ROBERT M. YAMADA and EMMA M. YAMADA, Appellants v. NATURAL DISASTER CLAIMS COMMISSION FOR THE COUNTY OF HAWAII FOR THE VOLCANIC ERUPTION OF 1960 and THE TSUNAMI OF 1960, Appellee.
No. 5223
Supreme Court of Hawaii
AUGUST 24, 1973
54 Haw. 621
RICHARDSON, C.J., MARUMOTO AND LEVINSON, JJ., CIRCUIT JUDGE VITOUSEK IN PLACE OF ABE, J., DISQUALIFIED, AND CIRCUIT JUDGE KAWAKAMI IN PLACE OF KOBAYASHI, J., DISQUALIFIED.
This dispute is the culmination of years of administrative wrangling over the value of property losses suffered by the appellants as a result of natural disasters and, as such, it presents us with a case of first impression regarding the power of an administrative commission to initiate reconsideration of its prior decisions.
The facts are as follows: The Island of Hawaii, where the appellants’ property is located, suffered two natural disasters in 1960, a volcanic eruption and a tsunami (tidal wave). As a consequence, in 1961 the Hawaii legislature created a Natural Disaster Claims Commission to determine the value of property destroyed by such occurrences, with the claimant thereafter receiving tax credits in that amount. This legislation, Act 173, S.L.H. 1961, as amended, is now
The Governor appointed the members of the Commission, which on November 21, 1961 certified the appellants’ loss to be $18,200.2 Some two and one-half years later, in 1964, the Director of Taxation suspended the granting of tax credits. Following the resignation of the original Commission members, a second group of commissioners was appointed in 1965 (hereinafter referred to as the Second Commission), which recertified the loss at $2,400 on January 5, 1966.
On appeal from the decision below, the appellants argue that the determination of losses by the First Commission was final, that there was no authority for the appointment of a Second Commission to recertify such losses, and that the State is equitably estopped from contesting and overturning the findings of the First Commission. We agree.
The appellants also argue that if the appointment of the Second Commission was allowable, its procedures both in challenging the First Commission and redetermining losses were improper; that the Attorney General‘s office should not have been permitted to represent the Second Commission against the First, which it had previously advised; and that the circuit court erred in its de novo computation of losses at $5,250. We do not find it necessary to reach these arguments.
The appellee attacks the validity of the First Commission‘s finding on the basis of various irregularities in its procedures, arguing that it is open both to rehearing and collateral attack. It opposes the applicability of equitable estoppel and defends the actions of the Second Commission, the Attorney General‘s office, and the adequacy of judicial review.
It must be noted at the outset that the Natural Disaster Claims Commission‘s function was quasi-judicial in nature, as opposed to merely executive, legislative, or administrative, for the reason that its purpose was to determine losses. Because of the time lapse between the original certification and the suspension of tax credits, as well as on account of the quasi-judicial nature of the First Commission, the reconsideration by the Second Commission was at least the substantial equivalent of
The problem of the extent to which an administrative agency should have continuing jurisdiction to reverse or modify prior decisions is made more difficult here because the statute which clearly authorizes reconsideration at the request of the claimant does not provide for reconsideration by the Commission on its own initiative. This lack of provision for reconsideration upon the initiative of the Commission was not affected by the 1966 amendment allowing judicial review. Moreover,
When statutes are silent and legislative intent unclear, agencies and reviewing courts must work out the practices and the limits on reopening. The considerations affecting reopening to take account of new developments or of new evidence of old developments often differ from those affecting the correction of mistakes or shifts in judgment about law or policy. Usually the search for a basic principle to guide reopening is futile; the results usually must reflect the needs that are unique to each administrative task. Factors to be weighed are the advantages of repose, the desire for stability, the importance of administrative freedom to reformulate policy, the extent of party reliance upon the first decision, the degree of care or haste in making the earlier decision, the general equities of each problem.
We hold that a statutory basis is necessary for an administrative body to initiate reconsideration of its prior final quasi-judicial decisions. As previously pointed out, the statute involved in the present case provides for appeals by claimants only, and it makes the Commission‘s decision final. The Commission was appointed, it accomplished its purpose of assigning valuation to property losses, and its conclusion must therefore stand.
