Kapena v. Kaleleonalani

• Decision Date: 01 July 1885
• Citation: 6 Haw. 579
• Parties: J. M. KAPENA, MINISTER OF FINANCE v. EMMA KALELEONALANI ET AL.
• Court: Hawaii Supreme Court

6 Haw. 579

J. M. KAPENA, MINISTER OF FINANCE v. EMMA KALELEONALANI ET AL.

Supreme Court of Kingdom of Hawai'i.

July 1, 1885

IN EQUITY.

Syllabus by the Court

Defendants having been decreed to be owners of the premises known as " Honolulu Hale" as against the Commissioners of Crown Lands, the Minister of Finance now sues defendants to recover amount of a mortgage on said property, formerly paid by the Government under the belief that the property was Crown Lands.

Held on demurrer, that the Commissioners of Crown Lands are not necessary parties defendant: that the devisee, not the personal representative, of a deceased owner is the proper person to be sued: and that the Public Treasury, having paid a mortgage on the property under the mistaken idea that it was Crown Land, has a lien on the premises to the extent of its value at the time the mortgage was released.

Attorney-General Neumann, for plaintiff.

A. S Hartwell, for Mr. and Mrs. Bishop.

F. M Hatch, for Queen Emma.

BEFORE JUDD, C.J.

DECISION

JUDD C.J.

The following is a simplified statement of the essential allegations in the bill:

I. Certain premises on Merchant street, in Honolulu, known as " Honolulu Hale, " as well as several other parcels of land described in the bill, were the property of Kamehameha IV. in his private capacity, and were not a part of the Royal Domain commonly known as Crown Lands, although they were erroneously understood and believed to be such and were so treated.

II. An Act of the Legislature passed January 3d, 1865, entitled " An Act to relieve the Royal Domain from encumbrances, " etc., authorized the Minister of Finance to extinguish such mortgages on the Crown Lands as might remain unsatisfied after the administrators of Kamehameha IV.'s estate had exhausted the estate belonging to their deceased intestate in his private capacity.

III. The property described in paragraph I was not sold by the administrators, because it was believed to be a part of the Royal Domain, and not the private estate of the deceased King.

IV. The premises above described as " Honolulu Hale, " as well as certain Crown Lands, had been encumbered with a mortgage by His Majesty Kamehameha IV., through the intervention of Wm. Webster as trustee, and this mortgage, amounting to $7732, was paid off by the Minister of Finance in pursuance of the said Act of the Legislature of January 3d, 1865, under the belief that all the private estate of Kamehameha IV. had been sold, and the Minister of Finance paid other mortgages and liens amounting in all to the sum of $27, 000, towards discharging the debts of Kamehameha IV.

V. The plaintiff is the Minister of Finance, and in behalf of the King and people of this Kingdom makes this demand, and asks for the relief prayed for. The defendant Emma is the widow and statutory heir of one-half of the estate which was of Kamehameha IV.

VI. The premises above described as " Honolulu Hale" were held by the Commissioners of Crown Lands as part of the Royal Domain from the time of the creation of their trust by law until the termination of a suit on the equity side of this Court, brought by defendants against the Commissioners of Crown Lands, by which the said premises were decreed to belong to the defendants.

The bill prays that the premises known as " Honolulu Hale" may be decreed to be chargeable with the amount of the mortgage paid off by the Minister of Finance, and that they be sold to satisfy the same, etc.

Both defendants demur. The questions raised are, first: Are the Commissioners of Crown Lands necessary parties to the bill either as plaintiffs or defendants.

I cannot see that the Commissioners of Crown Lands have now any right or interest in the premises sought to be charged with the payment made, or in the fund sought to be recovered by the Minister of Finance. Their claims have been considered and adjudicated by the Court, and they cannot be again heard.

