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Duties and Rights of Co-Owners, Trainers, Agents, Boarders, Partners, and Syndicate Managers
Note that there are several articles about these subjects available in the Publications section.
Archibald v. Act III Arabians, 755 S.W.2d 84 (Tex. 1988).
Horse owner sued trainers for damaging horses due to improper training. Texas Supreme Court held that an implied warranty of good and workmanlike performance applies to horse training services.
Beasley v. Trontz, 677 S.W.2d 891 (Ky. App. 1984).
Bloodstock agent purportedly represented both buyer and seller in a horse sale transaction. The agent failed to disclose ceratin facts about the transaction to one of the parties. The buyer sued for specific performance of the sales contract and was awarded summary judgment. The court of appeals reversed the summary judgment, and held that if the seller could show that the agent was representing both the buyer and the seller, the seller could void the contract of sale.
Bibeau v. Ward, 645 N.Y.S.2d 107 (App. Div. 1996).
Plaintiff sued agent for breach of contract requiring the agent to acquire, train and care for, and attempt to sell horses at a profit. Agent acquired horses, but did not train or care for the horses, and consigned them at a loss. Trial court awarded damages (including lost profits) for breach of contract, and punitive damages for gross negligence and fraud. Appeals court ruled that breach of a contract did not amount to gross negligence or fraud, and the award of lost profits was improper because they were speculative.
Bradshaw v. Thompson, 454 F.2d 75 (6th Cir. 1972).
Horse owner sued his agents for breach of fiduciary duty for failure to sell horses at highest and best prices, and demanded an accounting. The trial court sent the case to the jury, and the owner appealed after being dissatisfied with the verdit. The appeals court held that even though an equitable claim was made, the case was properly tried to a jury.
The owner also sued one agent for signing over registration papers to a buyer at auction. The appeals court held that the sale was complete at the fall of the hammer, and that transfer of title to the horse was not tied to transfer of registration papers.
Buster v. Hale, No. 88-CI-067 (Scott Circuit Court, Kentucky, May 20, 1988).
Lien priority dispute arose among a perfected security interest, stallion-keeper's liens, and an agister's lien. The trial court ruled that a syndicate shareholder was a "stallion keeper," entitling him or her to the benefits of the stallion-keeper's lien against the mare where the mare-owner failed to pay the stud fee. The court ruled that both the stallion-keeper's lien and the agister's lien had priority over a perfected security interest. As to the respective priority between the stallion-keeper's lien and the agister's lien, the court ruled that the concept of marshalling of assets should apply to allow the holder of the agister's lien to first satisfy the board bills from horses other than the horse on which the stallion-keeper's lien was placed.
Continental Bank v. Meyer, 10 F.3d 1293 (7th Cir. 1993).
Bank sued investors in thoroughbred breeding limited partnership to collect notes. Investors (who were lawyers) counterclaimed against bank for fraud and for aiding the alleged fraud of the promotors. The Court held that statements by bank officers that constituted opinions of the quality of the investment, and that the investment was risk free, did not, as a matter of law, constitute fraud.
Dall v. Kaylor, 658 A.2d 78 (Vt. 1995).
Vermont buyer discovered that horse he purchased from seller in Maryland suffered from chronic bone disease, and sued for breach of warranty. Vermont Supreme Court held that the courts of Vermont had jurisdiction over Maryland seller.
DiGrazia v. Old, 900 S.W.2d 499 (Tex. Ap.. 1995).
While horse was under care of trainer and being treated by a veterinarian, horse died from blood poisoning. The veterinarian led horse owner to believe that the cause of death was electrocution. Horse owner sued after the limitations period had run. The court ruled, though, that limitations had not run against the veterinarian because of his possible fraudulent concealment, but limitations had run against the trainer, because the trainer had no reason to know of the cause of death and thus could not have engaged in fraudulent concealment.
Dimario v. Coppola, 10 F. Supp. 2d 213 (E.D.N.Y. 1998).
This case gives an extraordinary effect to custom and usage in the thoroughbred horse business. In this case, the trainer of multiple stakes winning stallion RUNAWAY GROOM testified that he had been promised expressly (but orally) that he would be paid cash compensation, in addition to his usual benefits, in a sum equal to ten percent (10%) of the proceeds of RUNAWAY GROOM'S syndication upon retirement. The owners of the horse apparently did not disagree that this had been the oral agreement, but contended that the statute of frauds applied, and that the statue of limitations had run before the trainer filed his lawsuit. The Court recited much custom in the business, some of it inaccurately ("Each syndicate interest grants the holder a proportionate share in the profits and expenses of the stallion"), but was exactly correct that the usual compensation to a trainer of a successful male thoroughbred is the grant of a lifetime breeding right upon syndication. The term orally agreed in this case was said to be unusual. After wandering off into the discussion of cases involving"the absence of a material term" in a contract, and the undoubted rule that silence on such a term may be cured by "proof of established custom and practice in the industry," the Court indicated that in this case there is no question of a silence the trainer was not guilty of "mistake and perjury." There was no statute of frauds or statute of limitations problem, held the Court. However, having discussed for many pages the use of custom and usage in adding to or interpreting a contract, the Court decided to rewrite the contract: "These customs must be construed as implied precise terms of the original contract." The oral contract was not enforced; rather, compensation was limited to customary compensation. By "construed" the judge meant "constructed."
