Land Court, Schmand Court: State Disregards Torrens Title, Claiming Unstated, Preexisting Rights

A fascinating case is now pending in Hawaii's Intermediate Court of Appeals involving the nature of "Torrens" title and, in a broader sense, the nature of property rights themselves. 

Hawaii has had a dual system of land registration. One is your run-of-the-mill system of registering deeds (what we creatively call "Regular System"). The other is "Land Court" registration, a statutory Torrens scheme of title registration where the State guarantees indefeasible title to the rights and interests reflected in the register. Land Court registration insures that interests which are not reflected on title do not exist. Indeed, persons who are wrongfully deprived of land or their interest through registration or the act or omission of the registrar are entitled to be paid by an indemnity fund, and the State's guarantee operates against all claims, including claims by the State itself. 

As background (for those of you who, like me, weren't paying attention on the day it was discussed in your Property class) Torrens title derives its name from Sir Robert Torrens, an Australian by way of Ireland who became the first premier of South Australia. Largely through his efforts, South Australia adopted a system of land registration which was adopted by other common law jurisdictions, including several in the United States.  

The Torrens system, in general, is a method of creating a certificate of title and then registering a legal and basically absolute title to real property. This procedure, utilizing none the less, a judicial hearing to adjudicate all claims at the outset, was at one time in effect in 20 states. At the present time only ten states still utilize the (one step) Torrens system. Eleven states have repealed the Torrens statutes. In the remaining ten, in which the Torrens system is still in effect, the system is voluntary, and it functions side by side with the "old style," evidence of title recording system. The ten states are Colorado, Georgia, Hawaii, Massachusetts, Minnesota, North Carolina, Ohio, Virginia, Pennsylvania and Washington. New York recently repealed its registration of title law. In New York State around Buffalo and on Long Island there has been some use of the registration procedure. The registration system, until fairly recently at least, was in substantial use only in Massachusetts, Minnesota and Hawaii.

Todd Barnet, The Uniform Registered State Land and Adverse Possession Reform Act, A Proposal for Reform of the United States Real Property Law, 12 Buff. Envt'l. L.J. 1, 19-20 (2004) (footnotes omitted). Hawaii first adopted the Torrens Land Act in 1903, and it is currently codified at Haw. Rev. Stat. ch. 501.

Back to the case. In In re Trustees Under the Will of the Estate of James Campbell, No. 30006, the State of Hawaii claims that title to property on Oahu's north shore which was registered and confirmed to the Campbell Estate by the Land Court in 1938, is subject to the State's ownership of "all mineral and metallic mines of every kind or description on the property, including geothermal rights," and is subject to a flowage easement in favor of the State.

The case arose when the Campbell Estate submitted a petition to the Land Court in 2009 to consolidate and subdivide the land, and the State appeared and asserted its claims. The State argued that despite the 1938 Land Court registration, Campbell's title never included interests which the State reserved, even though the State's predecessor (the Territory of Hawaii) appeared in the 1938 proceedings and asserted other claims, and Campbell's title was confirmed to be free of all unregistered interests, including the Territory's.

The Land Court disagreed, and held that the State's claim of mineral rights was extinguished by the court's 1938 judgment (decree), and that Campbell's title was free of a flowage easement.

The State appealed to the Intermediate Court of Appeals, arguing that the original grantor of the land (the King as an individual) did not own the mineral rights, so could not have conveyed them to Campbell, and that the government's reservation of mineral rights is "self-effectuating" whether noted in the land grant or not. It also claims that the government always possesses a flowage easement as a function of the public trust in water resources.

Campbell counters that the State was bound by a Land Court title like any other party, and the fact that its claimed mineral rights and flowage easement was not noted in the certificate of title means that it does not exist. It also argues that the 1938 proceedings were res judicata to the State regarding interests the Territory could have raised, but did not. To impose these interests now, 70 years after its title was confirmed and registered, would be a taking without compensation.

Here are the briefs of the parties, which spell out the arguments in further detail:

• State of Hawaii's Opening Brief

• Campell Estate's Answering Brief

This case is worth following because the State's position seems to undercut the nature of Torrens title and the entire Land Court registration process. It is also especially interesting for those who want a crash course in the underpinnings of Hawaii's property law.

More when further briefs are filed.