It’s important to understand that equine law defines a “horse” as property, which can be bought and sold. The general rule in the United States is that horses are “personal property.” Once a horse is defined as property a person’s rights and remedies are limited to those the law recognizes for injury, interference or theft of property. For example, the definition of a horse as property limits a person’s right to seek emotional distress damages. Ownership of horse property is governed by the laws that apply to personalty and chattels. (Black’s Law Dictionary defines chattel to include animate and inanimate property.)
When it comes to forms of ownership, ahorse as property can be owned by an individual, a partnership, a corporationor a limited liability company. Ownership can be established by verbal orwritten agreements or by operation of law based upon the acts or omissions of aparty. A common fact pattern in horse ownership disputes is the absence of awritten agreement (or the writing is vague and ambiguous) and the presence ofsome type of verbal “understanding” which is difficult to prove withoutextrinsic evidence. This evidence usually in the form of written or verbal communicationof the parties (emails and text messages are very important), social mediaposts, competition entry forms (such as show programs and racing programs), andthird party witnesses who corroborate how the persons with the disputeinteracted with each other.
When evaluating any horse ownershipdispute it is very important to consider what proof is necessary in court toestablish ownership. (This may also apply with equal force in an administrativehearing.) If the proof is based on “hearsay” the lawyer should consider if anyexceptions to the hearsay rule exist such as the admission of a party opponent,the prior inconsistent statement of a witness or declaration against interestof a third party witness. Further, the admission of an “agent” for a party willbe imputed to the party who was the principal for purposes of the hearsay rule.
An agent’s statements though hearsay may beallowed as evidence against the principal as an admission of the principal ifcertain conditions are satisfied. The principal must have authorized the agentto act or to make the statement and the act or statement must be within thescope of the agency relationship – i.e., the sale of a horse. The agencyrelationship is usually proven by evidence which supports a finding of actualor implied authority given to the agent by the principal.
Generally, where ownership is disputedat the administrative level, the administrative body will first try to resolvethe issue between the parties. If the issue cannot be resolved between theparties the administrative body may conduct a hearing to resolve the equineownership conflict. In all cases, absent a contractual agreement to thecontrary, the administrative organization will defer and follow any appropriatecourt order related to the equine ownership conflict. Also, once theadministrative body is put on notice of a conflict as to ownership, theadministrative body will usually freeze the account and not permit a change inregistration or status of the subject horse absent resolution between theparties or by court order.
Many lay persons believe, and some lawyers too, that registrationof a horse with an equine body amounts to legal title for a horse. This isincorrect. In fact, most equine administrative bodies disclose in writing thatregistration with them is not legal title. That said, when an equine ownershipdispute arises the registration of a horse, or lack thereof, is probative andrelevant evidence to establish ownership. Persons who buy and sell horsesusually agree that the registration of a horse will occur immediately after thehorse is acquired or the registration document (or passport) will beconcurrently exchanged with the buyer when the seller delivers the horse to thebuyer. If you are a buyer of a horse the registration or passport documentshould be reviewed prior to any payment of consideration for the subject horse.These documents provide a great deal of information about a horse including itshealth history (though not always complete), its prior competition record andits prior history of ownership. The document may also reveal if another personhas an interest in the horse for sale – meaning a person who shows up in theregistration history, but is not identified as a seller of the horse or is notpart of the group selling the horse. A registration document is extremelyuseful in any court trial where ownership of a horse is in dispute.
Ownership of a horse may be established in a Bill of Sale, awritten agreement between the seller and buyer (or agents such as trainers orbloodstock agents) or by contract construction. Many states now require the useof a written Bill of Sale in connection with most horse sales.
In many cases a problem arises in the sale of a horserelated to its ownership when the parties for some reason dispense with theformality of a writing and elect to proceed based on “trust.” If a disputelater arises, the trust the parties thought they had usually is a casualty ofthe dispute. In most cases, lawyers for the parties must then resort to theearmarks of an agreement to support a claim of ownership by a client – forexample, the parties’ behavior towards each other, the sharing of expenses orprofits, emails or other written communication exchanged between the parties ortheir agents, and documentation such as the pre-purchase examination (who doesthe veterinarian list as the buyer or seller?).
Contract law will generally control whether a contract orother legally recognized agreement exists between the parties to the equineownership dispute. The law of equity may also apply when the law of contractcannot resolve the dispute.
[Doctrines such as promissory estoppel are very useful inequine ownership disputes. The Restatement of Contracts at Section 90(1)defines when a contract will be found to exist when a person makes a promiseand another person justifiably relies upon the promise even where there is alack of consideration. The law will substitute the estoppel as the contractualconsideration.]
It is always best touse a formal document when purchasing a horse or acquiring an interest in ahorse. Moreover, it is also very important to comply with any state statutesapplicable to the sale of a horse – for example states requiring the deliveryof a proper Bill of Sale.
