"Transferring the Medicine Shield," a painting of Indians by Howard Terpning of Tucson, Ariz., last night was named the winner of the first $250,000 Hubbard Art Award for Excellence, a prize billed by its promoters "as the largest art award ever given."

The Hubbard award, according to a press release, "was created in the spirit of the Nobel and Pulitzer" by R.D. and Joan Dale Hubbard of Fort Worth.

Hubbard, a plate glass manufacturer, is the founder of the Hubbard Museum of Ruidoso Downs, N.M. The museum is housed in the Turf Club of the Ruidoso Downs racetrack, which Hubbard owns. Its permanent collection -- prior to last night -- included just six objects, all of them depictions of Indians shooting arrows, or cowboys herding cattle, or other Western scenes. Today it owns seven.

The award is a purchase prize. In exchange for the money, the museum received Terpning's oil, which the painter had priced at $185,000. The $250,000 Hubbard Art Award for Excellence thus brought the winner at least $65,000 more than he would have received had he sold it to someone else.

Of the 40 artists invited to enter the Hubbard competition, not one paints abstractions, since the Hubbard competition is open only to practitioners of "the representational art genre." Twenty-eight of the artists specialize in scenes of elk grazing in the woods, or Western landscapes, or cowboy-and-Indian subjects. A number of the others are followers of -- or relatives of -- Andrew Wyeth. Eleven of the competitors live in New Mexico, six live in Colorado, and two come from Wyeth's hometown, Chadds Ford, Pa. Only one, Janet Fish, comes from New York City.

The sort of cowboy-and-Indian art considered -- like duck stamp art, wildlife art, bird art, horse art and boat art -- sells consistently, though it is very rarely shown in major art museums.

Hubbard and his wife chose the winning picture. They selected "Transferring the Medicine Shield" from half a dozen paintings selected as finalists by a panel of five judges -- one of them first secretary of the Union of Artists of the Soviet Union.

Terpning's victory was announced last night at the racetrack during a black-tie gala hosted by Sam Donaldson of ABC-TV.

Two objects by each of the 40 competitors were on sale at the $150-a-plate dinner. The least expensive was an $800 landscape by New Mexico's Jean Parrish. The costliest -- one of the six finalists -- was a portrait by Jamie Wyeth of Chadds Ford, priced at $500,000 (though Wyeth had agreed to let it go for the $250,000 purchase prize had his picture won). There were ballot boxes next to each of the paintings, and the 600 dinner guests were invited to bid for an opportunity to buy the works displayed. They didn't have much time. "Terms of all purchases," the catalogue reminded them, "will be cash, with payments due within fifteen (15) minutes from the posting of the purchaser's name."

The art on sale was priced at a total of more than $3.7 million.

Since the Hubbard Museum exacts a 25 percent commission, it was positioned to take in more than $800,000, before expenses, if all the objects sold.

Speaking before the sale, John V. Hall, the museum's director, described that prospect as "unlikely."

"If we sell art worth $1.2 million, that would be a home run for the museum," said Hall.

He said the competition's exhibition will visit Moscow and Berlin, though venues in those cities have not yet been determined.

The five other finalists were "Nancy" by Richard Schmid ($125,000), "Rowena" by Dean Mitchell ($25,000), "Autumn Tranquility" by William Acheff ($33,000), "Snake River Facing South" by Joellyn Duesberry ($11,500) and Wyeth's $500,000 "Portrait of Orca Bates." The judges who selected them were Nina Zucker, former chairman of the United Nations Art Council; Tair Salakhov, the Soviet official; Michael Duty, director of the Eiteljorg Museum, Indianapolis; and Mark Flieschner, CEO and chairman of Franchise Finance Corp. of America.