Jacobson v. Maryland Racing Commission

¹⁸² Hammond, C. J., delivered the opinion of the Court. Howard Jacobson, licensed by the Maryland Racing Commission (the Commission) as an owner and as a trainer of race horses, claimed three horses — Shoeless Rebel, Wag Wag and Bar Tab — in claiming races at the Bowie race meeting that ended March 6, 1969 and within sixty days of their respective purchase, sold the horses in New York during the Aqueduct race meeting. The Stewards suspended Jacobson’s licenses, relying on Rule 80 of the Maryland Rules of Racing (the Rules) which prohibits one who has claimed a horse in a claiming race in Maryland from selling it within sixty days of the date of claim. 1 The Circuit Court of Baltimore City, Carter, J., ordered the Commission to reinstate the licenses and continue them in effect pending a hearing by the Commission. This was done.

Jacobson filed a petition seeking (1) a declaration that the Rules did not apply to the charges brought against him (because the sales occurred in New York), and (2) an order that any action taken by the Commission after a hearing, adverse to him, be stayed, provided an appeal be taken within the time allowed by law. The Commission held a hearing at which most of the facts were stipulated and fined Jacobson $2,500 for violating Rule 80. Jacobson took an appeal from the Commission’s order to the Baltimore City Court under the Administrative Procedure Act, Code (1965 Repl. Vol.), Art. 41, § 255.

Judge Sodaro affirmed the Commission in the administrative appeal and dismissed the petition for the declaration and order, which had been consolidated with the appeal for the purpose of decision. Jacobson contends that (a) the Rules “according to their express wording, are not applicable to events which ¹⁸³ occur outside of Maryland and which have no connection with a Maryland race meet”; (b) the rule-making power and authority granted by the legislature does not permit the Commission to apply the Rules to events which occur outside of Maryland; and (c) the application of Rule 80 to events which occur outside of Maryland is violative of due process of law in two aspects — “the vagueness of Rule 80 with reference to its applicability outside of Maryland,” and “the arbitrary and capricious application of the Rule to the facts * * We agree with Judge Sodaro that these contentions must be rejected. Horse racing is an endeavor and undertaking that necessarily must be the subject of intensive, extensive and minute regulation. Greenfeld v. Md. Jockey Club, 190 Md. 96, 104-105 .

It exists only because it is- financed by the receipts from controlled legalized gambling which must be kept as far above suspicion as possible, not only to sustain and profit the racing fraternity but to feed substantial, although by today’s standards relatively few, millions to the State’s revenues. Not surprisingly the legislature has given the Commission full power to control racing. Code (1969 1 Repl. Vol.), Art. 78B, § 1, provides that the Commission “shall be vested with and possessed of the powers and duties in this article specified and also the powers necessary or proper to enable it to carry out fully and effectually all the purposes of this article.” Section 11 (a) says that the Commission “shall have full power to prescribe rules, regulations and conditions under which all horse races shall be conducted within the State of Maryland.” This Court held in Mahoney v. Byers, 187 Md. 81, 84 , that the Commission “has power and authority to promulgate reasonable rules to govern the racing of horses.

It -may make such rules regulating the conduct of trainers, jockeys, owners, and generally regulate all matters pertaining to horse [races], in order that they may be conducted fairly, decently and [cleanly] but may not revoke a license except for cause.” Faithful to the authorizing directives of the statutes ¹⁸⁴ the Commission has promulgated several hundred rules. An owner may not race until licensed, Rule 234, and a trainer may not function, until licensed, Rule 433. “Persons entering horses to run on licensed Maryland tracks agree in so doing to accept the decision of the Stewards on any question relating to a race or to racing,” Rule 375. Claiming races are regulated. Rule 8 defines a “claiming race” as “one in which, according to the [specified] conditions [governing the race], any of the horses engaged may be claimed.” Claiming races are provided for horses of varying values which, for the purposes of such races are in effect set by the owner.

For example, there are $1,200 claiming races, $5,000 claiming races, $10,000 claiming races, and up to perhaps $30,000 claiming races. By entering his horse in a claiming race, the owner agrees that the “horse may be [bought] for its entered price by any owner registered in good faith for racing at that meeting, who has nominated a starter up to or including the race in which the claim is made * * *,” Rule 69. “The claiming price of each horse in a claiming race shall be printed on the program, and all claims for said horse shall be for the amount so designated. Should more than one claim be filed for the same horse, the disposition of the horse shall be determined by lot under the direction and supervision of one or more of the Stewards of their designee,” Rule 81. J. F. Colwill, the Commission’s Steward, testified at the hearing before the Commission as to claiming races and the history and purpose of Rule 80: “The purpose of claiming races is to have the owner and or trainer classify his horse rather than have the handicapper do so.

If he runs a horse for a true price, therefore, he may lose his horse. If he sets too big a value on his horse, he will not win, and adjustment downward in price is indicated. A claiming race is not intended to be a sales ring in which a clever horseman or dealer can pick up a bargain and sell it at will. ¹⁸⁵ Therefore, there are certain protective restrictions; a horse cannot change ownership except by claim for sixty days, a horse cannot run at another track until the meeting in which he is claimed is terminated, agreements not to claim each other’s horses and protective claims are barred, a claimant must be registered in good faith at the meeting and have nominated a starter at that meeting to be eligible to claim. These and others are designed to prevent — to preserve the intent of the claiming rule, to classify horses in what appears to be the most accurate and satisfactory manner.” Colwill also testified that some years ago horsemen would come into Maryland and claim “twenty-five, thirty, thirty-five, forty horses” and take them to other racing States and sell them.

The Maryland horse breeders association became upset “because at that time Maryland was one of the few States that was racing in the winter time” and the Maryland horsemen found that: “some of their very best Maryland breds were being claimed and that they were being raided, that these horses were going out of our state which, in effect, would have some economic impact on racing in Maryland, because we were losing our better Maryland bred horses, and as you undoubtedly know, * * * the handle [the amount of money bet daily on the races at a meet] will vary with the quality of the horses that are run at the race meeting * * As a result of the horsemen’s concern, the Commission sent representatives to the Uniform Rules Committee of the National Association of State Racing Commissioners (of which Maryland is a member, supporting uniformity by the racing States in racing rules) and together with Kentucky, another great breeding State, asked to be relieved of the thirty-day “lockup” period after a claim in ¹⁸⁶ order to substitute a sixty-day lockup period. The National Association agreed and the Commission amended Rule 80 to its present form. Jacobsons’ argument that the words of Rule 80 are inadequate to make it apply to sales outside of Maryland does not impress us. The proscription of the Rule is against any sale within sixty days.

It is neither stated nor suggested that only sales in Maryland are barred. A main purpose of the Rule is to keep horses racing at the Maryland meeting at which they are claimed and this purpose would be frustrated if a horse could be sold outside of Maryland any minute after it was claimed in Maryland but could not be sold in Maryland under those circumstances for sixty days. In addition to