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Thursday, March 28, 2013
ICA Hears Case Challenging State Ownership of Mineral, Geothermal Rights
By Robert Thomas @ 4:09 AM :: 7689 Views :: Judiciary, Land Use

HAWICA Appeal: Is A Mineral Right An Inherent Servitude, Or Must It Be Reflected In Torrens Title?

by Robert Thomas,

Before the title of this post causes you to flee, please bear with us.

Oral arguments have just concluded in the Hawaii Intermediate Court of Appeals in a fascinating case involving the nature of "Torrens" title and, in a broader sense, the nature of property rights themselves. Disclosure: we filed an amicus brief in the case in support of the property owner. But more on that below.

Hawaii is one of the few remaining states retaining its Torrens system of title registration (two others are Massachusetts and Minnesota). We call it "Land Court," a system in which the State guarantees indefeasible title to the rights and interests reflected in the title register.  

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.

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 Eleven states have repealed the Torrens statutes.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. It 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 in its Opening Brief 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's Answering Brief countered 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's our amicus brief's summary of the issues:

This appeal presents an issue left unaddressed by the Hawaii Supreme Court in In re Robinson, 49 Haw. 429, 421 P.2d 570 (1966). Namely, whether the government waives a reservation of mineral and mining rights when it fails to raise and protect it in a Land Court title registration case, or whether government’s mineral and mining rights are inherent servitudes that need not be reflected in a Land Court decree.

Under Hawaii’s Torrens Land Act – codified at Haw. Rev. Stat. § 501-1, et seq., – the State of Hawaii (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, and 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.

. . . .

This brief addresses two issues.

First, even if in the original land grants the State of Hawaii’s predecessor did not convey – or reserved to itself – mineral and mining rights, they are not "burdens and incidents which attach by law" inherent in all Hawaii land titles. A reservation of mineral and mining rights could have been raised when the Territory appeared asserted other interests in the 1938 Land Court proceeding. Because the 1938 Land Court decree confirming title in Campbell's predecessor did not reflect a reservation of mineral and mining rights to the Territory, any claims to such rights by the State of Hawaii (State) were extinguished. The fact the State asserted mineral and mining rights claim in the present case seriously undermines its argument that the reservation of this claim is inherent and that it need not have been raised in Land Court at all.

Second, the State’s public trust powers do not include the imposition of flowage easements. The State’s duty to "protect, control and regulate the use of Hawaii's water resources for the benefit of its people," Haw. Const. art. XI, § 7, does not include a right to physically invade all property with water. If it does, the public trust is a per se physical taking.

Again, here are the party merits briefs:

The case are 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.


LINK: Brief Amicus Curiae of Pacific Legal Foundation in Support of Appellee, In re Trustees Under the Will of th...



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