Southern California Jockey Club, Inc. v. California Horse Racing Board

223 P.2d 1, 36 Cal. 2d 167, 1950 Cal. LEXIS 226

• Court: California Supreme Court
• Decided: October 18, 1950
• Docket: L. A. 21238
• Status: Published

Opinions

CARTER, J.

Proceeding under section 19480.5 of the Business and Professions Code, plaintiff applied to the California Horse Racing Board for a determination that the purposes of the horse racing law (Bus. & Prof. Code, §§ 19420 et seq.) and public interest would be served by the construction by it of a track for horse race meetings at Puente, Los Angeles County, California. The application was denied, and plaintiff thereupon presented a petition for a writ of mandate to the superior court to compel the board to issue a license to it for such purpose, and that court agreed with the board. Plaintiff now asserts that the licensing provisions of the horse racing law are invalid in that they constitute an unlawful delegation of legislative power to the board without adequate standards (Cal. Const., arts. III and IV, § 1); that improper evidence was admitted before the board; that the evidence was insufficient to sustain its determination or that of the superior court; and that the board acted irregularly.

Section 19480.5 under which plaintiff made its application provides: “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.” [Emphasis added.] This section was added to the horse racing law in 1941 (Stats. 1941, ch. 1248, § 3, p. 3129). It is not questioned that that section lays down adequate standards to govern the action of the board, but plaintiff challenges the broad provision contained in the preceding section, which provision reads: ‘ ‘ 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.” (Bus. & Prof. Code, § 19480.)

The horse racing board is in a different category than other administrative or executive agencies with respect to the delegation of legislative power to it. A horse racing act was passed by the Legislature in 1933 (Stats. 1933, pp. 1127, 2046), wherein it was provided that it should be effective “upon the adoption of a constitutional amendment ratifying its provisions.” (Id., §19.) In June, 1933, a constitutional amendment was adopted which provides: “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 tobe fully and completely effective ; provided, that said act may at any time be amended or repealed by the Legislature.” [Emphasis added.] (Cal. Const., art. IV, § 25a.) In Sandstrom v. California Horse Racing Board, 31 Cal.2d 401 [189 P.2d 17, 3 A.L.R.2d 90], this court considered the power of the board to revoke or suspend the license of a horse trainer licensed under the horse racing law. In that case petitioner’s license had been suspended for a violation of a rule adopted by the board, and one of the contentions of petitioner was that “insofar as that rule is based on the statutory grant of power to the board to prescribe rules, regulations and conditions under which horse racing is conducted ... it is an unconstitutional delegation of legislative authority. ’ ’ In answer to that contention, this court, after reciting the adoption of the 1933 act and constitutional amendment, stated: “The effect of this constitutional amendment as here material is that it expressly ‘ confirmed, ratified, and declared to be fully and completely effective’ the legislative grant of power to the California Horse Racing Board. That the Constitution may permit the Legislature to delegate powers may not be doubted. The Constitution may even authorize ■ the Legislature to confer additional powers which are cognate and germane to its purposes upon a .constitutional board or commission, and may further provide that such powers are unlimited by any other provisions of the Constitution. (See Const., art. XII, § 22; Pacific Telephone etc. Co. v. Eshleman, 166 Cal. 640 [137 P. 1119, AnmCas. 1915C 822, 50 L.R.A.N.S. 652].) The continuance of the grant of power into section 19561, Business and Professions Code, did not affect its status as previously ratified and confirmed. (See Bus. & Prof. Code, § 2.) The delegation of authority here considered has constitutional support.” [Emphasis added.] That case is controlling here on the subject of delegation of legislative power, for there is no rational difference between the delegation there of rule making power, and that presented here, that is, that insufficient standards were fixed by the Legislature as the basis upon which the board could grant or deny a license.

Plaintiff argues, however, that the 1933 statute did not give such broad powers to the board as are given by the present provisions of the Business and Professions Code. With that we cannot agree. The 1933 act, like the present one, prohibits the conduct of horse race meetings where wagering is permitted" without obtaining a license. (Stats. 1933, p. 1127, § 1; Bus. & Prof. Code, § 19560.) There is separate provision for licensing owners, riders, trainers, etc. (as distinguished from track operators or conductors of meetings) and such licenses “shall be subject to revocation and no person shall be eligible to, or permitted to participate in such racing "unless so licensed, and only during the time such license remains unrevoked. No qualified person shall be refused such license, nor shall such license be revoked without just cause.” (Stats. 1933, p. 1127, § 3, second paragraph.) Thus, those provisions are not here applicable as we are dealing with licenses for race meetings and places of meetings. It is next provided with regard to a license of the character here involved, that: "Upon the award to any applicant and upon payment of the license fees as hereinafter prescribed, the board shall issue a license which shall permit the licensee, during the dates awarded to such applicant and for which license fees shall have been paid, to conduct at its track a race meeting, or meetings, and wagering on the results thereof, as herein provided.

