Opinion ID: 1182352
Heading Depth: 1
Heading Rank: 2

Heading: the ownership of surface running waters in hawaii

Text: The only private rights to surface running waters in the Hanapepe Valley specifically acknowledged to the parties by McBryde I are those referred to as appurtenant by that case and prior cases, i.e., rights to the amount of water used for taro cultivation on specific plots of ground at or immediately preceding the time of Land Commission Awards. [11] McBryde Sugar Co. v. Robinson, supra at 187-190, 504 P.2d at 1339-1340; see Hutchins 102-03 and cases cited therein. [12] All other water in the valley (surplus water), McBryde I held, belongs to the State. The court's reasoning in this regard was based exclusively on language contained in the Land Commission Principles, RLH 1925, Vol. II, pp. 2124, 2128 (originally enacted as L. 1847, at 81, 85). [13] The circumstances surrounding the adoption of the Land Commission Principles are detailed in McBryde I. 54 Haw. at 184-185, 504 P.2d at 1337-1338. The only point needing reiteration here is that these measures were adopted by the Land Commission and approved by the Legislature for the purpose of providing the Land Commission with standards for the adjudication of private land titles following the Great Mahele of 1848, by which King Kamehameha III proclaimed that he was sharing the lands in the Hawaiian Kingdom with his people. McBryde Sugar Co. v. Robinson, supra at 185, 504 P.2d at 1337-1338. [14] It is true, as stated in McBryde I, that the Principles acknowledged the reservation by the sovereign of the prerogative ... to encourage and even to enforce the usufruct of lands for the common good. But to say that the king retained the power to encourage and enforce the usufruct of land is not to say that, ipso facto, he retained title to all surplus water in his kingdom. For while it is true that in ancient times the King was the sole owner of the water as he was the rest of the land, Hawaiian Commercial & Sugar Co. v. Wailuku Sugar Co., 15 Haw. 675, 680 (1904), the Land Commission was given the authority not only to confirm private allodial titles to land, but also to do so in accordance with ... native usages in regard to ... water privileges.  RLH 1925, Vol. II, p. 2123 (originally enacted as An Act to Organize the Executive Departments of the Hawaiian Islands, L. 1846, Pt. I., ch. VII, art. IV) (emphasis added). That one of the most important usufructs of land is the right to water cannot be doubted. See McBryde Sugar Co. v. Robinson, supra 54 Haw. at 186 & n. 12, 504 P.2d at 1338 & n. 12. However, to maintain, as the court did, that since water is a usufruct of land, therefore it was retained by the king after the Mahele, is a fruitless line of analysis. For if all usufructs of land were retained by the king, then nothing but bare legal title was passed by the Mahele and subsequent Land Commission Awards โ a proposition which is patently incorrect if not absurd. A more useful approach to the question of who owns the surplus waters in Hawaii is to examine into Hawaiian usage and judicial precedent for enlightenment. The Land Commission Principles, at best, are ambiguous on the point and in and of themselves do not support the court's position.
The ancient Hawaiian system of water rights was elaborate and well-defined, built largely around the dependence of the Hawaiian people on taro cultivation. See E.S. Handy & E.G. Handy, Native Planters in Old Hawaii 57-67 (1972). Indeed, the Hawaiian word for law or regulation is kanawai, a compound of the word wai, meaning water [15] โ a relationship which suggests that many early unwritten laws pertained to the regulation of water rights. [16] See A. Perry, A Brief History of Hawaiian Water Rights 3 (1912). Under ancient usage, the king owned all land and water in the kingdom. See Territory v. Bishop Trust Co., 41 Haw. 358, 361 (1956). However, a grant by the king to a konohiki of an ahupuaa or an ili kupono carried with it not only the control of the land and the right to its products, but also the absolute right to control the disposition of surplus water. See Hutchins 84-85. Although the konohiki was always subject to summary disseizin by the king, the bundle of rights and powers concomitant with the grant of such a parcel of land clearly included the legal right to surplus water and the power to use it however the konohiki saw fit. See A. Perry, supra at 11. Because such rights and powers were historically associated with land tenure in ancient Hawaii, it is natural to assume that when King Kamehameha III engineered the Great Mahele in 1848, he intended to mahele not only his legal title to the land but also his legal title to surplus water originating on all land not retained by himself as Crown property. As stated by Professor Wadsworth: Patently [surplus] water belonged to the chief, at the pleasure of the King, and in all logic the legal ownership passed to the chief along with the ownership of land upon his completion of the legal requirements of the Mahele. Wadsworth 132. See generally 1 Kuykendall ch. XV.
