BILL ANALYSIS
SB 254
Page 1
ASSEMBLY THIRD READING
SB 254 (Wiggins)
As Amended May 20, 2009
Majority vote
GOVERNMENTAL ORGANIZATION 17-0
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|Ayes:|Coto, Anderson, Chesbro, | | |
| |Cook, | | |
| |De Leon, Evans, Hall, | | |
| |Hill, Jeffries, Lieu, | | |
| |Mendoza, Nestande, | | |
| |V. Manuel Perez, | | |
| |Portantino, Silva, | | |
| |Torrico, Tran | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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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; and,
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
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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, 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; and,
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
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following occur:
a) The contract or agreement is in writing and is signed by the
party against whom enforcement is sought; and,
b) The recipient of the compensation provides a written bill of
sale or auction receipt for the 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; and,
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.
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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 the purchase
price.
FISCAL EFFECT : None
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. This
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
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the business culture by mandating written agreements and deterring
inappropriate behavior by providing enhanced damages. The revision
does not change the intent of existing law; it simply clarifies the
language and improves the efficiency of the statute."
Related legislation . SB 560 (Wiggins) of 2007 was 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.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0001739