
    IN THE MATTER OF THE TAX APPEAL OF HAWI MILL & PLANTATION COMPANY, LIMITED.
    No. 1467.
    Appeal prom Tax Appeal Court Third Circuit.
    Submitted October 3, 1923.
    Decided November 14, 1923.
    Peters, C. J., Perry and Lindsay, JJ.
    
      Taxation — real and personal property — assessment of enterprise for profit.
    
    Where the real and personal property of a corporation are combined and made the basis of an enterprise for profit, but it does not appear that as so combined their value is in excess of the aggregate value of the several parts thereof nor that the value of the several parts is depreciated by reason of their combination, such property must be assessed separately as to each item thereof for its cash value.
   OPINION OF THE COURT BY

PETERS, C. J.

The Hawi Mill & Plantation Company returned all real and personal property belonging to it and of which it had possession or control on January 1, 1922, including all animals subject to taxation in its possession on that day, as combined and made tbe basis of an enterprise for profit, at $600,000. Tbe tax assessor assessed tbe company’s property at $1,100,000.

Tbe taxpayer appealed from tbe assessment to tbe tax appeal court of tbe third judicial circuit. Tbe tax appeal court fixed tbe valuation of tbe taxpayer at $985,000. Tbe taxpayer appealed therefrom to this court.

It is undisputed that tbe taxpayer is an enterprise for profit. Evidence was submitted of tbe average annual net profits of tbe company for eight years next preceding tbe taxation period. This was no criterion, however, due to tbe unprecedented conditions obtaining during that period. (Re Taxes H. C. & S. Co., 26 Haw. 708; Re Taxes Oahu S. Co., 26 Haw. 780.) No evidence of any sales of stock of tbe company was produced, due as we understand it to tbe fact that tbe company is a close corporation, its stockholders few and its stock not quoted on tbe market. No facts and considerations which might reasonably and fairly bear upon tbe valuation of tbe company’s property were produced which would tend to show that tbe combined property of tbe taxpayer was of greater value than tbe aggregate of its several parts. On tbe other band it does not appear that tbe value of tbe several parts was depreciated by reason of their combination. (Re Taxes Waiahea Mill Co., 24 Haw. 333; Re Taxes Hawi M. & P. Co., 23 Haw. 46.) Under tbe circumstances tbe property of tbe company must be separately assessed for its cash value. (R. L. 1915, Sec. 1241 as amended.)

Tbe taxpayer in its return valued its property separately at $562,142.22. Tbe tax assessor testified that separately assessed its aggregate cash value was $979,894.80.

Tbe only items, tbe value of which was in dispute between tbe taxpayer and tbe tax assessor, were tbe company’s fee simple lands, certain lands leased by it from the Territory, growing crops and capital stock in foreign corporations.

First as to tbe valuation of tbe company’s fee simple lands. Tbe tax assessor testified that tbe fee simple cane lands owned by tbe taxpayer were worth $150 an acre and pasture lands owned by tbe taxpayer were worth $10 per acre. Tbe taxpayer produced two witnesses who testified that tbe company’s fee simple cane lands should not be assessed separately; that cane land was seldom if at all dealt in separately; that usually included.in lands denominated as cane lands was a certain proportion unsuitable for cane and suitable only for pasturage or of no use whatever, and that so dealt in tbe prevailing price was from $80 to $85 per acre throughout. No reason was given by tbe tax assessor for bis valuations other than that this court bad placed a valuation of $200 an acre upon cane lands of tbe Onomea Sugar Company. No similarity between tbe cane lands of tbe taxpayer and those of tbe Onomea Sugar Company was shown and under tbe circumstances we are compelled to adopt tbe evidence of tbe taxpayer and place tbe valuation of its fee simple lands at $85 per acre throughout, including in tbe category of cane lands such as may be pasture or waste land.

As to tbe value of lands leased from tbe Territory. Lands held by tbe taxpayer under lease from tbe Territory must by reason of tbe provisions of section 385, R. L. 1915, be taxed tbe same amount as tbe value of tbe fee. See Re Taxes Waiohinu Agr. Co., 23 Haw. 621; Re Taxes Hawi M. & P. Co., 26 Haw. 46.

Next as to the value of growing crops. Tbe only evidence submitted to tbe tax appeal court Was that of tbe tax assessor which tbe tax appeal court adopted. Under the circumstances its finding in that regard must be sustained.

G. F. Glemons and A. Lewis, Jr., for the taxpayer.

H. R. Hewitt, First Deputy Attorney General, for the assessor.

Finally as to the value of stock in foreign corporations. Stock held by the taxpayer in the California-Hawaiian Eefinery, a foreign corporation, was returned for taxation but its value was not separately stated. The tax assessor assessed it for its full par value. The company took exception to this assessment upon the ground that the stock had not been paid for by it. No evidence of the actual value of this stock was submitted by either the taxpayer or the tax assessor. Under the circumstances the finding of the tax appeal court cannot be disturbed.

We find the cash value of the real and personal property of the taxpayer including animals subject to taxation, separately assessed, to be in round numbers $942,000. A decree conformable to the foregoing opinion will be signed upon presentation.

CONCURRING OPINION OF

PERRY, J.

I concur in the view that the property of the taxpayer should be assessed at $942,000, basing my concurrence upon the ground that the testimony of the witnesses for the taxpayer to the effect that the value of its cane lands and pasture lands on an average is $85 per acre is of greater weight than the testimony of the assessor to the effect that the value of the cane lands is $150 per acre and that of the pasture lands $10 per acre; but I do not concur in the inclusion in the opinion of the- statement that “it does not appear that the value of the several parts was depreciated by reason of their combination.” That statement is upon an immaterial point and is misleading. In the majority opinion it is held, and I concur, that upon the facts of this case the property of the taxpayer cannot be assessed as an enterprise for profit and that the various items of property owned by tbe taxpayer must be assessed at tbe aggregate of their values as separate parts. By this I mean that if it appears from the evidence, as it does, that the various items of property owned by the taxpayer, could have been sold separately for certain stated amounts at the assessment date, those selling prices constitute the cash value of those items of property upon that date. It would be immaterial, to my mind, if it should be made to appear that by reason of their combination in use by this taxpayer they were worth as a profit-producing aggregate or enterprise less than the total of the separate values of the parts. If, as this court now unanimously finds, the separate items of property owned by this taxpayer if sold on the assessment date would have brought proceeds aggregating $942,000, under the law the assessment must be made at the sum of $942,000 even though it were made to appear to us that on the assessment date, used in combination as the property was used by this taxpayer, it was worth on the showing of its income-producing capacity less than that sum. The statement above quoted from the majority opinion is indeed true in fact but its inclusion as one of the grounds for the ultimate conclusion reached is misleading in giving the impression that it is legally possible for the property of a corporation to be worth less, for taxation purposes, than the aggregate of the cash values (using that term as hereinabove defined) of its separate parts,— something which, to my mind, is legally impossible.  