The foregoing general historical observations are supported by a long line of Hawaiian judicial precedent. I undertake to analyze this precedent here in order to point out more fully the errors of McBryde I. Peck v. Bailey, 8 Haw. 658 (1867), was a controversy between landowners within an ahupuaa involving the right of one such landowner to make certain diversions of water from a river originating within the ahupua to dry ( kula ) land. Although the case specifically adjudicated only appurtenant water rights, the court observed, in dictum, that the conveyance by the king of land bordering on [a] river will include the rights of water in said river, which had not been before granted [ i.e., surplus water]. Id. at 671 (emphasis added). Davis v. Afong, 5 Haw. 216 (1884), involved a dispute over the right of a konohiki to appropriate running underground spring water which originated on his land. The court held that konohiki land awarded subsequent to the Mahele carried with it the right to the surplus spring water originating thereupon. However, the court's reasoning had more far-ranging implications. If private land grants pursuant to the Mahele included the right to running spring water (an important usufruct of the land), then it would seem that a fortiori the grants included the right to running surface water. [17] In Hawaiian Commercial & Sugar Co. v. Wailuku Sugar Co., 15 Haw. 675 (1904), the court for the first time was faced squarely with the question of the ownership of surplus surface running water. The case involved a single ahupuaa that had been split in ownership between the complainant, as owner of the land in the ahupuaa in which a river originated, and the respondent, as owner of a large tract of kula land within the ahupuaa. At the heart of the suit were diversions by the respondent of all the surplus water from the river for the purpose of irrigating its kula land. The court held specifically that the grant to the respondent of the dry part of the ahupuaa did not carry with it the right to all the surplus water. Id. at 683. Instead, the court held: Surplus water. This, in our opinion, is the property of the konohiki [of the entire ahupuaa ], to do with as he pleases, and is not appurtenant to any particular portion of the ahupuaa. By ancient Hawaiian custom this was so ... [N]o limitation, so far as we can learn, ever existed or was supposed to exist to his power to use the surplus water as he saw fit. Id. at 680. The indication in McBryde I that the foregoing passage was dictum, 54 Haw. at 182, 504 P.2d at 1336, was erroneous, since the determination of who owned the surplus water was, as it is in this case, necessary to the proper resolution of the controversy between the parties to the suit. Cf. State v. Tominaga, 45 Haw. 604, 612-613, 372 P.2d 356, 361 (1962). The next case to consider title to the surplus water of a stream was Carter v. Territory, 24 Haw. 47 (1917). In Carter, a stream originated on one ahupuaa (owned by the Territory) and flowed through that land to a second ahupuaa (owned by the plaintiff). The sole issue in the action was whether the Territory, as konohiki of the upstream ahupuaa, was entitled to all of the storm and freshet surplus water in the stream. The court acknowledged that [w]here a stream flows through a single ahupuaa ... the [normal] surplus waters of the stream belong to the ahupuaa.  Id. at 70. However, it went on to hold that the ownership of storm and freshet water which passes through two ahupuaas must be divided between them on the basis of the common law doctrine of riparianism. [18] See Territory v. Gay, 31 Haw. 376, 404 (1930) (Parsons, J., concurring in part and dissenting in part). Whatever the wisdom of the Carter court in adopting the riparian doctrine with respect to this class of surplus water, a necessary element of its holding in this regard was that such water was subject to private ownership and was not the property of the government. See Foster v. Waiahole