If the Minister of Finance has paid from the Public Treasury a greater sum than he would if the land in question had been sold to extinguish the mortgage upon it, his right to recover this sum from the owners of the land is unaffected by the fact that the Commissioners of Crown Lands have had possession of the premises and collected its rents, for they are accountable for these rents not to the Minister of Finance, but to the defendants, the holders of the title. The diminution of the supposed extent of the Crown Lands by the decree above referred to in favor of defendants, is a matter not raised by the bill, and the enquiry as to who should be made good in consequence of the diminution, whether the Crown or the Public Treasury, is therefore not pertinent to the issues before me.

I do not think the bill is demurrable on account of the non-joinder of the Commissioners of Crown Lands.

The second question is: Should the executors of the will of the late R. Keelikolani be made parties instead of her heir and devisee.

It is elementary law that it is not necessary to make the personal representatives of a mortgagor parties to a bill for foreclosure of a mortgage upon real estate. See Story's Eq. Jur., Sec. 175. The learned author says this is not necessary even though the mortgage is primarily a debt chargeable upon the personal assets.

If the bill sought to charge the personalty of the deceased defendant with this claim or to recover from it any deficiency over and above the proceeds of her land, her personal representatives should be made parties, otherwise not. It was so held in Leonard vs. Morris, 9 Paige, 89. I think the heir and devisee, who holds the title to the real estate sought to be charged with a lien, is the proper party defendant. The case of Campbell vs. Kamaiopili, 3 Hawn. 477, is in point.

The objection taken by defendants, that the administrator of Kamehameha IV. had no authority to sell the deceased King's lands in order to pay his debts, I do not think is tenable. The jurisdiction to order such sales when the personal estate is insufficient has been exercised by the Probate Courts of this Kingdom from the time of their creation, and a confirmatory statute was passed by the Legislature of 1876. The administrator did, as a matter of fact, sell many of the King's private lands in pursuance of the authority of the Probate Court.

I do not think that the fact that the law set apart one-fourth of the revenues of the Crown Lands to be devoted to the repayment of the advances made by the Treasury, affects this case.

Nor do I think the issues raised in this case are affected by the subsequent act of 1866, which discharged the Commissioners of Crown Lands from all liability to repay these advances. The law made the grant in relief an absolute gratuity, the object of the Legislature being to relieve the Royal Domain of the mortgages upon it, and thus benefit the reigning Sovereign by enhancing the revenues of the Crown Lands. I can see nothing in the acts indicating that their object was to benefit the heirs-at-law of Kamehameha IV. The reigning Sovereign, Kamehameha V., was not the deceased King Kamehameha IV.'s heir-at-law. The statutory heirs of Kamehameha IV. were his widow and his father.

The remaining question is whether the bill shows title to the plaintiff to relief in equity.

Is there a lien in equity in favor of the Public Treasury upon the premises in question by virtue of the Treasury having paid the mortgage upon it? Is the Minister of Finance subrogated to the rights of the mortgagee?

The decision of these questions involve the discussion of many points not easy of solution.

The duty was by the law cast upon the Minister of Finance in connection with the Commissioners, to negotiate for the redemption of the mortgages, and he was to issue the bonds and use them to " extinguish those mortgages which may remain unsatisfied after the administrator of his late Majesty's estate has exhausted all the estate belonging to his late Majesty, in a private capacity, which the administrator may be legally entitled to use for the payment of the debts of the estate."

The bill alleges that the Minister of Finance, believing that all the private estate of Kamehameha IV. had been sold in accordance with the provisions of the law, issued $27, 000 of Government bonds and extinguished the mortgages, paying the amounts due to the several mortgagees.

Subrogation is defined by Sheldon to be " the substitution of another person in the place of a creditor, so that the person in whose favor it is exercised succeeds to the rights of the creditor in relation to the debt. The substitute is put in all respects in the place of the party to whose rights he is subrogated."

" Subrogation is treated as the creature of equity and is so administered as to secure real and essential justice without regard to form, and is independent of any contractual relations between the parties to be affected by it. It is broad enough to include every instance in which one party pays a debt for which another is primarily answerable, and which in equity and good conscience should have been discharged by the latter; but it is not to be applied in favor of one who has officiously, and as a mere...