ordinary sense, even if I take off my coat, I will still have possession over it. The deciding factor here is that I should be in a position to resume control over it. In primitive society, when there was no law regulating such provision, there was very little hope for resuming control over the item. In contrast to that, in the present society, where law exists, possession is protected by law.

Thus, when the possession is lost, it is easy to resume actual control over it. The remedy against dispossession enlarges the number of situations where actual control can be regained. There are two deciding factors, one being the extent of control and the second being the power to exclude other people from using it. Possession in law refers to such possession which is valid in the eyes of the law. It is called de jure possession. A person who is in de facto possession is also having de jure possession over it. There are exceptions to it. Like servant may hold possession of the car of its master, but in law, the master is said to have possession in actuality. But the reverse may not be true (a person having de jure possession may not have de facto possession). Like a ship owner, he does not necessarily have the ship under his control when the ship is plying in the sea.

Continuance of Possession

Generally, it is believed that an object falls in legal possession whereby an event occurs which puts the subject matter under the direct control of the possessor or anything happens that brings the object into the ambit of the possessor to exclude others from using it. But not necessarily every time this has to happen. There can be situations where the possession continues without even happening any events above.

For example, A leaves his house for an office, but in his absence, he still has possession of the house and everything inside it, even though his absence prevents him from exercising control over the furniture. Hence ability to have control over an item or even my intention to possess it sometimes becomes irrelevant (like if I have lost my valet and forgot about it or gave up my intention to resume control over it, this still may not prevent me from regaining possession over it). In this way, we continue to possess without actually having control over it.

Ownership and Possession - Difference

Conclusion

Ownership and possession are two distinguished yet interrelated concepts. Though the subject matter of both is the same, they do not give rise to the same rights. Ownership gives absolute rights over the property, while possession is merely the right to use the product/subject matter. Both are equally vital in human life as to use anything; we have to first possess that object, and only then can we avail the benefit of it. To eat a piece of cake, it has to be first possessed and then eaten, similar is the situation with every daily-use object. This example itself speaks how crucial it is to understand and distinguish ownership and possession.

Ownership is a purely legal concept, while possession is legal as well as factual concept. This leads to two different types of possession, i.e., possession in fact (de facto) and possession in law (de jure). There are several types of possession depending on the subject matter, and there are different types of ownership depending on time, subject matter, and the number of persons. Despite having so many differences, they are interrelated and form a vital part.

Important Links

Law Library: Notes and Study Material for LLB, LLM, Judiciary, and Entrance Exams

Law Aspirants: Ultimate Test Prep Destination