Opinion ID: 1153262
Heading Depth: 1
Heading Rank: 7

Heading: Blight of Summons Damages

Text: The City next alleges that the trial court erred in finding that the condemnees were entitled to blight of summons damages at the following rates of interest, for the following periods on the then unpaid balances of the respective final awards for parcels 63 and 64, as follows: 9½% per annum from May 23, 1969 to June 9, 1969; 10½% per annum from June 10, 1969 to March 26, 1970; 10% per annum from March 27, 1970 to August 25, 1970. There is no dispute that the condemnees are entitled to just compensation at the time of taking. However, as part of just compensation, the condemnees are further entitled to interest at a reasonable or proper rate upon the final award from the date of taking until payment is made. State v. Coney, 45 Haw. 650, 372 P.2d 348 (1962); Honolulu v. Lord, 36 Haw. 348 (1943); Territory v. The Honolulu Plantation Co., 34 Haw. 859 (1939). In State v. Coney, supra 45 Haw. at 660, 372 P.2d at 353, this court held that the proper or reasonable rate meant the normal commercial rate during the period of delay, but in the absence of evidence of such commercial rate, the presumption is that the legal or statutory rate is to be applied. The court applied the legal rate of 6% as there was no showing of the normal commercial rate of interest prevailing at the time. In determining the normal commercial rate in the instant case, the court considered evidence offered by the condemnees of the prime borrowing rates for the periods in question. The City alleges that use of the commercial borrowing rate is erroneous and that the rate paid by banking institutions for certificates of deposits is the normal commercial rate. We overrule the holding in State v. Coney, supra 45 Haw. at 660, 372 P.2d at 353, wherein the court held that the proper or reasonable rate was the normal commercial rate ... but in the absence of evidence of such commercial rate, the presumption is that the legal or statutory rate is to be applied. HRS § 101-33 provides that, as a part of just compensation and damages, interest at the rate provided in HRS § 101-25 shall be given from the date of order of possession under HRS § 101-28, 29, until the final judgment is paid. HRS § 101-25 provides that a rate of 5% be used. However, HRS makes no provision for the payment of interest as blight of summons damages for the period from the date of summons until the date of order of possession. It is possible that the date of summons and the date of the order of possession could coincide. In that case, assuming the City had deposited the estimate of just compensation in order to procure the order of possession, the City would be required by HRS § 101-33 to pay blight of summons damages at an interest rate of 5% only on the amount that the final judgment exceeded the deposited estimate. Here, the legislature has clearly provided for a rate to be used to determine blight of summons damages. We believe this to be strongly indicative of the interest rate contemplated by the legislature to be used to compute blight of summons damages. We therefore see no reason to provide, in this case where there is a time lapse between date of summons and date of order of possession, a different rate for blight of summons damages than that which has been statutorily prescribed. Thus, we are of the opinion that the interest rate of 5% is the proper or reasonable rate to be uniformly applied in computing blight of summons damages, and in computing the applicable time, HRCP Rule 6 shall govern. Furthermore, in calculating blight of summons damages the trial court shall adhere to the following provision in HRS § 101-33: ... provided, that except in the case of an appeal by the plaintiff as provided in section 101-32, interest shall not be allowed upon any sum paid by the plaintiff to the clerk of the court from the date of the payment ... (Emphasis added.) We reverse and remand for new trial in accordance with this opinion. LANHAM, Circuit Judge (concurring and dissenting). I concur in the majority decision except with respect to the interest rate to be applied to blight of summons damages, or for interest at a reasonable rate on the final award from the date of the taking until payment is made, with which I dissent. It is true that HRS § 101-25 does provide that if payment of final judgment is delayed for more than thirty days then interest shall be added at the rate of five per cent a year, and HRS § 101-33 provides that: the final judgment shall include, as part of the just compensation and damages awarded, interest at the rate provided in section 101-25... . I agree with the majority opinion that it was undoubtedly the intention of the legislature that this interest rate of five percent also apply to the period of time between the date of summons and the order of possession. I would hold, however, that the government must pay the legal interest rate of six percent as set forth in § 478-1 for its citizens in general in order to meet the test of the Constitution's requirement of just compensation. See City and County of Honolulu v. Tam See, 40 Haw. 429, 431 (1953). The legal rate of six percent set forth in § 478-1 is that which controls most transactions when there is no express written contract fixing a different rate of interest, and this rate applies to the people generally in their ordinary transactions, and also garnishment proceeding (HRS § 652-4), judgments (HRS § 478-2), and perhaps other items which further research would reveal. Also, it is noted that the State had once set the interest rate on non-taxable county and municipal bonds at a rate or rates not exceeding five per cent a year but found it necessary to amend such rate in 1969 to a rate or rates not exceeding seven percentum per annum. (HRS § 47-7 supplement.) Interest rates payable to the State on various delinquent tax returns are variable but the least is two-thirds percent per month. It seems to me, therefore, that the State has set six percent per year as the minimum fair interest return. I would hold that the government having in HRS § 478-1 established six percent as being the fair minimum amount of interest to be paid in the absence of written agreements to the contrary, cannot, consistent with the just compensation provision of Article I, Section 18 of our State Constitution, apply a different rate to itself than applies to the public in general without any reasonable basis therefor. (For analogous principle see Service v. Dulles, 354 U.S. 363, 77 S.Ct. 1152, 1 L.Ed.2d 1403 (1957).) Of course, where the government is consenting to be sued, or where an interest rate is set as a partial penalty, this concept would not apply, but where just compensation is involved, equality of treatment is one element in the consideration of what is just.