Green v. McGrath
| Decision Date | 26 August 1986 |
| Docket Number | Civ. A. No. 85-230. |
| Parties | Linda GREEN, Plaintiff, v. Patrick W. McGRATH, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Kentucky |
Douglas G. Worrall, Smith, Somerville & Case, Baltimore, Md., Edward S. Bonnie, E. Lambert Farmer, Jr., Brown, Todd & Heyburn, Richard W. Vimont, Anne A. Chesnut, Vimont & Wills, Lexington, Ky., for plaintiff.
Harry B. Miller, Jr., Catesby Woodford, Miller, Griffin & Marks, Lexington, Ky., for defendants.
This is a diversity action between parties having considerable experience in the thoroughbred horse industry and involves the interpretation of a contract dealing with the breeding of their respective thoroughbreds for seasons in 1982, 1983, and possibly 1984.
The plaintiff, Linda Green, owns a farm in Maryland and has been in the horse business since 1962. She holds licenses as an owner and a trainer, raced horses from 1970 to 1980, owns shares in four stallions, and breeds two to five mares per year. The defendants, E. Barry Ryan, Brian Sweeney, and Patrick McGrath, are also knowledgable horse people. Mr. Ryan is a 65-year-old resident of Normandy Farm in Lexington, Kentucky, has been associated with the thoroughbred horse industry since he was a child, trained horses for the 32 years, and has been on the board of directors of the Jockey Club. Ryan has known defendant Brian Sweeney for many years, and the latter gentleman has been associated with race horses since 1961.
Prior to 1982, the three defendants formed a partnership (hereinafter "the Syndicate") for the purpose of purchasing a share in the syndication of the Irish stallion, SHERGAR.
This matter is before the Court on cross-motions for summary judgment. Based on a review of the memoranda of the parties filed in support of their respective motions for summary judgment and the Stipulation of Facts the parties jointly filed subsequent to the pre-trial conference on June 10, 1986, the Court is of the opinion that there are no genuine issues of a material fact involved herein and that as a matter of law, this action is subject to resolution by summary judgment.
Plaintiff seeks an Order from the Court for the defendants to account for all use and benefits which have accrued to them from a thoroughbred colt produced from SHERGAR out of FOREIGN MISSILE, or in the alternative, to enter judgment against the defendants in the amount of $500,000.00.
The record reflects that this action evolved out of the following circumstances:
1. On November 18, 1981, in a Letter Agreement (the contract) signed by the plaintiff and the defendant Ryan, the parties agreed to arrange for the breeding of plaintiff's mare FOREIGN MISSILE to the Syndicate's stallion SHERGAR, standing in Ireland.
2. The mare, FOREIGN MISSILE, was to be transported to Ireland at the Syndicate's expense and would be bred to SHERGAR during the 1982, 1983, and possibly the 1984 breeding seasons. By its own terms, the contract expired no later than the close of the 1984 breeding season.
3. The parties agreed that the first foal produced from the SHERGAR/FOREIGN MISSILE mating would belong to the Syndicate; the second foal would belong to plaintiff. More specifically, the contract provided that if FOREIGN MISSILE should prove to be "barren" from her 1982 cover, she would be again bred to SHERGAR in 1983, in the interest of the Syndicate. Consequently, the 1984 breeding would be for plaintiff's benefit.
On the other hand, if FOREIGN MISSILE produced a foal from her 1982 cover, the 1983 breeding season would be for the plaintiff. If FOREIGN MISSILE proved to be "barren" from the 1983 season, plaintiff would be entitled to a breeding season in 1984, before the contract expired of its own terms at the end of the 1984 breeding season.
4. The 1982 breeding season produced a foal which belonged to the Syndicate and was ultimately sold for $850,000.00.
5. In early 1983, before the 1983 breeding season began, SHERGAR was kidnapped and was never recovered. Thus, any subsequent matings of FOREIGN MISSILE and SHERGAR to produce a foal for plaintiff were rendered impossible due to the disappearance of SHERGAR.
6. When it became apparent that SHERGAR had probably permanently disappeared, or at least was not going to be found in time for the 1983 breeding season, the Syndicate offered to arrange for FOREIGN MISSILE to be bred to an alternate stallion for plaintiff's benefit.