When a dispute arises as to the ownership of a horse theaggrieved parties may resort to acts which may be later seen by a court calledupon to dispense justice as illegal. Generally, acts which amount to“self-help” (such as removing a horse or moving it to a different jurisdiction)are disfavored by courts of law. Such acts may subject the offending “owner” toclaims of conversion or trespass to chattel by the other alleged owner orowners. In addition, if the horse is offered for sale to a third party and theaggrieved party attempts to interfere with the sale or the prospect of a salethe other alleged owner may make a claim for damages claiming the other partyillegally interfered with the potential or actual sale of the horse. Slander oftitle and trade libel are distinct torts. Most states allow for monetaryrecovery where disparagement of a title to property occurs. Both are treated asan invasion of the seller’s interest in the vendibility of property. Slander oftitle involves the false disparagement of the title to property and trade libelinvolves false disparagement of the quality of the goods. The action fordisparagement lies when actual damage has been suffered. [See Federal LanhamAct 15 U.S.C. Section 1125(a) which creates a related federal cause of action forthese torts.] In California slander of title is defined as a false andunprivileged disparagement, oral or written, of the title to personal propertyresulting in actual pecuniary damage. See Gudger v. Manton (1943) 21 Cal.2d537, 541. The statement is disparaging if it creates any doubt in the ownershipof the property. Disparagement may arise if there is a complete denial of thetitle, but also a claim of interest in the property. (Actual malice or ill-willis generally not a required element of this tort. Malice will be implied bylaw. Gudger at 543.) In the state of Kentucky the plaintiff must plead andprove that the defendant knowingly and maliciously made a communication, oralor written, which was false and had the effect of disparaging the plaintiff’stitle to property. The plaintiff is also required to plead and prove that theplaintiff suffered special damage by reason of the defendant’s actions. SeeBonnie Braes Farms, Inc. v. Robinson (1980) 598 S.W. 765, 766 (followed byWaldman v. PNC Bank, Nat’l Ass’n MR, 2016 WL 7330568, at *6). In Floridaslander of title has five elements: (1) a falsehood, (2) which was published orcommunicated to a third person, (3) when the defendant knew or reasonablyshould have known that the communication would likely induce a third party torefrain from business dealings with the plaintiff, (4) when, in fact, thefalsehood was a material and substantial basis which induced the third partynot to deal with the plaintiff and, (5) the plaintiff suffered special damages whichwere proximately caused by the published falsehood. See Trigeorgis v.Trigeorgis (2018) 240 So.3d 772, 775. Given these tort claims available to anaggrieved party who claims an ownership right in a horse it behooves the otherparty who also claims an interest in the horse to be very careful as to what issaid and how it is said to any third party. As stated above, the best way toproceed is with the assistance of counsel and the court system to avoid anyinadvertent violation of law.
The Jockey Club has specific rules related to the transferand report of ownership. The rules also address a situation where there is anownership dispute. The rules provide that upon notice of an ownership disputeThe Jockey Club may request additional information from the parties. The rulestates that in the absence of an agreement of the interested parties, TheJockey Club may defer any action related to horse registration until itreceives a court order. The rules also contemplate a problem with theregistration of a foal, in which case the rule states that “the failure tosubmit a valid Service Certificate pursuant to Rule 2(D) 10 See The AmericanStud Book Principal Rules and Requirements, Section V(7)(C). 11 Rule 21(F). 8may be considered evidence of an ownership issue . . . .” The Jockey Club alsoallows for appeals and hearings related to any action it takes as a Registrarof horses.
In California, the racing authority is the California HorseRacing Board. There are myriad rules which address horse racing, purses anddisputes between persons who claim an interest in a horse. Ownership is definedin Rule 1420(n) to mean “the owner, part owner and lessee of any horse . . . ifa husband and wife, it is presumed that joint ownership exists.” Rule 1594requires that any ownership certificate of registration accurately reflect thetrue ownership of the horse entered in a race. (An authorized “agent” means aperson appointed by a written document which is signed by the owner and filedwith the Board. Rule 1420(d).) If an ownership dispute arises it goes to theRacing Stewards for hearing and if the matter is not resolved at that level aparty may then seek court intervention.
Again, where an equine ownership dispute arises the fastestmeans of resolving the dispute on a permanent basis is by means of a lawsuitwith a court of competent jurisdiction. However, there will be occasions whereresort to an administrative body will be more efficient and cost effective forthe parties involved in any equine ownership dispute.
Many times a horse purchase is a financed purchase. Thebuyer pays the price for the horse with a down payment and the balance isplaced in a written promissory note. The promissory note is then securedagainst the horse as collateral using a UCC-1 financing statement.
There will beoccasions where a UCC-1 financing statement is recorded in an improperjurisdiction or where the UCC-1 financing statement is not timely removed afterpayment of the debt which underlies the financing agreement. In thesesituations it is important to timely put the holder of the financing statementon notice of any defect in the recording of the UCC-1 or failure to timely filea release of the UCC-1.
In addition to the consensual lien for a security agreement,the owner of a horse also gives a consensual lien for husbandry servicesprovided for the care and maintenance of a horse. Most states provide by lawthat a lien arises against the horse to secure the payment of any board andcare services that are delivered to the horse by a boarding facility. So longas the horse is in the possession of the party providing the care to the horsethe lien is perfected. The party providing the care to the horse also has theright to the sell the horse to collect on any husbandry services advanced andunpaid by the owner of the horse. The right to sell the horse to pay the “boardbill” is regulated in most states and a requirement of a court order allowingthe sale is not uncommon.
There will be disputes about the ownership of horses in anyequine endeavor. Most of the time the disputes can be quickly resolved.However, where large sums of money are involved or the reputation of a riderand horse is intertwined with the horse the dispute cannot always be resolvedabsent court intervention or without a directive from an administrative body.In such a circ*mstance it is wise to carefully review the facts of the casebefore a party moves to protect their rights in any equine ownership dispute.And, it is extremely important to carefully review any statement published to athird party by a party claiming ownership of a horse or ownership of aninterest in a horse to avoid running afoul of torts protecting prospectivebusiness relationships or the reputation of the other party in the disputeincluding the subject horse. When in doubt, it is best to seek legal counselbefore acting in any equine ownership dispute.
