Territory Ex Rel. Bigelow v. Honolulu Plantation Co. , 1939 Haw. LEXIS 34 ( 1939 )

  In 1933 the Territory of Hawaii, the appellee above named, in
order to construct a portion of the Kamehameha Highway in the
districts of Moanalua and Halawa, City and County of Honolulu,
was faced with the necessity of acquiring a right of way through
certain lands owned by the estate of S.M. Damon, the estate of
Bernice P. Bishop and the estate of Emma Kaleleonalani (better
known as Queen Emma). These lands were at the time under lease to
the appellant, the Honolulu Plantation Company, Limited. The
total area required by the Territory for highway purposes was
approximately forty acres of which twenty-eight acres were sugar
cane-bearing lands. In order to expedite the construction of the
highway, which appeared to be a matter of public importance at
the time, the Territory and the Honolulu Plantation Company,
Limited, entered into an agreement in writing, dated October 19,
1933, by the

terms of which the Territory was authorized to enter upon the
lands and to proceed with the construction of the road, the
Territory agreeing that it would, within a short stipulated
period, institute condemnation proceedings for the acquisition of
the lands required by it and would reimburse the appellant for
any property taken and for all damages suffered, which damages to
be awarded should be ascertained as of the date of the filing of
such proceedings or as of the date prior to the entry upon the
property by the Territory, whichever should be earlier. The
action was instituted and possession of the property was taken
over by the Territory concurrently, to wit, November 15, 1933.
The Honolulu Plantation Company, Limited, appellant herein, and
the trustees of the three estates, namely, the Damon, Bishop and
Queen Emma estates, were all named as respondents in the action.
Prior to the trial of the cause in the court below the Territory
acquired by purchase or exchange the interests of the said three
estates in the property sought to be condemned so that from that
time hence the remaining issues in the proceedings were solely
between the Territory and the present appellant, the Honolulu
Plantation Company, Limited, lessee of the lands involved.
  Some time before the purchase of the interests of the Damon
estate the Territory and the trustees of that estate, as well as
the Honolulu Plantation Company, Limited, entered into a
stipulation which, because of its important bearing upon both the
questions of law and fact involved in this appeal, will be set
out in full and is as follows: "IT IS HEREBY STIPULATED AND
AGREED by the parties hereto that: 1. The several parcels of land
described in the petition herein as Parcels 64, 65, 66, and 67,
comprising a total area of 23.844 acres, are the property of the
Trustees of the Estate of Samuel M. Damon, deceased, and that the
Honolulu Plantation Company has a leasehold interest therein, and
that said parcels of land, exclusive of growing

crops and other improvements thereon, are of the aggregate value
of $10,133.70; 2. The value of the lessors' interest therein as
of November 15, 1933 was the sum of $9,291.13 and the value of
the lessee's interest therein as of November 15, 1933 was the sum
of $842.57, both figures being exclusive of growing crops or
other improvements thereon; 3. The petitioner having taken
immediate possession of said land, shall pay to said Honolulu
Plantation Company the rental it has paid or will pay to said
Trustees for said land from November 15, 1933 to the date of
judgment, which rental was and is the sum of $493.54 per annum;
4. That as between the said lessors and the lessee the rent paid
under their lease for said land shall be abated as of the date of
the judgment to be entered in this suit and which rent shall be
computed at the rate of $493.54 per annum; and 5. That nothing
herein contained shall affect or be prejudicial to the rights of
the Honolulu Plantation Company or the Territory of Hawaii
regarding the claim of the Honolulu Plantation Company for
reimbursement for the (1) value of the growing crops on the said
land, (2) value of the improvements on the said land, and (3)
damages suffered by it by reason of the taking of the lands
sought to be condemned by the above entitled proceedings; and
that nothing herein contained shall vary or modify or be deemed
to vary or modify the terms of any other stipulations or
agreements heretofore entered into between the Territory of
Hawaii and the Honolulu Plantation Company."
  At the inception of the trial of the cause in the court below
it was agreed between the parties and without prejudice to
appellant's right to claim additional damages that by reason of
the appropriation the appellant was damaged as follows: Value of
growing crops $1388.85, value of buildings $325, value of
railroads and damage thereto $13,768.45, value of irrigation
ditch $1955, value of leasehold interest in Damon estate land
condemned $842.57, value of leasehold

