State ex rel. Stephan v. Kansas Racing Com'n, 64350

• Decision Date: 25 May 1990
• Docket Number: No. 64350,64350
• Citation: 792 P.2d 971,246 Kan. 708
• Parties: STATE of Kansas ex rel. Robert T. STEPHAN, Attorney General, Petitioner, v. The KANSAS RACING COMMISSION; Harry Anthony, Kay Arvin, Bert Cantwell, Alfred Schroeder, and H. Philip Martin, in their capacity as Commissioners of the Kansas Racing Commission; and James R. Cobler, Director of Accounts and Reports, Respondents.
• Court: Kansas Supreme Court

Page 971

792 P.2d 971

246 Kan. 708

STATE of Kansas ex rel. Robert T. STEPHAN, Attorney General, Petitioner, v. The KANSAS RACING COMMISSION; Harry Anthony, Kay Arvin, Bert Cantwell, Alfred Schroeder, and H. Philip Martin, in their capacity as Commissioners of the Kansas Racing

Commission; and James R. Cobler, Director of Accounts and

Reports, Respondents.

No. 64350.

Supreme Court of Kansas.

May 25, 1990.

Syllabus by the Court

1. Mandamus is a proper remedy where the essential purpose is to obtain an authoritative interpretation of the law for the guidance of public officials in their administration of the public business, notwithstanding the fact that there also exists an adequate remedy at law.

2. The record in this original action in mandamus is examined and it is held: Pursuant to K.S.A.1989 Supp. 74-8815(d), the money required to be deposited with the Kansas Racing Commission by an applicant for a facility owner license proposing to construct a racetrack facility is forfeited if, after the license is granted, the racetrack facility is not completed in accordance with the terms of the license. Accordingly, the Kansas Racing Commission had no authority or discretion to refund the $250,000 deposit. The deposit was forfeited as a matter of law upon the surrender of the license by Sunflower Racing, Inc., to the Kansas Racing Commission. The Kansas Racing Commission is ordered to rescind the order directing the refund of the $250,000 deposit to Sunflower Racing, Inc., and to order that said deposit and any interest accrued thereon is forfeited.

Robert T. Stephan, Atty. Gen., argued the cause, and John W. Campbell, Deputy Atty. Gen., and Daniel P. Kolditz, Asst. Atty. Gen., were with him, for petitioner.

Robert E. Keeshan, of Hamilton, Peterson, Tipton & Keeshan, Topeka, argued the cause, and Leon B. Graves, of the same firm, was with him on the brief, for respondents.

R. Scott Beeler, of Gage & Tucker, Overland Park, argued the cause, and J. Patrick Shepard, of the same firm, was with him on the brief, for intervenor Sunflower Racing, Inc.

ALLEGRUCCI, Justice:

This is an original action in mandamus brought by the attorney general against the Kansas Racing Commission (Commission), individual members of the Commission, and James R. Cobler, Director of Accounts and Reports. At issue is the $250,000 deposit paid by Sunflower Racing, Inc., (Sunflower) pursuant to K.S.A.1989 Supp. 74-8815(d). The attorney general is asking this court to find that the statute mandates forfeiture of the deposit and requests an order compelling respondents to perform their duty pursuant to the statute by refraining from obtaining or delivering the $250,000 deposit to Sunflower.

The facts are not in dispute. On November 4, 1986, the Kansas Constitution was amended to permit horse and greyhound racing with a parimutuel system of wagering. Kan. Const. art. 15, § 3b. The Kansas Parimutuel Racing Act, K.S.A.1989 Supp. 74-8801 et seq. was enacted on May 28, 1987. Members of the Commission, which conducted its first regular meeting in August 1987, included former Kansas Supreme Court Chief Justice Alfred Schroeder, former Wyandotte County Sheriff and Highway Patrol Superintendent Bert Cantwell, former Representative H. Philip Martin, former District Court Judge Kay Arvin, and former veterinarian and University of Kansas Professor Harry Anthony. All are respondents in this action.

On March 3, 1988, The Racing Association of Kansas-Southeast (TRAK) filed an application for an organization license to conduct greyhound races, and Sunflower Racing, Inc., (Sunflower) filed an application for facility owner and facility manager licenses to construct, own, operate, and manage a greyhound racing facility in Pittsburg, Crawford County, Kansas. TRAK contracted with Sunflower to conduct its races at Sunflower's track. Initially, R.D. Hubbard and Richard J. Boushka owned equal stock in Sunflower. Sunflower's owner and facility manager applications were accompanied by a nonrefundable application fee of $5,000 for each license for a total of $10,000. K.S.A.1989 Supp. 74-8815(c). Sunflower also filed a deposit of $500,000, which was an appropriate amount for a racing schedule that would include more than 150 racing days in a year. K.S.A.1989 Supp. 74-8815(d). When a conditional license was subsequently issued for less than 150 racing days during the calendar year, it was established that the deposit need be only $250,000; the excess $250,000 was refunded to Sunflower, which the attorney general concedes was appropriate. The deposit at issue in this action is the remaining $250,000.

