In re Assessment of Taxes, Commercial Pacific Cable Co.
| Decision Date | 16 January 1905 |
| Citation | 16 Haw. 396 |
| Parties | IN RE ASSESSMENT OF TAXES, COMMERCIAL PACIFIC CABLE COMPANY. |
| Court | Hawaii Supreme Court |
Argued December 5, 1904.
APPEAL FROM TAX APPEAL COURT, FIRST TAXATION DIVISION.
(Hatch J., Dissenting.)
Syllabus by the Court
Section 817, C. L., providing that with certain exceptions all " real and personal property within the Territory shall be subject to an annual tax of one per cent. upon the full value of the same" authorizes a tax upon six miles of submarine cables lying beyond the line of low water mark on the island of Oahu and within the zone of three miles in its surrounding waters.
The submarine cables are not to be treated as real estate under the tax laws.
The aggregate of the invoice price and duties paid on the cables less a deduction of ten per cent. is appropriate for taxable value.
Robertson & Wilder for appellant.
Ballou & Marx for appellee.
STATEMENT OF CASE AND OF RESPECTIVE ARGUMENTS.
This is an appeal by the tax assessor for the island of Oahu from the decision of the tax appeal court in failing to find a valuation of six miles of cable lying below low water mark and all being within three miles from land. It was returned for nothing, the Cable Company claiming it was not legally assessable, and it was assessed at $42, 800. The tax appeal court held that it was not legally taxable.
Robertson & Wilder for appellant: The whole question hinges on whether this property is within the Territory or not. If within, it is clearly taxable, and if without, it is clearly not taxable. The statute (C. L., Sec. 817), provides that " except as herein provided all real property and all personal property within the Republic (now Territory) shall be subject to an annual tax, " etc. It is clear that the property in question is not exempt under any Territorial statute, and so the only question is, was it within the territory on January first? The supreme court has definitely settled the point in controversy in Hilo Sugar Co. v. Minister of Finance, 7 Haw. 665. There, a vessel laden with sugar cleared for San Francisco from Hilo on June 30, but owing to lack of wind did not sail from the port until July 1. The statute then in force was: " All personal property within this kingdom not subject to specific taxes shall be subject to an annual tax, " etc. (Comp. L., p. 119), and the owner was required to return all property belonging to him or of which he had the " possession, custody or control on the first day of July." It was held that the sugar on board the vessel was properly taxed to the owner in this kingdom, being within the kingdom on July first. There, as in the case at bar, the property was situated below low water mark. If this cable is not within the Territory then that sugar was not within the then kingdom. In Brewer & Co. v. Luce, 6 Haw. 554, sugar was laden on a vessel at Honolulu prior to July 1 and the bills of lading signed and mailed to foreign consignees. The vessel sailed from Honolulu at noon of July 1. It was held that the sugar was within this kingdom on July 1 and properly taxable. Although the decision was by a single justice, to wit, the late Chief Justice Judd, still it is right in line with the case at bar. Civil Laws, section 6, expressly limits the effect and operation of laws to property " within the territorial jurisdiction" of this Territory. See 3 Haw. 296. Clearly this property is within the territorial jurisdiction of this Territory. It appears from the evidence that this same property has paid duty to the federal government in order to get into the Territory. The property is not within the Territory for one purpose and without the Territory for another purpose. If the law is as contended for by the taxpayer, all that a man has to do is to take all his property below low water mark on January 1 and keep it there during that day and he cannot be taxed for that property. A vast amount of property is situated below water mark. Under the ruling of the tax appeal court a house built below low water mark cannot be taxed.