interest in Bishop estate and Queen Emma estate lands $346, and
that appellant was entitled to the further sum of $867.61 as
reimbursement of rentals in respect to lands condemned which had
been prepaid by appellant. To these items the trial court added:
$392.52, cost of construction of plantation railroad crossings
over the new highway, $143.25, cost of installing traffic light
at crossings and $271.85, cost of additional pipe line made
necessary because of the highway construction. These separate
items, amounting to $20,301.10, were found by the trial judge to
be the total amount of damages suffered by appellant and judgment
was accordingly rendered against the Territory for that amount.
  The appellant, the Honolulu Plantation Company, Limited, comes
here on a bill of exceptions. The numerous exceptions may be
summarized as presenting for the consideration of this court: 1.
Failure of the circuit judge to award damages to the plantation
company's remaining properties in the sum of at least $18,000
over and above the amount of the judgment, 2. failure of the
circuit judge to award specific damages in the amount of $4239.05
over and above the amount of the judgment, and 3. failure of the
circuit judge to award interest upon the judgment entered.
  Preliminary to a discussion of the exceptions imposed in group
1 a brief outline of the corporate purposes and activities of the
Honolulu Plantation Company, Limited, and a discussion of its
realty holdings in the vicinity of the land taken by the
Territory will aid in a better understanding of the issues
involved.
  The appellant is engaged in the growing of sugar cane and the
manufacture of cane and sugar. It has been properly referred to
as a leasehold plantation. The entire plantation consists of
approximately 5500 acres of land suitable for cane growing. Of
this entire area the company owns in fee simple about 250 acres;
the remaining 5250 acres are

owned by the Damon estate, Queen Emma estate, Bishop estate,
Austin estate, L.L. McCandless and the Oahu Railway and Land
Company, under whom the appellant occupies these several holdings
as lessee. The Bishop estate and Queen Emma estate leases
terminate in the year 1940; the Damon estate lease terminates on
January 1, 1944. The record contains no reference to the date of
termination of the leasehold interest of appellant in the lands
of McCandless, the Austin estate or the Oahu Railway and Land
Company, although it is shown on defendant's exhibit 3 that these
latter leaseholds contain a very large area of the lands occupied
by appellant. The fee simple land of appellant is composed of six
or seven noncontiguous lots interspersed among the leaseholds. It
is also to be noted that some of the leasehold property,
particularly the lands of the Bishop estate, the Queen Emma
estate and the Damon estate, do not consist of adjacent property
but each consists of noncontiguous lots. The leasehold and fee
simple lands operated by the appellant as a sugar plantation
extend in a general direction from near the Rodgers Airport in a
northerly direction to the Waiala stream in the Ewa district for
a distance of more than seven miles and from east to west it
extends some five miles.
  The areas taken by the Territory for the highway traverse one
each of the tracts included within the Bishop estate, Damon
estate and Queen Emma estate leases. None of appellant's fee
simple land nor its leasehold property demised to it by
McCandless, the Austin estate or the Oahu Railway and Land
Company is included within the condemned area.
  There is in force in this jurisdiction a statute prescribing
certain rules which govern the fixing of damages to be paid to
the owner. It reads: "In fixing the compensation or damages to be
paid for the condemnation of any property, the value of the
property sought to be condemned and all

improvements thereon, shall be separately assessed; and if the
property sought to be condemned constitutes only a portion of a
larger tract, the damages which will accrue to the portion not
sought to be condemned by reason of its severance from the
portion sought to be condemned, and the construction of the
improvements in the manner proposed by the plaintiff shall also
be assessed; and also how much the portion not sought to be
condemned will be benefited, if at all, by the construction of
the improvement proposed by the plaintiff; and if the benefit
shall be equal to the amount of compensation assessed for the
property taken, and for damages by reason of its severance from
another portion of the same tract, then the owner shall be
allowed no compensation, but if the benefits shall be less than
the amount so assessed as damages or compensation, then the
former shall be deducted from the latter and the remainder shall
be the amount awarded as such compensation or damages." R.L.
1935, § 63.
  The appellant urged in the court below and reiterates here
that, under the doctrine of severance recognized in the foregoing
statutes and the fifth amendment to the Constitution of the
United States, which guarantees that private property shall not
be taken "without just compensation," it was entitled to show
that, due to the severance of the property condemned, all of the
remaining fixed property of the plantation, both fee simple and
leasehold, mills, pumping plants, irrigation system and all other
types of property which could not be readily removed, was
depreciated in value by reason of the taking of the property
condemned and that this constituted a proper element of damage.
The position of counsel for appellees reflected in their
interrogatories propounded to Mr. Greene and Mr. Scott, witnesses
for the appellant, and offers of proof made by them. As an
example: After Mr. Scott had testified that the appellant would
suffer a loss beyond the stipulated sums by reason of

