Jackson Testifies as Kentucky Dual Agency Bill Passes Committee
Updated: Thursday, February 9, 2006 5:38 PM
Posted: Wednesday, February 8, 2006 3:45 PM
Photo: Anne M. Eberhardt
Thoroughbred owner Jess Jackson discusses HB 446 during Wednesday committee meeting at the Capitol Annex in Frankfort.
A horse industry ethics bill making it unlawful to receive commissions from buyer and seller without full disclosure sailed through a Kentucky House of Representatives committee by unanimous vote Wednesday afternoon.
The bill, HB446, was sponsored by Louisville Democrat Denver Butler, chairman of the House Licensing and Occupations Committee, which heard testimony from Jess Jackson, the prominent vintner and owner-breeder involved in a high-profile lawsuit against two agents and a trainer he said defrauded him by accepting undisclosed commissions from horse sellers.
"I've been a victim of what's called dual agency, an undisclosed fee going to my agent who was bidding up horses, and I paid a higher price because of him doing that," Jackson told the House committee. "It happened to me 38 times in 20 months. All we are asking is that that be disclosed and revealed to both the buyer and seller."
Jackson said the legislation "isn't about me. I'm trying to protect the small farms, the little farms that can't afford to litigate" when they feel they have been damaged by dual agency.
Jackson introduced several people from the Thoroughbred industry who accompanied him to the state capitol in Frankfort to show support for the bill: Drew Couto, president of Thoroughbred Owners of California, which backed similar California legislation that passed more than a decade ago; Bill Casner, co-owner of WinStar Farm and chairman of the Thoroughbred Owners and Breeders Association; Duncan Taylor, head of leading consignor Taylor Made Sales Agency; and Reynolds Bell, a bloodstock agent who is head of the TOBA's Sales Integrity Program monitoring committee. Jackson told the House committee that Keeneland and the Kentucky Equine Education Project also support the bill, as does the Kentucky Thoroughbred Association, whose president, Bill Landes, attended the hearing.
"There are dissenters, and you'll probably hear some of that in the future, but I'd suggest that most of the dissent would be coming from people who profit from this activity," Jackson said.
Democratic Rep. Susan Westrom of Lexington applauded Jackson for his initiative. "I'm a licensed Realtor, and one of the things I have to do ethically is disclose when I'm listing a property as well as when I'm selling a property," she said. "If I do not disclose that information, I lose my license."
Jackson responded that the industry could ask for bloodstock agents to be licensed just as real estate agents are.
The bill was amended from its original version following input from owners, breeders, and sale company officials. Under the amended version, a written bill of sale with price is still mandatory for all transactions, but an auction receipt generated by a sale company will be sufficient for horses sold at public auction. Additionally, syndicate or stallion managers may represent the seller in transactions relating to seasons or shares of stallions.
The bill originally prohibited an agent for the buyer or seller from accepting any undisclosed fee or item of value from the other party, but the language approved by the committee set a threshold value of $100, permitting agents to receive small gifts. That number could be increased to as much as $500 through a floor amendment when the full House of Representatives considers the bill, according to a source.
A subsection added to the bill regarding public auctions specified that there shall be no requirement for disclosure of reserve prices, the principals involved in a transaction, or the auctioneer's commissions. Auction companies are not considered dual agents.
If the bill becomes law, parties injured through undisclosed dual agency will be eligible to receive up to triple damages. The prevailing party in any litigation will be entitled to costs of the suit, reasonable litigation expenses, and attorney fees.
Jackson, who owns Kendall-Jackson winery in California and Thoroughbred farms in Florida and Kentucky, filed a lawsuit in California last year against agents Emmanuel de Seroux and Brad Martin and trainer Bruce Headley, alleging dual agency fraud in public and private transactions.Full text of Amended House Bill 446
AN ACT relating to the sales of horses
Be it enacted by the General Assembly of the Commonwealth of Kentucky:
SECTION 1. A NEW SECTION OF KRS CHAPTER 230 IS CREATED TO READ AS FOLLOWS:
(1) Any sale, purchase, or transfer of an equine used for racing, or showing, including prospective racehorses, breeding prospects, stallions, stallion seasons, broodmares, or weanlings, or any interest therein, shall be:
(a) Accompanied by a written bill of sale setting forth the purchase price; and
(b) Signed by both the purchaser and the seller or the syndicate manager or stallion manager in a transaction solely relating to a season or fractional interest in the stallion.
(2) In circumstances where a transaction described in subsection (1) is accomplished through a public auction the bill of sale requirement described in subsection (1) may be satisfied by the issuance of an auction receipt, generated by the auction house, and signed by the purchaser or the purchaser's duly authorized agent. An agent who signs an auction receipt on behalf of his or her principal shall do so only if authorized in writing. When presented with such authorization, all other parties to the transaction may presume that an agent signing on behalf of his or her principal is duly authorized to act for the principal.
(3) It shall be unlawful for any person to act as an agent for both the purchaser and the seller, which is hereby defined as a dual agent, in a transaction involving the sale, purchase, or transfer of an interest in an equine used for racing or showing, including prospective racehorses, breeding prospects, stallions, stallion seasons, broodmares, or weanlings, or any interest therein, without the prior knowledge and written consent of both the purchaser and the seller.
(4) It shall be 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 used for racing or showing, including prospective racehorses, breeding prospects, stallions, stallion seasons, broodmares, or weanlings, or any interest therein, to receive compensation, fees, a gratuity, or any other item of value in excess of one hundred dollars ($100), and related directly or indirectly to such transaction, from an individual or entity including any consigner involved in the transaction, other than an agent's principal, unless:
(a) The agent receiving and the person or entity making the payment disclose in writing the payment to both the purchaser and seller; and
(b) Each principal for whom the agent is acting consents in writing to the payment.
(5) Any person acting as agent for a purchaser or seller or acting as a dual agent in a transaction involving the sale, purchase, or transfer of an equine used for racing or showing, including prospective racehorses, breeding prospects, stallions, stallion seasons, broodmares, or weanlings, or any interest therein, shall, upon request by the purchaser or seller, furnish copies of all records and documents pertaining to the transaction to the requesting party. However, disclosure of compensation arrangements described in subsection (7) of this section shall not be required.
(6) Any person injured by a violation of this section shall recover treble damages, from persons or entities violating this section, and the prevailing party in any litigation under this section shall be entitled to an award of costs of the suit, reasonable litigation expenses, and attorney's fees.
(7) Nothing in this section shall require disclosure of compensation arrangements between a principal and an agent where no dual agency exists, where the agent is acting solely for the benefit of his or her principal, and where the agent is being compensated solely by his or her principal.
(8) Notwithstanding any provision of the Kentucky Revised Statutes to the contrary, for transactions contemplated by this section that are accomplished through a public auction, this section shall not require disclosure of the reserves, the identity of the principals, or the auctioneer's commissions. Auction companies shall not be deemed to be dual agents for all purposes under this sectionPrint Document
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