In re Taxes B. P. Bishop Estate

• Decision Date: 20 September 1934
• Docket Number: No. 2133.,2133.
• Citation: 33 Haw. 149
• Parties: IN RE TAXES B. P. BISHOP ESTATE.
• Court: Hawaii Supreme Court

33 Haw. 149

IN RE TAXES B. P. BISHOP ESTATE.

No. 2133.

Supreme Court of the Territory of Hawai‘i.

Argued May 22, 1934.

Decided September 20, 1934.

APPEAL FROM TAX APPEAL COURT.

Syllabus by the Court

Expressions “full cash value” and “fair and reasonable value” held to be terms of like import.

What is the fair and reasonable value of real property for tax purposes is solely a question of fact to be ascertained in each individual case in the manner prescribed by statute.

Landowner conscientiously desiring to ascertain the fair value of his property may not require the appraisers of the property to disregard any factor either adding to or detracting from its value.

The findings of fact of the tax appeal court are accorded the same weight as the findings of a circuit judge at chambers.

The decision of the tax appeal court fixing the value of property will be sustained unless shown to have been erroneous and the burden of proof is upon the appellant.

Under recent statute the tax appeal court has been raised to the dignity of a court of record clothed within the sphere of its duties and functions with all the power and authority of a circuit judge at chambers.

A. G. M. Robertson (Robertson & Castle on the briefs) for the taxpayers.

M. E. Winn, Deputy Attorney General (H. R. Hewitt, Attorney General, and G. P. Kimball, Third Deputy Attorney General, on the brief), for the assessor.

COKE, C. J., BANKS AND PARSONS, JJ.

OPINION OF THE COURT BY COKE, C. J. (Parsons, J., dissenting.)

This case comes here on appeal from a decision rendered by the tax appeal court of the Territory. The appellants, the trustees of the estate of Bernice P. Bishop, deceased, are, and for many years past have been, the owners of a tract of unoccupied and unimproved real property containing 163,383 square feet and bounded on one side by Ala Moana and on the other by the Honolulu Harbor and lying between the premises of the Inter-Island Steam Navigation Company and property occupied by the United States lighthouse service, in the city of Honolulu. Of this area 88,895 square feet are under water measured from high watermark and 74,488 square feet are above high watermark. The portion of the land described as being submerged is covered by shallow water near the water line which tapers downward to an estimated depth of thirty-five feet. The owners made a written return of the property in question as of January 1, 1933, but refrained from fixing any value thereon in accordance with Act 40, 2d Sp. S. L. 1932. In due course the property was assessed by the tax assessor of the first taxation division, who fixed the value of the property at $176,440. From this assessment the owners perfected an appeal to the tax appeal court of the Territory and in their notice claimed the value of the property to be $46,006. The cause was thereafter heard by the tax appeal court, oral and documentary evidence being introduced by both the appellants and the Territory. At the conclusion of the hearing the tax appeal court rendered a lengthy decision, placing the fair and reasonable value of the property as of January 1, 1933, at the sum of $101,398.75, and ordered the assessment list to be amended accordingly. From this decision the owners have perfected an appeal to this court pursuant to statute, the taxpayers urging in their appeal that the value of the property fixed by the tax appeal court is excessive and is not supported by the evidence.

Under the law heretofore existing, namely, chapter 102, R. L. 1925, real and personal property within the Territory was required to be assessed on the basis of its “full cash value” (see §1315). The more recent legislation on the subject enacted by the territorial legislature (see §21, Act 40, 2d Sp. S. L. 1932) provides: “Real property tax. Except as exempted or otherwise taxed, all real property in each taxation division of the Territory shall be subject each year to a tax of such rate per cent as shall be determined in the manner provided in this section upon its fair and reasonable value.” As hereinafter explained we regard as unimportant the adoption in the new statute of the phrase “fair and reasonable value” instead of “full cash value.” Section 26 of Act 40 provides in part: “In making all assessments of land consideration shall be given to the advantage or disadvantage of location, accessibility, transportation facilities, size, shape, topography, quality of soil, water privileges, availability of water and its cost, easements and appurtenances, productivity and nature of use, and further to selling prices, and to the opinions of persons who may be considered to have special knowledge of land values, and further to all other influences whether similar to those listed or not, which fairly and reasonably bear upon the question of value.”

