Craddick Development, Inc. v. Craddick

2 Am. Samoa 3d 20

• Court: High Court of American Samoa
• Decided: July 22, 1998
• Docket: AP No. 14-95; CA No. 43-89
• Status: Published

Opinions

OPINION

WALLACE, Acting Associate Justice.

Introduction

In this latest episode in a long-running land- ownership dispute, we. consider whether the transfer of 20-year beneficial interests in land constitutes alienation, and if so, whether provisions of the American Samoa Code that prohibit alienation of land to non-Samoans violate constitutional rights. Because we conclude that such transfer does constitute alienation but that the alienation restriction passes strict scrutiny review, we affirm.

The relevant facts of this matter are not in dispute. Douglas Craddick (Craddick), now deceased, was a United States citizen married to Magdalene Vaivao Craddick (Magdalene), a full-blooded Samoan. In 1981, Craddick formed Craddick Development, Inc. (Craddick Development) with the intent of buying land, developing it for housing, and selling the developed land to American Samoans. The arrangement was that Craddick provided funds for the purchase of land in Magdalene’s name, with the land held in two trusts, one for the benefit of Craddick Development, and the other for Craddick Development and another individual who was the trustee of an employee benefit plan. Magdalene was named as the trastee for both trusts. Both trusts were limited to 20-year periods.

Craddick chose this arrangement because an earlier attempt to acquire land directly in joint ownership with Magdalene had failed, on the ground that Craddick’s ownership of land, even individually owned land, would violate American Samoa restrictions on the alienation of land to non-Samoans. See Craddick v. Territorial Registrar of American Samoan, 1 A.S.R. 2d 10 (1980) (“Craddick I").

Craddick died on February 18, 1986, but the trusts continued in operation for two years. On February 12, 1988, Magdalene sought to cancel the trusts and claim clear title to the trust lands, prompting Craddick Development and the other individual beneficiary to file suit in the Trial Division of the High Court of American Samoa on April 21, 1989, seeking an accounting, damages, and injunctive relief from Magdalene. Magdalene counterclaimed, alleging that she owned the lands in question in fee simple and that the trusts were void.

The Trial Division held a three day trial in April 1994 and rendered its decision on June 27, 1995, holding the trusts to be void as against the non-alienation restriction.¹ The Court also denied a motion for a new trial. This appeal followed!

Discussion

Craddick Development makes two main arguments on appeal. First, it contends that the trusts in this case did not constitute “alienation” under A.S.C.A. § 37.0201(a). Second, it argues that if the .trusts did constitute alienation, the restriction of land to those with less than one-half native blood violates the United States Constitution (“Constitution”) and the Revised Constitution of American Samoa (“Revised Constitution”).²

It shall be the policy of the Government of American Samoa to protect persons of Samoan ancestry against alienation of their lands and the destruction of the Samoan way of life and language, contrary to their best interests. ... No change in the law respecting the alienation or transfer of land or any interest therein, shall be effective unless the same be approved by two successive legislatures by a two-thirds vote of the entire membership of each house and by the Governor.

Rev. Const of Am. Samoa, Art. I, Sec. 3. Clearly, the framers of the Revised Constitution wanted to ensure that American Samoa’s land remained in the hands of native Samoans.

A. The Tssne of Alienation

With this strong preference for native ownership in mind, we next turn to the relevant sections of the American Samoa Code. Section 37.0204(b) states:

It is prohibited to alienate any lands except freehold lands to any person who has less than one-half native blood, and if a person has any normative blood whatever, it is prohibited to alienate any native lands to such person unless he was bom in American Samoa, is a descendant of a Samoan family, lives with Samoans as a Samoan, lived in American Samoa for more than 5 years and has officially declared his intention of making American Samoa his home for life.

This statute applies to all land in American Samoa except for “freehold lands,” i.e., lands excluded from the general restriction on alienation of land to a person with less than one-half native blood. See A.S.C.A. §§ 37.0201(b) and 37.0204(b). Thus, with the exception of freehold lands (not applicable here), a Samoan cannot “alienate” any Samoan lands to persons with less than full native blood except in special circumstances.

That leads to the question: what does “alienation” mean? The Code provides some- guidance. According to section 37.0201(a), “‘[a]lienation’ means the sale, gift, exchange, or any_other method of disposal of property.” (Emphasis added.) This expansive definition of alienation has an exception in A.S.C.A. § 37.0205, which provides that “[t]his regulation [restricting the alienation of land] shall not apply” to a trust for mixed-race couples or descendants as beneficiaries.

