Yamada v. Natural Disaster Claims Commission

• Decision Date: 24 August 1973
• Docket Number: No. 5223,5223
• Citation: 513 P.2d 1001,54 Haw. 621
• Court: Hawaii Supreme Court
• Parties: Robert M. YAMADA and Emma M. Yamada, Appellants, v. NATURAL DISASTER CLAIMS COMMISSION for the County of Hawaii for the Volcanic Eruption of 1960 and the Tsunami of 1960, Appellee.

Page 1001

513 P.2d 1001

54 Haw. 621

Robert M. YAMADA and Emma M. Yamada, Appellants, v. NATURAL DISASTER CLAIMS COMMISSION for the County of Hawaii for the Volcanic Eruption of 1960 and the Tsunami of 1960, Appellee.

No. 5223.

Supreme Court of Hawai'i.

Aug. 24, 1973.

Syllabus by the Court

1. The quasi-judicial nature of the function of the Natural Disaster Claims Commission created under HRS ch. 234, as well as the time lapse between its original certification of natural disaster losses and the subsequent suspension of statutorily required tax credits by the State, make the reconsideration of such losses by the commission the substantial equivalent of a new proceeding.

2. HRS § 234-4, which authorizes reconsideration of natural disaster losses at the request of the claimant, does not provide for reconsideration by the commission on its own initiative, and this provision was not affected by the 1966 amendment permitting judicial review.

3. A statutory basis, either stated expressly or inferred from a reading of the entire statute, is necessary for an administrative body to initiate reconsideration of its prior final quasi-judicial decisions.

4. Administrative proceedings under HRS ch. 234 to determine the value of natural disaster losses cannot be characterized as adversary in form or substance, since there were no essential elements of contested litigation.

5. While administrative convenience or even necessity cannot override the constitutional requirement of due process, agencies should be free to fashion their own rules of procedure.

6. Under the doctrine of necessity, an administrative officer exercising a quasijudicial function can act in a proceeding when he would otherwise be disqualified, if jurisdiction is exclusive and no provision exists for substitution.

7. The doctrine of equitable estoppel is fully applicable against the government if it is necessary to invoke it to prevent manifest injustice, and such circumstances are present where a party, in reliance upon the receipt of tax credits, reinvests capital on property which has suffered natural disaster damage.

Shuichi Miyasaki, Honolulu, and Roy K. Nakamoto, Hilo (Masanori Kushi, Hilo, with them on the briefs), for appellants.

T. Bruce Honda, Deputy Atty. Gen. (George Pai, Atty. Gen., of counsel), for appellee.

Before RICHARDSON, C. J., MARUMOTO and LEVINSON, JJ., VITOUSEK, Circuit Judge, in place of ABE, J., disqualified, and KAWAKAMI, Circuit Judge, in place of KOBAYASHI, J., disqualified.

LEVINSON, Justice.

This dispute is the culmination of years of administrative wrangling over the value of property losses suffered by the appellants as a result of natural disasters and, as such, it presents us with a case of first impression regarding the power of an administrative commission to initiate reconsideration of its prior decisions.

The facts are as follows: The Island of Hawaii, where the appellants' property is located, suffered two natural disasters in 1960, a volcanic eruption and a tsunami (tidal wave). As a consequence, in 1961 the Hawaii legislature created a Natural Disaster Claims Commission to determine the value of property destroyed by such occurrences, with the claimant thereafter receiving tax credits in that amount. This legislation, Act 173, S.L.H.196s, as amended, is now HRS ch 234. ¹

The Governor appointed the members of the Commission, which on November 21, 1961 certified the appellants' loss to be $18,200. ² Some two and one-half years later, in 1964, the Director of Taxation suspended the granting of tax credits. Following the resignation of the original Commission members, a second group of commissioners was appointed in 1965 (hereinafter referred to as the Second Commission), which recertified the loss at $2,400 on January 5, 1966.

The appellants then sought judicial review by the circuit court, which decided that both the First Commission and the Second Commission were in error and, after a de novo hearing, made its own determination of $5,250 as the correct amount.

On appeal from the decision below, the appellants argue that the determination of losses by the First Commission was final, that there was no authority for the appointment of a Second Commission to recertify such losses, and that the State is equitably estopped from contesting and overturning the findings of the First Commission. We agree.