Water Co., 25 Haw. 726, 734 (1921) (surplus water is the class of water which originally the chief or konohiki could dispose of at will irrespective of the rights of the other owners and tenants). The overruling of this aspect of Carter in McBryde I was ill-advised, especially in light of the reliance on that case earlier in the court's opinion for the proposition that the water law of this State is governed by riparian doctrine. See 54 Haw. at 182, 504 P.2d at 1336. Finally, Territory v. Gay, supra , held unequivocally that the normal surplus water of a stream was the private property of the konohiki of the ahupuaa or ili kupono on which it originates. This was a suit by the Territory to enjoin diversions by Gay and Robinson (both parties here) of surplus water from the Koula stream. The Territory argued that as owner of the ahupuaa of Hanapepe it was entitled to all the surplus water originating in the valley, even though the source of that water was in the ilis kupono of Koula and Manuahi, owned by Gay and Robinson. The court, however, reasoned that an ili kupono was co-equal in dignity with an ahupuaa, and that at least as to normal surplus water which originated on an ili kupono the konohiki thereof had title paramount to that of the konohiki of a downstream ahupuaa. [19] McBryde I gave a grudging acceptance to Gay by holding that as between the State and Gay and Robinson the case was res judicata. 54 Haw. at 177-179, 504 P.2d at 1334-1335. However, the court proceeded to sap that precedent of its force by holding that under established Hawaiian water law there is no such thing as normal daily surplus water. Id. at 199, 504 P.2d at 1345. In doing so, the court ignored the well-defined and often reiterated meaning acquired by the term surplus water over the course of more than a century of Hawaiian law, viz., all water in a stream not required to satisfy appurtenant or prescriptive rights. See Hutchins 69 & n. 15 and cases cited therein; note 6 supra. It follows that the Gay case awarded to Gay and Robinson real and substantial water rights in accordance with this meaning. See McBryde Sugar Co. v. Robinson, supra at 206, 504 P.2d at 1348 (Marumoto, J., concurring and dissenting). The foregoing judicial pronouncements, even standing alone, are highly persuasive authority for the proposition that title to the surplus waters of maheled land passed into the private hands of the konohikis. As stated in Yoshizaki v. Hilo Hospital, 50 Haw. 150, 153, 433 P.2d 220, 222-223 (1967), this court is not as free in deciding cases in the area of real property as in the area of torts, even if it is assumed, for the sake of argument, that the abovementioned line of precedent projects a consistently erroneous line of reasoning. In re Austin, 33 Haw. 832, 839 (1936) (the doctrine of stare decisis has a special force in the area of land law; even though prior decisions may be unsound, if they are long established and conformed to ... such decisions should not be overturned). [20] The very substantial agricultural industry of this state exists in its present configuration only by virtue of great expenditures made for the development of irrigation systems. See McBryde Sugar Co. v. Robinson, supra 54 Haw. at 201, 208, 504 P.2d at 1346, 1349 (Marumoto, J., concurring and dissenting). These systems are designed to deliver vast amounts of water which, under prior decisions of this court, was thought to be the subject of private ownership and development. See, e.g., Wadsworth 150-58. See generally 3 Kuykendall 62-70; R. Kuykendall & A. Day, Hawaii: A History 128, 153-54 (rev. ed. 1948). I discuss the constitutional ramifications of the court's sudden about-face from these decisions in pt. IV of this opinion. But I need not rest the judgment that the court erred in McBryde I as a matter of state law solely on a re-evaluation of prior case law and ancient Hawaiian usage. There is other historical evidence which lends final force to that judgment.
