Can the legislature adopt a law mandating that from here forward, upon an owner’s death, all of her property escheats to the State? Yes, according to the Hawaii Intermediate Court of Appeals. Because the property is not “vested” in future heirs and “may never materialize,” the State is free to take it.
That’s the basic rationale the 3-judge ICA panel adopted in Maunalua Bay Beach Ohana 28 v. State of Hawaii, No. 28175 (Dec. 30, 2009), where the issue was not the right of descent and devise, but whether littoral property owners are entitled tocontinue to own accreted lands. In that case, the court held the legislature was not constrained by the takings clauses of the federal and state constitutions from simply assigning ownership of land which has not yet accreted from littoral property owners to the State. [Disclosure: we filed an amicus brief supporting the property owners, available here.]
Act 73: Shoreline Accretion is “State property”
In 2003, in “Act 73” (codifed here and here),theHawaii legislature declared that title to shoreline land naturally accretedcannot be registered by anyone except the State, and that only theState could quiet title to accreted lands. Most critically, the Actdeclared that all accretion not registered was State property.
Until then, the common law of the Kingdom, Territory, and State of Hawaii uniformly held that littoral owners lose ownershipof land when it erodes, but when it accretes, the new land belongs to the owner of the littoral parcel. See Halstead v. Gay, 7 Haw. 587 (1889); State ex rel. Kobayashi v. Zimring, 566 P.2d 725 (Haw. 1977); In re Banning,832 P.2d 724 (Haw. 1992). Theserules insured that littoral parcels remained so, even when the water’sedge shifted naturally over time. This was arguably the dominant andmost valuable aspect of owning a littoral parcel. See Zimring, 566 P.2d at 734.
Act 73 abolished the accretion rule and made the reciprocal equation into a one-way street: an ownerstill loses land when it erodes, but when it accretes, a formerly beachfront parcel will be cut off from contact with the ocean by a state-owned beach, potentially transforming beachfront land into beach view land.
Act 73 Invalidated
In 2005, a group of littoralproperty owners filed a class action lawsuit in state court, allegingthat Act 73 took their right toaccretion. The trial court agreed:
Act 73 … represented a sudden change in the commonlaw and effected an uncompensated taking of, and injury to, (a)littoral owners’ accreted land, and (b) littoral owners’ right toownership of future accreted land, insofar as Act 73 declared accretedland to be “public land” and prohibited littoral owners fromregistering existing and future accretion under [Hawaii RevisedStatutes (HRS)] Chapter 501 and/or quieting title under [HRS] Chapter669.
The trial court’s order is available here. The State appealed.
ICA: A Taking of Existing Accretions, But “Future Accretions” Are “Speculative”
The ICA affirmed that Act 73 was a taking of accreted land presently existing. The court first rejected the State’s contention that in “Act 221,” a 1985 statute, the legislature meant to alter the common law of accretion. See Haw. Rev. Stat. §§501-33, 669-1 (1993). The State argued that Act 73 was not a taking because in Act221, the State had already taken the common law right togain ownership of accreted lands. Slip op. at 33.
Next, the court held that “Act 73 clearly changed the common law by declaring that all accreted lands ‘not otherwise awarded’ and not previously recorded or the subject of a then-pending registration or quiet-title proceeding was now state or public property. Therefore, littoral owners who had such accreted lands when Act 73 became effective on May 20, 2003 had their ownership rights in their accreted lands taken from them by the passage of Act 73.” Slip op. at 34 (citing Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982)).
However, the court held that “future” accretion might never happen, so the State could acquire it without first paying compensation. Slip op. at 29-32. The panel bought the State’s argument that Act 73 did not take future accretion, because the right is simply a contingent future interest. Listen to this keyexchange from the State’s oral argument:
The ICA concluded, “any claims that Plaintiff may have to future accretions are purely speculative, and other courts have held that a riparian owner has no vested right to future accretions.” Slip op. at 30.
Accretion as a “Future” Interest?