The appellants also argue that if the appointment of the Second Commission was allowable, its procedures both in challenging the First Commission and redetermining losses were improper; that the Attorney General's office should not have been permitted to represent the Second Commission against the First, which it had previously advised; and that the circuit court erred in its de novo computation of losses at $5,250. We do not find it necessary to reach these arguments.

The appellee attacks the validity of the First Commission's finding on the basis of various irregularities in its procedures, arguing that it is open both to rehearing and collateral attack. It opposes the applicability of equitable estoppel and defends the actions of the Second Commission, the Attorney General's office, and the adequacy of judicial review.

It must be noted at the outset that the Natural Disaster Claims Commission's function was quasi-judicial in nature, as opposed to merely executive, legislative, or administrative, for the reason that its purpose was to determine losses. Because of the time lapse between the original certification and the suspension of tax credits, as well as on account of the quasi-judicial nature of the First Commission, the reconsideration by the Second Commission was at least the substantial equivalent of a new proceeding. Therefore, the threshold problem before us is to determine whether the circuit court should have permitted any reconsideration in the circumstances presented by this case.

The problem of the extent to which an administrative agency should have continuing jurisdiction to reverse or modify prior decisions is made more difficult here because the statute which clearly authorizes reconsideration at the request of the claimant does not provide for reconsideration by the Commission on its own initiative. This lack of provision for reconsideration upon the initiative of the Commission was not affected by the 1966 amendment allowing judicial review. Moreover, HRS § 234-4 specifies that the Commission finding is 'final' unless the claimant appeals. With so little guidance from the legislature regarding the Commission's power to reconsider, we are forced to develop our own standards. Professor Davis discusses this problem in his Administrative Law Treatise, § 18.09 at 607 (1958):

When statutes are silent and legislative intent unclear, agencies and reviewing courts must work out the practices and the limits on reopening. The considerations affecting reopening to take account of new developments or of new evidence of old developments often differ from those affecting the correction of mistakes or shifts in judgment about law or policy. Usually the search for a basic principle to guide reopening is futile; the results usually must reflect the needs that are unique to each administrative task. Factors to be weighed are the advantages of repose, the desire for stability, the importance of administrative freedom to reformulate policy, the extent of party reliance upon the first decision, the degree of care or haste in making the earlier decision, the general equities of each problem.

The weight of authority requires that an administrative agency's power to reconsider final decisions be statutorily grounded, either stated expressly or inferred from a reading of the entire statute. Keating v. State, 167 So.2d 46 (Fla.Ct.App.1964); Koehn v. State Board of Equalization, 166 Cal.App.2d 109, 333 P.2d 125 (1958); Pearce Hospital Foundation v. Illinois Public Aid Comm'n, 15 Ill.2d 301, 154 N.E.2d 691 (1958); Peerless Fixture Co. v. Keitel, 355 Mo. 144, 195 S.W.2d 449 (1946). See generally, Davis, Administrative Law Treatise, § 18.09 (1958, Supp.1970). A few courts have held that such power is inherent or implied. Handlon v. Town of Belleville, 4 N.J. 99, 106-107, 71 A.2d 624, 627-628 (1950); Anchor Casualty Co. v. Bongards Co-Operative Creamery Ass'n, 253 Minn. 101, 91 N.W.2d 122 (1958). But even these cases require that the power be exercised by the agency within a reasonable time, which the Commission in the present case failed to do by waiting two and one-half years.

We hold that a statutory basis is necessary for an administrative body to initiate reconsideration of its prior final quasi-judicial decisions. As previously pointed out, the statute involved in the present case provides for appeals by claimants only, and it makes the Commission's decision final. The Commission was appointed, it accomplished its purpose of assigning valuation to property losses, and its conclusion must therefore stand.

We do not regard the irregularities which the appellee argues were committed by the First Commission as fatal to its determination.

The appellee argues that the findings of the First Commission are suspect because tax office records were used as a basis for its valuation formula, information was gathered by individual commissioners, and claimants were allowed to make statements with no supporting evidence. However, it is our opinion that these proceedings cannot be characterized as adversary either in form or substance, since there were no essential elements of contested litigation. Compare, Morgan v. United States, 304 U.S. 1, 20, 58 S.Ct. 773, 82 L.Ed. 1129 (1938). Although administrative convenience or even necessity cannot override the constitutional requirement of due process, Ohio Bell Telephone Co. v. Public Utilities Comm'n, 301 U.S. 292, 304-305, 57 S.Ct. 724, 81 L.Ed. 1093 (1937), agencies 'should be free to fashion their own rules of procedure and to pursue methods of inquiry...