7. Plaintiff decided that she wanted FOREIGN MISSILE bred to GOLDEN FLEECE, a very popular stallion at Coolmore Stud in Ireland. The popularity of GOLDEN FLEECE was evidenced by the fact that his service fee was 100,000 pounds, 30,000 pounds more than SHERGAR's service fee of 70,000 pounds.
8. The parties agreed that the Syndicate would pay the first 70,000 pounds of the service fee to GOLDEN FLEECE, which was the equivalent to the benefit plaintiff would have received if SHERGAR had been available for service to FOREIGN MISSILE, since SHERGAR's service fee was 70,000 pounds, and plaintiff would pay the remaining 30,000 pounds.
9. Subsequently, FOREIGN MISSILE was bred to GOLDEN FLEECE during the 1983 breeding season and was pronounced to be in foal when examined 100 days thereafter.
10. In November of 1983, FOREIGN MISSILE, while in foal, was shipped from Ireland back to the United States and was boarded at Normandy Farm in Fayette County, Kentucky. On January 31, 1984, FOREIGN MISSILE slipped or aborted the foal.
11. FOREIGN MISSILE remained at Normandy Farm and was subsequently bred to RIVER MAN in March of 1984, for a cost of $63,000.00. Plaintiff later sold FOREIGN MISSILE, while in foal to RIVER MAN, for $1.7 Million.
As the defendants point out, the original agreement between the parties became impossible to perform due to the disappearance of SHERGAR. It is well established that when the performance of a contract is based on subject matter, the continuing existence of which is the basis of the contract, performance of the contract is excused when the subject matter of the contract is destroyed or becomes unavailable. 18 Williston on Contracts, Section 1948; Restatement of Contracts (Second), Section 261.
The general rule concerning destruction of the subject matter of a contract is set out in Horn v. Ranier, 560 S.W.2d 233 (Ky.App.1977), as follows:
Horn v. Ranier, 560 S.W.2d at 235.
Furthermore, nonperformance of the contract is excused regardless of whether the unavailability of the subject matter is caused by the malicious act of a third person of by an "act of God". Tennessee Electric Power Company v. White County, 52 F.2d 1065 (6th Cir.1931); 18 Williston on Contracts, Section 1936.
Therefore, based on the fact that the disappearance of SHERGAR was legally tantamount to the destruction of the subject matter of the parties contract concerning FOREIGN MISSILE's service to SHERGAR, the defendants correctly contend that legally they could have done nothing to alleviate the unfortunate turn of events and would have incurred no liability to plaintiff. However, since the Syndicate had received a foal from the 1982 cover between FOREIGN MISSILE and SHERGAR, per the terms of their contract, the Syndicate felt a "moral" obligation to try to help plaintiff arrange for an alternate stallion of plaintiff's choice for service to FOREIGN MISSILE. Consequently, the Syndicate offered her the amount of SHERGAR's stud fee (70,000 pounds) against the stud fee of the stallion plaintiff chose for FOREIGN MISSILE.
Plaintiff chose GOLDEN FLEECE, and on April 14, 1983, a Nomination Agreement was entered into by defendant Brian Sweeney, on plaintiff's behalf, which provided that the nomination fee of 100,000 pounds was payable, as follows:
... on the 1st October following the end of the said covering season unless the Purchaser produces for inspection on or before the said date a certificate signed by a qualified veterinary surgeon dated at least 40 days after the Mare's last service by the Stallion to the effect that the Mare has been found barren; (emphasis added).
To reiterate, FOREIGN MISSILE was examined on the 100th day following her last service to GOLDEN FLEECE and was pronounced to be in foal. She was shipped to Normandy Farm in foal in November of 1983, and she remained in foal until January 31, 1984, when she aborted the foal.
Plaintiff argues that originally the parties intended to permit rebreeding on behalf of each party unless a live foal resulted from the cover. She takes the position that regardless of the express language of their contract, the parties intended their contract to be a "live foal" contract rather than a "no guarantee" contract.
The pertinent contract language provides as follows:
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