the taking of the property in question, he was asked by
appellant's counsel: "Just what would the elements be that would
make up the additional loss?" He answered: "It would be the
lesser value of the remaining properties, occasioned by the fact
that there are certain costs which are borne by the entire
plantation, and the costs would not be reduced proportionately
with the reduction in area because of the land condemned and
taken by the government; also the elements that would inhere in
the location of the lands, the fact that they were among the most
productive, lying practically level, and lying at an elevation
which might have rapid-growing time as well as low cost, because
of the fact that water did not have to be pumped up to great
heights. Also the element of increased costs on areas adjacent to
the road because of the cutting up of areas by the road passing
through, cutting into two pieces what was formerly one large
piece which could be operated economically." (Tr. p. 60.)
  And while Mr. Scott was still on the witness stand counsel for
appellant offered to prove by him "that the properties of the
Honolulu Plantation Company, consisting of leaseholds, a small
amount of fee simple, and the improvements on the leaseholds and
the fee simple, consisting of railroads, camp buildings, pump and
pumping equipment, mill and factory, and the machinery forming a
part thereof, domestic water distribution system for the camps,
electric light and power distribution system, maintenance shops
and irrigation water distribution system for the fields, but
excluding from such improvements personal property readily
removed and that would have a substantial value disconnected from
the land and improvements, were worth less, immediately after the
taking, by the sum of forty-three thousand six hundred and
twenty-five dollars than the same properties, including those
taken, were worth immediately before the taking, and that the
difference

between said sum of $43,625., and the sum of $18,625., which
latter sum is the agreed value of the crops, buildings, railroads
and irrigation ditch on the land taken, and the value of the
lessee's interest in the land taken, and which difference is the
sum of twenty-five thousand dollars, represents a loss to the
Honolulu Plantation Company and its said properties over and
above the amount the government agrees to pay." (Tr. p. 71.)
  The trial judge denied the offers of proof and held that the
elements of damage which appellant was endeavoring to show were
entirely too remote, conjectural and speculative. The rulings
rejecting the evidence and denying the offers of proof are made
the subject of appellant's exceptions numbers 3 to 12, inclusive,
13 to 16, inclusive, and 18 to 21, inclusive. The general rule is
that where only a part of a tract of land is taken in exercise of
the power of eminent domain the just compensation which the fifth
amendment to the Constitution guarantees the owner includes not
only the value of the part taken but also the damage accruing to
the residue. The measure of the damage is the injury done to the
fair market value of the entire tract by the taking of only a
part. In other words, the owner is entitled to recover the
difference between the market value of the entire tract before
the taking and the market value of what is left after the taking.
(20 C.J. 730-732.) In the case at bar appellant made no attempt
to show the market value of the property or the difference
between such market value before and after the taking nor did
appellant attempt to overcome the natural presumption that the
property was marketable but confined itself to an attempt to
show, by what the circuit judge described a "holus bolus" method,
that the numerous items of fixed property owned by it had been
depreciated in value as a whole and in a lump sum by reason of
the taking of the area in question.
 
  It was the purpose of counsel for appellant, as clearly
indicated by the tenor of the questions propounded by them to
witnesses Scott and Greene and by their offer of proof, to
establish damages by eliciting from the witnesses testimony to
the effect that because of the taking of the small area of land
involved in the proceeding all property owned by appellant of
every type and description and wheresoever located, except
readily removable personalty, was damaged by the taking. That is,
that the remaining 5460 acres of cane land composed of sundry
areas of noncontiguous property held in fee and of large areas of
leaseholds, some contiguous and others noncontiguous, some of
which were under leases expiring in seven years, others in eleven
years, while still others were of undisclosed duration, and the
improvements, including buildings, mills, shops, pumping
stations, machinery, plantation railroads, irrigation system and
many other items of property owned by appellant and utilized by
it in the operation of its sugar enterprise as a whole, came
within the scope of the questions and the offers of proof and in
this manner a large portion of the amount of damage which
appellant claims was ascertainable.
  Counsel for appellant concede that the rule of damage
applicable to a case of this nature is "subject to the limitation
that the damages claimed must be such as directly result from the
condemnation and that injuries or damages which are remote,
conjectural or speculative should be excluded from
consideration." They however urge that because there were certain
overhead operating costs of the plantation, such as manager's
salary, repairs to buildings, railroads, factories, road
maintenance, etc., which were static and could not be reduced
(although Mr. Greene testified that only a portion of such cost
was definitely ascertained), as a result of the withdrawal the
appellant's remaining fixed properties would be burdened with an
increased

