122 SIDELINES DECEMBER 2012
FOR HORSE PEOPLE • ABOUT HORSE PEOPLE
e
Equine Law
Compliance with State Laws Regarding
Need for a Written Bill of Sale
By Lisa Hollister, Esq.
Some states require a bill of sale when selling a horse. But
even if the state does not have such legislation, to comply with
the Uniform Commercial Code (UCC) Statute of Frauds one must
have the transfer reduced to a written agreement between the
parties whenever a horse is sold for more than $500 dollars or
more. The issue of complying with the New Mexican bill of sale
requirements, the UCC Statute of Frauds as well as the specifc
terms of the sale were the central issues in the unpublished New
Mexico case of Rhames v. Esparza, 091511 NMCA.
Facts
Carl Rhames, Plaintiff, owned a racehorse named Danseur’s
Diamond and placed the horse in training with Defendant Osualdo
Esparaza. At the end of the racing season Rhames agreed to sell
Danseur’s Diamond to Defendant and transferred the ownership
of the horse by signing the back of the horse’s racing papers,
instead of signing a bill of sale. Additionally the racing papers,
which evidenced the transfer, were only signed by the Plaintiff.
After the horse was transferred the parties had a discrepancy as
to the exact terms of the sale.
The Plaintiff claimed that according to the agreement the
Defendant was to pay Plaintiff $5,000 for the horse. The Defendant
claimed that according to the agreement the Plaintiff transferred
the horse to Defendant for $500 as well as forgiving the training
fees owed to Defendant by the Plaintiff. Addressing the issue of
the training fees, the Plaintiff claimed that the training fees, which
had been owed to the Defendant, had been settled separately. A
decision was made in favor of the Plaintiff and the Plaintiff was
awarded a judgment in the amount of $5,000.
District Court Decision
The District Court found that when the transfer was made by
signing the back of the horse’s racing papers it was a violation
of New Mexico’s statute which requires the signing of a bill of
sale for the transfer of a horse and as a result the transfer was
void or voidable. However since the Defendant kept the horse,
and even resold the horse to a third party, the Court found that
neither party wanted to void the sale. As a result the only issue
to be resolved was the price of the horse agreed to by the parties
and whether the training bill had been paid separately. The
Plaintiff presented documents evidenced that the defendant had
been paid separately for the only training invoice which Plaintiff
received as well as testimony that 50 bales of hay had also been
traded between the parties to help settle the training debt. The
District Court determined that Plaintiff’s testimony was credible
and awarded him $5,000 for the sale of the horse.
Appeals Court Decision
On appeal the Defendant raised three issues. The frst and
second issues raised were slightly different but both concerned
whether or not the sale of the horse was void or voidable. (A
voidable sale is one that could be rescinded by one of the parties.)
The Appeals Court considered both the claim that there was no
proper bill of sale and the fact that the transfer violated the UCC’s
Statute of frauds. The Court put both issues to bed by noting that
when the Defendant kept the horse and then subsequently sold
it, he ratifed the sale regardless of whether or not it was initially a
void or voidable sale.
As a result the only issue which still needed to be resolved on
Appeal was the issue of whether the lower court erred in allowing
the Plaintiff to provide additional evidence that the Defendant
had been paid separately for the training fees rather than having
traded Danseur’s Diamond for a substantial portion of the fees
owed to the Defendant. The Appeals Court found that the District
Court did not err when it allowed the Plaintiff to supplement the
record. The Court came to this conclusion because it determined
that the Plaintiff provided only the additional evidence that
the District Court felt it needed to make a determination as to
the actual facts concerning the sale of the horse. The Appeals
Court further noted that the District Court allowed both parties to
supplement the record but only the Plaintiff did so. As a result the
Appeals Court could not fnd that the District Court showed any
biases in Plaintiff’s favor or prejudice against the Defendant when
it based its decision partially on the new evidence submitted by
the Plaintiff. As a result, the Appeals Court reaffrmed the lower
Court’s decisions and found in favor of the Plaintiff with an award
of $5,000.
Conclusion
A handshake or transfer on
the back of a horses registration
papers may not always comply
with state laws to have a valid
transfer of a horse. But even if
the transfer is valid it is always
recommended that the terms of
the agreement be addressed in
writing so that if there is ever a
question as to the legal obligations
of the parties that they are clearly
spelled on in a legal document.
Lisa Hollister is an attorney practicing
in Cincinnati, Ohio. Questions for Ms.
Hollister’s column can be addressed to
twinbridgefarm@aol.com.
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