Opinion
Page __
__ Cal.App.2d __ 216 P.2d 69 SOUTHERN CALIFORNIA JOCKEY CLUB, Inc. v. CALIFORNIA HORSE RACING BOARD et al. Civ. 17437. California Court of Appeals, Second District, Second Division March 24, 1950.Subsequent opinion 223 P.2d 1.
Rehearing Denied April 10, 1950.
As Corrected March 27, 1950.
[216 P.2d 70] Athearn, Chandler & Farmer, Hoffman & Angell, F. G. Athearn, Leigh Athearn, San Francisco, for appellant.
Fred N. Howser, Attorney General, Kenneth E. Lynch, Assistant Attorney General, Howard S. Goldin, Deputy Attorney General, for respondents.
MOORE, Presiding Justice.
Appellant was obviously incorporated for the purpose of conducting horse race meetings at Puente. With a view to accomplishing that object it filed an application with respondent board for a determination that the conducting of such meetings will be consistent with the public interest and will subserve the purposes of the Horse Racing Act. The matter having been duly tried, the board determined and adjudged that the applicant had failed to establish that the conducting of horse race meetings at the proposed track would be in the public interest and would subserve the purposes of the Horse Racing Act and made its order denying the application. Appellant then presented the matter to the superior court by petition for writ of mandate and complaint for injunction and declaratory relief in which it attacked the constitutionality of the licensing provisions of the Horse Racing Act and alleged that the evidence was insufficient to support the implied findings of the board. Issue having been joined by respondent's answer and return, trial was had, findings made and judgment entered upholding the constitutionality of the licensing provisions of the Horse Racing Act and the sufficiency of the evidence to support the determination that the holding of horse racing meetings at Puente would not subserve the purposes of such act. Inasmuch as the court is in agreement upon the unconstitutionality of the provisions relating to the granting or denying of annual licenses for race tracks, a decision of that issue will suffice for the purposes of this action.
Business and Professions Code, sec. 19480.5: 'The board shall not issue a license to conduct a horse racing meeting at any place, inclosure, or track, not used for horse racing meetings prior to July 1, 1941, unless prior to the beginning of the construction or preparation of such place, inclosure, or track for horse racing meetings, the board, upon application in such form as it may require, has determined that conducting horse racing meetings at such place will be in the public interest and will subserve the purposes of this chapter.'
Appellant contends that the vice of the statutes authorizing licenses for race tracks lies in the fact that there has been an unconstitutional delagation of power from the legislature to the Horse Racing Board; that there are no limits set upon the board's [216 P.2d 71] discretion in granting such permits. Section 19480 of Business and Professions Code provids that the board 'may issue * * * a license' to any applicant to conduct a horse racing meeting at any place if he 'has complied with the provisions of this chapter.' That section is followed by section 19480.5 to the effect that such license shall not issue to conduct a horse racing meeting at any place unless prior to the beginning of the construction of such place the board has determined that such meetings 'at such place will be in the public interest and will subserve the purposes of this chapter.' In other words, no license can issue until the meeting place has been approved and thereafter it 'may' not issue at the pleasure of the board. The two statutes put the law in a state of confusion and uncertainty which requires a consideration of the origin and constitutional basis of the Horse Racing Act.
'The board may issue to any person who makes application therefor in writing, who has complied with the provisions of this chapter and who makes the deposit to secure payment of the license fee required by this article a license to conduct a horse racing meeting in accordance with this chapter at the place, inclosure or track specified in the application.'
Prior to 1933 there was no constitutional provision relating to horse racing. The only statutes that affected it were sections 337a, 337b, 337c and 337d of the Penal Code, enacted in 1921 and previous years. They forbade (1) bookmaking, (2) receiving money wagered upon the result of contests of 'skill, speed or power of endurance of man or beast', (3) permitting any inclosure to be used or occupied for any purpose prohibited by the statute, (4) making bets upon the results of contests of skill, speed or power of endurance. Also they inhibited giving or receiving bribes for the purpose of causing a participant in contests of skill and of endurance other than the superior man or beast to win. Under such statutes horse racing was in effect forbidden for the evident reason that horse racing does not thrive unless it is made profitable by some plan for wagering on the results of the races.
