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Understanding Horse Ownership Disputes in the Equine Industry

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, a horse as property can be owned by an individual, a partnership, a corporation or a limited liability company. Ownership can be established by verbal or written agreements or by operation of law based upon the acts or omissions of a party. A common fact pattern in horse ownership disputes is the absence of a written agreement (or the writing is vague and ambiguous) and the presence of some type of verbal “understanding” which is difficult to prove without extrinsic evidence. This evidence usually in the form of written or verbal communication of the parties (emails and text messages are very important), social media posts, competition entry forms (such as show programs and racing programs), and third party witnesses who corroborate how the persons with the dispute interacted with each other.

When evaluating any horse ownership dispute it is very important to consider what proof is necessary in court to establish ownership. (This may also apply with equal force in an administrative hearing.) If the proof is based on “hearsay” the lawyer should consider if any exceptions to the hearsay rule exist such as the admission of a party opponent, the prior inconsistent statement of a witness or declaration against interest of a third party witness. Further, the admission of an “agent” for a party will be imputed to the party who was the principal for purposes of the hearsay rule.

 An agent’s statements though hearsay may be allowed as evidence against the principal as an admission of the principal if certain conditions are satisfied. The principal must have authorized the agent to act or to make the statement and the act or statement must be within the scope of the agency relationship – i.e., the sale of a horse. The agency relationship is usually proven by evidence which supports a finding of actual or implied authority given to the agent by the principal.

Generally, where ownership is disputed at the administrative level, the administrative body will first try to resolve the issue between the parties. If the issue cannot be resolved between the parties the administrative body may conduct a hearing to resolve the equine ownership conflict. In all cases, absent a contractual agreement to the contrary, the administrative organization will defer and follow any appropriate court order related to the equine ownership conflict. Also, once the administrative body is put on notice of a conflict as to ownership, the administrative body will usually freeze the account and not permit a change in registration or status of the subject horse absent resolution between the parties or by court order.

Many lay persons believe, and some lawyers too, that registration of a horse with an equine body amounts to legal title for a horse. This is incorrect. In fact, most equine administrative bodies disclose in writing that registration with them is not legal title. That said, when an equine ownership dispute arises the registration of a horse, or lack thereof, is probative and relevant evidence to establish ownership. Persons who buy and sell horses usually agree that the registration of a horse will occur immediately after the horse is acquired or the registration document (or passport) will be concurrently exchanged with the buyer when the seller delivers the horse to the buyer. If you are a buyer of a horse the registration or passport document should be reviewed prior to any payment of consideration for the subject horse. These documents provide a great deal of information about a horse including its health history (though not always complete), its prior competition record and its prior history of ownership. The document may also reveal if another person has an interest in the horse for sale – meaning a person who shows up in the registration history, but is not identified as a seller of the horse or is not part of the group selling the horse. A registration document is extremely useful in any court trial where ownership of a horse is in dispute.

Ownership of a horse may be established in a Bill of Sale, a written agreement between the seller and buyer (or agents such as trainers or bloodstock agents) or by contract construction. Many states now require the use of a written Bill of Sale in connection with most horse sales.

In many cases a problem arises in the sale of a horse related to its ownership when the parties for some reason dispense with the formality of a writing and elect to proceed based on “trust.” If a dispute later arises, the trust the parties thought they had usually is a casualty of the dispute. In most cases, lawyers for the parties must then resort to the earmarks of an agreement to support a claim of ownership by a client – for example, the parties’ behavior towards each other, the sharing of expenses or profits, emails or other written communication exchanged between the parties or their agents, and documentation such as the pre-purchase examination (who does the veterinarian list as the buyer or seller?).

Contract law will generally control whether a contract or other legally recognized agreement exists between the parties to the equine ownership dispute. The law of equity may also apply when the law of contract cannot resolve the dispute.

[Doctrines such as promissory estoppel are very useful in equine ownership disputes. The Restatement of Contracts at Section 90(1) defines when a contract will be found to exist when a person makes a promise and another person justifiably relies upon the promise even where there is a lack of consideration. The law will substitute the estoppel as the contractual consideration.]

 It is always best to use a formal document when purchasing a horse or acquiring an interest in a horse. Moreover, it is also very important to comply with any state statutes applicable to the sale of a horse – for example states requiring the delivery of a proper Bill of Sale.

