Ai v. Bailey , 30 Haw. 210 ( 1927 )

It is the contention of the land commissioner that inasmuch as the land sought to be withdrawn is to be used by the government for the acquisition of other lands upon which public improvements are to be placed it therefore follows that the withdrawal is for a public purpose. In a certain sense this is true. But is it the reasonable meaning of the withdrawal clause? The language conferring this power to withdraw is ambiguous. If construed broadly it may be given the meaning contended for by the commissioner. A more conservative construction would be that before the power of withdrawal can be exercised it must be intended to erect the public improvements upon the land withdrawn.

It is also contended by the land commissioner that because the lessor is the Territory, and therefore in a sense sovereign, the more liberal construction should be adopted. I cannot take this view. When the Territory undertakes to lease public lands it does not act in its sovereign capacity but as a private landowner and is on the same footing as other landowners. This question is fully discussed, and I think correctly decided, in BostonMolasses Co. v. Commonwealth, 193 Mass. 387, 389. In its opinion the Massachusetts court quotes from People v.Stephens, 71 N.Y. 527, 549, as follows: "The State, in all its contracts and dealings with individuals, must be adjudged and abide by the rules which govern in determining the rights of private citizens contracting and dealing with each other. There is not one law for the sovereign and another for the subject; but, when the sovereign engages in business and the conduct of business enterprises, and contracts with individuals, although an action may not lie against the sovereign for a breach of the contract, whenever the contract, in any form, comes before the courts, the rights and obligations of the contracting parties must be adjusted upon the same principles as if both contracting parties were private persons. Both stand upon equality before the law, and the sovereign is merged in the dealer, contractor and suitor." See also Hall v. Wisconsin, 103 U.S. 5, 11.

Instead of construing the power to withdraw land from the lease liberally in favor of the exercise of the power by the lessor a contrary rule under generally recognized canons of construing leases should be adopted. There are, of course, equally well recognized exceptions to this rule but the instant case does not fall within any of them. The general rule is thus stated in 35 C.J., p. 1181, § 478: "It has frequently been laid down that leases are to be most strongly construed against the lessor, and that if there is any doubt and uncertainty as to the meaning of a lease, it is to be construed most strongly in favor of the lessee." The reason for the rule is thus stated in the same section: "The rule requiring strict construction against the lessor is ordinarily based upon the facts that the lease is regarded as the grant of the lessor, which should be most strongly construed against him, and that it is usually prepared by him, and generally applies where the lessor has prepared the lease or is regarded as having employed the ambiguous words." See also Coney v. Dowsett, 3 Haw. 685.

It seems only just, therefore, that the lessee rather than the lessor should be given the benefit of any reasonable doubt as to the meaning of the withdrawal clause. The land was conveyed to him for a term of fifteen years. Under a reasonable interpretation of the withdrawal clause he had a right to believe that as long as he performed the covenants imposed upon him his possession would remain undisturbed unless the Territory required all or a portion of the land upon which to erect public improvements. Let us suppose the commissioner had desired to withdraw the land in question in order to exchange it for other land the Territory wished to use for homestead purposes, would it be a fair construction of the lease to say that he could do so? Certainly not and for the reason that the natural and rational meaning of the withdrawal clause is that the land cannot be withdrawn for homesteads unless the homesteads are to be established on the land itself. The power to withdraw for public purposes is subject to the same limitation. Any other construction of the lease would subject the lessee's tenure to a hazard not within the reasonable meaning of the withdrawal clause of the lease. For these reasons I concur in the conclusion of the majority.