overhead operating cost which would automatically depreciate the
value of such properties. It may be that to a slight degree the
effect would be as claimed by appellant. But as an offset it
would also follow that there would be a saving to the plantation
in such items as plowing, planting, cultivation, irrigating,
milling, transportation, warehouse charges, taxes and in sundry
other respects but in no case could the loss, if in fact one
actually accrued, be ascertained with even approximate accuracy.
Hence the questions and offers of proof, if they had been allowed
by the trial judge, would have projected the inquiry into the
realms of speculation and conjecture to an impracticable and
unprecedented degree.
  Chicago, Burlington etc. R'd v. Chicago, 166 U.S. 226, was
an eminent domain case where the City of Chicago sought to
acquire for street purposes a part of a right of way owned by the
railroad company within the city limits. In its appeal the
company complained of the refusal of the trial court to instruct
the jury to the effect "that if the land of the railroad company
to be crossed by the proposed street was used by it for railroad
purposes as part of ``its railroad and terminal facilities,' and
the value of such railroad and terminal facilities would be
depreciated and lessened by the use of the land by the public for
the purposes of a street * * * then the railroad company was
entitled to recover from the city a sum equal to such
depreciation in value as damages to part of its land not taken or
crossed by the proposed street." The Federal Supreme Court, in
sustaining the lower court, said: "This instruction was properly
refused. It was objectionable for the reason, if there were no
other, that it was too general. The words ``its railroad and
terminal facilities' included the company's entire line of road
and terminal facilities within, at least, the corporate limits of
the city. The land within the crossing is three miles inside the
city limits,

about four miles from the passenger depot of the company and a
thousand feet from its nearest freight depot. If the instruction
last referred to had been given, the range of inquiry as to the
sum due the company for what was taken from it would have been
extended far beyond what was required or permissible in order to
ascertain the amount of compensation."
  Appellant has called to our attention a number of cases in
which the subject is discussed, including Monongahela Navigation
Co. v. United States, 148 U.S. 312; Essex Storage Electric
Co. v. Victory Lumber Co., 108 A. 426, and Louisiana
Highway Commission v. Guidry, 146 So. 1. The opinion in the
Monongahela Navigation Co., supra, case is a scholarly
discussion of the doctrine and emphasizes the principle that
where the right of eminent domain is invoked in order to take
private property for public uses "the compensation must be a full
and perfect equivalent for the property taken," and that Congress
is without power or right to determine what shall be the measure
of compensation to which the owner is entitled because that is a
judicial and not a legislative matter. In Essex Storage Electric
Co. v. Victory Lumber Co., supra, the court held that where
two or more tracts of land are affected by the taking of a part
of or all of one of such tracts contiguity is not always the
controlling question although the court concedes that generally
speaking the requirement of contiguity affords the correct basis
for the measure of damages. This case, as well as the two other
State cases referred to, involved facts so wholly dissimilar to
the one at bar as to render them of slight, if any, assistance.
We think the questions and offers of proof were entirely too
general and comprehensive and were properly excluded by the trial
judge.
  In the second group of exceptions the appellant complains of
the refusal of the trial court to allow recovery

for specific damages suffered by it in at least the sum of
$4239.05 over and above the sum of $807.62 awarded by the court
as a result of the severance of its fields numbers 62, 81, 82 and
83 (see appellant's exhibit 6) so that each of said fields was
separated into two tracts of land, one lying above and another
below the highway; also the necessary maintenance of the watchman
at highway crossings during harvesting seasons, construction of
railway crossing, ditches, etc. Mr. Scott testified that the
damage to the fields which were severed by the highway and the
direct and necessary outlay which would be required of appellant
because of the appropriation amounted to the total sum of
$4239.05 over and above the amount awarded by the court. This
type of damage, we think, comes within the contemplation of our
statute which authorizes severance damages. It is similar to the
element of damage approved in Maxwell v. Iowa State Highway
Commission, 265 N.W. 899, and Louisiana Highway Commission v.
Guidry, supra, and many other decisions of similar import.
  In the absence of a showing that the land severed by the
highway is not marketable the usual and recognized method of
establishing severance damage is to prove the market value of the
property before and after the taking. If damage has resulted the
amount of such damage would be the difference between the two
figures. No attempt was made by appellant to show that the
property did not have a market value and in the absence of any
such showing its method of establishing damages was
objectionable. No objection, however, having been made by
appellee to the method of proof, this element of damage should go
back to the trial court for admeasurement of such damage, if any,
as appellant may be entitled to by reason of the severance of
fields 62, 81, 82 and 83.
  The third and last group of exceptions challenged the action of
the trial court in denying interest to appellant