When a dispute arises as to the ownership of a horse the aggrieved parties may resort to acts which may be later seen by a court called upon 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” to claims of conversion or trespass to chattel by the other alleged owner or owners. In addition, if the horse is offered for sale to a third party and the aggrieved party attempts to interfere with the sale or the prospect of a sale the other alleged owner may make a claim for damages claiming the other party illegally interfered with the potential or actual sale of the horse. Slander of title and trade libel are distinct torts. Most states allow for monetary recovery where disparagement of a title to property occurs. Both are treated as an invasion of the seller’s interest in the vendibility of property. Slander of title involves the false disparagement of the title to property and trade libel involves false disparagement of the quality of the goods. The action for disparagement lies when actual damage has been suffered. [See Federal Lanham Act 15 U.S.C. Section 1125(a) which creates a related federal cause of action for these torts.] In California slander of title is defined as a false and unprivileged disparagement, oral or written, of the title to personal property resulting in actual pecuniary damage. See Gudger v. Manton (1943) 21 Cal.2d 537, 541. The statement is disparaging if it creates any doubt in the ownership of the property. Disparagement may arise if there is a complete denial of the title, but also a claim of interest in the property. (Actual malice or ill-will is generally not a required element of this tort. Malice will be implied by law. Gudger at 543.) In the state of Kentucky the plaintiff must plead and prove that the defendant knowingly and maliciously made a communication, oral or written, which was false and had the effect of disparaging the plaintiff’s title to property. The plaintiff is also required to plead and prove that the plaintiff suffered special damage by reason of the defendant’s actions. See Bonnie Braes Farms, Inc. v. Robinson (1980) 598 S.W. 765, 766 (followed by Waldman v. PNC Bank, Nat’l Ass’n MR, 2016 WL 7330568, at *6). In Florida slander of title has five elements: (1) a falsehood, (2) which was published or communicated to a third person, (3) when the defendant knew or reasonably should have known that the communication would likely induce a third party to refrain from business dealings with the plaintiff, (4) when, in fact, the falsehood was a material and substantial basis which induced the third party not to deal with the plaintiff and, (5) the plaintiff suffered special damages which were proximately caused by the published falsehood. See Trigeorgis v. Trigeorgis (2018) 240 So.3d 772, 775. Given these tort claims available to an aggrieved party who claims an ownership right in a horse it behooves the other party who also claims an interest in the horse to be very careful as to what is said and how it is said to any third party. As stated above, the best way to proceed is with the assistance of counsel and the court system to avoid any inadvertent violation of law.

The Jockey Club has specific rules related to the transfer and report of ownership. The rules also address a situation where there is an ownership dispute. The rules provide that upon notice of an ownership dispute The Jockey Club may request additional information from the parties. The rule states that in the absence of an agreement of the interested parties, The Jockey Club may defer any action related to horse registration until it receives a court order. The rules also contemplate a problem with the registration of a foal, in which case the rule states that “the failure to submit a valid Service Certificate pursuant to Rule 2(D) 10 See The American Stud Book Principal Rules and Requirements, Section V(7)(C). 11 Rule 21(F). 8 may be considered evidence of an ownership issue . . . .” The Jockey Club also allows for appeals and hearings related to any action it takes as a Registrar of horses.

In California, the racing authority is the California Horse Racing Board. There are myriad rules which address horse racing, purses and disputes between persons who claim an interest in a horse. Ownership is defined in Rule 1420(n) to mean “the owner, part owner and lessee of any horse . . . if a husband and wife, it is presumed that joint ownership exists.” Rule 1594 requires that any ownership certificate of registration accurately reflect the true ownership of the horse entered in a race. (An authorized “agent” means a person appointed by a written document which is signed by the owner and filed with the Board. Rule 1420(d).) If an ownership dispute arises it goes to the Racing Stewards for hearing and if the matter is not resolved at that level a party may then seek court intervention.

Again, where an equine ownership dispute arises the fastest means of resolving the dispute on a permanent basis is by means of a lawsuit with a court of competent jurisdiction. However, there will be occasions where resort to an administrative body will be more efficient and cost effective for the parties involved in any equine ownership dispute.

Many times a horse purchase is a financed purchase. The buyer pays the price for the horse with a down payment and the balance is placed in a written promissory note. The promissory note is then secured against the horse as collateral using a UCC-1 financing statement.

 There will be occasions where a UCC-1 financing statement is recorded in an improper jurisdiction or where the UCC-1 financing statement is not timely removed after payment of the debt which underlies the financing agreement. In these situations it is important to timely put the holder of the financing statement on notice of any defect in the recording of the UCC-1 or failure to timely file a 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 services provided for the care and maintenance of a horse. Most states provide by law that a lien arises against the horse to secure the payment of any board and care services that are delivered to the horse by a boarding facility. So long as the horse is in the possession of the party providing the care to the horse the lien is perfected. The party providing the care to the horse also has the right to the sell the horse to collect on any husbandry services advanced and unpaid by the owner of the horse. The right to sell the horse to pay the “board bill” is regulated in most states and a requirement of a court order allowing the sale is not uncommon.

There will be disputes about the ownership of horses in any equine endeavor. Most of the time the disputes can be quickly resolved. However, where large sums of money are involved or the reputation of a rider and horse is intertwined with the horse the dispute cannot always be resolved absent court intervention or without a directive from an administrative body. In such a circumstance it is wise to carefully review the facts of the case before a party moves to protect their rights in any equine ownership dispute. And, it is extremely important to carefully review any statement published to a third party by a party claiming ownership of a horse or ownership of an interest in a horse to avoid running afoul of torts protecting prospective business relationships or the reputation of the other party in the dispute including the subject horse. When in doubt, it is best to seek legal counsel before acting in any equine ownership dispute.