When Selling a Horse, Think Full Disclosure!

25 03 2014

We have all seen it before with friends, family and maybe even ourselves:

Stage One: Seller decides to sell a horse. Buyer wants a horse, comes and tries Seller’s horse and likes it. Buyer has pre-purchase veterinary examination done on the horse (or maybe does not have one done if the horse has low purchase price that keeps it from being cost effective to have a pre-purchase examination). The pre-purchase examination, if done, does not show anything significant. Seller says he or she knows of no problems with the horse and Buyer then buys the horse from the Seller.

Stage Two: Buyer gets the horse to his home stable or boarding barn and within the first few days or weeks Buyer notices health or behavioral issues with the horse. Buyer is unhappy and contacts Seller about returning the horse for a refund. Or Buyer asks Seller to reimburse Buyer for expenses which Buyer has incurred in his or her efforts to correct the health and/or behavioral issues with the horse. Seller saw no problems with the horse before Buyer took the horse away and, in fact, may believe that something about the Buyer’s boarding situation or treatment of the horse is giving rise to this health or behavioral issue and so declines to give Buyer a refund or to reimburse Buyer for expenses. So here we are – at an impasse. What next?

Stage Three: this stage is where things usually get sticky. If the Seller has provided veterinary records to the Buyer and given the Buyer an opportunity for a pre-purchase examination and either one was not done – or the one which was done showed no issues- then as long as the Seller has disclosed anything which might be reasonably relevant to a Buyer (injuries, illnesses, bad habits, bad behaviors, rider injuries and the like), than the Seller needs to decide whether he or she wants to take the horse back. Sometimes Sellers love the horse, can afford to and would rather take it back and give the Buyer a full or partial refund than have the horse with someone who does not want the horse. But if that is not the case and a Seller makes full disclosure and gives adequate opportunity for the Buyer to have the horse checked out, then a Seller is certainly within his or her rights to refuse to (a) unwind the sale transaction or (b) reimburse the Buyer.

That being said, if the Seller has not been totally forthcoming about all issues with the horse about which the Seller is aware, then the Seller may want to refund the Buyer and take the horse back or face some difficult questions in court if the Buyer pursues the Seller in that venue. Seller’s reputation could also be at stake if Buyer chooses to share his unpleasant story with third parties. Sometimes it is more important to a Seller to maintain a stellar reputation in the horse community than it is to prove he or she is right in a particular sales transaction with a particular horse. That being the case, sometimes a Seller will refund money and take a horse back even when he or she really has done nothing wrong from a legal perspective. Lots of different factors come into play in these situations. Is the Buyer well known as a good, honest person? Is the Buyer known to be difficult? Is the Buyer a family member or family friend? Is the horse widely known for being chronically lame or is the horse widely known to be tough as nails? Is the veterinarian who did the pre-purchase examination a friend of Seller who will be sued for a faulty pre-purchase examination if the Seller refuses to unwind the sale? Can the horse’s issue be rehabilitated by the Seller? There are lots of questions the Seller needs to ask him or herself. Depending on the answers to these types of questions, the Seller may decide to refund the Buyer – or not refund the Buyer.

If a Buyer requests a trial period with the horse before finalizing the sale, I advise Sellers to check out the location where the Buyer is taking the horse to be sure the Seller is comfortable with the personnel on duty at that location and the overall safety of that location for the horse. Absent some reason not to, Sellers with horses out on trial should require that the horse on trial be on individual turnout (alone with no other horses) during the trial period so that the risk of the horse being injured is minimized as much as possible. There are two schools of thought on trial periods. Some Sellers feel like it weeds out earlier the people who will end up wanting to send the horse back and it’s a good idea which saves time in the long run. Other Sellers feel that their horse is placed at risk when it leaves their farm and they do not want to risk injury to the horse (or liability for the horse should it injure someone or something) by allowing a trial period so they do not allow them. Both schools of thought are valid, so it again is up to the individual Seller to determine what makes the most sense to him or her on this issue.

How to minimize the number of these sticky situations for Sellers?