on any of the items which made up the final award until the
expiration of thirty days after the judgment was docketed. The
trial judge held that as the parties had agreed upon the value of
the lessee's interest in the land actually appropriated, the
value of growing crops of cane destroyed, the value of buildings
removed and railroads and damages thereto, amounting in all to
the sum of $18,625.87, this sum so stipulated included all
interest which otherwise would have been allowable from the date
of the summons. Technically speaking, interest, as such, is not
allowed in a proceeding of this nature prior to judgment. What is
commonly called interest is in fact an additional award of
damages for injury caused to the owner by the "blight of the
summons" because from the time of the institution of the suit the
owner can claim nothing for added improvement nor is he entitled
to benefit by any advance in the value of the property, but this
element of damage should become a part of the award so that the
owner may have that "just compensation" granted to him by the
fifth amendment to the Federal Constitution. This element of
damage is not dependent upon any statutory authorization. (See
Jacobs v. United States, 290 U.S. 13.)
  We can find nothing in any of the agreements or stipulations
between the parties sustaining the conclusion that it was the
intent of the appellant to waive interest to which it otherwise
would have been entitled. That is, interest at the agreed rate of
six per cent upon the value of appellant's leasehold interest in
the land appropriated, the value of the growing crop of cane and
the buildings demolished from the date of the summons and
interest upon the expenditure of $13,768.45 for relocating and
constructing railroads and upon the several other items which go
to make up the total judgment of $20,301.10 from the dates of
such several expenditures as shown by the evidence,

exhibits and other records in the cause.
  The courts have repeatedly held that just compensation rests on
equitable principle and it means substantially that the owner
should be put in as good a position financially as he would have
been had his property not been taken. The subject was discussed
in Weiser Valley Land  Water Co. v. Ryan, 190 Fed. 417, in
an appeal from a judgment allowing interest on the judgment from
the date of summons in a condemnation suit, the court saying:
"The next contention is that the court erred in adding interest
to the amount of the assessment from the date of the summons.
Under the statute, the right to the compensation shall be deemed
to have accrued at the date of the summons. Having such right to
compensation at a given time, it would seem that the owner ought
to have interest upon the amount ascertained until paid. In the
meanwhile he can claim nothing for added improvements, nor is he
entitled to any advance that might affect the value of the
property."
  The statute of the State of Idaho under discussion in the
Weiser case is strikingly similar to section 64, R.L. 1935.
This section reads: "For the purpose of assessing compensation
and damages, the right thereto shall be deemed to have accrued at
the date of summons, and its actual value at that date shall be
the measure of valuation of all property to be condemned, and the
basis of damage to property by reason of its severance from the
portion not sought to be condemned, subject, however, to the
provisions of section 63. No improvement put on the property
subsequent to the date of the service of the summons shall be
included in the assessment of compensation or damages."
  In United States v. Rogers, 255 U.S. 163, 169, the court,
speaking through Mr. Justice Day, said: "We agree with the courts
below that the allowance of just compensation

by giving interest from the time of taking until payment is a
convenient and fair method of ascertaining the sum to which the
owner of the land is entitled." (See also United States v.
First Nat. Bank, 250 Fed. 299; Seaboard Air Line Ry. v.
U.S., 261 U.S. 299.)
  Our conclusion is that such of appellant's exceptions which
complain of the refusal of the trial court to allow any damages
to appellant caused by the severance by the construction of the
highway of its leasehold areas as appear on defendant's exhibit
3, the cost of the maintenance by appellant of a watchman during
harvest season at highway crossings and the disallowance by the
court of interest on the several amounts as hereinabove specified
should be and they are sustained and all other exceptions having
been duly considered are overruled and the cause is remanded to
the circuit court for action in accord with this opinion.