Hawaii Housing Authority v. Midkiff Portlock Community Association v. Midkiff Kahala Community Association, Inc v. Midkiff

• Court: U.S. Supreme Court
• Writing for the Court: O'CONNOR
• Citation: Hawaii Housing Authority v. Midkiff Portlock Community Association v. Midkiff Kahala Community Association, Inc v. Midkiff, 467 U.S. 229, 104 S.Ct. 2321, 81 L.Ed.2d 186 (1984)
• Decision Date: 30 May 1984
• Docket Number: Nos. 83-141,83-236 and 83-283,s. 83-141
• Parties: HAWAII HOUSING AUTHORITY et al. v. Frank E. MIDKIFF et al. PORTLOCK COMMUNITY ASSOCIATION (Maunalua Beach) et al. v. Frank E. MIDKIFF et al. KAHALA COMMUNITY ASSOCIATION, INC., et al. v. Frank E. MIDKIFF et al

467 U.S. 229

104 S.Ct. 2321

81 L.Ed.2d 186

HAWAII HOUSING AUTHORITY et al.

v Frank E. MIDKIFF et al.

PORTLOCK COMMUNITY ASSOCIATION (Maunalua Beach) et al.

v. Frank E. MIDKIFF et al.

KAHALA COMMUNITY ASSOCIATION, INC., et al.

v. Frank E. MIDKIFF et al.

Nos. 83-141, 83-236 and 83-283.

Supreme Court of the United States

Argued March 26, 1984.

Decided May 30, 1984.

Syllabus

To reduce the perceived social and economic evils of a land oligopoly traceable to the early high chiefs of the Hawaiian Islands, the Hawaii Legislature enacted the Land Reform Act of 1967 (Act) which created a land condemnation scheme whereby title in real property is taken from lessors and transferred to lessees in order to reduce the concentration of land ownership. Under the Act, lessees living on single-family residential lots within tracts at least five acres in size are entitled to ask appellant Hawaii Housing Authority (HHA) to condemn the property on which they live. When appropriate applications by lessees are filed, the Act authorizes HHA to hold a public hearing to determine whether the State's acquisition of the tract will "effectuate the public purposes" of the Act. If HHA determines that these public purposes will be served, it is authorized to designate some or all of the lots in the tract for acquisition. It then acquires, at prices set by a condemnation trial or by negotiation between lessors and lessees, the former fee owners' "right, title, and interest" in the land, and may then sell the land titles to the applicant lessees. After HHA had held a public hearing on the proposed acquisition of appellees' lands and had found that such acquisition would effectuate the Act's public purposes, it directed appellees to negotiate with certain lessees concerning the sale of the designated properties. When these negotiations failed, HHA ordered appellees to submit to compulsory arbitration as provided by the Act. Rather than comply with this order, appellees filed suit in Federal District Court, asking that the Act be declared unconstitutional and that its enforcement be enjoined. The court temporarily restrained the State from proceeding against appellees' estates, but subsequently, while holding the compulsory arbitration and compensation formulae provisions of the Act unconstitutional, refused to issue a preliminary injunction and ultimately granted partial summary judgment to HHA and private appellants who had intervened, holding the remainder of the Act constitutional under the Public Use Clause of the Fifth Amendment, made applicable to the States under the Fourteenth Amendment. After deciding that the District Court had properly not abstained from exercising its jurisdiction, the Court of Appeals reversed, holding that the Act violates the "public use" requirement of the Fifth Amendment.

Held:

1. The District Court was not required to abstain from exercising its jurisdiction. Pp. 236-239.

(a) Abstention under Railroad Comm'n v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971, is unnecessary. Pullman abstention is limited to uncertain questions of state law, and here there is no uncertain question of state law, since the Act unambiguously provides that the power to condemn is "for a public use and purpose." Thus, the question, uncomplicated by ambiguous language, is whether the Act on its face is unconstitutional. Pp. 236-237.

(b) Nor is abstention required under Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669. Younger abstention is required only when state-court proceedings are initiated before any proceedings of substance on the merits have occurred in federal court. Here, state judicial proceedings had not been initiated at the time proceedings of substance took place in the District Court, the District Court having issued a preliminary injunction before HHA filed its first state eminent domain suit in state court. And the fact that HHA's administrative proceedings occurred before the federal suit was filed did not require abstention, since the Act clearly states that those proceedings are not part of, or are not themselves, a judicial proceeding. Pp. 237-239.