While we cannot guarantee a Seller will never have a disgruntled buyer even if every precaution in the world is taken, there are things Sellers can do to help prevent these situations. If the Seller can afford it and it makes financial sense (i.e., the more valuable the horse, the more sense it makes), I recommend having the horse examined by a veterinarian before listing it for sale so that you can produce a vet report to potential buyers when they approach you and advertise the horse “as is, where is, with all faults,” while offering potential buyers the opportunity to have the horse examined for themselves as well. Also good protection for Sellers is an excellent sales contract drafted by an equine lawyer in the Seller’s state which sets out in detail the terms of the sales transaction, provides that Buyer has had the opportunity to have the horse examined by a veterinarian and also has a place in the contract for the Buyer to initial a statement which says: (a) the horse is being sold “as is, where is, with all faults;” (b) if the Buyer declines to have an examination done, Seller is not responsible for any issues that arise after the sale; and (b) Seller has disclosed all issues with the horse which are known to him or her, but that Seller is not making any guarantees with regard to the health or behavioral issues of the horse. Such language in a sales contract will help to protect Sellers somewhat and will hopefully remind Buyers of the importance of a pre-purchase veterinary examination of a purchase prospect.

Next month’s article will be about what to think about when you are buying a horse!

If you get into a bind and need assistance or just want to ask some questions to avoid getting in a bind, feel free to email me at dburch@rl-law.com. I often will answer a short and simple question for free if I have time and know the answer off the top of my head! 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. And you can always buy the first hour of my time for $250 (my usual hourly rate for 2014 is $350). Lots of folks will save up all their equine (and some corporate or real estate) legal questions and short documents and sit with me for an hour and we will do as much as we can during that hour and it’s only $250. You can check out my Twitter feed @nchorselawyer as well as our firm’s Equine Law Group web page at http://www.rl-law.com/equine if you’re interested, and yes, in addition to providing what I hope are interesting and informative stories, this blog and the Twitter feed referenced above are also (in one way or another, I guess) an advertisement for legal services.

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Only YOU can Prevent Forest Fires! Before Hiring a Hauler, Insure Your Horse!

17 02 2014

Be Vigilant When Using a Professional Hauler for your Horse!

Some of us are lucky enough to have our own horse trailers and the driver’s license required to pull them. Our rig is insured and while our horse may or may not be insured, we know we will be careful with our very own precious cargo aboard. Even if we are the ones doing the hauling, it is a good idea to have full major medical and mortality insurance coverage for your horse if the horse’s value reasonably exceeds the cost of the insurance premium so that it makes financial sense to insure the horse.

However, some of us are not so lucky and are in the position of having to rely on third party haulers to get our horses from point A to point B. For some folks it’s a rare occurrence to hire a hauler and for others it’s common. The more often you use third party commercial horse haulers, the more closely you may want to read this blog entry.

First of all, remember that your personal automobile or homeowner’s or farm owner’s insurance policies do NOT cover the value of your horse if it is injured or killed in transit – whether you are hauling the horse or someone else is hauling. These types of personal policies do not typically cover the value of anything in a transport trailer, whether it is a horse or other property. There may be exceptions for certain types of personal property, but horses are typically not a covered property under these policies.

While many of us realize our personal insurance policies do not cover the value of our horse, many of us do not realize that commercial haulers are not required to have any specific amount of insurance to cover the value of the animals they are hauling. Many haulers do have insurance coverages for this purpose, but many of them do not. And of the ones who do carry the type of coverage which would pay an owner for the value of a horse which is injured or killed transit, most have very low coverages, as low as $1,000-$3,000 per head with a maximum per vehicle amount as well. If you are shipping a world champion cutting horse and it is killed in a collision, odds are that it was worth more than $3,000. Alternatively, if your world champion dressage horse is badly injured but not killed, odds are that the veterinary treatment costs will far exceed $3,000. There may be a few well insured haulers out there but, unfortunately, they are rarer than we would like, probably because good insurance coverage is cost prohibitive for them. The cheaper the cost of hauling, the less likely the hauler will have generous insurance coverage and the more likely they will have no coverage at all for your horse.

