BILL ANALYSIS
SB 254
Page 1
Date of Hearing: July 1, 2009
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Joe Coto, Chairman
SB 254 (Wiggins) - As Amended: May 20, 2009
SENATE VOTE : 30-8
SUBJECT : Horses: sale, purchase, or transfer.
SUMMARY : Revises horse racing law relative to the sale of
equines. Requires each purchase, sale or transfer to be
accompanied by a written bill of sale signed by the buyer and
seller. Prohibits any person from acting as a dual agent, as
defined, without the knowledge and written consent of the buyer
and seller. Restricts an agent's compensation to no more than
$500 per transaction unless the amount of compensation is
disclosed in writing and the buyer and seller provide written
consent. Specifically, this bill :
1)Defines "equine" to mean a horse of any breed used for racing
or showing, including prospective racehorses, breeding
prospects, stallions, stallion seasons, broodmares, yearlings,
or weanlings, or any interest therein.
2)Requires any sale, purchase, or transfer of an equine to be:
a) Accompanied by a written bill of sale or acknowledgment
of purchase setting forth the purchase price.
b) Signed by both the purchaser and the seller or their
duly authorized agents or, in a transaction solely relating
to a season or fractional interest in a stallion, signed by
the syndicate manager or stallion manager.
1)Provides that when a sale, purchase or transfer of an equine
is accomplished through a public auction, the bill of sale
requirement may be satisfied by the issuance of an auction
receipt generated by the auction house and signed by the
purchaser or an agent whom the purchaser has
authorized.
2)Makes it unlawful for a person to act as a "dual agent," which
is defined as a person acting as an agent for both the
purchaser and the seller, in a transaction involving the sale,
SB 254
Page 2
purchase, or transfer of an interest in an equine without the
prior knowledge of both the purchaser and seller, and the
written consent of both the purchaser and seller.
3)Makes it unlawful for a person acting as an agent for either a
purchaser or a seller or acting as a dual agent in a
transaction involving the sale, purchase, or transfer of an
equine to receive in excess of $500 worth of compensation,
fees, gratuities, or other items of value, related directly or
indirectly to that transaction, from an individual or entity,
including any consigner involved in the transaction, other
than the agent's principal, unless both of the following
occur:
a) The agent receiving the item of value and the individual
or entity giving the item of value disclose
the transfer of that item of value in writing to the
principal or principals for whom the agent is acting.
b) Each principal for whom the agent is acting consents
thereto in writing.
1)Requires any person acting as an agent for a purchaser or
seller or acting as a dual agent in a transaction involving
the sale, purchase, or transfer of an equine shall, upon
request by his or her principal or principals, provide to the
requesters, copies of all financial records in the possession
or control of the agent pertaining to the transaction, as
described.
2)Provides that any person injured by a violation, as described
shall recover treble damages from persons or entities
violating this provision of law.
3)Provides that no contract or agreement for payment of a
commission, fee, gratuity, or any other form of compensation
in connection with any sale, purchase, or transfer of an
equine shall be enforceable by way of an action or defense
unless both of the following occur:
a) The contract or agreement is in writing and is signed by
the party against whom enforcement is sought.
b) The recipient of the compensation provides a written
bill of sale or auction receipt for the
SB 254
Page 3
transaction of the equine.
1)Authorizes the California Horse Racing Board (CHRB) to suspend
or revoke the license of any person who violates this law.
2)Provides that the provisions related to the award of damages
or enforceability of an action shall not apply to the acts or
omissions of an entity or individual engaged in conducting a
public auction of an equine, or the entity or individual's
employees or agents, if both of the following conditions
apply:
a) The acts or omissions of the entity, individual,
employee, or agent are in furtherance of or pursuant to the
conduct of the public auction of an equine.
b) The entity or individual is appropriately licensed or
authorized to conduct that specific public auction by CHRB
and any other governmental entity whose permission or
authorization is required to conduct the auction.
EXISTING LAW :
1)Prohibits a person from receiving any form of compensation in
connection with the sale or purchase of a racehorse,
prospective racehorse, stallion, or broodmare, unless the
purchaser and seller have agreed in writing to the payment of
that compensation.
2)Provides that no contract or agreement shall be enforceable by
way of an action or defense unless there is a document in
writing sufficient to indicate that the party against whom
enforcement is sought or his or her authorized agent or broker
has agreed to the commission, fee, gratuity, or other form of
compensation.
3)Provides that anyone who receives a commission, fee, gratuity
or any other form of compensation in violation of this section
is subject to treble damages to the injured purchaser or
seller.
4)Authorizes the CHRB to suspend or revoke the license of any
person who violates this section. Any transfer of an interest
in a racehorse, prospective racehorse, stallion, or broodmare
shall be accompanied by a written bill of sale setting forth
SB 254
Page 4
the purchase price.
FISCAL EFFECT : Unknown.
COMMENTS :
SB 254 revises current law to provide a reliable written record
of horse transactions and punish, through treble damages and
potential license revocation, those who use equine transactions
to defraud.
According to the author's office, current law lacks clarity and
has resulted in opportunities for unscrupulous individuals to
defraud people in the sale of horses. A person is prohibited
under existing law from receiving any form of compensation in
connection with the sale or purchase of a racehorse, prospective
racehorse, stallion, or broodmare, unless the purchaser and
seller have agreed in writing to the payment of that
compensation.
This bill makes it clear that any sale, purchase, or transfer of
an equine is to be accompanied by a written bill of sale or
acknowledgment of purchase, and a security agreement setting
forth the purchase price, and signed by both the purchaser and
seller or their duly authorized agents. The bill makes it
unlawful for any person to act as a dual agent unless certain
conditions are met, and prohibits a person acting as an agent to
receive in excess of $500 in compensation or in other items of
value, related to that transaction, other than from the agent's
principal, unless certain conditions are met.
SB 254 would allow any person injured by a violation of its
provisions to recover treble damages, plus other expenses. The
bill would provide that the CHRB may suspend or revoke the
license of any person who violates its provisions.
In Support : Stonestreet, the sponsor of the bill, writes,
"[t]he unfortunate reality of the equine world is that
traditionally acceptable industry practices have resulted in an
environment which provides an opportunity for unscrupulous
individuals to defraud others and when such fraud has been both
difficult to detect and correct. The intent of the statute is
leveled at both correcting the business culture by mandating
written agreements and deterring inappropriate behavior by
providing enhanced damages. The revision does not change the
SB 254
Page 5
intent of existing law; it simply clarifies the language and
improves the efficiency of the statute."
Related legislation . SB 560 (Wiggins, 2007) was gut and amended
on the Assembly Floor to contain provisions identical
to SB 254. The bill was referred to Rules Committee pursuant to
Assembly Rule 77.2 and held in that committee.
AB 1418 (Tucker, Chapter 311, Statutes of 1994) enacted Business
and Professions Code Section 19525 which governs the sale,
purchase, and transactions of racehorses.
REGISTERED SUPPORT / OPPOSITION :
Support
Stonestreet (source)
Barretts Equine Limited
Hey & Hey, Attorneys-at-Law
Opposition
None on file
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531