We do not regard the irregularities which the appellee argues were committed by the First Commission as fatal to its determination.
The appellee argues that the findings of the First Commission are suspect because tax office records were used as a basis for its valuation formula, information was gathered by individual commissioners, and claimants were allowed to make statements with no supporting evidence. However, it is our opinion that these proceedings cannot be characterized as adversary either in form or
The appellee also argues that two of the three members of the First Commission were interested parties un-
There is no doubt that the First Commission could have done a better job, and it is not our intention to defend its methods. Nevertheless, viewing the circumstances in their totality, we do not find the alleged irregularities prejudicial to the State in the absence of fraud, an issue which has not been raised in this case and concerning which we do not express any opinion.
Factual circumstances most analogous to those presented in this case are found in Butte, Anaconda & Pacific Ry. v. United States, 290 U.S. 127 (1933). That case involved an Interstate Commerce Commission decision to reimburse a railroad for deficits incurred during a period of federal control. Two years after the amount of the reimbursement was determined and was received by the railroad, the I.C.C. decided to reopen the proceeding, and it then dismissed the railway‘s claim for the reason that earlier it had mistakenly construed the word “deficit“. The railroad refused repayment, and the government then brought an action to recover the money. The
An alternative ground upon which we base our holding is that of equitable estoppel. While some cases hold that the government can be estopped and other cases are contra, we agree with the view expressed by Professor Davis:
Because of the erosion of the doctrine of sovereign immunity, the cases estopping the government may largely represent the law of the future, even though they are still exceptional. Davis, Administrative Law Treatise, § 17.03, at 504 (1958).
We hold that the doctrine of equitable estoppel is fully applicable against the government if it is necessary to invoke it to prevent manifest injustice. City and County of Denver v. Stackhouse, 135 Colo. 289, 310 P.2d 296 (1957); Market Street Ry. Co. v. State Bd. of Equalization, 137 Cal. App. 2d 87, 290 P.2d 20 (1955); Florida Livestock Bd. v. Gladden, 76 So. 2d 291 (Fla. 1954); Cities Service Oil Co. v. City of Des Plaines, 21 Ill. 2d 157, 171 N.E.2d 605 (1961). In our opinion, the manifest injustice present in this case requires the invocation of equitable estoppel. Under
The purpose of the limitation was to encourage the retention of investments in disaster areas. The appellant, in reliance upon the receipt of tax credits following the First Commission‘s determination, developed his property by erecting an apartment house upon it. 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.
The policies to be weighed in cases involving the propriety of an administrative decision to initiate reconsideration are apparent: A flat prohibition against such reconsiderations can easily lead to flagrant abuses on the part of claimants. However, too much liberality in permitting reconsiderations not only deprives decisions of dignity and force, but can also contribute to carelessness by undue reliance on reconsideration. While the First Commission‘s procedures may cast some doubt upon its conclusions, it is our opinion that in this case the policy of finality outweighs the State‘s interest in avoiding a potential giveaway of tax credits.
The judgment of the circuit court is reversed, and this case is remanded to that court for proceedings consistent with this opinion.
Shuichi Miyasaki and Roy K. Nakamoto (Masanori Kushi, with them on the briefs) for appellants.
T. Bruce Honda, Deputy Attorney General (George Pai, Attorney General, of counsel) for appellee.
DISSENTING OPINION OF RICHARDSON, C.J.
I respectfully dissent.
The majority would reverse the trial court‘s de novo computation of appellant‘s losses at $5250, and uphold the original valuation of $18,200, as determined by the First Commission. The majority bases its decision on two conclusions of law:
- In the absence of express statutory authority, the Second Commission was without authority to recertify losses as determined by the First Commission; and
- The State is equitably estopped from contesting and overturning the findings of the First Commission.
The Circuit Court was without jurisdiction to review the findings of the two commissions, and its findings are moot.