The legislature may have intended otherwise but after careful consideration and the investigation of the authorities we conclude that the expressions “full cash value” and “fair and reasonable value” are terms of like import and denote the price in cash which a capable and diligent man could obtain for it as distinguished from the sacrifice price on the one hand and the credit price on the other. Cash is the antonym of credit. The authorities uniformly hold that the terms “value,” “market value,” “fair value,” “reasonable value,” “fair cash value,” “actual cash value” and “fair and reasonable cash value” are synonymous expressions. 4 Words & Phrases (2d Ser.) 1137-1142. See also State v. Woodward, 208 Ala. 31;Sisk v. American Central Fire Ins. Co., 69 S. W. (Mo.) 687. In Stern v. Paper, 183 Fed. 228, 231, the court in defining “fair value” made use of the following language: “Such a value excludes, on the one hand, the sacrifice price that would result from an execution or foreclosure sale, and, on the other hand, the retail price that could be realized in the slow process of trade. * * * ‘Fair valuation’ means such a price as a capable and diligent business man could presently obtain for the property.” While the court in that case was dealing with a stock of merchandise yet we think its definition of “fair valuation” is equally applicable in the present case.

The supreme court of Hawaii has on divers occasions, in dealing with chapter 102, R. L. 1925, endeavored to define the term “full cash value.” We quote from a few of the local decisions: “The cash value of property at a given time is determined by what people then believe it to be worth.” Tax Assessment Appeals, 11 Haw. 235, 241. “ ‘Full cash value’ under the tax law means the value for purposes of sale, if the property is salable, and not either the value to the owner or the cost of reproduction.” In re Taxes Castle, 15 Haw. 1. See also Kash Co. v. Assessor, 15 Haw. 476. “The term ‘cash value,’ as used in the tax statute, means the highest price which the property will bring for cash on the assessment date whether sold as a whole or in lots,--whichever will bring the higher return --and after reasonable advertisement. It means the cash price obtainable if all the property were sold on the assessment date.” Re Taxes Bishop Estate, 27 Haw. 190.

The new statute is more comprehensive than the old in that it prescribes in more detail the formula to be employed to determine real property values. Act 40, 2d Sp. S. L. 1932, requires that in ascertaining the fair and reasonable value of real property many factors must be taken into consideration, namely, location, accessibility, transportation facilities, size, shape, topography, quality of soil, water privileges, availability of water and its cost, easements and appurtenances, productivity and nature of use, the opinions of persons who may be considered to have special knowledge of land values and all other influences, whether similar to those listed or not, which fairly and reasonably bear upon the question of value. What is the fair and reasonable value of a piece of property, therefore, becomes a question which can only be solved by the consideration of the facts of each case so variant are the circumstances under which this question arises.

In the present case the land involved is conceded by all parties to enjoy a frontage on the harbor of Honolulu of 307.2 feet and a frontage of 331.2 feet on Ala Moana and this is an advantage of location which we hold should not be overlooked in arriving at the fair and reasonable value of the property. While the taxpayers contend that the premises should be appraised as industrial property and no importance should attach to the fact that the same is harbor frontage, we are unable to concur in this view. It seems plain to us that the property has an advantage of location far beyond that of strictly industrial property. This is supported by an overwhelming preponderance of the testimony of the witnesses, including the testimony of the witness Watson who appeared before the tax appeal court in behalf of the taxpayers. This witness in answer to a question propounded by one of the members of the tax appeal court, who was endeavoring to ascertain from the witness whether an exchange of the land involved for other industrial property of like area but noncontiguous to the harbor front would be a fair and reasonable one, gave the following answer: “Q * * * Mr. Watson, * * * assuming that the possibility of leasing both properties were approximately the same chance, do you think that an exchange of this property for this other property would be a fair and reasonable exchange? A No, I don't. Q Which do you think would be the better? A The Bishop estate property. The fact that it is on the harbor is inescapable.” Campbell Crozier, deputy tax commissioner of the Territory, a witness qualified as an expert on real estate values in Honolulu and called by the government, testified in part as follows: “Q And that is, from your standpoint as tax assessor, its value would be for harbor development, docks, wharves and piers and things of that sort? A...