Ballou & Marx for appellee: The jurisdiction of the Territory of Hawaii for taxation purposes does not extend out into the ocean beyond low water mark, and therefore the assessment on the cables of the appellee company lying below low water mark out to the three mile limit was illegal. Jurisdiction over the seas for the space of three miles from land is an attribute of and dependent on sovereignty. It has been granted by international law to the sovereigns of the adjoining shores. 1 Farnham on Waters, Secs. 3-3c; Gould on Waters, Sec. 2; Hardin v. Jordan, 140 U.S. 371, 381; Carroll v. Price, 81 F. 137, 141; Queen v. Keyn, L. R. 2 Ex. Div. 63. There was at one time serious doubt whether the individual states of the Union possessed such jurisdiction, but it was finally held that they did on the ground that they retained sovereignty in all matters in which they had not granted it to the federal government. Manchester v. Mass., 139 U.S. 240; Commonwealth v. Manchester, 152 Mass. 230. A territory has no sovereignty. It is merely a political subdivision, an " organized municipality" for local self government. Talbott v. Silver Bow Co., 139 U.S. 438, 445-6; Natl. Bank v. Co. of Yankton, 101 U.S. 129, 133; Coffield v. Territory, 13 Haw. 478; Carroll v. Price, 81 F. 141. It has no powers or authority except such as are expressly or by fair implication conferred on it by Congress. There has been no general delegation of sovereignty by the United States to the Territory of Hawaii nor has there been any express or implied delegation of this particular attribute of sovereignty, i. e., jurisdiction for such purposes as taxation for three miles out to sea. On the contrary the United States holds the title to and dominion over the surrounding territorial waters in trust for the future state. See 30 U.S. Stats. at Large, p 750; Shively v. Bowlby, 152 U.S. 1; Carroll v. Price, 81 F. 137; 1 Farnham on Waters, p 48. The Territory of Hawaii has been granted general legislative power and that includes the power of taxing property within its limits. But it does not include jurisdiction over the three mile area. Such extra territorial jurisdiction is a distinct incident of sovereignty arising as a matter of international right, and has nothing to do with local self government. Territories are said to most closely resemble counties in their nature as political subdivisions. Natl. Bank v. County, 101 U.S. 129, 133; People v. Daniels, 6 Utah 288, 292; Coffield v. Territory, 13 Haw. 478. It is clear that the English counties do not share the national jurisdiction out to the three mile line. Queen v. Keyn, L. R. 2 Ex. Div. 63. In America the boundaries of counties have sometimes been extended three miles out to sea by statute. Where that has not been done either expressly or impliedly counties by the weight of authority have no jurisdiction over the three mile area though they do include harbors and small bays. See Gould on Waters, Sec. 13. Municipalities have no power to tax property situated below low water mark. Gilchrist's Ap., 109 Pa. St. 600; Sioux City Bridge Co. v. Dakota Co., 61 Neb. 75. The two Hawaiian cases cited by counsel for the appellant are not in point because they deal with the jurisdiction of the sovereign kingdom of Hawaii. International law strictly speaking concedes jurisdiction over the three mile area only for purposes of self protection and of control over navigation and fisheries. Any further assertion of dominion is a political rather than a legal matter in which the courts of any given country must follow the statutes and practice of the legislative and executive departments of the government of that country. 1 Farnham on Waters, Sec. 3b. We have failed to find any assertion by the federal government that jurisdiction over the three mile area includes the power of taxation. On this question Hawaiian cases are of little importance. See Manchester v. Mass., 139 U.S. 240, 258; U.S. v. Kessler, 26 Fed. Cas. 766, 775; The Alexander, 60 F. 914; cf. Queen v. Keyn, L. R. 2 Ex. Div. 71; 1 Farnham on Waters, Sec. 3b, note 1. Tax laws should be strictly construed and any doubt resolved in favor of the public. Valkenburg v. Treas., 14 Haw. 182; Castle v. Luce, 5 Haw. 321; Cooley on Taxation, p. 200. It should not be assumed that the Territory meant in its tax to avail itself if possible of the national jurisdiction over the three mile area. A cable actually laid on the bottom of the ocean and embedded in the sand is taxable as real estate if at all. See Vane v. Newcombe, 132 U.S. 238; Am., etc., Tel. Co. v. Middleton, 80 N.Y. 408. But the cables in question cannot be taxed as real estate because the land on which they are located and to which they have become affixed belongs to the federal government and is exempt from territorial taxation.
The appellant's counsel have correctly stated the question in the case, viz.: " Is this property within the Territory for taxation purposes under the statute which with certain exceptions not in this case declares that all " real and personal property within the Republic" (which by section 9 of the Organic Act must be read " within the Territory" ) " shall be subject to an annual tax of one per cent. upon the full value of the same." Sec 817, C. L. The appellee's counsel do not expressly admit although their argument practically concedes that when Hawaii was a sovereign state this statute would have authorized its taxing submarine cables on the high seas between low water mark and within the three mile zone of the surrounding waters. They claim, however, that Hawaiian decisions under the monarchy are not in point both because Hawaii then held all the power...
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