2. The Act does not violate the "public use" requirement of the Fifth Amendment. Pp. 239-244.

(a) That requirement is coterminous with the scope of a sovereign's police powers. This Court will not substitute its judgment for a legislature's judgment as to what constitutes "public use" unless the use is palpably without reasonable foundation. Where the exercise of the eminent domain power is rationally related to a conceivable public purpose, a compensated taking is not prohibited by the Public Use Clause. Here, regulating oligopoly and the evils associated with it is a classic exercise of a State's police powers, and redistribution of fees simple to reduce such evils is a rational exercise of the eminent domain power. Pp. 239-243.

(b) The mere fact that property taken outright by eminent domain is transferred in the first instance to private beneficiaries does not condemn that taking as having only a private purpose. Government does not itself have to use property to legitimate the taking; it is only the taking's purpose, and not its mechanics, that must pass scrutiny under the Public Use Clause. And the fact that a state legislature, and not Congress, made the public use determination does not mean that judicial deference is less appropriate. Pp. 243-244.

702 F.2d 788 (CA9 1983), reversed and remanded.

Justice O'CONNOR delivered the opinion of the Court.

The Fifth Amendment of the United States Constitution provides, in pertinent part, that "private property [shall not] be taken for public use, without just compensation." These cases present the question whether the Public Use Clause of that Amendment, made applicable to the States through the Fourteenth Amendment, prohibits the State of Hawaii from taking, with just compensation, title in real property from lessors and transferring it to lessees in order to reduce the concentration of ownership of fees simple in the State. We conclude that it does not.

I

A.

The Hawaiian Islands were originally settled by Polynesian immigrants from the western Pacific. These settlers developed an economy around a feudal land tenure system in which one island high chief, the ali'i nui, controlled the land and assigned it for development to certain subchiefs. The subchiefs would then reassign the land to other lower ranking chiefs, who would administer the land and govern the farmers and other tenants working it. All land was held at the will of the ali'i nui and eventually had to be returned to his trust. There was no private ownership of land. See generally Brief for Office of Hawaiian Affairs as Amicus Curiae 3-5.

Beginning in the early 1800's, Hawaiian leaders and American settlers repeatedly attempted to divide the lands of the kingdom among the crown, the chiefs, and the common people. These efforts proved largely unsuccessful, however, and the land remained in the hands of a few. In the mid-1960's, after extensive hearings, the Hawaii Legislature discovered that, while the State and Federal Governments owned almost 49% of the State's land, another 47% was in the hands of only 72 private landowners. See Brief for the Hou Hawaiians and Maui Loa, Chief of the Hou Hawaiians, as Amici Curiae 32. The legislature further found that 18 landholders, with tracts of 21,000 acres or more, owned more than 40% of this land and that on Oahu, the most urbanized of the islands, 22 landowners owned 72.5% of the fee simple titles. Id., at 32-33. The legislature concluded that concentrated land ownership was responsible for skewing the State's residential fee simple market, inflating land prices, and injuring the public tranquility and welfare.

To redress these problems, the legislature decided to compel the large landowners to break up their estates. The legislature considered requiring large landowners to sell lands which they were leasing to homeowners. However, the landowners strongly resisted this scheme, pointing out the significant federal tax liabilities they would incur. Indeed, the landowners claimed that the federal tax laws were the primary reason they previously had chosen to lease, and not sell, their lands. Therefore, to accommodate the needs of both lessors and lessees, the Hawaii Legislature enacted the Land Reform Act of 1967 (Act), Haw.Rev.Stat., ch. 516, which created a mechanism for condemning residential tracts and for transferring ownership of the condemned fees simple to existing lessees. By condemning the land in question, the Hawaii Legislature intended to make the land sales involuntary, thereby making the federal tax consequences less severe while still facilitating the redistribution of fees simple. See Brief for Appellants in Nos. 83-141 and 83-283, pp. 3-4, and nn. 6-8.

Under the Act's condemnation scheme, tenants living on single-family residential lots within developmental tracts at least five acres in size are entitled to ask the Hawaii Housing Authority (HHA) to condemn the property on which they live. Haw.Rev.Stat. §§ 516-1(2), (11), 516-22 (1977). When 25 eligible tenants,¹ or tenants on half the lots in the tract, whichever is less, file appropriate applications, the Act authorizes HHA to hold a public hearing to determine whether acquisition by the State of all or part of the tract will "effectuate the public purposes" of the Act. § 516-22. If HHA finds that these public purposes will be served, it is author- ized to designate some or all of the lots in the tract for acquisition. It then acquires, at prices set either by condemnation trial or by negotiation between lessors and lessees,² the former fee owners' full "right, title, and interest" in the land. § 516-25.

After compensation has been set, HHA may sell the land titles to tenants who have applied for fee simple ownership. HHA is authorized to lend these tenants up to 90% of the purchase price, and it may...