The court relied on four cases, the most important of which is Damon v. Tsutsui, 31 Haw. 678 (Terr. 1930), because the court asserted it presented “a somewhat similar situation.” Slip op. at 31. The court quoted Damon for the proposition that “[r]ights are vested when the right to enjoyment, present or prospective, has become the property of some particular person or persons as a present interest. On the other hand, a mere expectancy of future benefit, or a contingent interest in property founded on anticipated continuance of existing laws, does not constitute a vested right.” Damon, 31 Haw. at 693.
The ICA’s reliance on this case is misplaced for two reasons.
First, under Damon‘s definition of a “vested right,” the right to accreted land — even land which has not yet accreted — is a “right to enjoyment, present or prospective” that has become the property of specific people as a present interest. The case should cut for the littoral property owners, not against them. It is true that land may never accrete on any particular littoral owner’s land, but butif it does, the common law rule was that it attaches to the littoral parcel. That does not make the right a contingent future interest. The ICA dismissed as “dictum” the U.S. Supreme Court’s determination that:
The riparian right to future alluvion is a vested right.It is an inherent and essential attribute of the original property. Thetitle to the increment rests in the law of nature. It is the same withthat of the owner of a tree to its fruits, and of the owner of flocksand herds to their natural increase. The right is a natural, not acivil one. The maxim “qui sentit onus debet sentire commodum” [“he whoenjoys the benefit ought also to bear the burdens”] lies at itsfoundation. The owner takes the chances of injury and of benefitarising from the situation of the property. If there be a gradual loss,he must bear it; if, a gradual gain, it is his.
County of St. Clair v. Lovingston, 90 U.S. 46, 68-69 (1874). The right to future accretion is a right presently “vested” because the littoral owner is bearing the risk of erosion now.
Statutory vs. Common Law Rights
Second, Damon was not a case which presented a “somewhat similar situation.” That case turned on whether a lessee had offshore fishing rights allegedly granted to his predecessor during the Kingdom period. Exclusive fishing rights were originally created in 1839 when the King (who, as the sovereign, had allodial title to all land and fishing rights) “gave” a portion of them “to the common people.” Haalelea v. Montgomery, 2 Haw. 62, 65 (1858). These rights, which granted auhupuaa tenants fishing rights as long as they remained tenants, were eventually codified by statute. The Damon court made it clear that these rights were limited and stemmed from — and were dependent upon — the King’s gift:
But for this gift or grant the tenants would not have had any rights;and they have them only to the extent and with limitations expressed inthe grant.
Damon
, 31 Haw. at 688. After annexation of Hawaii by the United States in 1898, the Hawaii Organic Act of 1900 repealed these laws, exempting those who could show “vested rights” by judicial confirmation. [Sidebar: the confirmation process was similar to the Land Commission procedures after the Mahele, and the post-California statehood land commission process to confirm Mexican and Spanish land grants after California joined the Union.] Those who did not confirm their fishing rights were not “vested” under the Act and were subject to the repeal of the King’s gift:
In our opinion those persons who became tenants after April 30, 1900, as did Tsutsui in 1929, did not have any “vested” rights within the meaning of the Organic Act and therefore the repealing clause was operative as against them.
Damon
, 31 Haw. at 693. The ICA relied on three federal cases, Western Pac. Ry. Co. v. Southern Pac. Co., 151 F. 376 (9th Cir. 1907), Cohen v. United States, 162 F. 364 (C.C.N.D. Cal. 1908), Latourette v. United States, 150 F. Supp. 123 (D. Or. 1957), to hold that accretion was similarly not “vested,” and the legislature could take it without consequence. These cases are distinguishable (and even if they were not, the U.S. Supreme Court’s rule in County of St. Clair that “right to future alluvion is a vested right” would seem to be more compelling).
The ICA’s gravest error, however, is that it conflated the nature statutory rights with common law rights. The fishing rights in Damonwere a case of “what the King giveth, the King may taketh away,” muchlike the modern cases which hold that there is no property right in thecontinued existence of a statute. See, e.g., American Pelagic Fishing Co. v. United States, 379 F.3d 1363 (Fed. Cir. 2004).