In 1915, the Legislature of the Territory of Hawaii, concerned about providing for the optimum utilization of the water resources within the territory under then existing laws, passed An Act to Provide for the Appointment of a Commission to Examine into the Water Resources and Water Laws of the Territory. L. 1915, Act 36. The first section of the statute provided as follows: The governor is hereby authorized to appoint a commission of three persons, one or more of whom shall be a member or members of the legal profession, which shall serve without pay, and which shall collect and examine available data and information relative to the water resources, both underground and surface, and both privately and publicly owned or controlled, in the Territory of Hawaii; Which shall also examine and make a study of existing laws pertaining to the diverting, developing, using, conserving, holding, and wasting of water; Which shall, if deemed necessary, employ the services of legal and technical experts; Which shall have the power to visit, examine and measure all existing water sources, channels, ditches, wells, tunnels or other structures used for transporting or utilizing water; and Which shall make such recommendations and draft such legislation as may by it be deemed necessary to serve the best interests of the people of the Territory of Hawaii, and shall embody the same in a report to the governor on or before January 1, 1917. (Emphasis added). As the italicized portions of the statute indicate, the mandate of the Commission was far-ranging, and included no less than an invitation to propose a complete revision of the water laws of the territory should such a change be found necessary. Soon after the passage of the Act, the governor appointed Messrs. G. Larrison, A. Smith (then the first Deputy Attorney General of the Territory) and T. Sedgwick as commissioners to undertake the study. They were assisted in this regard by A. Chandler, a member of the State Water Commission of California and a foremost authority on water law. After nearly two years of preparation, the Commission issued its recommendations in the form of a Report of the Water Commission of the Territory of Hawaii to His Excellency the Governor of Hawaii (January 13, 1917) [hereinafter cited as Water Commission Report ]. The Commission recommended the adoption of a detailed code relating to the development and husbandry of underground artesian water, because in large measure the use of such sources of water had begun relatively late in Hawaii's history, see 3 Kuykendall 66-70, and hence a tested and well-reasoned system of artesian water regulation had not had time to evolve. See Hutchins 178-79 and cases cited therein. The Legislature adopted virtually verbatim the specific legislation drafted by the Commission. RLH 1955 ch. 101 (originally enacted as L. 1917 ch. 156). However, with respect to surface waters, the Commission reported as follows: We have come to the conclusion that we do not care to recommend any legislation concerning surface waters. As is stated by Mr. Chandler in his report to the Commission dated November 4, 1916 ... we already have a very good workable method for the determination of rights to surface waters; and the law relative thereto has been fairly definitely settled by a series of decisions. There are, it is true, several questions as yet unsettled, but we believe them to be of such a nature that they can be better determined by the courts than by positive legislation which could only attempt to define and not change vested rights in the absence of provision for compensation therefor. Accordingly, we make no recommendation for any legislation at the present time pertaining to the diverting, developing, using, conserving, holding or wasting of surface water. Water Commission Report 9 (emphasis added). These recommendations were evidently accepted, for no laws relative to surface waters were subsequently forthcoming. This acceptance by the Legislature of the Commission's recommendation that existing judicial precedent adequately and correctly reflected the status of Hawaiian water law is legislative recognition that surplus surface waters belong to the konohiki of the ahupuaa or ili kupono on which they originate. The Commission and the Legislature not only had before them dicta supporting this proposition in Peck v. Bailey, supra and Davis v. Afong, supra , but also an express holding to this effect in Hawaiian Commercial & Sugar Co. v. Wailuku Sugar Co., supra .