I disagree. As to the first conclusion, I believe that administrative tribunals possess the inherent power of reconsideration of their judicial acts. Handlon v. Town of Belleville, 4 N.J. 99, 106-07, 71 A.2d 624, 627-28 (1950). This court may look for guidance to the courts of New York, which have found that administrative
On the other hand, New York courts have balanced such consideration against “the grave consequences that might follow if a decision once made were to be considered beyond recall” or “the public interest and the supervisory nature of the administrative agency‘s powers” which warranted the finding of an implied power to reconsider People ex rel. New York Fire Ins. Exchange v. Phillips, 203 App. Div. 13, 16, 196 N.Y.S. 202, 204 (3d Dept. 1922), rev‘d on other grounds, 237 N.Y. 167, 142 N.E. 574 (1923); People ex rel. West Seneca v. Public Service Comm‘n, 130 App. Div. 335, 340-42, 114 N.Y.S. 636, 639-40 (3d Dept. 1909), appeal dismissed, 195 N.Y. 562, 88 N.E. 1128 (1909); see Weiss, Administrative Reconsideration: Some Recent Developments in New York, 28 N.Y.U.L. Rev. 1262, 1271 (1953). These courts have found an implied power to reconsider absent express statutory grant or denial of such power where the latter considerations prevail.
The factual circumstances of an earlier New York decision, People ex rel. West Seneca v. Public Service Comm‘n, supra, are analogous to those presented in the instant case. That case involved an April 30, 1907 decision of the New York Board of Railroad Commissioners concerning the number and location of railroad street crossings in West Seneca, N.Y. On July 1, the effective date of the Public Service Commissions Law, the Board of Railroad Commissioners was abolished and its powers
The New York Court of Appeals, writing in two 1919 decisions, set standards for a finding of the existence of an implied power to reconsider an administrative decision. Judge Cardozo, writing for the court in Equitable Trust Co. of New York v. Hamilton, 226 N.Y. 241, 246, 123 N.E. 380, 382 (1919), found that a Board of Supervisors had the inherent power to rescind the allowance of a claim on the basis of a finding of error, because the Board “ought to have some opportunity to undo and correct an error apparent to themselves.” In People ex rel. Finnegan v. McBride, 226 N.Y. 252, 257-58, 123 N.E. 374, 376 (1919), the court ruled that a civil service commission, which exercised a quasi-judicial function, possessed the implied power to vacate its own order by setting aside an eligible list if such list were the result of illegality, irregularity in vital matters, or fraud. The Finnegan standard has generally been followed in New York, and I would apply it to decide the instant case.
I also disagree with the majority‘s opinion that the doctrine of equitable estoppel may be invoked against
The circuit court‘s decision should be affirmed if the First Commission‘s decision demonstrated illegality, irregularity in vital matters, or fraud.
The record on appeal by stipulation of the parties included the transcript of proceedings in Hawaiian Coffee Co. v. Natural Disaster Claims Comm‘n (No. 1359, Haw. 3d Cir. Ct., Mar. 31, 1970), a case presenting similar questions of law and fact to the instant case. In both cases, Judge Dick Yin Wong found the First Commission‘s certification of the claimants’ losses not supported by evidence.
The Commission was charged with determining the claimants’ total loss in each case, based upon the difference between the market value of the property immediately prior to and immediately after the date of the natural disaster.
In the Hawaiian Coffee case, claimant filed a claim
The record below demonstrated that in Judge Wong‘s opinion, the First Commission‘s decisions were characterized by irregularity in vital matters, and therefore were subject to administrative reconsideration.
Having concluded that the Second Commission possessed an implied power to reconsider the First Commission‘s certification of losses, I must next determine whether the Second Commission properly certified claimants’ losses. The parties stipulated that the Second Commission recertified claimants’ losses in the amount of $2400 without prior notice or opportunity to be heard. Although the claimants subsequently received a hearing before the Commission, the recertified amount of loss was affirmed. No evidence was adduced at trial to indicate how the Second Commission‘s determination was made or on what evidence it was based.
The right to a hearing on notice before property is taken or substantial rights withdrawn, which have previously been awarded in a judicial or administrative proceeding, is of the essence of procedural due process. Handlon v. Town of Belleville, 4 N.J. 99, 107, 71 A.2d 624, 628 (1950); Garfield v. United States ex rel. Goldsby, 211 U.S. 249, 262 (1908).
