Munoz v. Ashford, 2923.

Decision Date14 January 1955
Docket NumberNO. 2923.,2923.
Citation40 Haw. 675
PartiesFRANK MUNOZ v. MARGUERITE K. ASHFORD, AS COMMISSIONER OF PUBLIC LANDS FOR THE TERRITORY OF HAWAII, AND E. ROGERS.
CourtHawaii Supreme Court

OPINION TEXT STARTS HERE

APPEAL FROM CIRCUIT JUDGE FIRST CIRCUIT, HON. R. B. JAMIESON, JUDGE.

Syllabus by the Court

A taxpayer may maintain an action against a public officer seeking cancellation of a written instrument or other equitable relief only if he as such taxpayer, and taxpayers as a class, have sustained or will sustain pecuniary damage or injury.

Where it is established that fraud exists, either actual or constructive in the sale of property of a municipality or other political unit the fraud is deemed tantamount to a waste of public funds, thereby vesting a taxpayer with sufficient pecuniary interest to attack such sale. In the absence of fraud mere irregularity without more, asserted in connection with a sale is insufficient to justify intervention.

Where the sale of a lease of public lands is alleged to have resulted in “irreparable loss” to the Territory by failure to obtain the maximum rental thereon due to alleged illegalities in connection with the auction of such lease, a taxpayer complainant is precluded from attacking the validity of the sale, where, as here, the petition fails to allege that such loss will result in an increase either in his tax burdens or that of all taxpayers in general.

All parties interested in the subject matter of a suit in equity are necessary parties. Where, as here, a taxpayer's suit against the commissioner of public lands of the Territory of Hawaii to rescind a lease of public lands executed by such officer to a third-party purchaser at an auction of such lease, the failure to join the Territory as a party respondent and to allege its consent to be sued constitutes a bar to the suit since the Territory possesses a direct proprietary and pecuniary interest in the lease thereby constituting it a necessary party to the proceedings.

A taxpayer asserting the invalidity of an auction of a lease of public lands upon the grounds of alleged illegalities occurring in connection with the auction is estopped from attacking the subsequent disposition of such property, where, with knowledge of his alleged rights he remains silent and fails to interpose his objections either prior to or at the time of the sale, where as here, he also participates directly in the auction sale by bidding.

In the absence of statute, a demand upon the proper public officer, in this case the attorney general of the Territory of Hawaii to take appropriate action, is a condition precedent to the filing of a taxpayer's suit challenging the validity or legality of what, in the premises, the public officer is intending to do or has done, unless facts are alleged which sufficiently establish that such demand would have been useless.G. T. Nakamura, Deputy Attorney General (also on the brief), for the Territory and E. Rogers, appellees.

E. H. Nakamura ( Bouslog & Symonds with him on the briefs) for appellant.

TOWSE, C. J., LE BARON AND STAINBACK, JJ.

OPINION OF THE COURT BY TOWSE, C. J.

This is an appeal from an order sustaining a demurrer to the petition of the appellant, an unsuccessful bidder at the public auction of a lease upon a parcel of territorial land conducted by respondent-appellee's predecessor in office and in which appellant also sought cancellation of a lease upon the parcel to respondent-appellee Rogers, the highest bidder at the sale.

The material portions of the bill allege: That petitioner, a resident and taxpayer of the county of Maui, brings this action individually and on behalf of the taxpayers and citizens of the Territory of which he is one of a class; that on November 14, 1951, December 5, 1951, December 26, 1951 and January 12, 1952, respondent Godbold, as commissioner of public lands, caused to be published in the Maui News, a newspaper of general circulation in the Territory, a notice of sale of territorial government general leases of government lands on the islands of Maui and Molokai; that included among the parcels of lands described in said notice was a parcel designated “A-3,” situated at Lahaina, Maui, containing an area of approximately 4,896.28 acres, the term of lease being twenty-one years from January 14, 1952, with an upset rental of $2,500.00 per annum; that said parcel together with other parcels was to be sold at public auction to the highest bidder on January 14, 1952, at the territorial office building in Wailuku, Maui, at 9:00 o'clock a. m., pursuant to section 73 of the Hawaiian Organic Act and the Revised Laws of Hawaii 1945, as amended.