In 1933 the legislature enacted the Horse Racing Act, Stats. 1933, ch. 769, p. 2046, whereby the California Horse Racing Board was created with state-wide jurisdiction. Also, the statute gave the board power to issue two kinds of annual licenses, namely, (1) to the person or corporation holding any horse racing meeting where wagering is permitted, and (2) to 'horse owners, riders, agents, trainers, stewards, starters, timers, judges and others acting as officials. * * * No qualified person shall be refused such license, nor shall such license be revoked without just cause.' The act also provided for the board (1) to have power to award racing dates to track operators, (2) to apportion racing days permitted in the respective counties to such licensees as shall in the judgment of the board 'appear to be for the best interests of legitimate racing and of the public.' By the phrase 'the best interests of legitimate racing and of the public' a fixed and adequate standard was prescribed whereby the board might determine which tracts should each year be awarded racing days.
Sections 9 and 11 of the act of 1933 were mandatory. Section 9 provided that 'Upon the award to any application and upon payment of license fees * * * the board shall issue a license', permitting the licensee during the days awarded to him to conduct horse race meetings at its track and wagering on the results thereof. Section 11 of the act provided that upon the filing of a written application for a license in accordance with the act and 'upon the payment of the license fee * * * it shall be within the power of the board to issue a license to the applicant to conduct a horse race meeting.' The language used in both the quoted sections makes it mandatory upon the Racing Board to issue the license. Chase v. United States, 256 U.S. 141 S.Ct. 471, 65 L.Ed. 801; Robinson v. Payne, 20 Cal.App.2d 103, 106, 66 P.2d 710. The guiding rules prescribed by the act of 1933 lacked nothing in clarity or effectiveness. The board was vested with discretion to award or deny racing [216 P.2d 72] dates to any track in the event it should find that the interests of the public as well as of racing should require such decision. But if the board had awarded the dates for racing it became obligatory upon the board to issue a track license on receipt of the fee.
During the legislative session of 1933 an act was adopted providing for the submission to the qualified electors at a special election on June 27, 1933, of an amendment to the constitution. Stats.1933, p. 841. The amendment was adopted and is now known as section 25a of Article IV. The effect of the amendment was to ratify and confirm the Horse Racing Act and to make it completely effective. Sandstrom v. California Horse Racing Board, 31 Cal.2d 401, 404, 189 P.2d 17, 3 A.L.R.2d 90. By such act of the people, section 337a et seq. of the Penal Code were rendered ineffective as to betting on horse races at licensed tracks.
'The Legislature may provide for the regulation of horse races and horse race meetings and wagering on the results thereof. The provisions of an act entitled 'An act to provide for the regulation and licensing of horse racing, horse race meetings, and the wagering on the results thereof; to create the California Horse Racing Board for the regulation, licensing and supervision of said horse racing and wagering thereon; to provide penalties for the violation of the provisions of this act, and to provide that this act shall take effect upon the adoption of a constitutional amendment ratifying its provisions,' are hereby confirmed, ratified, and declared to be fully and completely effective; provided, that said act may at any time be amended or repealed by the Legislature.'
Under the act of 1933 the board had authority to grant or deny a track license, but the standards for guidance were controlling upon the board. In such condition the act was valid and workable. But the legislature was not satisfied with the act which had been ratified by the people in 1933. By the Horse Racing Act adopted in 1941, Statutes 1941, p. 669, the legislature added chapter 4 to Division VIII of the Business and Professions Code. Secs. 19400 to 19663. The result of such addition is that all the existing law applicable to the licensing of horse racing is embraced within such chapter. Instead of the mandatory language contained in sections 9 and 11 of the original 1933 act, the Business and Professions Code now has the permissive section 19480. While it permits the board to issue a license, and applicant has two handicaps to overcome before such event may occur, namely, (1) he must make application for the board to determine that the conducting of horse racing meetings at the place designated in the application will be in the public interest and 'will subserve the purposes of this chapter'; (2) should the decision of the board grant the application, the board is at liberty under section 19480 to grant or deny a license to conduct a horse racing meeting. This brings us to a consideration of the validity of section 19480.