The appellants’ claim was recertified by the Second Commission on January 5, 1966. The applicable statute in effect at that time, R.L.H. § 131E-6 (now
On May 4, 1966, the legislature amended R.L.H. chap. 131E. Section 4 of Act 48, S.L.H. 1966, granted victims of the tsunami of 1960 the right of appeal in circuit court from the certification or recertification of any claim prior to the effective date of the Act. In the absence of a statutory right of appeal, an administrative decision is not subject to judicial review “unless the decision is wholly unsupported by the evidence or is wholly dependent upon a question of law, or is seen to be clearly arbitrary or capricious.” Silberschein v. United States, 266 U.S. 221, 225 (1924). Under either theory, Judge Wong‘s review of the actions of the First and Second Commissions and de novo determination of the amount of claimants’ losses were properly taken.
The majority implies that a finding of fraud by the trial court might have justified administrative and judicial reconsideration in this case. The inconsistency in this conclusion is that the Second Commission and Circuit Court, which must reconsider the claim to determine fraud, are barred from reconsidering the claim in the absence of fraud.
The actions of both the First and Second Commissions were irregular and the proper subject of judicial review.
I would affirm.
Notes
The finding of the commission shall be final, unless within thirty days after receipt of a copy of the commission‘s certification to the director, the claimant files a notice of appeal to the circuit court in the county for which the commission was appointed. In all cases of such appeal, the commission and the director shall be notified of the pendency thereof by the clerk of the court. On appeal to the circuit court, the claimant shall be entitled to trial by jury. The right to trial by jury shall be deemed to be waived unless claimed within ten days from the date the notice of appeal is filed. The court may, by proper rules, prescribe the
The finding of the commission or the judgment of the court as to the amount of the loss suffered by the claimant shall be final for the purposes of chapters 235, 237, and 246 notwithstanding section 235-7.
Section 234-5 reads:§ 234-5 Review of claims, adjustment. The amount of loss certified by the natural disaster claims commission or adjudged by the court pursuant to section 234-4 shall be subject to review by the commission or the court in the event substantial and new evidence should show more accurately the amount of losses suffered from damage by destruction of real or personal property resulting from the natural disaster, provided, that any such substantial and new evidence shall only be acceptable if applicable as of the date the losses were incurred. In such event, the taxpayer, within six months from the filing of the original claim, may file an amended claim with the commission, or with the court if an appeal is pending or the court has rendered a judgment, and the commission or the court shall receive further proof of the amount of the loss initially claimed by the taxpayer. The determination of the loss by the commission on the amended claim may be appealed by the claimant to the circuit court in the same manner as an appeal in the case of a determination of loss by the commission on the original claim. The judgment of the circuit court shall be final in all cases. In the event of any change in the amount of the certification or judgment furnished to the director of taxation, the commission or the clerk of the court shall notify the director of such adjustments, and the director shall make appropriate adjustments in the remitting, refunding, or forgiveness of taxes above provided; in case any adjustments are made, any tax refund which exceeds the amount of adjusted loss recoverable may be collected in the same manner as a tax due and payable under chapters 235, 237, or 246.
The language of both sections has remained virtually unchanged since the statute was originally enacted, except that until the 1966 amendment, there was no provision for appeal to the circuit court.Whenever, pursuant to section 234-2, the governor has declared that a natural disaster has occurred, there shall be established in each county affected, a natural disaster claims commission as defined in section 234-1 (1), whose duties shall be to receive, process, and pass upon the application for tax relief by certification as provided for in this chapter. . . . The commission shall continue in existence until all losses within the particular county are fully determined and certified.
The members of the commission shall elect their chairman and shall serve without pay, but shall be reimbursed by the State for any reasonable and necessary expense incurred in the course of their duties as commissioners.
No person shall sit as a member of a commission for a particular disaster in which he has any interest, directly or indirectly, in any type of claim, or who is related to any claimant by affinity or consanguinity within the third degree, or who is employed by, is an agent of, or is connected in business with any one or more of the claimants.
(c) Upon receipt of the certification from the commission or the
- Real property taxes for that year and thereafter as provided above, due from the claimant on account of any real property located on the island on which the losses were incurred under chapter 246,
- Taxes due from the claimant under chapter 237 on account of any trade or business conducted by the claimant on the island on which the losses were incurred for the year in which the disaster occurred and thereafter as provided above, and
- Taxes due from the claimant under chapter 235 on account of any income earned or derived by the claimant on the island on which the losses were incurred for the year in which the disaster occurred and thereafter as provided above.