For a period in excess of 60 years, the government of Hawaii has executed the laws of the Territory and the State in a manner which both expressly and impliedly has acknowledged that title to surplus water rests in the owner of ahupuaa or ili kupono on which it originates. Although in a position to know the law relating to this subject and to enforce it in the best interests of the people of Hawaii, successive attorneys general and their offices as well as territorial and state taxing authorities have consciously adopted legal positions premised on the basic proposition of private ownership of surplus water. In a Statement Regarding the Law of Waters and Water Rights in Hawaii, as Existing with Relation to Fresh Waters, 4 Honolulu Water Commission Records 169 (1908), the then attorney general of the Territory of Hawaii, C.R. Hemenway, specifically acknowledged the right of the konohiki to surplus water arising on his land. In doing so, he noted that King Kamehameha III maheled not only land into private ownership, but also all the water flowing on the land. Id. at 169-70. Similarly, in 1919 the attorney general gave an opinion to the Lahainaluna School on Maui with respect to its water rights which rested on the implied proposition that the Pioneer Mill Company, not the Territory, owned the surplus waters flowing in the watercourses of the valley of Kauaha. 1919 Op. Att'y Gen. 386. Other evidence of the government's position in this regard abounds. In Carter v. Territory, supra , the Territory took the unequivocal stance that surplus water belongs to the konohiki of the ahupuaa on which it originates. Opening Brief for Territory at 272-73. The legal arguments of the Territory in Territory v. Gay, supra , echoed its position in Carter. Opening Brief for Territory at 16. Indeed, in this very case the State made no claims to the surplus water of the Hanapepe watershed, conceding the private ownership thereof to Gay and Robinson. Cf. Opening Brief for State at 7-9, McBryde Sugar Co. v. Robinson, supra . Moreover, since at least 1913, the Territory and thereafter the State have taxed surplus water severed in ownership from the land upon which it originated as the property of its private owner. See In re Taxes, Waiahole Water Co., 21 Haw. 679 (1913). In Waiahole Water, this court upheld the taxation to the taxpayer of surplus water which had been conveyed to him by the konohiki of an ahupuaa. In holding that a tax assessment on the water separate from its land of origin was proper, the court noted that [t]he intent of grantors, grantee and assessor to separate the water rights from the remaining interests in the lands is beyond doubt. Id. at 682 (emphasis added). See also Brief for appellee at 8-9, id. Similarly, it was established without contest in Territory v. Gay, supra , that the Territory has been assessing and collecting taxes upon the land of Makaweli at its value as the same has been enhanced by the use of Koula water upon it, [ i.e., ] the value of the [surplus] water has regularly been assessed for taxation as the private property of the respondents. Opening Brief for Gay and Robinson at 43, id. This practice of taxing surplus water as private property, in addition to the knowingly and consistently followed position of successive attorneys general and their staffs, constitute compelling historical evidence that the State and its predecessor governments have at all times prior to this court's opinion in McBryde I regarded surplus water as private and not sovereign property. In re Title of Kioloku, 25 Haw. 357 (1920), is highly persuasive in this regard. In Kioloku the Territory claimed title to an ahupuaa that was ostensibly privately-owned on the ground that the land was not included in the Great Mahele of 1848. Although there was no record of an award of the land in question, the court nonetheless refused to award it to the Territory, reasoning that the government had made no claim of ownership of the property for nearly sixty years and that: during the whole period the property was assessed as the property of Kalakaua and his successors in interest and taxes were collected by the government down to the date of the institution of this proceeding. As said in Jover v. Insular Government, 221 U.S. 623 [31 S.Ct. 664, 55 L.Ed. 884] [(1911)], we would not be justified in assuming that the State would collect taxes on its own property. Id. at 364. [21] The foregoing facts indicate persuasively that the reasoning of McBryde I turned on assumptions which are wholly unjustified by and contrary to the consistent and long-standing posture of the Hawaiian government with respect to surplus water. Such a posture knowingly adopted for more than half a century, is strong evidence of the government's non-ownership, and at the very least should have been dealt with by the majority.