It is elemental that the delegation by the legislature of uncontrolled discretion to an administrative agency is a nullity. While the legislature may delegate authority to administrative boards to adopt and enforce reasonable rules for effectuating the purpose of a statute, it may not invest such boards with a purely arbitrary discretion; neither may it delegate to a board the power to determine what the law shall be in a particular case, In re Peppers, 189 Cal. 682, 688, 209 P. 896; In re McLain, 190 Cal. 376, 381, 212 P. 620, or to adopt rules 'which abridge, enlarge, extend or modify the statute creating the right.' Blatz Brewing Company v. Collins, 69 Cal.App.2d 639, 645, 160 P.2d 37, 41. The legislature must provide standards for the guidance of the administrative agency. 11 Am.Jur. 955, sec. 240; U. S. v. L. Cohen Grocery Co., 255 U.S. 81, 41 S.Ct. 298, 65 L.Ed. 516; 14 A.L.R. 1045. In Jersey Maid Milk Products Company v. Brock, 13 Cal.2d 620, 91 P.2d 577, the statute was attacked on the ground that it leaves the designating of the marketing area of milk producers solely and entirely in the uncontrolled discretion of the director of agriculture. While rejecting the attack made, the court held that if there is no designation of any standard of measurement in the act by which the director [216 P.2d 73] may be guided, with no limitation or direction in the exercise of the power so given, then it is a void attempt to delegate legislative power to an administrative officer.
The true distinction is between the delegation of power to make law, which necessarily involves a discretion as to what it shall be, and conferring an authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done. To the latter no valid objection can be made.
From the foregoing the rule is established that to be a valid delegation of authority to an administrative board to exercise a discretion concerning valuable rights or privileges, the statute must prescribe ascertainable standards for the guidance of those selected to exercise such discretion. Section 19480 is devoid of such guiding rules or standards. The board may grant all applications or refuse to issue a license to any applicant and still comply with the section. It may refuse a license because it does not like the location which it has but recently approved. It may refuse a license because its members are opposed to racing and betting on religious or moral grounds, or because they have interests in the successes of established race tracks or in other locations. Thus arbitrarily to grant special powers to a triumvirate enables the latter to control the success or failure of an applicant for a license to operate a horse racing meeting at an approved place or to grant or deny any applicant without strict regard for his merit. It is more than a rulemaking power. It is such delegation of authority as is inhibited by the organic law, Calif.Const., Art. I, sec. 21; Art. IV, sec. 25, subd. 19, and is violative of the Federal Constitution guaranteeing a republican form of government.
