Once upon a time one of my favorite clients decided he wanted to start a horse business. Not being an expert himself, not knowing the “tricks of the trade,” so to speak, and just knowing he really enjoyed riding and being around horses, he enlisted the help of a cousin who had grown up with horses and knew something about their care, training and riding. We’ll call my client John. John had done very well for himself in the business world and had been fortunate enough to retire at a young age. He wanted to do some fun things and allow his cousin to work somewhere where he could really enjoy doing what he loved – working with horses.
John bought a beautiful piece of property and built a beautiful barn. Now, he needed horses. Some friends introduced him to a local horse trader/broker who was experienced with Western horses, the kind his aunt really enjoyed. Folks said that Billy could help him set up a good Western Pleasure barn. John met Billy and enjoyed his company. Billy was funny, friendly and seemed to know a lot about horses. Billy told John he could find him a great breeding stallion and John told him to go for it. John visited Billy’s farm where Billy lived in a broken down mobile home and had a few horses living in paddocks made from temporary metal fencing and in a pre-fabricated metal barn. In retrospect, Billy’s meager existence should have probably set off a few bells in John’s head, but oftentimes hard core horse folks live very sparsely because they spend all their time and money on their horses. But for future reference, most really successful, well respected horses traders/brokers probably don’t live like Billy lived and their horses are probably in a little better shape than Billy’s horses were in. But a little charisma goes a long way and Billy had charisma in spades.
Billy reported back that he had found a champion Western Pleasure stallion that he loved. John read about the stallion online and saw lots of photographs of the stallion. He liked what he saw so he told Billy to buy him. Billy inquired and came back to John with a full report. The stallion was named Lucky and his purchase price was $100,000. If John wanted Lucky he would need to act quickly, Billy said, because two other folks were looking at Lucky (no 2010 Derby pun intended ;-)). John obediently put $100,000 in Billy’s checking account because, after all, Billy was a local guy who knew everyone, so how risky could that be?
Billy delivered Lucky to John’s beautiful new facility – he was a truly impressive and beautiful animal. John was happy with his purchase and Lucky settled in nicely. They began marketing Lucky and he was very popular with the ladies, so to speak, and things were going well. Lucky produced beautiful foals the first breeding year, which was a great indicator of a successful breeding future for Lucky and the barn. Billy was also helping John buy brood mares and other horses while helping to train Lucky’s offspring. Billy found some experienced horsemen to work at the barn for John and they became part of the barn family. Billy was definitely a trusted member of the farm’s inner circle.
The one frustrating thing about Billy was that he was, like so many horse folks, a little disorganized when it came to proper documentation of horse transactions. The paperwork was always spotty because Billy had things to do, horses to move and train and places to go. It wasn’t until John’s CPA began fussing about how in the world she was supposed to handle the farm’s books and tax returns that folks started noticing that things looked a little fishy with Billy. Everytime the CPA would call Billy and ask for paperwork, he would have some excuse about why he couldn’t find it, didn’t have it or he would promise to send it later and wouldn’t. This buck-passing went on and on until I was talking with the CPA one day and she asked me to start pressing Billy for the paperwork.
Eventually Billy slipped up and some paperwork showed up that didn’t exactly match his oral description of the transaction it described. Billy had an explanation, of course, but then there was another situation where a neighbor knew the seller of one of the horses which John now owned who mentioned what a steal John had gotten on that horse, having paid only paid $5,000 for it. John was puzzled when he heard this from the neighbor because he thought Billy said that horse cost $10,000. John began to notice other inconsistences and uncertainties because once you’re tuned in and looking for these things, they become more evident to you.