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Garner-Rose v. Anderson, 894 S.W.2d 223 (Mo. App. 1995).
Plaintiff claimed fees for boarding horse. The court ruled (on setting aside a default judgment) that fact that defendant's ex-wife had taken the horse and transfered it to the plaintiff was a defense to the claim for boarding fees.
Gebert v. Yank, 218 Cal. Rptr. 585 (Cal App. 1985).
Thoroughbred allegedly injured by inappropriate use of a shank by sales consignor. Court upheld jury verdict for breach of bailment contract, despite no finding of negligence.
Gross v. Victoria Station Farms, Inc., 578 N.W. 2d 757 (Minn. 1998).
Horse escaped from boarding farm, and owner sued for breach of contract and negligence, alleging lameness had resulted. Boarding farm moved for summary judgment, presenting affidavits of veterinarians that the lameness resulted from a prior condition. Owner presented an affidavit of a PhD, who had degrees in geology and paleontology, but who studied horsemanship. The trial court granted summary judgment because the PhD was unqualified to give an expert opinion as to the cause of equine lameness. The Supreme Court of Minnesota affirmed.
Gussin v. Shockey, No. 90-1402 (4th Cir. 1991).
Horse buyers claimed their agent took a secret commission or markup when he acquired horses for them, and they sued for fraud and breach of fiduciary duty to recover. Judgment requiring the secret commission or markup to be paid to buyers was affirmed on appeal.
Harlan v. Lovett, 1996 WL 97590 (Tenn. App. 1996).
Lessee of farm acreage for pasturage of horses failed to pay rent, and lessor sold the horses to collect the rent. Court of Appeals held that the lessee was entitled to recover damage for conversion, and that the lessor did not have a statutory lien for payment of rent because the horses were placed on leased property.
Knott v. Boone, 1996 WL 220 (unpublished).
Syndicate manager liable for dealing with one partner of partnership that owned share in the stallion syndicate, where syndicate manager should have known that partner was acting against interest of the partnership.
Lampley v. L.M. Webb, 1996 WWL 524330 (E.D. Pa. 1996).
Partner in joint venture sued other partners for breach of contract and fraud. Court held that plaintiff partner could not testify as to value of horses in order to establish amount of damages, because there was no authority under FRE 701 allowing an equitable owner to testify as to value.
Lindsay-Field v. Friendly, 43 Cal. Rptrt. 2d 71 (Cal. App. 2 Dist. 1995).
Manager of a stallion syndicate transported stallion to Australia for the southern hemisphere breeding season after receiving a majority vote of the syndicate members in favor. A nonapproving minority of members sued and a jury held in favor of the syndicate manager and majority. The appeals court reversed, holding that unanimous consent was required to give the syndicate manager authority to make such a drastic change in the fundamental rights of the nonapproving syndicate members.
Lundberg v. Church Farm, Inc., 502 N.E.2d 806 (Ill. 1986).
A discussion of actual and apparent authority of an agent in the context of negotiating an agreement to "stand" a stallion, which term is defined.
Marsh v Gentry, 642 S.W.2d 574, 37 A.L.R.4th 484 (Ky. 1982).
Partners sold a horse at public auction. One partner secretly bid on the horse, without informing the other partner. Another partnership horse was secretly purchased by the other partner in a private sale. The Kentucky Supreme Court ruled that one partner's secret purchases of partnership horses, sold at auction or privately, constituted a breach of the partner's fiduciary duty to the other partner. The Court also rejected the defense that self-dealing in partnership assets was a custom in the industry.
Mason v. Jackson, 914 S.W.2d 728 (Ark. 1996).
Riding teacher was paid by student to select a horse to purchase. Student was dissatisfied with horse and sued the riding teacher for negligence. Court ruled that teacher was not negligent.
Mizan Arabians v. The Pyramid Society, 851 F.2d 357 (6th Cir. 1987).
Horse auction firm sold a consigned horse below the "reserve" set by the seller. The court of appeals affirmed the district court's finding of liability and award of damages measured by the difference between the sale price and the reserve bid, rather than the fair market value and reserve bid.
Simmons v. Plummer, 902 P.2d 1084 (N.M. App. 1995).
Sellers promised bloodstock agent a commission if he found a buyer for their interest in a race horse. The interest was subject, however, to a right of first refusal, which was exercised upon the intended sale. The agent sued for his commission and the court ruled in favor of the agent.
Simon v. Fasig-Tipton Co., 652 So.2d 1351 (La. App. 1995).
Dispute arose between novice owner and his agent. The owner sued for breach of fiduciary duty and the agent counterclaimed against the owner, alleging the owner committed conversion by failing to remit funds. It was the agent's position that he was entitled to a proportionate interest in all horses owned by owner. The jury sided with the agent, but the appellate court held that the damages awarded were excessive.
Turner v. Grifs Western, Inc., 565 So.2d 874 (Fl. Dist. 1990).
Feed supplier sought an injunction based on Florida's statutory agister's lien. The court of appeals ruled that the feed supplier could not avail itself of the lien, thus an injunction preventing removal of the horse was improper.
Williams v Tam, 131 Cal. 64, 63 P. 133 (1900).
The plaintiff claimed to be a co-owner of two horses that had been owned by the plaintiff and her husband. The defendant denied that the plaintiff had an interest because the husband sold the horses to him. The court held that one co-owner did not have authority to sell the interest of the other co-owner.
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