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Horsemen''s Benevolent and Protective Association v. Atlantic City Racing Association

Decided: February 14, 1985.

HORSEMEN'S BENEVOLENT AND PROTECTIVE ASSOCIATION, NEW JERSEY DIVISION, PLAINTIFF-RESPONDENT AND CROSS-APPELLANT,
v.
ATLANTIC CITY RACING ASSOCIATION, DEFENDANT-APPELLANT AND CROSS-RESPONDENT



On appeal from and certification to the Superior Court, Appellate Division.

For affirmance as modified -- Justices Clifford, Schreiber, Handler, Pollock, O'Hern and Garibaldi. For reversal -- None. The opinion of the Court was delivered by Pollock, J.

Pollock

The Horsemen's Benevolent & Protective Association, New Jersey Division (NJHBPA) sued the Atlantic City Racing Association (ACRA) for money allegedly due from the 1978 and 1979 racing seasons and for equitable relief that it no longer seeks. The basis of the claim for money is N.J.S.A. 5:5-66, which authorizes payments by racetracks to NJHBPA from purse money won by horse owners. ACRA asserted, among other defenses, that the statute constitutes special legislation in violation of N.J. Const. of 1947, art. IV, § 7, paras. 7, 9(8), an illegal appropriation of public funds to a private entity, contrary to N.J. Const. of 1947, art. VIII, § 3, para. 3, and an illegal exercise of the state police power.

In an unreported decision, the Chancery Division found the statute to be constitutional and entered a money judgment against ACRA. Also in an unreported decision, the Appellate Division, with one judge dissenting, affirmed the finding that the statute was constitutional. The court was unanimous, however, in reversing the money judgment. The different results with respect to the money judgment arose because the trial court found that ACRA was estopped from paying less than the amount authorized by the statute, but the Appellate Division concluded that NJHBPA had not proved the facts necessary to support estoppel.

ACRA filed an appeal of right on the constitutionality of the statute. R. 2:2-1(a)(2). Subsequently, we granted NJHBPA's petition for certification on the issue of estoppel. 95 N.J. 222 (1983). We hold that because payments authorized by N.J.S.A. 5:5-66 serve the public purpose of aiding New Jersey horsemen and do not involve public funds, the statute is constitutional. We hold further that ACRA is not estopped from paying less than the statutory maximum to NJHBPA.

I

NJHBPA is one of twenty-six regional divisions of the Horsemen's Benevolent and Protective Association (HBPA). HBPA is a national nonprofit organization that serves both as a charity aiding the horserace industry and as a representative of racetrack personnel, primarily owners and trainers. According to its constitution, the purposes of HBPA are to provide relief to owners and trainers who are old, sick, and poor, to negotiate purse contracts, and to improve living conditions for its members. Each of the regional divisions, including NJHBPA, is bound by HBPA's national constitution and bylaws and may not unilaterally change its procedures or benefits to meet local needs.

ACRA is a New Jersey corporation licensed pursuant to N.J.S.A. 5:5-39.1 to conduct horse races, i.e., it is a race track. It accepts bets from customers, the sum of which is commonly known as the "handle," and is sometimes referred to in relevant statutes as "contributions" or "deposits." As with other racetracks, ACRA's activities are controlled by statutes and regulations adopted by the New Jersey Racing Commission.

Before 1971, the statute governing racing did not expressly establish the portion of the total amount bet that should be distributed as "purse money" to the owners of winning racehorses. Beginning in 1971, the Legislature has allocated varying percentages of the handle to horse owners. L. 1971, c. 159, § 1. Although the original provision required the tracks to

distribute the entire allocation "as purse money," id., a 1974 amendment directed that it be distributed "as purse money and for programs designed to aid the horsemen and their representatives." L. 1974, c. 181, § 3. As of 1974, the racetracks were required to pay out 3.74% of the handle "as purse money and for programs designed to aid the horsemen and their representatives." Id. Of the sum available for purse distributions, the Legislature fixed a maximum of 3.2% (of the 3.74%) that could be allocated for such programs. Id. In 1975, the Legislature, for the first time, designated NJHBPA as a recipient of funds, requiring that 4.24% of the total amounts wagered be allocated "as purse money and for programs designed to aid the horsemen and the New Jersey Horsemen's Benevolent and Protective Association." L. 1975, c. 327, § 2. The 1975 amendment also provided for a 7.24% purse share for pools where the betting customer selects three or more horses, known as "trifectas." In addition, the amendment lowered the ceiling for horsemen's aid programs to 2.9% of the available purse money. The ceiling was reduced further to 2.5% in 1979, L. 1979, c. 94, § 2, and remains at that level, N.J.S.A. 5:5-66b.(1)(d) and b.(2)(d), except at the Meadowlands track where a 2.9% ceiling applies. L. 1980, c. 25, § 4, codified at N.J.S.A. 5:10-7.

Determining the appropriate allocations under the statute requires an estimate by each track of the total parimutuel wagering for a given time period. Of that total, the statutory percentage, currently 6% where the average daily handle is less than $1 million, is designated as purse money. Then 2.5% (the current ceiling) of that amount is set aside for NJHBPA, and the remainder apportioned for distribution in the various races to be run during the applicable time period. Thus, for example, some $56,000 in total purse money was available for distribution in nine races at the Atlantic City Race Course on July 16, 1980. Of that amount, only $54,601 was actually paid to owners as "net" purse money; the remaining $1,399, approximately 2.5% of $56,000, was deducted for the use of NJHBPA.

Pursuant to the statutory authorization, ACRA and other New Jersey racetracks have made payments to NJHBPA since 1975. Although the allocation varies with wagering volume, NJHBPA received a total of approximately $600,000 in 1978 and 1979. In the racing year 1978, ACRA paid to NJHBPA $75,498.00, which represents 2.9% of the statutorily required 4.24% of the total handle paid out in purse money. Although ACRA fulfilled the statutory mandate by allocating 7.24% of the amount bet to trifecta purses, it paid NJHBPA only 2.9% of 4.24% of the trifecta purse. In other words, ACRA reserved 3% of the trifecta handle exclusively for payment to the owners as purse money.

In 1979, ACRA declined to pay NJHBPA the full 2.5% allowable purse share under the amended statute. L. 1979, c. 94, § 2. Instead, ACRA paid NJHBPA the full 2.5% allowable for only part of the year, beginning in August of 1979. ACRA further changed its method of payment, deducting the maximum ...


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