Opinion ID: 1182352
Heading Depth: 2
Heading Rank: 5

Heading: The Long-standing Position of the Territorial and State Governments of Hawaii with Respect to the Ownership of Surplus Water

Text: 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.