“All licenses provided to be granted under the provisions of this act, including those granted pursuant to the provisions of section 3 hereof, shall be subject to all rules, regulations and conditions from time to time prescribed by the board and shall contain such conditions as shall be deemed by said board necessary or desirable for the purposes of this act.

“Such license shall be subject to suspension or revocation by the board in any case where the board shall have reason to believe that any condition of its license has not been complied with or any law or any rule or regulation of such board shall have been broken or violated. . . .” [Emphasis added.] (Stats, 1933, p. 1127, § 9.) Plainly, the first paragraph above quoted refers to the mere mechanical issuance of the license certificate after the award has been made, that is, after there has been a determination that the applicant is entitled to a license. Naturally such terms are mandatory for nothing is left to do following such a finding except the ministerial act of issuing the license. Moreover, the words “as herein provided” refer to an “award” as provided in the act. Hence that section (9) does not apply to the situation here involved which concerns the making of a determination or an award that an applicant should or should not have a license. This is further demonstrated when we turn to section 11 of the 1933 act which contains provisions similar to section 19480 of the Business & Professions Code, supra, and here pertinent. Section 11 reads: “Upon the filing of an application, in writing, for a license, as herein provided, if the same should be in accordance with this act, and upon the payment of the license fee hereinafter provided for, it shall be within the power of the board to issue a license to the applicant to conduct a horse race meeting in accordance with the provisions of the act at the place, enclosure or track specified in the application; and in counties of the first and second classes, as hereinabove defined, no license shall be granted to conduct a horse race meeting upon a track less than one mile in circumference and/or length, except that the board may in its discretion grant licenses to county fairs and to rodeos to conduct horse race meetings upon tracks less than one mile in circumference and/or length, in counties of the third class licenses may be granted in the discretion of the board to conduct race meetings on tracks of less than a mile in circumference and/or length.” [Emphasis added.] (Stats. 1933, p. 1127, § 11.) There is just as much a lack of standard for issuance of a license in the foregoing provision of the 1933 act as there is in section 19480 of the Business and Professions Code, and the words “shall be within the power of the board” contained in the 1933 act are no more or less mandatory or permissive than the word “may” in section 19480 of the Business and Professions Code. The two expressions mean substantially the same thing. For illustration, it is said that “may” means “to have power” (National Automobile etc. Co. v. Garrison, 76 Cal.App.2d 415 [173 P.2d 67]; Robison v. Payne, 20 Cal. App.2d 103 [66 P.2d 710]), and “may” may be either mandatory or permissive depending upon the circumstances. (See Robison v. Payne, supra; California Trust Co. v. Bennett, 33 Cal.2d 694 [204 P.2d 324]; Carter v. Seaboard Finance Co., 33 Cal.2d 564 [203 P.2d 758]; Soliman v. Warren, 32 Cal.2d 351 [196 P.2d 562]; Department of Social Welfare v. Kern County, 29 Cal.2d 873 [180 P.2d 1]; Housing Authority v. Superior Court, 18 Cal.2d 336 [115 P.2d 468].) Moreover, it must be remembered that the codification of the horse racing law (placing it in the Business and Professions Code) was presumably not intended as a change in the law. (Bus. & Prof. Code, § 2; Sandstrom v. California Horse Racing Board, supra.) We conclude, therefore, that section 19480 of the Business and Professions Code made no substantial change in the 1933 statute on the subject here involved, and since the 1933 act was confirmed and ratified by the constitutional amendment, the attack made on its validity cannot stand. (Sandstrom v. California Horse Racing Board, supra.)

The board found, pursuant to section 19480.5 of the Business and Professions Code, that applicant (plaintiff) had failed to show that the conduct of horse race meetings at Puente would be in the public interest and subserve the purpose of the horse racing law. The trial court decided the case upon the record made before the board and found that its finding was supported by “substantial evidence.” Plaintiff challenges these findings.