Even if your hauler has insurance which covers the loss of or injury to your horse, getting the insurance company to pay you for that loss or cost is not easy. You are then in the position of having to prove that the damage to or death of your horse was proximately caused by the covered person’s negligent actions or omissions. Proving this causation is easier said than done, especially when you are virtually never present when the injury or death occurs because the horse is usually alone with the hauler when it happens. I am reminded of a case where a client’s beautiful warmblood hunter filly prospect was being hauled from the west coast and the hauler cruelly left the filly on the trailer the first three days of the trip. He finally stopped at an equine layover facility on the east coast which happened to be owned by a veterinarian and, not surprisingly, the filly was three-legged lame when she came off the trailer. The veterinarian signed an affidavit attesting to the filly’s poor condition upon removal from the trailer and my client filed a claim with the hauler’s insurance company. The insurance company denied the claim because we could not prove to the company’s satisfaction that the injuries to the filly were caused by its insured hauler. Instead of going through the arduous process of filing a lawsuit and introducing evidence of the horse’s condition when it stepped on the trailer versus its condition when it stepped off, the client opted to drop the case when it discovered that even if it were successful in the lawsuit, the hauler had no personal or company assets (the truck and trailer both had large liens on them) and the limit of the hauler’s insurance coverage was only $3,000 per horse. After spending thousands on veterinary treatments, the client could not afford to pay lawyers to chase such a small sum of money and did not feel comfortable handling a small claims court action alone. In retrospect, of course they wish they had thought to insure the filly with major medical and mortality before she stepped foot on the trailer. If they had done so they would have been reimbursed for much of their expense.

What have we learned? If at all possible, to insure your horse with major medical and mortality for its full value before letting it step onto a trailer, whether your trailer or a third party’s trailer. If insurance is not an option for you for some reason, at least try to haul your horse yourself when you can (assuming you are an experienced, safe horse hauler) so that you have more control over the situation or be prepared to bear the loss of the horse’s value or the cost of the veterinary treatment in the event the horse is injured and survives. Make the choice today about what coverages you do or do not want so that you know what to expect in the event tragedy strikes.

If you get into a bind and need assistance or just want to ask some questions to avoid getting in a bind, feel free to email me at dburch@rl-law.com. I often will answer a short and simple question for free if I have time and know the answer off the top of my head! 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. And you can always buy the first hour of my time for $250 (my usual hourly rate for 2014 is $350). Lots of folks will save up all their equine (and some corporate or real estate) legal questions and short documents and sit with me for an hour and we will do as much as we can during that hour and it’s only $250. You can check out my Twitter feed @nchorselawyer as well as our firm’s Equine Law Group web page at http://www.rl-law.com/equine if you’re interested, and yes, in addition to providing what I hope are interesting and informative stories, this blog and the Twitter feed referenced above are also (in one way or another, I guess) an advertisement for legal services.





NC Liens for the Care of Horses

19 06 2013

The two most common calls I seem to be receiving these days in my equine practice are from people who (a) have had horses left in their care for which they are not being paid board or (b) have allowed someone else to keep their horses only to find out later that the person has given away or sold or euthanized their horse without their knowledge or permission.

This article addresses the former situation. You have a horse on your property and the owner or other possessor of the horse (lessee, family member, etc.) is not paying the agreed upon boarding fees. What can you do? Well, assuming you have an agreement for how much they are supposed to pay you for board (written agreements are obviously best, but an oral agreement, especially if made in front of a witness, can be okay too), you may be able to successfully assert a boarding lien, also known as an agister’s lien or a stablemen’s lien, on the horse in your possession.

The statutes that you need to read are N.C. Gen. Stat. Section 44A-2 through 44A-6. You can find them at http://www.ncleg.net/gascripts/Statutes/Statutes.asp. Just put “44A” in the top search box. These statutes explain how to go about asserting a lien on a horse in your care when you aren’t being paid proper board for the animal. Basically they provide, in summary, that if you board animals for people for pay and you don’t get paid, you have a preferential lien on that animal so long as you don’t voluntarily give up possession of the animal and so long as you follow the requirements of those statutes. The statutes provide that once you have not been paid for a period of 30 days you may begin the process to assert your lien on the animal. After 30 days of not being paid you can serve a notice on the owner of the animal (or person with whom you dealt regarding the animal) that contains very specific factual information set out in the statute and giving them ten days from the day that they receive the notice to respond via certified mail and, if they disagree with your assertion of the lien, to request a hearing before the court to determine whether you have a lien. If they do not request such a hearing and you have met all statutory requirements, then you will be entitled to sell the animal at a public or private sale, depending on the situation. Typically a public sale is better because you are permitted to buy at that type of sale whereas you cannot buy the horse yourself at a private sale.