Because Lucky was such an expensive horse, the CPA absolutely put her foot down and said that she had to have some documentation verifying his cost. After weeks of promising and not producing anything, Billy finally faxed a faint, smudged up copy of a cancelled check for $100,000 to the CPA. What Billy didn’t realize was that any sophisticated horse thief would realize that when a bank cancels a check they run it through a machine which types the amount for which the check was negotiated across the bottom and on the back of the check, albeit buried amongst a lot of other reference numbers and letters. There on the back and front (Billy had faxed both sides), clear as a bell, were the numbers “$30,000” typed on the check. Then it all hit the proverbial fan. Now you experienced horse folks will be saying “that’s the oldest trick in the book” and you’re right. Yet somehow people still seem to get away with it every day in the horse world.
Billy was discharged from the farm and John sued him for the $70,000 that he overpaid for Lucky plus another $30,000 or so that he had been overcharged on some other horses Billy bought for him. Billy kept re-creating various scenarios to explain all the money overages in an effort to get himself out of the way of the quickly approaching legal train that was about to run him over.
It’s amazing what a little videotaped deposition in a small room with a bright light on the deponent can do. I’ve never seen any human being sweat, literally, as much as Billy sweated during his deposition in that case. He was literally dripping sweat, soaking all the papers on the table in front of him. The old “hot light” treatment worked and Billy cracked under the pressure, admitted having altered the check he used to pay for Lucky – using good old “white out” to modify the number from $30,000 to $100,000 in order to back up his fabricated story of a $100,000 purchase price. He even produced the actual check, complete with white out on it. We all just shook our heads in disbelief, including Billy’s lawyer.
We mediated the case the next day and Billy didn’t have a lot of money, so he agreed to pay John back every penny within a year and John was given a deed of trust (mortgage) on Billy’s farm. The facilities weren’t much, but thankfully the underlying land was beautiful, so we felt comfortable that it was worth at least what Billy owed John – and Billy did own it free and clear when we put John’s mortgage on the record. Billy managed to scrounge up enough money over the next year to pay John back in full. Lord knows where he came up with that money and whether it too was ill gotten gains, but he did pay John back.
Moral of the story: Pay attention. Before even considering using a particular horse trader/broker, ask around the area for references. Go to the most respected horse folks in your disclipline in the area and in the state and ask if they have ever heard of the person before. One benefit of the horse world is that it is an incredibly small world and everyone tends to know everyone else. They may not all like each other, but they will have probably heard of someone who is very successful and you want to know their opinion, good or bad. You may have to filter your results because, for example, you might know that “Bobby Sue hates everyone who isn’t from York County,” so it’s no wonder she says your broker is a crook, etc. but you should ask around a lot, nonetheless and only go with a broker after you are comfortable that lots of folks have gotten what they’ve paid for with that broker.
**Note: of course the facts and names in the above story have been altered somewhat to protect my client’s privacy and preserve any privileged information. But the essence of the story is there and the lesson to be learned remains the same.
If you have a situation with some connection to North Carolina (I am only licensed in NC and cannot give advice regarding any other state’s laws) and get into a bind needing legal assistance or just want to ask some general questions to avoid getting in a bind, feel free to email me at dburch@rl-law.com. I used to answer quick questions for free if I could, but I am getting so many calls for free legal advice that I am having to start charging a little something for an initial chat! A good problem to have, I guess 🙂 Starting July 1, 2023, I’m going to be charging $150 for a 30 minute general question session. You won’t be engaging me as your lawyer, and we will still have to run a conflicts check, but frequently I can help folks a lot in 30 minutes. Can’t guarantee it, but usually I can at least give you some direction or general thoughts about a general type of situation. If you don’t hear back from me quickly, it’s not because I don’t love you or think you have a great question or because I don’t know the answer (usually), I’m probably just really busy and haven’t had a chance to email back. You can check out our firm’s Equine Law Group at www.rl-law.com if you’re interested, and yes, in addition to providing what I hope are interesting and informative stories and information, this blog is in some small way, I guess, also an advertisement for legal services. I have to tell you that in bold, says the State Bar.
Hope you enjoy riding in this beautiful Spring weather!
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