41 Haw. 461 | Haw. | 1956
This is an appeal by plaintiff from an order revoking the prior order of the court on plaintiff's motion for issuance of temporary restraining order and an order dismissing plaintiff's complaint on motions to dismiss filed by defendants and intervener.
On August 9, 1955, the commissioner of public lands published notice of sale of two lots of public lands in Honolulu, designated as parcels 5 and 6 of Keehi Industrial Lots, at public auction to be held on October 10. Upset prices were $100,000 for parcel 5 and $300,000 for parcel 6. Purchase prices were payable in cash or twenty per cent down and balance in sixteen equal quarterly installments with interest at the rate of four per cent per year on unpaid principal balances. Both parcels were restricted to industrial use for ten years from the date of issuance of land patent grants. Successful bidder for parcel 5 was required to construct buildings and improvements thereon costing not less than $100,000 within three *463 years from the date of sale and furnish the commissioner within thirty days from the date of execution of special agreement of sale a bond in the sum of $50,000 to guarantee the expenditure for such buildings and improvements. Successful bidder for parcel 6 was required to construct buildings and improvements thereon costing not less than $400,000 within two years from the date of sale and furnish the commissioner within thirty days from the execution of special agreement of sale a bond in the sum of $200,000 to guarantee the expenditure for such buildings and improvements. The commissioner published the notice after she received a request from Gaspro, Ltd., to offer parcel 5 for sale and a request from Foremost Dairies Hawaii, Limited, to offer parcel 6 for sale.
Previously, on June 30, 1954, the commissioner had offered comparable industrial lands lying directly across Kamehameha Highway from parcels 5 and 6 for sale at public auction. These lands were sold subject to restriction as to industrial use for ten years but without any building and bond requirements. Purchase prices were payable ten per cent down and balance in ten equal annual payments with interest at four per cent per year on unpaid principal balances. Plaintiff purchased a large portion of these lands under special agreement of sale.
Plaintiff alleged that if parcels 5 and 6 were offered for sale on terms similar to the offer of June 30, 1954, he would have bid not less than $110,000 for parcel 5 and $400,000 for parcel 6. He claimed that the terms and conditions imposed on the sale of parcels 5 and 6 were so burdensome and oppressive as to deter public participation in the bidding, thereby depriving the auction of public character and that the effect of such terms and conditions was to enable only Gaspro, Ltd., and Foremost Dairies-Hawaii, Limited, to purchase those parcels.
On the basis of the foregoing facts plaintiff, for himself *464 and taxpayers and citizens similarly situated, filed a complaint in the court below against the governor, attorney general, chairman of the board of public lands and the commissioner, seeking an order enjoining them from holding the auction sale as published and from ever offering parcels 5 and 6 for sale on the terms and conditions stated in the published notice of August 9. Upon the filing of the complaint Foremost Dairies-Hawaii, Limited, intervened, and defendants and intervener filed motions to dismiss.
On October 10 the commissioner duly postponed the auction sale to October 17. On October 14 the court heard the motions to dismiss but deferred its ruling until October 19. In the meantime, on plaintiff's motion for temporary restraining order, the court ruled that such order would issue subject to the filing of a bond in the sum of $400,000 by plaintiff before the time set for the auction sale. Plaintiff failed to file the bond. Consequently, on October 17 the commissioner proceeded with the auction sale, at which Gaspro, Ltd., was the only bidder for parcel 5 and Foremost Dairies-Hawaii, Limited, was the only bidder for parcel 6. Each bid the upset price for the respective parcel. Immediately after the auction sale, the commissioner executed special agreements of sale with the purchasers.
On October 19, the court held a further hearing on the motions to dismiss the complaint and on the following day entered an order revoking its prior order on plaintiff's motion for issuance of temporary restraining order and an order dismissing the complaint. The complaint was dismissed on the grounds that it failed to disclose justiciable interest in plaintiff to entitle him to relief; that it failed to state a claim on which relief could be granted, and that the transaction sought to be enjoined was consummated and the cause of action, if any, stated in the complaint was moot. *465
In the complaint, plaintiff set forth two alternate contentions as legal bases for his claim for relief.
His first contention is that the first proviso of section 73 (1) of the Organic Act, on which the commissioner bases her authority to sell parcels 5 and 6, is unconstitutional because it constitutes an unlawful delegation of legislative authority by Congress to the commissioner in violation of Article I, Section 1, of the Constitution of the United States.
His second contention is that, if the proviso is constitutional, the action of the commissioner in imposing the building and bond requirements and the terms of payment as stated in the published notice is void because the commissioner failed to comply with sections 4511 and 4531 of the Revised Laws of Hawaii 1945, which prescribe the authority and procedure to be followed in sales of public lands; violated the equal protection of the law clause of the fourteenth amendment of the Constitution; conferred special privilege upon Gaspro, Ltd., and Foremost Dairies-Hawaii, Limited, contrary to section 55 of the Organic Act; and such action was arbitrary, unreasonable, capricious, discriminatory and an abuse of discretion.