Once you’ve reached the point where you are permitted to sell the animal, you have to give notice of the sale to the owner (or person with whom you dealt regarding the animal) and that notice has to contain very specific information as well. If you follow the letter of the statute properly with regard to all the notices and the sale itself, the buyer at the sale will take title to the horse free and clear of any liens and the proceeds of the sale will pay, first, your reasonable expenses in pursuing the debt (the statute does not include attorney’s fees specifically, but you may have an argument that you are entitled to them), second, the past due boarding obligation owed for the animal’s board and care; and last, any surplus must be paid to the owner (or person with whom you dealt regarding the animal) or, if you cannot find him or her, into the clerk of court for the county in which you have been boarding the horse.

This is of course a very simplified summary of the law regarding liens on boarded animals, but hopefully it has given you a flavor of how the lien process works. And we are of course assuming here that you can actually find buyers to come to your sale if you have one. Right now there is a surplus of horses and in many situations, even where the statutory procedure is followed perfectly, there will be no buyers present at the sale to bid on the horses being sold. If that is the case then you’re still unfortunately out of luck when it comes to that horse. If you’re having a public sale, you can bid in at the amount of your damages and the horse becomes yours. That may be good or that may be bad, depending on your perspective (and the horse!). Then you have a choice to make about whether you keep the horse for yourself or donate the horse to USERL or similar organization. In some cases, I have had clients who asserted a lien on a horse which was left at their property without payment, sold the horse at a public sale, had to buy the horse themselves for the amount of their lien (basically just forgiving the debt to themselves) and ended up selling the horse to a buyer in another state whom they strategically located and contacted about the horse because of that animal’s specific attributes. That is a rarity, of course, but can actually happen and it is truly wonderful when it does!

My recommendation is to hire a good equine lawyer at least for the first time you decide to assert a boarding lien on a horse in your care. Once you’ve been guided through the process once by a legal professional and developed an internal procedure for asserting such a lien, the next time you just might be able to handle it all by yourself!

If you get into a bind and need assistance or just want to ask some questions to avoid getting in a bind, feel free to email me at dburch@rl-law.com. I often will answer a short and simple question for free if I have time and know the answer off the top of my head! 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. And you can always buy the first hour of my time for $250 (my usual hourly rate for 2013 is $325). Lots of folks will save up all their equine (and some corporate or real estate) legal questions and short documents and sit with me for an hour and we will do as much as we can during that hour and it’s only $250. You can check out my Twitter feed @nchorselawyer as well as our firm’s Equine Law Group web page at http://www.rl-law.com/equine if you’re interested, and yes, in addition to providing what I hope are interesting and informative stories, this blog and the Twitter feed referenced above are also advertisements for legal services. I have to tell you that in bold, says the State Bar.





NOT a Good Practice to Have a Seller Veterinarian do Your Prepurchase Exam

30 05 2012

I would think this principle goes without saying but, based upon my experience recently, it may not, so I will say it:

If you are purchasing a horse from a vet, do not rely on him or her for your prepurchase examination of that horse. 

While most vets are wonderful, honest folks, there are a few who are not and you can avoid worrying about which is which if you have an independent, neutral veterinarian conduct your prepurchase examination on any horse you are considering for purchase from a veterinarian.  Frankly, most of the good veterinarians I know would refuse to do the prepurchase examination for you if they were selling you a horse for fear of having it even LOOK like a conflict of interest – and wanting to avoid that concern altogether by having a neutral vet come in to conduct the prepurchase exam.