On March 7, 1988, two additional groups applied for licenses to construct and operate a greyhound racing facility in Crawford County, Kansas. The Little Balkans Foundation filed an application for an organization license, Camptown Racing, Inc., filed for a facility manager license, and Camptown Development Limited Partnership filed for a facility owner's license. This group will hereinafter be referred to as Camptown/Little Balkans. In addition, O.G.B. Charities, Inc., (OGB) applied for an organization and facility owner's license, and Crawford County Racing, Inc., for a facility manager license.

On September 16, 1988, the Commission conditionally granted the following three licenses: An organization license to TRAK pursuant to K.S.A.1989 Supp. 74-8802(n) and K.S.A.1989 Supp. 74-8813, and facility owner and facility manager licenses to Sunflower pursuant to K.S.A.1989 Supp. 74-8802(f) and (g) and K.S.A.1989 Supp. 74-8815. The TRAK organization license is not at issue in this action. Applications of the two competing groups, Camptown/Little Balkans and OGB, were denied.

The owner and manager licenses issued to Sunflower were expressly conditioned upon providing a financial commitment approved by the Commission as required by K.S.A.1989 Supp. 74-8815(j). The order, which gave Sunflower 150 days from the date of licensing to submit a commitment for financing, stated:

"(a) Sunflower Racing, Inc., shall promptly enter final negotiations with its lender or lenders and shall file with the commission within 150 days following the date of this order final loan documents of all lenders participating in the loan commitment, security documents and all other evidence of indebtedness, guarantees or assurances necessary to obtain closing of the construction loan described in the verified application. The documents shall be substantially in the form described in the verified application. Closing of the loan shall be completed to the commission's satisfaction and approval within 150 days of this date, unless this order is extended.

....

"(d) Sunflower Racing, Inc., shall adhere to the plans and specifications and the construction schedule set forth in the application except as approved by the commission after applicant files a revised schedule with the commission in the same format used for its application. Applicant shall diligently pursue the planning, acquisition, construction and completion of each phase of the project on the date set forth in the schedule subject to strikes, accidents, acts of God, weather conditions, documented shortage of labor and materials, litigation or other actions and circumstances beyond the control of the two applicants." (Emphasis added.)

In the order, the Commission concluded that issuance of licenses to Sunflower for a greyhound racing facility in Pittsburg/Crawford County would facilitate management development and minimize operating cost because Sunflower was similarly licensed in Kansas City, Kansas. Finally, the order provided that failure to abide by the terms of the license and the conditions set forth therein would be just cause for the Commission to pursue statutory remedies.

Kansas Racing Management, Inc., and Wyandotte County Economic Development, who were unsuccessful applicants for organization and facility owner licenses in the Kansas City, Kansas, area, appealed the Commission's denial of their applications (KRM appeal). The Commission and Sunflower were both respondents in that litigation. The KRM appeal, which was decided February 27, 1989, in Kansas Racing Management, Inc. v. Kansas Racing Comm'n, 244 Kan. 343, 770 P.2d 423 (1989), decided many, but not all, issues that were presented in Camptown/Little Balkans litigation involving the Pittsburg/Crawford County racetrack.

Immediately after the Commission granted Sunflower a facility owner license, the Little Balkans Foundation petitioned this court for review of that decision, filing its petition on October 14, 1988. Camptown Racing, Inc., and Camptown Development Limited Partnership filed separate petitions for review with this court on October 17, 1988. These three cases were consolidated for briefing.

Meanwhile, on October 28, 1988, the Commission approved a change in stock ownership in Sunflower Racing, Inc., with R.D. Hubbard owning 60% and Richard J. Boushka owning 40% of the stock but with the voting control remaining equally divided by proxy agreement. On January 27, 1989, Sunflower requested a minimum 60-day extension for presentation of financing documents for approval by the Commission. In light of the pending litigation regarding Sunflower and the Pittsburg/Crawford County facility, as well as other contingencies, on February 3, 1989, the Commission agreed to extend the time for approving TRAK's financing documents until April 14, 1989, "with the understanding that the track would be built as scheduled, that the lender would be the same as the Kansas City facility and that the non-profit group was provided notice and was in agreement." Pursuant to K.S.A.1989 Supp. 74-8815(j), the Commission can authorize additional time for a facility owner licensee to submit a commitment for financing. The statute does not prescribe a minimum nor a maximum period of time or limit the Commission to a single extension.

On March 11, 1989, Sunflower asked the Commission...