Plaintiff's first contention is without merit. Plaintiff did not argue this point in his opening brief. He only incidentally touched upon it in his reply brief. However, inasmuch as he did not completely waive this contention, consideration may be given to it.
The proviso in question reads as follows: "Provided, however, That the commissioner shall, with the approval of said board [board of public lands], sell to any citizen of the United States, or to any person who has legally declared his intention to become a citizen, for residence purposes lots and tracts, not exceeding three acres in area; and that sales of Government lands or any interest therein may be made upon the approval of said board for business *466 uses or other undertakings or uses, except those which are primarily agricultural in character, whenever such sale is deemed to be in the interest of the development of the community or area in which said lands are located, and all such sales shall be limited to the amount actually necessary for the economical conduct of such business use or other undertaking or use."
By the Joint Resolution to Provide for Annexing the Hawaiian Islands to the United States, known as Newlands Resolution, of July 7, 1898, 30 Stat. at L. 750, Congress accepted the cession by the Republic of Hawaii to the United States of all public lands belonging to the government of the Hawaiian Islands. Thus, upon annexation, all public lands in Hawaii became the property of the United States.
Under Article IV, Section 3, of the Constitution, Congress has the power to dispose of the property belonging to the United States. The power of Congress under this constitutional provision is plenary and without limitation. (United States v. Gratiot,
14 Pet. 526.) Congressional acts concerning the disposal of public lands are not of a legislative character in the highest sense of the term but are proprietary. Like any private owner Congress may provide when, how and to whom public lands may be sold. (Camfield v. United States,
Congress enacted the proviso in question in the exercise of this power. It prescribed the main and substantial conditions of disposal, namely, that sales shall be made for business uses or other undertakings or uses which are deemed to be in the interest of the development of the community or area in which the lands are located and that such sales shall be limited to the amounts actually necessary for the economical conduct of such business uses or other undertakings or uses. Within this framework the *467
commissioner is given the authority to determine the details concerning the execution of this plan of disposal, subject to the approval of the board of public lands. Congressional acts for the disposal of public lands are necessarily general in nature. Grant of authority to local legislatures to implement the congressional plan by making local regulations does not constitute an unlawful delegation of legislative authority. (Butte City Water Co. v.Baker,
Plaintiff's second contention requires a consideration of the laws governing sales of public lands in Hawaii which were in effect on the date that the commissioner published notice of sale of parcels 5 and 6. Such laws are section 73 of the Organic Act and sections 4511, 4531 and 4565 of the Revised Laws of Hawaii 1945.
Newlands Resolution provided that the existing laws of the United States relative to public lands shall not apply to such lands in Hawaii but Congress shall enact special laws for their management and disposition. Pursuant thereto, Congress provided in section 73 of the Organic Act, as originally enacted on April 30, 1900, that the laws of Hawaii relating to public lands, except as changed by the Act, shall continue in force until it shall otherwise provide. The laws of Hawaii then governing sales of public lands were embodied in sections 169, 177 and 201 of the Civil Laws of 1897. These laws are still in our statutes. Sections 169 and 177 are compiled in the Revised Laws of Hawaii 1945 as sections 4511 and 4531. Portion of section 201 which has a bearing on this case is compiled in such Revised Laws as section 4565.
Plaintiff argues that section 4511 does not authorize the commissioner to impose the building and bond requirements *468 and the terms of payment prescribed for parcels 5 and 6.
A study of the language as well as the history of section 4511 and laws in pari materia leads to the conclusion that it is within the discretion of the commissioner to impose such conditions.
Section 4511 provides that the commissioner, with the consent of the governor, may sell public lands in such manner as he deems best for the protection of agriculture and the general welfare of the Territory, subject to such restrictions as may be expressly provided by law. The section is derived from section 42 of the Civil Code of 1859, which conferred authority to sell public lands on the minister of the interior. The authority of the minister of the interior under section 42 was a broad one. He had the discretion to determine whether a particular sale of public land would serve the purpose of promoting agriculture and the general welfare of the kingdom. Once he made that decision he could make the sale in such manner as he deemed best for the purpose, subject only to restrictions expressly provided by law. The commissioner now exercises the power granted to the minister of the interior, subject to the same restrictions. What then are the restrictions expressly provided by law to which the commissioner is presently subject? They are contained in the first proviso of section 73(1) of the Organic Act and section 4531 of the Revised Laws of Hawaii 1945.
