Alpert v. Thomas

• Decision Date: 08 September 1986
• Docket Number: Civ. A. No. 85-143.
• Citation: 643 F. Supp. 1406
• Court: U.S. District Court — District of Vermont
• Parties: George ALPERT and Lee Wolfman v. Susan THOMAS.

643 F. Supp. 1406

George ALPERT and Lee Wolfman v. Susan THOMAS.

Civ. A. No. 85-143.

United States District Court, D. Vermont.

September 8, 1986.

COPYRIGHT MATERIAL OMITTED

Jessel Rothman, Mineola, N.Y., Albert A. Raphael, Jr., Waitsfield, Vt., for plaintiffs.

Robert D. Rachlin, Downs, Rachlin & Martin, Burlington, Vt., for defendant.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

BILLINGS, District Judge.

After a trial before the Court without a jury on June 9-11, 1986, the Court has considered the evidence presented at trial and the briefs and proposed findings of facts and conclusions of law submitted by the parties, and makes the following findings of fact and conclusions of law in accordance with Fed.R.Civ.P. 52.

FINDINGS OF FACT

Plaintiffs, George Alpert and Lee Wolfman, citizens and residents of Arizona, brought this civil action against defendant, Susan Thomas, a citizen of Vermont, to recover the remaining purchase price, plus interest and costs, on an Arabian stallion named Raxx, sold by plaintiffs to defendant on March 15, 1984. Defendant counterclaims for recission of the sale or, in the alternative, for damages arising from plaintiffs' breach of express and implied warranties, fraud and misrepresentation. The amount in controversy is $175,000.00, exclusive of interest and costs, which is the sales price of Raxx, the subject of this lawsuit.

Defendant, Susan Thomas, is the owner and operator of Putney Ridge Farm, a horse farm in Putney, Vermont. As of February, 1984, she was a full-time farm operator and breeder, owning several Crabbet mares. Plaintiffs George Alpert and Lee Wolfman are partners and owners of Georgian Hill Arabians, which trains, breeds and sells Arabian horses for profit. Prior to the transaction involved in this lawsuit, Georgian Hill Arabians had consigned seven or eight mares for sale at auctions and had sold shares in a breeding stallion. George Alpert, through Georgian Hill Arabians, holds himself out as having knowledge and skill peculiar to the purebred Arabian horse business. Georgian Hill Arabians also employs agents who hold themselves out as having such knowledge and skill. Lee Wolfman is a silent partner of Georgian Hill Arabians.

In February, 1984, Thomas was in Scottsdale, Arizona for a horse show when she first heard of the horse Raxx, a twenty-month old Russian-Arabian stallion owned by Alpert and Wolfman. (All dates mentioned hereafter refer to 1984, unless noted otherwise.) Thomas visited Georgian Hill Arabians at this time to view Raxx. She met and spoke with Jon Mallory, then general manager of Georgian Hill Arabians. Plaintiffs had given Mallory full authority to sell Raxx and to take any action necessary to remedy problems arising after the sale. Thomas, with Mallory's permission, examined Raxx's configuration and general physical condition. Because Thomas is not a veterinarian, she did not have the necessary skills or equipment to perform a breeding soundness evaluation. After looking Raxx over, Thomas became interested in purchasing the horse; she felt that Raxx would work well with her breeding program.

Georgian Hill Arabians understood that Thomas was purchasing the horse for breeding purposes. Several days later, while still in Arizona, Thomas again met Mallory at a cocktail party at the Equestrian Manor. Thomas inquired if Raxx was for sale. Mallory said the horse was for sale at a non-negotiable price of $175,000.00. Thomas told Mallory that prior to purchasing the horse she would want a collection of sperm to test his breeding soundness, in order to evaluate and guarantee his ability to breed. The credible evidence indicates that Mallory said he would take care of it. He also advised Thomas that Raxx would be eligible for Georgian Hill Arabians' breeding promotion program after the horse was delivered to her. After Thomas returned to Vermont, she decided to purchase Raxx. To that end she had several telephone conversations with Mallory over the terms of the sale. Again she requested Mallory to have a collection and a breeding soundness evaluation, to which Mallory agreed. It is customary in the industry to have a breeding soundness guarantee where, as here, defendant was purchasing the horse for the purpose of commercial breeding. Despite the agreement between Thomas and Mallory, no collection or evaluation was ever done by Mallory at plaintiffs' farm.