That section 4531 of the Revised Laws of Hawaii 1945, referred to in the notice of public sale, provides in part: “Notice of any auction as above required shall contain a full description of the land to be sold as to locality, area and quality, with reference to the survey, which shall in all cases be kept in the office of the commissioner or his agents. Such surveys shall be open to inspection to all who may desire to examine the same, without charge, during the whole period of the advertisement of the auction.”

That the published notice provided, among other matters pertaining to rights-of-ways and water rights, that: “Each successful bidder shall, at the fall of the hammer, deposit with the auctioneer in cash or by certified check a sum equal to six months' rent as established by his bid, together with the pro rata share of all advertising costs, survey charges and other charges required by law;” and further that: “The form of government general leases containing most all of the covenants to be complied with by successful bidders, together with maps of all parcels offered for sale, showing the existence or non-existence of access rights-of-ways, are on file * * * at the office of the Subland Agent, Territorial Office Building, Wailuku, Maui * * * and are available for inspection thereat;”

That immediately after the first publication of said notice, petitioner proceeded to the subagent's office at Wailuku, Maui, and requested the subagent of said commissioner for the county of Maui to permit him to inspect the form of leases and maps of the parcels which were to be included in the public sale as advertised together with the form of lease and map of said parcel A-3; that petitioner was informed by said subagent, then and there acting within the scope of his authority that the forms of leases and maps of the said parcels were not then available, but that he would promptly obtain the same and have them available for inspection by the petitioner prior to the time set for the auction;

That on numerous occasions thereafter petitioner called in person at the said Maui office of respondent commissioner and requested of the said subagent that he be permitted to inspect the forms of leases and maps of the parcel as aforesaid but that on each occasion petitioner was informed by the subagent that they were not available but that he would obtain the same; that at no time prior to the auction sale did said subagent make them available, and that the said subagent refused and neglected to comply with the provisions of said published notice above set forth or with section 4531 of the Revised Laws of Hawaii 1945;

That the failure of said subagent to comply with the provisions of the notice as aforesaid rendered it impossible for petitioner to determine the availability of water, the location of boundaries, and the availability of access rights-of-way of and pertaining to the said parcel A-3; that the maximum annual rental that could be obtained for said parcel A-3 would be for its utilization as grazing land for cattle and therefore the amount of rental to be offered at said public auction was dependent upon the availability of sufficient water, the location of boundaries, and the availability of access rights-of-way;

That on January 14, 1952, the public auction was held pursuant to the published notice, and that petitioner was present and offered bids and did bid upon the lease of said parcel A-3; that respondent E. Rogers was the highest bidder, he having ceased bidding when he did not have sufficient cash or a certified check in his possession required to meet the conditions of sale; that contrary to the provisions of said published notice, and at the fall of the hammer establishing respondent E. Rogers the successful bidder upon said parcel A-3, the auctioneer did not require the said E. Rogers to deposit with said auctioneer in cash or by certified check a sum equal to six months' rental as established by his successful bid together with a pro rata share of all advertising costs, survey charges and other charges required by law, all as provided in said published notice;

That without the form of leases and maps of parcel A-3 having been theretofore made available to him for inspection as by law required, petitioner was not in a position to evaluate the maximum rental that he would have otherwise bid upon the said parcel A-3 although petitioner was ready, able and willing to bid substantially more than he did bid for said parcel, and substantially more than respondent Rogers' highest bid had he known or been informed by the auctioneer that it was not necessary to comply with the provisions of the published notice regarding a deposit in cash or by certified check; That petitioner is informed and believes that subsequent to the said auction the respondent commissioner entered into a lease with respondent E. Rogers upon parcel A-3, which lease is now in full force and effect; that the said lease is null and void for the reason that the terms and conditions of the published notice and the requirements of section 4531 of the Revised Laws of Hawaii 1945, were not complied with and that as a result thereof, the Territory of Hawaii suffered irreparable loss in that the maximum rental for parcel A-3 was not obtained at said...

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    • March 21, 2019
    ...and disadvantages to, the municipality and to the interests represented by it and so to those who are taxpayers. Munoz v. Ashford, 40 Haw. 675, 683 (Haw. Terr. 1955) (citation and quotation marks omitted).This "basic theory," id., aligns with the "theory of injury presented by" Tax Foundati......
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