The first proviso of section 73(1) of the Organic Act has been quoted in the earlier portion of this decision. It is an amendment of a proviso in the eighth paragraph of section 73 enacted on May 27, 1910, which read as follows: "Provided,however, That the commissioner may, with the approval of said board, sell for residence purposes lots and tracts, not exceeding three acres in area, and that sales of government lands may be made upon the approval of said *469 board whenever necessary to locate thereon railroad rights of way, railroad tracks, side tracks, depot grounds, pipe lines, irrigation ditches, pumping stations, reservoirs, factories and mills and appurtenances thereto, including houses for employees, mercantile establishments, hotels, churches, and private schools, and all such sales shall be limited to the amount actually necessary for the economical conduct of such business or undertaking."
It appears from House of Representatives Report No. 2462, 79th Congress, 2d Session, accompanying H.R. 3361, which became the second proviso of section 73(1), that the commissioner had imposed building conditions on a sale pursuant to the proviso quoted in the preceding paragraph. The report stated: "The Territory of Hawaii, acting under authority of the Organic Act, sold a piece of land in the industrial area of Honolulu to one of the large canning companies under the condition that within a specified period a warehouse would be constructed on this property." Fully cognizant of this practice of the commissioner, Congress on August 7, 1946, enacted the second proviso, which reads as follows: "Provided further, That in case any lands have been or shall be sold pursuant to the provisions of this paragraph for any purpose above set forth and/or subject to any conditions with respect to the improvement thereof or otherwise, and in case any said lands have been or shall be used by the United States of America, including any department or agency thereof, whether under lease or license from the owner thereof or otherwise, for any purpose relating to war or the national defense and such use has been or shall be for a purpose other than that for which said lands were sold and/or has prevented or shall prevent the performance of any conditions of the sale of said lands with respect to the improvement thereof or otherwise, then, notwithstanding the provisions of this paragraph or of any agreement, *470 patent, grant, or deed issued upon the sale of said lands, such use of said lands by the United States of America, including any department or agency thereof, shall not result in the forfeiture of said lands and shall result in the extension of the period during which any conditions of the sale of said lands may be complied with for an additional period equal to the period of the use of said lands by the United States of America, including any department or agency thereof."
Congress, by thus enacting this second proviso not only ratified the practice of the commissioner in imposing building conditions with respect to past sales but also approved such practice with respect to future sales.
By the Act of July 9, 1952, Congress amended the first proviso to read as it is at the present time. The reason for the amendment is stated in House of Representatives Report No. 1120, 82d Congress, 1st Session, as follows: "The present law is restrictive in that it does not permit the sale of public lands for such purposes as bank sites, hospitals, easements, garages, theatres, amusement centers, and other uses which would tend to aid the economic conduct of modern business. The proposed amendment would permit the Commissioner, with the approval of the members of the Board of Public Lands, to sell to any United States citizen lots and tracts not exceeding 3 acres in area for residence purposes or for business uses and undertakings deemed to be in the interest of the development of the community."
Plaintiff takes the position that this amendment merely enlarges the category of uses for which public lands may be sold and does not authorize the commissioner to specify any particular type of use within the category. In other words, his position is that, whereas under the original proviso the commissioner may specify a particular type of use, such as depot ground, pumping station, factory or *471 mercantile establishment, under the amendment the commissioner's authority is limited to a determination of use areas, such as areas for industrial use or business use under municipal zoning ordinances, and that the authority does not extend to a determination of any particular type of use in such use area. No such limitation may be read into the amendment. The term undertaking is employed in the amendment in addition to the term use. Undertaking certainly does not mean use area. It means a particular type of use. Furthermore, a sale must be limited to amount necessary for the economical conduct of a business use or other undertaking or use. This limitation implies a sale for a particular type of use or undertaking.
Authority to sell for a particular type of use or undertaking necessarily implies a further authority to impose building conditions or other requirements that will assure the carrying out of the commissioner's determination. It is to be noted that Congress left the second proviso intact. It would logically follow that if Congress intended to take away the authority of the commissioner to prescribe building conditions, it would have repealed the second proviso or at least amended it to confine its application to past sales.
So, in this case, a situation is presented where a prospective purchaser states to the commissioner that it desires to purchase a parcel of land which in location and area is suited for a particular type of use that it is contemplating and that it is willing to make improvements thereon of specified minimum cost. The commissioner determines that the proposal is in the interest of the development of the area in which the land is located. She makes a decision to offer the land for sale. The board of public lands agrees. The decision is not that the sale be made to this prospective purchaser. The decision is that here is a proposal for improvement which is in the interest of the development *472 of the area; here is a prospective purchaser who is willing to meet the minimum standard of improvement which is deemed desirable by the commissioner and the board; there may be other prospective purchasers who may be willing to exceed that standard; so let the Territory offer the land for sale with conditions to assure that at least that minimum standard will be met.