The less savory seller vets will tell you that they will do the prepurchase for you at a discount to lure you into thinking that’s the way to go.  And before folks yell at me for that statement, I will say that I am certain there are perfectly fine, nice, honest vets who sell horses and offer a discounted prepurchase examination if you use them.  But my point is that you will not know which are the good folks who are genuinely trying to help you by doing the exam themselves and which are the vets who are trying to get you to let them conduct the prepurchase examination for their own selfish reasons.  So, in my professional opinion, the best practice is to avoid the scenario altogether and get a vet who has no connection whatsoever to the seller of the horse.  For example, they didn’t go to vet school together, they weren’t in each other’s weddings, their kids don’t play little league together….you get the point.  Just like when hiring a lawyer, you want a vet doing your prepurchase examination who ONLY has YOUR interests at heart and does not have any vested interest – financial, social or emotional – in the seller vet or in whether you purchase the horse or not.

Good luck out there!

If you get into a bind and need assistance or just want to ask some questions to avoid getting in a bind, feel free to email me at dburch@rl-law.com. I often will answer a short and simple question for free if I have time and know the answer off the top of my head! 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. And you can always buy the first hour of my time for $250 (my usual hourly rate for 2012 is $325).  Lots of folks will save up all their equine (and some corporate or real estate) legal questions and short documents and sit with me for an hour and we will do as much as we can during that hour and it’s only $250.  You can check out my Twitter feed @nchorselawyer as well as our firm’s Equine Law Group web page at www.rl-law.com if you’re interested, and yes, in addition to providing what I hope are interesting and informative stories, this blog and the Twitter feed referenced above are also advertisements for legal services.  I have to tell you that in bold, says the State Bar.

Happy Riding!





Drug Test That Horse Anyway!

7 03 2012

Recently have discovered a new trend with unsavory sellers in the equine world.  They can be very creative, I’m afraid.

Here’s the newest trick.  You go to try a horse and it is delightful.  You decide to buy it so you very responsibly have a licensed equine veterinarian come out to conduct a pre-purchase examination.  When you get to the point where your vet is going to draw blood, the seller pipes up “Oh, we had to tranq him yesterday to (shoe him, clip him, load him, etc) and so there’s no point in drug testing him because he will have Ace in his system from that.”

Of course you have no prior notice they are going to say this or that they had tranquilized the horse for any reason, but it sounds reasonable and drug testing is expensive, and your daughter is standing there with tears in her eyes at the idea of NOT being able to take this horse home with you today so you relent and “trust” the seller.  Never, ever trust the seller blindly.  Even if you have dealt with this seller for years and he’s related to you or whatever, you are still responsible for protecting yourself, even from people you know and love.  A good, trustworthy seller will understand completely where you are coming from and that it’s not a personal attack on the seller if you want a drug test on the horse he or she is selling.  That’s just plain smart and a good, honest seller will tell you that it’s a good idea.  If you feel bad about pushing for the drug test, feel free to blame it on that lawyer Dottie Burch who says buyers should always conduct their own independent investigations into the health and well being of any equine he or she is purchasing.  Unless of course you are prepared to lose all the money you have invested in the animal and are okay with that.  Most of us don’t have money to throw away, but if it’s a $50 horse, maybe you take a chance?  Well, even then the horse could be carrying Equine Infectious Anemia or something just as bad and you would still want to know that before you put that horse with your other horses or at a barn with other folks’ horses.

Everything about keeping and caring for horses is so expensive that even if the purchase price isn’t high, you still want to protect yourself with a pre-purchase examination by an independent equine veterinarian (no, it’s not okay to use the seller as your pre-purchase exam vet if the seller just happens to be an equine vet – which is not that unusual around here – lots of equine vets have horses and buy and sell horses) coupled with a drug test if you can possibly afford it.  If you can’t, just be prepared that you are taking a risk and that risk could have dire, or at least expensive, consequences.

So what to do in this case?  Go ahead and drug test the horse anyway or wait and come back to test later.  If you go ahead and test, be sure to inform your independent equine veterinarian about exactly what the seller told you they gave the horse and when.  And then let your vet speak with the seller to get confirmation of that information. The vet may suggest waiting, leaving the horse where it is for a while and coming back to draw blood and ride the horse when the tranquilizers are supposedly out of its system.  If so, wait and test later so you will know for sure.  Otherwise, it’s a crap shoot which you might just lose.

