Cloverleaf Kennel Club v. Racing Com'n, 17405

• Decision Date: 29 November 1954
• Docket Number: No. 17405,17405
• Citation: 277 P.2d 226,130 Colo. 505
• Parties: CLOVERLEAF KENNEL CLUB, a corporation, Plaintiff in Error, v. The RACING COMMISSION of the State of Colorado, and Ben T. Poxson, E. A. Honnen and Richard Hite, as members thereof, Defendant in Error.
• Court: Colorado Supreme Court

Page 226

277 P.2d 226

130 Colo. 505

CLOVERLEAF KENNEL CLUB, a corporation, Plaintiff in Error, v. The RACING COMMISSION of the State of Colorado, and Ben T.

Poxson, E. A. Honnen and Richard Hite, as members

thereof, Defendant in Error.

No. 17405.

Supreme Court of Colorado, En Banc.

Nov. 29, 1954.

Rehearing Denied Dec. 20, 1954.

Max D. Melville, Fred M. Winner, Walter F. Scherer, Denver, for plaintiff in error.

Duke W. Dunbar, Atty. Gen., Frank A. Wachob, Deputy Atty. Gen., Patricia Maloy, Asst. Atty. Gen., for defendants in error.

HOLLAND, Justice.

Plaintiff in error, to which we will refer as the Club, is a Colorado corporation formed primarily for the ownership and operation of a racing establishment and to conduct racing meets within the state. In the late summer of 1953 it applied to the Racing Commission of the State of Colorado, one of the defendants in error, for a license as is provided in the so-called Racing Act, to conduct races in Larimer county. The application was in full compliance with the Racing Act and there were no additional requirements made by the Commission.

In November of 1953, what may be called a hearing on this application was held before the Commission. We have nothing before us except a narrative statement as to the proceedings at this hearing. The executive secretary of the Commission, in its presence, stated that the Club had filed all required papers and documents for receiving a license, and that there was nothing else required to be filed; that the files of the Commission contained nothing derogatory to any of the persons interested in the Club as shown by the application; that it was shown that the Club had the absolute right to purchase 160 acres of land that had been selected as a track site; that it was prepared to start construction of the required track and other improvements forthwith; and further, that approximately $255,000 of its capital stock had been subscribed without public solicitation, 98% of the subscribers being Colorado residents, and 90% being residents of northern Colorado. It further was shown that a conservative estimate of the percentage that the general fund of Colorado would receive from the gross revenue from the operation of the Club would be $300,000 annually, not including the general, income and excise taxes.

The narrative statement discloses that the Commission had in writing advised the Club that the standard applied by it in the consideration of applications for licenses was the racing Act, particularly sections 5, 6 and 8 thereof, see, S.L. '49, page 583; and further that it had set up no rule or regulations concerning or creating standards.

The Commission, in denial of the application, directed the following communication to the Club:

'You are advised that on this date the Colorado Racing Commission has considered the application submitted by the Cloverleaf Kennel Club, and in this connection you are advised that:

'The Colorado Racing Commission Finds that there is presently in existence licenses for the operation of three tracks for the racing of greyhounds totalling 180 days of racing on the Eastern Slope of Colorado, the locations of which are in Derby, Colorado Springs and Pueblo; the Commission further finds that the site of the operation for which license is sought is approximately 45 miles from the location of the presently licensed track in Adams County. It is the further finding of the Commission that the granting of said license at this time would not be in the best interests of racing as a whole nor in the best interests of the people of this State.

'Accordingly, it is advised that said application for license be and the same is hereby denied.'