Under the statutory interpretation maxim expressio unius est exclusio alterius, we agree with the Trial Division that the limited scope of the. section 37.0205 exception implies that the term “alienation” under section 37.0201, and thus the restriction of section 37.0204(b), applies to all other forms of trusts. If the legislature wanted to exempt the trusts of the type involved in this case from the sweeping language of section 37.0201, it would have passed another exception like section 37.0205. This is especially true in light of Article I, section 3 of the Revised Constitution, which makes it clear that keeping American Samoa’s land in the hands of native Samoans is of critical importance.

In this case, Magdalene held the trust for the benefit of Craddick Development. Obviously, as the beneficiary, Craddick Development owned an interest in the land, namely the interest in “all earnings, avails and proceeds of the Property.” The beneficiary also had “(a) the right to direct the Trustee to convey or otherwise deal with the title . . .; (b) the right to manage and control the property; and (c) the sole right to receive the proceeds and avails from rental, sale, lease, mortgage or other disposition of the Property.” Also, the Trustee only acted upon “written direction of the Beneficiary.” Clearly, as beneficiary, Craddick Development owned these interest and rights in the land, and effectively controlled how the land would be used. This “ownership” by persons with non-native blood, we hold, violates section 37.0204(b), especially when viewed in light of the Revised Constitution’s warnings against non-Samoan ownership (i.e. control) of the land.

Craddick Development argues that because the Code permits leases of 55 years, the trusts in this case are also acceptable. But like the exception under section 37.0205, the Samoan legislature expressly provided for leasés under sections 37.0221-.0222. No such express legislative exception for the trusts in this case exists under the Code, and we should not manufacture one, especially in light of Article I, section 3 of the Revised Constitution. Based on the foregoing statutory interpretation, we agree with the Trial division and hold that the trusts in this case constitute illegal alienation under Samoan law.

B. The Constitutionality of the Statutory Prohibitions

Because we hold that the trusts in this case are illegal under American Samoa statutory law, we next examine whether the relevant sections of the Code violate constitutional rights applicable in American Samoa.

Amicus American Samoa Government argues that A.S.C.A § 37.0204(b)’s restrictions on the right to own certain real property is not subject to the due process or equal protection guarantees of the Constitution. On the other hand, Craddick Development refers to the due process rights guaranteed by the Revised Constitution in Article I, section 2: “No person shall be deprived of life, liberty or property without due process of law, nor shall private property be taken for public use without just compensation.” But this section must be read in conjunction with Article I, section 3, which restricts the ownership of Samoan lands to Samoan natives. Both provisions of the Revised Constitution must be given meaning.

The backdrop for this issue starts with the Treaty of Berlin, ratified by the United States Senate in 1890:

In order that the native Samoans may keep their lands for cultivation by themselves and by their children after them, it is declared that all future alienation of lands. in the Islands of Samoa to the citizens or subjects of any foreign country, whether by sale, mortgage or otherwise shall be prohibited.

Craddick I, 1 A.S.R.2d at 13. As amicus properly asserts, the subsequent deeds joining American Samoa to the United States implement this land restriction. Because of this background, amicus argues that the law governing American Samoa is different from that of the United States in dealing with alienation of land.

Recognizing that the Constitution nevertheless has some application to American Samoa as a United States Territory, and that fundamental rights will be enforced, amicus argues that land alienation is not such a right in American Samoa. Amicus not only relies on the Treaty of Berlin, the deeds of cessation, and the Revised Constitution, but argues persuasively from Wabol v. Villacrusis, 958 F.2d 1450 (9th Cir. 1990). There, the Ninth Circuit carefully examined land alienation restrictions imposed in the Northern Mariana Islands that had been challenged under the equal protection clause of the Constitution. Recognizing that the Constitution exported protection of fundamental rights to the .Territories, the court stated:

“[Fundamental” within the territory clause are ‘“those . . . limitations in favor of personal rights’ which are ‘the basis of all free government.’” In the territorial context, the definition of a basic and integral freedom must narrow to incorporate the shared beliefs of diverse cultures. Thus, the asserted constitutional guarantee against discrimination in the acquisition of long-term interests in land applies only if this guarantee is fundamental in this international sense.

Id. at 1460 (citations omitted).

Thus, amicus argues that the equal protection clause, which does not appear in the Revised Constitution, is not imported as a fundamental right as to alienation of land restricted by the Treaty of Berlin, the deeds of cessation, and the Revised Constitution.