In response to the argument of the Territory in Territory v. Gay, supra , that surplus water in the Hanapepe Valley was government owned, Gay and Robinson adduced considerable evidence that the government should be estopped from asserting whatever title it had to such water. See Gay and Robinson, id., at 33-43. This evidence included the government's silence in the face of Gay and Robinson's overt and well-known expenditures of large sums of money for the development of surplus water, statements by then Governor Frear acquiescing in Gay and Robinson's claim of private title, and taxation by the Territory of surplus water as privately owned by Gay and Robinson. It was the position of Gay and Robinson that in the event it should lose on the issue of whether the konohikis of ilis kupono and ahupuaas were equal in status and rights, the evidence of the government's affirmations of and knowing acquiescence in Gay and Robinson's title to surplus water in the Hanapepe Valley, coupled with the latter's extensive reliance thereupon, sufficed equitably to estop the Territory from claiming ownership of the water. Cf. Kauhi v. Liaikulani, 3 Haw. 356 (1872). Of course, this position was never tested since Territory v. Gay held that Gay and Robinson owned the surplus water in any event. Nor did Gay and Robinson urge the point at trial in this case, since the basic ownership of surplus water in the valley was not contested by the State and since Territory v. Gay had seemingly settled the issue. Whatever doubts that previously existed in this State as to whether the government can be equitably estopped, see Godbold v. Manibog, 36 Haw. 206, reh. denied, 36 Haw. 230 (1942), in my opinion were dispelled by Yamada v. Natural Disaster Claims Commission, 54 Haw. 621, 513 P.2d 1001 (1973). In an analysis that alternatively supported the result in the case, Yamada announced that the doctrine of equitable estoppel is fully applicable against the government if it is necessary to invoke it to prevent manifest injustice. Id. at 629, 513 P.2d at 1006. While this aspect of Yamada was subsequently disavowed by the court as not essential to the result in the case, Yamada v. Natural Disaster Claims Commission, 55 Haw. 126, 516 P.2d 336 (1973), the soundness of its reasoning has not been questioned. That it correctly projects the law of this jurisdiction is apparent from the recent decision of this court, Waianae Model Neighborhood Association, Inc. v. City & County, 55 Haw. 40, 44, 514 P.2d 861, 864 (1973), wherein we agreed with the following proposition as eminently fair and equitable: [A]n act of an administrative official which is without any semblance of compliance with or authorization in an ordinance, is beyond his competence and is utterly void; but an act of such official, done in good faith and within the ambit of his duty, upon an erroneous and debatable interpretation of an ordinance, is no more than an irregularity, and the validity of such act may not be questioned after expenditures have been made and contractual obligations have been incurred in reliance thereon in good faith. (Emphasis added). Yamada involved an attempt by the Natural Disaster Claims Commission to revalue downwards certain tax credits it had awarded the plaintiff as a result of property losses he had suffered in a tsunami. Relying on the originally adjudicated amount of these credits, the plaintiff had made substantial expenditures in developing his property on the island of Hawaii. These expenditures in reasonable reliance on the Commission's award, the court held, meant that the government was estopped from now reducing that award. The court stated: A denial of such credits after more than two years means, in effect, that his investment in compliance with the statute is wholly dependent upon the State's continuing decision not to take away that which it gives. We think this is a patently unfair burden to impose upon the claimant. 54 Haw. at 630, 513 P.2d at 1007. The relevance of Yamada to this controversy is obvious. That the government had led Gay and Robinson into the expenditure of large sums of money in the development of surplus water, Gay and Robinson offered to prove in Territory v. Gay, supra . Moreover, the position of the Territory in this regard originated at the highest levels of government, and was not merely the unauthorized stance of low-echelon employees. Compare Godbold v. Manibog, supra 36 Haw. at 214-215. In the circumstances, even assuming the correctness of McBryde I as a general matter, Gay and Robinson should have been afforded an opportunity to prove that the State should be estopped from asserting ownership of the surplus water in the Hanapepe Valley. If anything, evidence showing the government's long-standing position and Gay and Robinson's reliance presents a factual situation in which the equities may be greater in favor of estoppel than in Yamada. Surely the logic of Yamada is that the government may not lawfully reverse previously firm policies with respect to property when, in reasonable reliance thereupon, private parties have expended significant sums of money. See City of Long Beach v. Mansell, 3 Cal.3d 462, 91 Cal. Rptr. 23, 476 P.2d 423 (1970). I find the majority's failure to consider this argument in the present case legally inexcusable.
In view of ancient Hawaiian usage, Hawaiian judicial precedent, and the other historical evidence explored in this opinion, I would reverse McBryde I with respect to the ownership of normal surplus water and adhere to the prior position of this court consistently expressed in Hawaiian Commercial Sugar Co. v. Wailuku Sugar Co., supra , Carter v. Territory, supra , and Territory v. Gay, supra . To reiterate, these cases held that when Kamehameha III maheld his lands in 1848, it was his clear intent to pass both the title to land and the title to water thereupon. Consistent with ancient Hawaiian usage, this meant that upon the konohikis devolved title to all surface water originating on their lands excepting that required to satisfy the appurtenant rights and prescriptive rights of others. Stated flatly, normal surplus water should be the private property of the konohiki from whose land it springs and not the property of the State.