Thereupon the Club petitioned the district court for a peremptory writ directing the Commission to issue it a license for the racing of greyhounds. The writ was issued directing the Commission to certify its record of the hearing held on the application for a license; to show cause why same should not be issued; and to grant the license forthwith. The Club filed its return; however, there is no transcript of the testimony given before the Commission, and the court allowed the Club to file its narrative statement as to the evidence and occurrences at the hearing, which was supported by affidavits and treated as a supplemental record. No answer was filed to the petition or writ and no denial made by the Commission by answer, evidence, or otherwise, of the matters alleged in the petition, or of the matters set out in the supplemental record, which therefore, in effect, are admitted by the Commission in its motion to quash the writ on the ground 'That the petition herein filed fails to state a claim upon which relief can be granted in that, said petition fails to allege or show that the petitioner herein has no plain, speedy and adequate remedy.' On hearing, the court quashed the writ and dismissed the Club's petition by holding in effect that the so-called racing Act gives the Commission a discretionary power in the matter of issuing racing licenses above and beyond the express requirements as set forth in the Act, and since the word 'privilege,' is used in the Act there is an indication that no inherent right exists to engage in racing and conducting pari mutuel wagering, and the Act merely legalizes what was a prohibited and unlawful undertaking previous to its enactment; that the Commission had the right to consider the number of existing licenses and their locations, and the best interests of racing and of the people of Colorado; and that in refusing to issue the license for which application had been made, the Commission had not acted arbitrarily, capriciously or unlawfully in exercising its discretion.

The Club procured the issuance of a writ of error and seeks a reversal of the judgment on grounds and argument, which, in summation are, that a licensing board has no legal right to deny a license to an applicant fully qualified under the licensing statute here involved, when the statute provides that, the licensing authority 'shall' license under such circumstances; that the decision of the Commission in denying the application on the sole ground that it would not be in the best interest of racing, nor in the best interest of the people of this State, is a declaration of public policy not within the power of the Commission to make, that being a legislative function; that the licensing body can refuse to grant license only upon the grounds which the legislative body permits under the terms of the Act; that the racing Act is unconstitutional in so far as it fails to set forth adequate and uniform standards to govern the Commission in the consideration of applications; and that the decision of the Commission and the trial court's judgment were arbitrary, capricious and constituted an abuse of discretion.

On the motion to dismiss or quash the writ, the allegations of the complaint were presumed to be true, and for the purposes of the motion they were confessed by defendants. Such a confession was an admission that the Commission had acted arbitrarily, capriciously and illegally, which stated, among other allegations in the complaint, a claim upon which relief could be granted, and it was therefore error to quash the writ.

The second point urged by the Club is that this licensing board or Commission has no legal right to deny a license to an applicant fully qualified under the licensing statute when that statute provides that the board 'shall' license under such circumstances.

Section 5 of the Act provides:

'The commission shall license, regulate and supervise all race meets held in this State with pari mutuel wagering at which horses or other animals participate, and shall cause the places where such race meets are held to be visited and inspected at least once a year by the commission by its officers or employees, and it shall require all such places to be constructed, maintained and operated in accordance with the laws of this state and the rules of said commission.' S.L. '49, p. 583.

The Legislature by the employment of the word 'shall' in connection with the issuance of a license, unquestionably intended that such was to be put beyond the pale of permissive action on the part of the Commission in cases where the applicant has met every requirement of the Act in connection with its application, as is here admitted, and does not fall within the specific prohibitions of the Act. The prohibitions specifically contained in the Act are that no license shall be issued for the racing of horses or other animals within 40 miles of any other racing operation licensed under this law, and further, that the number and kind of race meets to be held in any one county in any one year shall be determined by the Commission, provided that not more than two race meets for animals other than horses shall be licensed in any county in any one year, nor held for a duration longer than 30 days, and no race meet shall be conducted on any Sunday. The Act provides not only the eligibility for applicants for a license, but distinctly sets out what may be considered ineligible applicants. The use of the word 'shall' is a clear indication that in the consideration of applications that meet every requirement when a third person as well as the State of Colorado has an interest in the exercise of the duty of the Commission, that the exercise of the power is then imperative. This rule applies where the statute uses the word 'may.' Brooke v. Moore, 60 Ariz. 551, 142 P.2d 211. It seems a wise intendment on the part of the legislature to forestall or prevent the Commission from exercising favoritism among applicants and making it impossible for the Commission to issue licenses only to such applicants as might be in the favor of the Commission, and reject others for no given reason. In the present case, by the Act, the Commission is told what applications to reject. We see no room within the...