When this issue was before this court in Craddick /, we provided little analysis of this issue, and moved directly to whether such a classification, which we held was based on race, was necessary to protect a compelling state interest. Craddick I, 1 A.S.R. 2d at 11-12. We applied strict scrutiny review to the land restrictions. We then concluded that: “American Samoa has demonstrated a compelling state interest in preserving the lands of American Samoa for Samoans and in preserving the Fa'a Samoa, or Samoan culture. We find the prohibition against the alienation of land to non-Samoans to be necessary to the safeguarding of these interests.” Id. at 12. Craddick I relied on the Treaty of Berlin, which expressly prohibited the alienation of land to non-Samoans, and the Revised Constitution for support.

We understand the argument by amicus on whether the Constitution’s equal protection clause applies to this case and are not unsympathetic to it. However, we need not resolve that issue in this case, because even if the equal protection clause does apply to American Samoa, the land restrictions at issue would not violate that clause.

We agree with Magdalene and amicus that the vital interest in preserving Samoan culture has not diminished since the 1980 holding of this court. Preserving Samoan culture is of primary importance to American Samoa, and we cannot imagine anything that would so fundamentally alter the nature of Samoa than permitting non-full blooded Samoans to own and control land, whether native or individually held. Such an outcome would allow non-full blooded Samoans to decide the fate of American Samoan culture and identity, something abhorrent to the Treaty of Berlin and the Revised Constitution. While strict scrutiny is a high hurdle to clear, the interest of American Samoa in retaining its national identity clears that hurdle. Thus, even if equal protection of the law applied to land alienation is a fundamental right guaranteed-to citizens of American Samoa, we hold that the land restrictions are narrowly tailored to satisfy a compelling state interest. As we said in Craddick I: “It is this compelling state need to preserve an entire culture and way of life that permits the government of American Samoa to utilize a racial classification and still withstand the rigorous scrutiny of a. watchful court.” Id. at 12.

C. Appellant’s Policy Arguments

Finally, we dispose of Craddick Development’s policy arguments. Craddick Development first argues that “this is not a case calling out for. protection of American Samoans against overreaching land grabbing by an outsider.”

We understand this first policy argument and are not unsympathetic to it, particularly in light of the Trial Division’s finding that Magdalene assented to the trust arrangements and disavowed them when it redounded to her personal benefit and that she “appropriated trust funds for her personal use, badly abusing her position as trustee,” However, the American Samoa- Code does not contain an exception for cases that do not involve “overreaching land grabbing by an outsider.” While Craddick Development’s business plan might have ultimately benefited American Samoans, it is for the legislature, and not the courts, to amend the Code to allow for land transactions of the sort attempted in this case.

Second, Craddick Development argues that the land in question is individually-held land, which comprises only two percent of the land of American Samoa and is therefore not subject to the same protection as native land. While individually-owned land may comprise a small fraction of all American Samoan land, the alienation restriction plainly applies to all land except freehold land. Had the legislature intended to exempt individually owned land from the alienation restriction, it could have done so as well.

AFFIRMED.

1 Without encouragement of either party, the concurrence suggests that the trial court was without jurisdiction to make its decision based on land law in addition to bust law. The trusts involved Samoan land and the trial court was required to consider both areas of Samoan law. Thus, the action was properly filed in the'Trial Division of the High Court because it involved trusts, and its disposition also required application of land law.

Both the Trial Division and the Land and Title Division are part of the High court. A.S.C.A. § 3.0207(a). Rather than have the case in both the Trial Division and the Land and Title division, the trial court rendered one opinion. As the concurrence admits, the same judges could decide the land issues. The trial court could have entered a perfunctory order reconstituting itself as both a Trial Division and a Land and Title division of the High Court, but what it did was the functional equivalent of such action. There was jurisdiction in the trial court to hear this case.

On appeal, the Appellate Division of the High Court was constituted into a five-judge bench, , and,, therefore, is competent to decide trust as well as land issues, since the Appellate division has jurisdiction to hear appeals of final orders from either the Trial Division or the Land and Titles Division. See A.S.C.A. § 3.0208 (c). The question raised as to whether the notes of two justices are enough to decide the appeal is not at issue here, as the two associate judges agreed with two of the acting associate justices, and, in any event, the issue is not jurisdiction.

2 The concurrence would resolve this case not on these issued raised by the parties, but on the alleged statutory ground that Craddick Development failed to obtain the approval of the Governor to acquire an interest in land. This issue was never raised in the court below and has not been argued on appeal. To the extent it has validity, it has been waived.