Oahu Railway & Land Co. v. Shaw

11 Haw. 210 | Haw. | 1897

OPINION OP THE COURT BY

JUDD, C.J.

In this case the value of the leaseholds of the lands of Honouiliuli, Kahuku, Waimano and Waiawa, Oahu, held by the Oahu Railway & Land Company is in dispute. The company returned their leaseholds as worth nothing. The Tax Assessor placed the ■value at $10,000, and this was affirmed by the Tax Appeal Court. The company appealed to this Court. The lease of the lands of Honouliuli and Kahuku have forty-three years of the term unexpired and the company pay an annual rental of $40,000, and, having sublet portions of the land, receive as rentals some $3,000 more than the rent reserved by their landlord. The unlet portions of the land are used by the company as cattle ranches and they return their cattle, horses and other chattel property in detail and claim that the assessor in assessing the leaseholds at $40,000 has valued the ranches as combined property constituting an “enterprise for profit” under Sec. 1Y of the Tax Act of 1896, having taken into consideration the profits on sales of cattle, and, that, having assessed the several items of property, the assessment of them in combination is void. In furtherance of this argument it is urged that the value of the bare leaseholds must be viewed without reference to the profits from the cattle grazed upon the land and that it is nothing.

It is true as contended by the company, that it would be contrary to the intention of the statute to tax separate items of property and again to tax their aggregate value when used in combination, for, as the law calls for a tax of one per cent, only, this method would call for a tax of two per cent. But we do not understand from the evidence that the assessor has taxed the “ranch business” of the company as an “enterprise for profit.” The company returned their cattle, horses, &e., itemized and noted their leaseholds, claiming they had no value; the assessor has valued each item, to wit: cattle, horses, leaseholds, &c., separately. It would be manifestlv impossible to assess the value of the company’s combined property as an “enterprise for profit,” for by statute a large portion of it is free from taxation. It is not necessary in this case to decide who has the option, the assessor or the taxpayer, to say which method should be followed. Bor the purposes of this case it is enough to say that both parties here have followed the method of tax assessing the value of the several items of the property. And the exact question is, what is the “full cash value” of the leaseholds. It would be idle to say that they were worth nothing whatever on the 1st of January, 1897, when there existed at that date an option by the company, which was accepted and executed later, for the sublease to the Oahu Sugar Company for the unexpired term, of some 3,000 acres of land in Honouliuli for a very valuable consideration which paid the rent in full. Other advantageous dispositions of a large portion of this extensive property may be made hereafter. As laid down in the case between the same parties, reported in 10 Haw. 643, “the value of a leasehold depends upon many circumstances, the amount of the rent reserved in the lease, the privileges, covenants and conditions in the indenture, the location of the land, the uses to which it can be put, the population in the locality, the prospect for further development of its resources and we might add, all other considerations economic or political which affect values in general.” Several disinterested witnesses gave their estimates of the value of the leaseholds in question. One placed it at $50,-000, another at $40,000, the manager of the company and the owner of the fee considering the leaseholds as of no- value. Entering into their calculations is the use to which the lands can be put and the figures show that an average annual net profit of $20,000 has been obtained during five years last past from the cattle and horses alone without essentially diminishing the herds. But the actual present value of the live stock does not enter into this calculation. The estimates show what use the land under these leases can be put to, and the company having placed their value at $40,000 in the return of July, 1896, this valuation being supported by evidence, we sustain the judgment of the Tax Appeal Court, and fix the amount at $40,000.

(7. Bromi for the appellant. A. Cr. M. Robertson for the Tax Assessor.