The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1901-11-29
TAX APPEAL
DECISIONS
Supreme Court
Makes Rules for
Tax Payers.
(From Wednesdays daily)

same time information Of much value
to the taxpayers generally. The SUI
preme Court reverses the lower court
in the proposition that property can be
assessed only up.to eight times its an
..Eal rental value. AS a net result of
the decisions, which are made in the
matter of the Estate of Bernice Bishop
and of Emily X. Mehrtens about $4,000
is added to the taxable valuation of the
Territory.
The opinion of the court is as follows
in the matter of the Bishop Estate:
A decision of Tax Appeal Court,
though not having the conclusiveness OF
a jury verdict, should not be disturbed
for light reasons.
To apply the eght-rental rule (Civ. L.,
Sec SOD to determine the value of the
landlords interest in land for purposes
of taxation would be manifesty unfair
and unjust where the land was leased
nineteen years ago at rental of only
500 a year. and is now worth $4,000, al
though the lease has twenty-one years
yet to run. The landlords interest is
assessed at $500.
When a taxpayer makes return with
in the time prescribed by the statute,
and the assessor gives him further time
for furnishing additional informauon,,
and he furnishes such information and 1t
is accepted by the assessor as part of the
return, the latter cannot object on APP
peal that the return was not complete in
the first instance.
OPINION OF THE COURT.
By Frear, c. ].
This is an appeal by the tax assessor
from the assessments made by the Tax
Appeal Court of two pieces of land be-
longing to the Bishop estate.
4, l@s F,A,, s,,gr hi
square in Honolulu, containing $3.50
square feet. Its dimensions are
80 feet on King street, 79S on
Richards street, 945 on Merchant
street, and 106 in the rear. 1t was return
ed at $50, 900 assessed by the present as
SCISSORS predecessor in Office at $4,000 adj
mitted by the present assessor to be of
the fair value of not over $4,000, and val
ued by the Tax Appeal Court at $4,000.
The assessment was made as of January
/, 1901. The evidence was substantially
as follows: This lot fronts on three
streets and is vacant and unimproved. A
lot, also vacant and unimproved, not far
away, on another corner of the same
block, nearer the center of the town,
having about So feet frontage on Mer-
chant street and % on Alakea, was sold
in June, 1901, at the rate of s6.22 square
foot. 1t was returned for taxation by its
foot. There is no evidence as to the cir
cumstances under which the sale took
place. One witness, government sur
veyor, testified that in June, 1900, he VAL
ued all the lots In this block for the SUI
perintendent of Public Works, and that
after due consideration he valued the lot
just referred to at $4.4i a square foot and
the lot now in question at $3.50 square
foot. Another surveyor, the superintend-
ent and land agent OF the estate in ques-
ton, testified that the return of $4,000
or about $3.50 square foot was made
after careful study, and that there had
been a tendency in 1900 toward a lowering
of values. A lot in an adjoining block,
nearer the center of the town, with
frontage on King street, but not corner
lot, containing about 2l,O1O square feet,
was sold in July, 1899, at auction at the
rate of little less than 81 a square foot.
The Tax Appeal Court state in their de-
cision that two lots, not corner lots, adj
joining the lot In question, had been as
sessed at $40 and s2.25 square foot,
though we do not find this in the tran
script of the evidence. The evidence is
rather meager on which to base an esti-
mate of the value of the lot While the
decision of the Tax Appeal Court has
not the conclusiveness of a jury verdict.
IT Is entitled to some weight. We do not
find sufficient reason in this instance for
disturbing the finding of that court and
accordingly 1t Is affirmed.
The other lot is one of about eleven
acres situated at Pawaa. in Honolulu.
with a frontage on the lower side of King
street between Sheridan street and the
Waikiki road. 1t was returned at $500.
assessed al $4,000 and valued by the Tax
Appeal Court at $500. The peculiar feat
ure is that the tract Is subject to a lease
for forty years at a rental of only 500
year, the lease having twenty-one and
a half years yet to run. There seems to
be no dispute that the land unincumbered
is worth $4,000, as held by the Tax APP
peal Court. But as 1t is rented for only
800 a year, that court valued the land,
subject to the lease, at only sS00-presum-
ably under the provisions of the statute
(Civ. L., Sec. 500, that when any real
estate or house is leased or rented the
sum of eight years rental thereof shall
be the assessment value of such real es-
tate or house, unless such valuation shall
be manifestly unfair or unjust" This
eight year rental rule" was discussed in
Parker VS.. Shaw, .. Haw., 4O7 and Chill
ton VS.. Shaw, 10 Haw., $50 A valuation
under that rule is generally ''manifestly
unfair and unjust when, as here, the
property was leased years ago at a small
er rental than could now be obtained.
Just what the valuation of the landlord S
interest in such a case should be, depends
principally on the length of the uneX-
pred term of the lease and the difference
between the stipulated rental and the
market rental value. The value of the
landlords interest increases and that OF
the tenants interest decreases as the ex-
piration Of the term approaches, other
things remaining constant. OF course
the value of the property as a whole may
change so that the values of both inter-
ests may Increase or decrease absolutely
though the values may change in differ
ent directions relatively to each other
Presumably when the lease was made
the stipulated rental was the market
rental value. II that were so, the value
= of the land at that time on the eight
year basis was $500. II has now increased
to $4,000. portion of this increase be
longs 10 the landlord, who should pay
taxes on that portion. This is property
tax, not an income tax. The Tax Appea