Plaintiff asserts that the trial court did not weigh the evidence; that, therefore, this court must weigh the evidence and Moran v. Board of Medical Examiners, 32 Cal.2d 301 [196 P.2d 20], is not controlling. There are two answers to that contention. First, it clearly appears from the findings that the court did weigh the evidence, although the memorandum opinion of the trial judge might point to the contrary. The findings control. There is no distinction between this case and Moran v. Board of Medical Examiners, 32 Cal.2d 301 [196 P.2d 20], where it was held that the appellate court would not reweigh the evidence in reviewing the findings of a trial court on a determination by a statewide administrative agency; and that such findings would be given all the benefits accorded them in other proceedings. Second, even if it be assumed that the trial court did not reweigh the evidence, it should not have done so in a case such as this, where it was reviewing the denial of an application for a license for a business whose regulation is a proper subject of the police power as distinguished from the revocation or suspension of a license. This rule was announced in McDonough v. Goodcell, 13 Cal.2d 741 [91 P.2d 1035, 123 A.L.R. 1205], where this court said: “The legislature has the power to vest in a public officer the discretion to deny an application for a permit to engage in a business subject to regulation when prerequisite facts do not exist. But such a discretion must be exercised within legal bounds. Those bounds are generally that the discretion of the administrative officer or board may not be exercised arbitrarily, capriciously, fraudulently, or without a factual basis sufficient to justify the refusal. ... A survey of the foregoing authorities discloses that it is the settled general rule of law in this state that where the legislature has by statute clothed an administrative officer with power to ascertain the facts with reference to the fitness of an applicant for a permit to engage in a business subject to regulation under the police power and has vested in such officer the discretion, based on the facts ascertained, to grant or deny a permit to engage in such business the courts will not interfere with the exercise of such discretion except in the case of an abuse thereof. There may be modifications of this general rule under special circumstances not here present, as will hereinafter be noted.

"The question here is whether the commissioner abused his discretion in denying the permit to the petitioners. Such abuse of discretion would appear if he acted arbitrarily, capriciously, or fraudulently. No claim can properly be made that he acted capriciously or fraudulently. And he acted arbitrarily only in the event there was no sufficient factual basis for his conclusions.

“The testimony before the commissioner was voluminous and highly conflicting . . .

“Unquestionably the testimony before the commissioner would sustain a conclusion either way upon the issue of the good moral character and fitness of the petitioners to engage in the bail bond business in San Francisco. If the trial had been before a court the evidence was sufficient to support findings either way or was sufficient to support a verdict either way on the issue. With this state of the record our inquiry on this phase of the case is at an end, for it cannot be said that there was not a sufficient factual basis for the conclusion of the commissioner and therefore he did not act arbitrarily or otherwise abuse his discretionary power in denying the permit.” Those views have been consistently approved. (See Dierssen v. Civil Service Commission, 43 Cal.App.2d 53, 60 [110 P.2d 513]; Newport v. Caminetti, 56 Cal.App.2d 557 [132 P.2d 897]; Wallace v. Board of Education, 63 Cal.App.2d 611 [147 P.2d 8]; Housman v. Board of Medical Examiners, 84 Cal.App.2d 308 [190 P.2d 653]; McDonough v. Garrison, 68 Cal.App.2d 318 [156 P.2d 983]; Glick v. Scudder, 69 Cal.App.2d 717 [160 P.2d 90].) And the rule was not changed by statute as is evident from the wording of section 10945 of the Code of Civil Procedure. We therefore hold, that in a case such as this, the trial court should not reweigh the evidence, and its sole function is, to determine from a review of the record, whether there is sufficient evidence to sustain the ruling of the board. If the trial court should hold the evidence insufficient, and this holding is attacked on appeal, the court to which the appeal is taken must review the record and determine the sufficiency of the evidence. If the evidence is found to be sufficient, the ruling of the board must be sustained.

Plaintiff "urges that there is not sufficient evidence to support the finding of the board against it; that “improper” evidence was received by the board; and that competent evidence offered by plaintiff was rejected.

Dealing first with the last mentioned contention, plaintiff claims that “improper” evidence was admitted before the board and a transcript of it was submitted to the court, that is, evidence by Santa Anita and Hollywood race tracks n Los Angeles County, that they would suffer an “economic detriment” if another track was authorized in the county; that it is not the purpose of section 19480.5 under which new tracks could be limited, to protect existing tracks from competition or preserve a monopoly for them. It will be noted from the wording of section 19480.5, however, that no new race tracks may be constructed unless it is determined that such tracks will be in the public interest and will promote the purposes of the horse racing law. Defendants concede that it is not the function of the board to protect existing tracks from competition. In its memorandum opinion the trial court said: “Nevertheless, eliminating from consideration testimony concerning the economic interest of the existing tracks, there is still substantial evidence upon which to sustain the Board’s determination. Even if there he some error in the record, the court should follow the general principle enunciated in Article VI, section 4 [4 of the Constitution, to-wit, sustain the trial body where the error complained of has not resulted in a miscarriage of justice.”, Thus its conclusion was that without such evidence there was sufficient evidence to support the board’s decision. Moreover, it is presumed on appeal that the court, sitting without a jury, did not base its finding on irrelevant evidence where there is competent evidence to support it. (Brock v. Fouchy, 76 Cal.App.2d 363 [172 P.2d 945]; Cordi v. Garcia, 56 Cal.App.2d 584 [132 P.2d 887].) There being competent evidence to support the judgment without such “improper” evidence, and the court not having based its findings on the latter, it is not important that plaintiff’s offer of proof in rebuttal thereof was denied by the board.