When a proposal is made containing a certain standard of improvement, the commissioner, as a responsible public official, will be derelict in her duty if she does not prescribe conditions to assure that such minimum standard will be met. Such conditions include not only requirements as to minimum cost of improvements but also requirements as to time of performance and assurance of performance.
The amount of money to be realized is not the sole criterion by which the commissioner is to be guided. Section 4511 requires that sales be made for the protection of agriculture and the general welfare. Agriculture may now be disregarded because the first proviso authorizes only sales of lands not primarily agricultural in character. The same proviso limits the expression general welfare to mean the interest of the development of the area or community in which the lands are located.
Suppose the commissioner agrees with the plaintiff that her authority is limited to the designation of use areas and offers parcels 5 and 6 for sale for industrial use, without any other restriction. That will permit a land speculator to offer the highest bid at the public auction and, after acquiring the lands, subdivide them into lots only large enough to meet the minimum area requirement of the zoning ordinance and sell such subdivided lots to a hodge podge of individual purchasers. There is nothing to prevent such individual purchasers from erecting only rusted corrugated iron sheds or using the subdivided lots as dumping ground for used automobiles which have seen *473 better days. Such a situation may not be in the interest of the development of the community or area in which the land is located.
The case of Barber Lumber Co. v. Gifford,
If the commissioner needs any further authority to impose conditions on sales of public lands, such authority is found in section 4565, which provides that the commissioner may sell public lands not under lease upon part credit and part cash, and deliver possession under an agreement of sale containing conditions of residence on or improvement of the premises sold, or of payment by installments *475 or otherwise of the purchase price, or all or any of such conditions. It is argued that the term improvement, as used in this section, does not mean building but an act by which a settler expresses his intention to cultivate or clear lands under homestead and settlement laws. This section is derived from section 17 of the Land Act of 1895. In view of the purposes of the Act and in view of the fact that public lands as defined in the Act did not include town lots, the term originally may well have had the meaning ascribed to it by plaintiff. But public lands as now defined in section 73(a) of the Organic Act does not exclude town lots and section 4565 applies to all public lands. The term improvement is used in the second proviso of section 73 (1). There it clearly means building. The term as now used in section 4565 should have the same meaning.
Now, we come to a consideration of section 4531. This section provides that, except as otherwise provided, all sales of public lands shall be made at public auction and requires that in case a price has been offered for any land prior to an offer of sale by the commissioner, such price shall be published as the upset price for such land. It is derived from chapter XLIV of the Laws of 1876, which was enacted to prevent improvident bargains and corruption possible under section 42 of the Civil Code. (Hawaiian Government v. Cornwell,
Plaintiff argues that the section does not authorize the commissioner to hold an auction sale subject to the terms and conditions complained of, that such terms and conditions chill the bidding and that an auction sale subject to such terms and conditions is not a public auction within the meaning of the section. Plaintiff cites an Idaho case, Hammond v. Alexander,
This court agrees with the foregoing statement. Congress has directed the commissioner to make sales in the interest of the development of the area in which the lands are located. This direction cannot be ignored. Public auction, subject to the terms and conditions complained of, is a measure to obtain the maximum possible amount of money without ignoring such direction. Such auction is within the spirit and meaning of section 4531.
There remains to be considered the charges that the commissioner's action was contrary to section 55 of the Organic Act, that it violated the equal protection of the law clause of the Fourteenth Amendment, and that it was arbitrary and an abuse of discretion.
A sufficient answer to the charge that the commissioner's action was contrary to section 55 of the Organic Act, which prohibits the granting of special privileges to corporations without congressional consent, is that the section is a limitation on the powers of the legislature and has nothing to do with the authority of the commissioner, even assuming that her action resulted in granting such privileges, which assumption has no basis in fact.
On the question of violation of the equal protection of the laws clause of the Fourteenth Amendment, it is plaintiff's position that even if the commissioner has discretionary authority under the applicable laws she has exercised such authority in a manner so discriminatory as to infringe upon plaintiff's rights. The case of Yick Wo v. Hopkins,
The charge that the commissioner's action was arbitrary and an abuse of discretion amounts to no more than that this court should substitute its judgment on a matter which Congress has entrusted to the commissioner, subject to the approval of the board. This the court cannot do. The reason is well stated by Chief Justice White in Dakota Central Telephone Company v.South Dakota,
Plaintiff failed to state a claim upon which relief could be granted and for this reason the complaint was properly dismissed. In view of this holding, it is not necessary for this court to consider the other grounds for dismissal stated by the court below, nor to review the action of the lower court on plaintiff's motion for issuance of temporary restraining order.
Affirmed.