If you get into a bind and need assistance or just want to ask some questions to avoid getting in a bind, feel free to email me at dburch@rl-law.com. I often will answer a short and simple question for free if I have time and know the answer off the top of my head! 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.  And you can always buy the first hour of my time for $250 (my usual hourly rate for 2012 is $325).  Lots of folks will save up all their equine (and some corporate or real estate) legal questions and short documents and sit with me for an hour and we will do as much as we can during that hour and it’s only $250.  You can check out my Twitter feed @nchorselawyer as well as our firm’s Equine Law Group web page at www.rl-law.com if you’re interested, and yes, in addition to providing what I hope are interesting and informative stories, this blog and the Twitter feed referenced above are also advertisements for legal services.  I have to tell you that in bold, says the State Bar.

Happy Riding!





Stick your nose under that horse’s skirt!

9 06 2010

Got an email from a very nice lady the other day who found out the horse she bought the day before had some health issues that weren’t disclosed by the seller.  When I asked if she had a pre-purchase examination by a veterinarian she said no.  Big mistake.

It’s perfectly reasonable and, in fact, should be anticipated that you want to stick your nose under a prospective mount’s skirt, so to speak.  You have every right to know what’s going on under there!

It’s not that all folks selling horses are dishonest.  They aren’t.  Some are, that’s for sure, but many horse sellers are great folks.  The problem is that horses are complicated beasts from just about every perspective you can imagine, whether it be physiological, mental, logistical, educational….and lots of other “als.”  The result of their complicated nature is that often times they will have latent (not obvious) medical issues that aren’t evident to anyone, even folks who handle them every day.  Sometimes it’s not until you try to use that horse for a specific purpose that you have in mind or have a particular person sit on that horse that the issue becomes evident.  I’ve seen one person sit on a horse and the horse trotted around totally sound and then another person sits on him and he’s lame.  First person gets back on and horse is sound again, all in a period of about 5 minutes.  Weird.  Complicated.

Accordingly, please, please, please don’t be cheap and try to save a few hundred dollars on your horse purchase transaction when you’re spending thousands purchasing the animal.  It’s not worth the risk you take.  And relying on old vet records isn’t much better than doing nothing.  Perhaps worse.

If you’re buying a horse or leasing a horse long term (6 months or more) get a pre-purchase (or pre-lease, as the case may be) examination done by a reputable veterinarian who does NOT have a relationship with the Seller.   It will only cost you a $100-$300, depending on whether you want x-rays or not and that could save you exponentially more than that in the event the horse has a significant issue.  I have had more than one vet tell me that she or he would always get a lameness exam, overall health check, blood draw, proof of current vaccinations and x-rays of the hocks and front feet no matter what you’re doing with the horse.   And if the horse is going to be ridden for any purpose, make sure the vet observes the horse’s movement with the relevant person seated on the horse.  Some horses’  bodies just aren’t compatible with certain folks’ body type and you need to know it up front if that’s the case.

Unfortunately we don’t have “lemon laws” with regard to horses like we do with automobiles.  Once you have parted with the purchase money, you will have a hard time getting it back from the seller unless you can show with convincing proof that the seller actively misrepresented the horse to you, altered documents, forged signatures, etc….. and even then you would likely have to sue that person.   And suing someone is expensive.  A lot more expensive than that pre-purchase exam would have been 🙂

If you get into a bind and need 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 January 1, 2019, I’m going to be charging $99 for a 30 minute general question session. You won’t be engaging me as your lawyer and we won’t talk specific names because that requires conflicts checks, etc., 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 also an advertisement for legal services.  I have to tell you that in bold, says the State Bar.

Happy riding!





Old Time Horse Traders are Alive and Well – Buyer Beware!!

6 05 2010

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 get into a bind and need 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 January 1, 2019, I’m going to be charging $99 for a 30 minute general question session. You won’t be engaging me as your lawyer and we won’t talk specific names because that requires conflicts checks, etc., 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 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!