Respondent contends that 'since the Horse Racing Act of 1933 was given express constitutional sanction by a constitutional amendment duly adopted, the authority of respondent board to adopt a licensing scheme as to all licenses provided for in the act stems directly from the Constitution of the State and that no question of unconstitutional delegation of authority arises.' In support of such contention respondents cite Sandstrom v. California Horse Racing Board, 31 Cal.2d 401, 189 P.2d 17, 3 A.L.R.2d 90. Of course, the Constitution has not by explicit terms conferred such powers upon the board as those of which they now claim to be possessed. The people approved the legislative act of 1933. There is nothing in the constitutional amendment, sec. 25a to indicate that the approval of the original act is carte blanche authority to remove valid provisions from the act approved, insert others that are void and then assert the latters' validity on the basis that section 25a authorized amendments to the first act. The authorization to amend implied that the amendments would comport with the old act and with other pertinent provisions of the Constitution. The Sandstrom decision related to licenses of trainers of the horses who were subject to rules of the board. Such rules were declared valid as having been made by the board pursuant to the act of 1933 giving it 'full power to prescribe rules, regulations and conditions.' By nothing said in the Sandstrom decision or in section 25a can it be concluded that the legislature is no longer bound by the constitutional limitations upon the delegation of power. Indeed, the very fact that the act of 1933 specified standards for the guidance of the board's discretion in granting dates and annual licenses to tracks indicates a desire of the people to have the delegation of power restricted. The removal of those restraints can be ascribed to nothing more than an oversight by the legislators when in 1941 they attempted to codify the statutes enacted for the governance of horse racing and wagering. While some powers of the board may derive from the constitution, its licensing powers are of purely statutory authority, see Blatz Brewing Co. v. Collins, 88 Cal.App.2d 438, 199 P.2d 34, and since they grant arbitrary power to the board, they are void.
Section 25a, supra, was not authority for the legislative attempt in 1941 to grant the board power to determine the merits [216 P.2d 74] of applications for track licenses with no standards for guidance. That amendment merely ratified the statute already enacted which provided for the automatic issuance of a license whereas by section 19480 the license is dependent upon the native endowments of the board members. The board contends that standards are provided by section 19480.5 which requires the board to determine that conducting horse racing meetings at the place designated will be in the public interest and will 'subserve the purposes of this chapter.' But such language does not determine the issuance of a license. They contend also that SECTION 19562 , BUSINESS & PROFESSIONS CODE, provides a standard in that it declares 'the encouragement of agriculture and the breeding of horses' is the purpose of the chapter. Although a requirement that the action of the board be governed by the purposes of an act may establish a sufficient standard, Jersey Maid Milk Products v. Brock, 13 Cal.2d 620, 658, 91 P.2d 577, that principle is unavailing here. There is nothing said in section 19480 about the board's actions being based on the purposes of the act. If such had been the legislative intent, it would have provided that the license issue automatically upon determining an application under section 19480.5 favorably to the applicant. In Panama Refining Co. v. Ryan, 293 U.S. 388, 55 S.Ct. 241, 79 L.Ed. 446, the court held a delegation to the President improper and rejected a contention that the purposes and policy of the act provided a standard or rule for the guidance of the President.
'It is hereby declared that since the purpose of this chapter is the encouragement of agriculture and the breeding of horses in this State a sum equal to 10 per cent of the first money of every purse won by a 'California bred' horse shall be paid by the licensee conducting the horse racing meeting to the breeder of such animal. A 'California bred' horse, within the meaning of this section, shall, prior to January 1, 1944, be deemed to be a foal dropped by a mare in California, whether conceived in California or not, and after January 1, 1944, shall be deemed to be a foal dropped by a mare in California after being bred in California and remaining in California until the foal is weaned. The board shall by rule provide for the registration of all 'California bred' horses.
The board argues that appellant is not entitled to attack section 19480 for the reason that it has not obtained a favorable determination of its application under 19480.5 and thus has not 'complied with the provisions of this chapter' as specified in 19480. In other words, since appellant is not injured by the latter section it cannot attack that statute. While that contention acknowledges a favored doctrine it is not pertinent here. Although 19480.5 is valid in itself, it is not separable from, and cannot be used as a shield to protect section 19480.
Section 19480 contains the basic licensing power in Article 4 of Chapter 4 which deals with 'Licenses for Track Operators.' All other sections of the article follow it and qualify it and are utterly meaningless without it. Since it is void the remaining sections fall.
The judgment is reversed.
McCOMB and WILSON, JJ., concur.
'Every licensee conducting a horse racing meeting shall run at least one race each racing day to be known as a 'California bred race' which shall be limited to California bred horses as defined in this section.
'If, however, sufficient competition cannot be had among such class of horses, the race may, with the consent of the board, be eliminated for the day and a substitute race provided.'