That’s a long way from a legislature prospectively abolishing a common law right which does not have its origin in a grant or a statute. The fishing right at issue in Damon was solely the product of positive law that could be altered or repealed by the sovereign. The common law right of accretion, by contrast, does not exist by virtue of a grant or by statute; rather, it has a normative component immunizing it from a legislature’s repeal withoutcondemnation and payment of just compensation. As Justice ThurgoodMarshall once noted:
Quite serious constitutional questions might be raised if a legislatureattempted to abolish certain categories of common-law rights in somegeneral way. Indeed, our cases demonstrate that there are limits ongovernmental authority to abolish “core” common-law rights, includingrights against trespass, at least without a compelling showing ofnecessity or a provision for a reasonable alternative remedy.
PruneYard Shopping Center v. Robins, 447 U.S. 74, 93-94 (1980) (Marshall, J., concurring). The nearly universal rules of accretion anderosion are precisely this type of right. The ability to maintain a littoral parcel’s physical contact with theocean is not simply a unilateral expectation or a product of positivelaw, but an expectation “that has the law behind it.” Kaiser Aetna v. United States,444 U.S. 164, 178 (1978). In other words, it is “property” within the meaningof the Fifth Amendment.
Whena legislature transfers valuable legal rights from an owner to the State(even when those interests may be future interests), the Supreme Court has found a taking. For example, the Court invalidated a federal statute inwhich Congress determined that small interests in Indian land wouldescheat to the tribe and could not be passed to heirs by descent ordevise. Babbitt v. Youpee,519 U.S. 234 (1977). (See the hypthetical posed at the start of this post.) Similarly, when the Florida legislature reassignedinterest on monies which litigants deposited in the courtsfrom the owners of the funds to the state, the Courtinvalidated the statute, even though the interest had not yet been earned. See Webb’s Fabulous Pharmacies, Inc. v. Beckwith,449 U.S. 155 (1980).
The “Notice” Defense Revived?
The ICA also concluded that the Hawaii Constitution’s “public trust” provision, article XI, § 1, “clearly diminishes any expectation that oceanfront owners in Hawaii had and may have in future accretions to their property.” Slip op. at 32. The court’s rationale is a slightly rephrased form of the “notice defense” rejected by the U.S. Supreme Court in Palazzolo v Rhode Island, 533 US 606 (2001). There, the government argued the property owner lost its right to claim a taking because it acquired the property after the restrictive regulation was adopted. This same reasoning was on the ICA’s mind:
The Palazzolo court dismissed a similar argument as “Hobbesian”
The theory underlying the argument that postenactment purchaserscannot challenge a regulation under the Takings Clause seems to run onthese lines: Property rights are created by the State. So, the argumentgoes, by prospective legislation the State can shape and defineproperty rights and reasonable investment-backed expectations, andsubsequent owners cannot claim any injury from lost value. After all,they purchased or took title with notice of the limitation.
The State may not put so potent a Hobbesian stick into the Lockean bundle… Just as a prospective enactment, such as a newzoning ordinance, can limit the value of land without effecting ataking because it can be understood as reasonable by all concerned,other enactments are unreasonable and do not become less so throughpassage of time or title. Were we to accept the State’s rule, thepostenactment transfer of title would absolve the State of itsobligation to defend any action restricting land use, no matter howextreme or unreasonable. A State would be allowed, in effect, to put anexpiration date on the Takings Clause. This ought not to be the rule.Future generations, too, have a right to challenge unreasonablelimitations on the use and value of land.
Palazzolo, 533 U.S. at 626-27.
Finally, the ICA remanded the case for a determination of whether the plaintiffs were injured by Act 73, since “[n]otably absent from Plaintiffs’ complaint is any allegation that Plaintiffs have ownership rights in accreted lands that existed at the time Act 73 was enacted.” Slip op. at 37. This is only a problem if the false distinction between “existing” and “future” accretions matters. As noted above, it does not.
The briefs are posted here. We analyzed the oral arguments here (podcast). More to follow as this case goes to the next step.