On March 15, Mallory, on behalf of the plaintiffs, flew to Vermont with a purchase and sale agreement prepared by plaintiffs. When she examined the agreement, Thomas indicated to Mallory that it did not say anything about a breeding soundness guarantee. Mallory, in his capacity as general manager of Georgian Hill Arabians, orally stated that the horse was guaranteed breeding sound.¹ The credible evidence also indicates that Mallory repeated his promise that the collection test would either be done prior to shipping or had already been done. After being assured of Raxx's breeding soundness, Thomas executed the purchase and sale agreement. The agreement contained an "as is" clause in small, inconspicuous type.² As a result of the statements and promises of Mallory, the "as is" clause was not intended by either party to apply to Raxx's breeding soundness, but rather only to apply to his general physical health. The agreement did not contain a "merger" clause.

Subsequent to the execution of the purchase and sale agreement there were a number of phone calls between Mallory and Thomas wherein Mallory, among other things, indicated that Raxx would continue to be registered in plaintiffs' name and mortality insurance for Raxx would be kept in plaintiffs' name despite the fact that the horse would be in Thomas's possession. The reason for this is unclear: there was testimony at trial that plaintiffs' continued interest in Raxx would last until his chronological two-year birthdate, which would be in June, for capital gains tax purposes. However, Mallory stated that plaintiffs' continued interest in Raxx would last until Thomas fully paid for the horse. (See Court Exhibit 2, page 30. See also Plaintiffs exhibit 2, Security Agreement, at p. 3-4.)

In May, Thomas arranged to have Raxx transported first to Massachusetts, and then to defendant's farm in Vermont, by one Ed Hayes. When Raxx arrived at the defendant's farm, she examined him and found a bump on his front leg, which occurred during transport; otherwise he had suffered no injury. Thomas received several documents along with Raxx at the time of his delivery. Included among these documents was a veterinarian bill, which Thomas took to represent the cost of the breeding soundness evaluation performed in Arizona. As mentioned above, despite the parties agreement that Georgian Hill Arabians would arrange for a breeding soundness test, no such test was actually performed.

The following month Thomas executed a promissory note in the amount of $116,667.00, payable in eight quarterly payments of $14,583.38 with 12% interest. On the same day Thomas also executed a security agreement in favor of plaintiffs. From the face of these documents it appears that they were executed on June 15, although by correspondence it appears that they were actually executed subsequent to June 18. As of this time defendant paid to plaintiffs a total sum of $58,333.33 towards the purchase of Raxx.

During June and July Thomas bred Raxx to four mares at Putney Ridge, and although the process was successful and without injury to Raxx, none of the mares settled. In August Raxx was transported to Sedgewood Farms in Plaineville, Massachusetts and remained there until the middle of October 1984, under the care and supervision of Dag Hultgreen, manager of Sedgewood Farms. Raxx was bred to two mares, again without injury. Once again Raxx failed to settle any mare. Because Raxx was still registered under plaintiffs' names, George Alpert signed the stallion breeding reports required by the various horse registries after each attempted breeding. It is customary for someone to be present at all times during the breeding process. Any traumatic injury to Raxx's testicles while he was breeding would have been readily observed by Thomas, Hultgreen and others supervising the breeding. The fact that no such observation was ever made leads to the inference that Raxx received no traumatic injury while mating. Indeed, the Court finds that Raxx did not receive a traumatic injury to his testicles nor was he substantially changed in any way after delivery to Thomas.

During early October Kenneth MacLeod, then plaintiffs' farm manager, called Thomas and indicated that she had not made the October payment. Thomas advised MacLeod that she would have to sell some stocks in order to make the payment, since there had been no stud fees and there appeared to be a breeding problem. MacLeod stated he was not involved with the transaction and only wanted the money then due.

Because Raxx was having problems settling a mare, Thomas asked Hultgreen to take Raxx to Dr. S. Thomas Butera, D.V.M. for a "breeding evaluation" examination at his hospital in Uxbridge, Massachusetts. Dr. Butera performed the examination on October 18, 1984. As a result of this examination, Dr. Butera concluded that Raxx's breeding capability was questionable. He advised that the parties wait a few months to perform another evaluation, as the problem might resolve itself. He also advised that Thomas not breed Raxx until the next evaluation, and Thomas followed this advice and did not breed Raxx again.

Upon receipt of Butera's evaluation, Hultgreen called Thomas, who was at the National Horse Show in Louisville, Kentucky, and told her of the results. Thomas then saw Mallory at the horse show and told him that there was a serious breeding problem and advised him of Dr. Butera's findings. Mallory felt that the problem required more time and study before its source could be determined. The credible evidence indicates that Mallory assured...