Furthermore, since the proceeding in the trial court must be considered as only a hearing where the record before the board is examined for the purpose of determining the sufficiency of the evidence, rather than a limited trial de novo (see McDonough v. Goodcell and discussion supra), then the applicable rule is, that the admission of irrelevant or incompetent evidence by the board is not ground to annul its action if there is sufficient competent evidence to support its determination. (See Maryland Casualty Co. v. Industrial Acc. Com., 178 Cal. 491 [173 P. 993]; Mesmer & Rice v. Industrial Acc. Com., 178 Cal. 466 [173 P. 1099]; Mary Len Mine v. Industrial Acc. Com., 64 Cal.App.2d 153 [148 P.2d 106]; Tagg Bros. & Moorhead v. United States, 280 U.S. 420 [50 S.Ct. 220, 74 L.Ed. 524].)

There is ample evidence to support the determinate of the board and trial court. Two witnesses representing an improvement association testified that the transportation facilities and traffic conditions would be adversely affected by a track at Puente, and that added fire protection would be necessary. A resolution by the California Thoroughbred Breeders’ Association representing 95 per cent of the breeders of thoroughbred horses in the state was received in evidence. It declared that the proposed track would reduce the standard of the racing and breeding industry in the state and curtail the revenue to the state. There was also received in evidence a resolution by the Western Pair Association, comprising 74 nonprofit fairs in California, opposing the track, asserting that it would be injurious to such nonprofit fairs and hence to agriculture. There is other evidence of a like character in the record. There is, however, evidence that the saturation point for race tracks in Los Angeles County has not been reached, but such evidence created nothing more than a conflict. ^The credibility of the witnesses and weight of], the evidence cannot be considered on this appeal. It is clear from the wording of section 19480.5 that the applicant has the burden of proving, at least, that public interest and the purposes of the act would not be detrimentally affected by the proposed new track. There is considerable discussion by the parties as to whether the applicant must affirmatively show that the public interest would be benefited or merely that it would not suffer, but it is not necessary to pass upon that point. Thus it was for the board to determine whether plaintiff’s evidence was such that the burden had been met. This is especially true where most of the evidence consists of opinions, and the issues involved—public interest and purposes of the act—are general and incapable of exact definition. Indeed, plaintiff states in its brief: “A moment’s reflection upon the very nature of the determination that the board was required to make shows that such determination must be predicated, not upon provable concrete facts, but upon opinion evidence exclusively.” In such a case, wide discretion is necessarily vested in the fact-finder.

Plaintiff argues that the board and trial court failed to apply the standard established by section 19480.5, asserting that the words “public interest” used therein related only to the purposes to be served by the horse racing law. Be that as it may, the finding of the board was in the language of the statute. It reads: "That the applicant has failed to show that the conducting of horse racing meetings at the proposed Puente track would be in the public interest and would sub-serve the purposes of the California Horse Racing Act and that therefore said application is hereby denied.” Likewise the court’s finding was sufficient. There is no basis, therefore, for the assumption that either the board or the trial court applied the wrong standard or test. On the contrary, the presumption is the other way. (Code Civ. Proc., § 1963(15).)

Finally, it is urged that the board acted irregularly in reaching its decision in that one of the board members telephoned his vote to a meeting of the board at which the two other members were present, one of whom dissented. Assuming that there must have been present at a meeting at which the matter was decided by the board, the members necessary to make a decision by a majority of the board, from all that appears, such was done. The meeting at which only two members were present was on September 17, 1948. The written decision of the board, dated September 21, 1948, recites: “The Matter of the Application of.the Southern California Jockey Club, Inc., came on for hearing; evidence was introduced by the applicant and the objectors; the matter was briefed by said applicant and objectors and by the Board submitted.

“It is now held as follows:

"That the applicant has failed to show that the conducting of horse racing meetings at the proposed Puente track would be in the public interest and would subserve the purposes of the California Horse Racing Act and that therefore said application is hereby denied.” It is signed by two members of the board, and the third member’s dissent was filed with it.

The judgment is affirmed.

Gibson, C. J., Shenk, J., and Schauer, J., concurred. Spence, J., concurred in the judgment.