License or Profit?

This blog examines practice Multi-State Bar Exam questions and hopefully helps prospective takers learn to spot various devices used that can so easily throw anyone off balance in their 1.8 minute race to the next question.

I agree with Mr. Emerson that “A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.”

But when it comes to identifying and referring to legal principles, surely law students everywhere can agree that consistency of terms is not only not foolish, but vital to communicating accurately and effectively, not to mention success on the bar exam and the MBE.

A farmer asked his adjoining neighbor if he could build an irrigation ditch from the neighbor’s natural fresh-water spring to his property to provide water for his cattle. Because the spring supplied more than enough water to meet the neighbor’s needs, she agreed, provided that the farmer construct the ditch in such a manner that it would need the least maintenance possible, so that he did not need to continually enter her land. The farmer constructed a concrete irrigation ditch from the spring to the land at a cost of $25,000. The only maintenance required on the ditch was a semiannual cleaning. Three years later, the neighbor informed the farmer that her water needs had increased, and he could no longer take water from the spring. In addition, the neighbor did not allow the farmer onto her land to do the semiannual cleaning, resulting in the blocking of the ditch. The farmer wishes to keep water flowing through the irrigation ditch to his land.

Which of the following would be the farmer’s strongest argument?

A. The farmer owns a valid easement appurtenant to the neighbor’s property.

B. Because the neighbor has allowed the farmer to construct the irrigation ditch, the neighbor would be estopped from preventing the farmer from coming onto her land.

C. The farmer, although a licensee, has expended such a substantial sum of money in constructing the irrigation ditch that the neighbor may not terminate the farmer’s license now.

D. The farmer, although a licensee, may continue to enter the neighbor’s property to clean and maintain the ditch until he is able to acquire another source of water.

Note the italics that have been added to highlight the term “licensee” in choices C and D.

Use of that term seems to be confusing because there’s a permissive entry by farmer onto the land of neighbor for the purpose of taking something off. If left to that simple formulation, that sounds like the definition of a profit a prendre, or more simply called a profit.

Stoebuck and Whitman in their real property hornbook, the Third Edition of The Law of Property, state: “Profits allow some substance to be severed and removed.”

They further note that the removal of water not owned by the landowner is deemed an easement. That would fit into answer choice A.

Here, the water removed from a spring on the neighbor’s property is likely to be the neighbor’s property. So that seems to put it back into the category of a profit.

Except . . .

Except, one distinction between profit and license is that a profit, as an interest in land, is subject to the Statute of Frauds, while a license, as a mere privilege, isn’t. There are no facts as to that, and full performance removes the Statute of Frauds issue anyway. 

Another distinction is that a profit, as an interest in land is perpetual, terminated expressly by conditions in the writing, or by release from the profit holder; licenses are freely revocable (with some exceptions, of course).

It is said that the MBE is all about testing the fine-line distinctions and nuances in the law. But there are many areas of the law — this being one — where there just aren’t clear distinctions, either fine-line or bright-line.

Stoebuck and Whitman in their hornbook acknowledge the muddle in this area even as they incorporate a discussion of licenses made irrevocable by the licensee expending significant money or labor to make use of the license, and where the landowner should reasonably anticipate that expenditure by the licensee.

Basically, the authors seem to indicate that once a license is made irrevocable, it ceases to be a license and becomes something more: an actual interest in land in the form of a profit or an easement.

Therefore, the use of the term licensee is at best confusing and at worst misleading.

The answer key identifies C as the correct answer, apparently because of the farmer’s expenditure, duly anticipated (neighbor’s dictation of condition as to ditch construction) by the neighbor, to transform this into an irrevocable license. But that concept itself turns on a principle of estoppel.

So it seems that answer choice B is just as reasonable. It could be argued it might even be a more reasonable choice because it doesn’t attempt to name the interest as profit or license, which even as experts in this field acknowledge, is not so clear cut as to be easily testable on the MBE through a simplistic multiple choice question.

So the quandary is trying to find consistency of terms in a conceptual area so nebulous: consistency requires definitiveness, and definitiveness requires distinction. Where A could possibly equal C or B, or even A, consistency, Aristotle would have agreed, is simply not possible.

Given the amorphous nature of these concepts in the current law, acknowledged even by textbook authors, this topic needed to be saved for an essay.

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Disclaimer: The examples cited here are either from the National Conference of Bar Examiners or one of the private bar preparation providers, and are used here under the fair use safe harbor for nonprofit educational purposes outlined in 17 USC §107. BE ADVISED these examples are, perforce, outdated and are used only as illustrations of methodology in form and language that may be encountered on the MBE, and further be advised that the state of current law may not be accurately reflected.