Vanier v. Ponsoldt

• Decision Date: 22 May 1992
• Docket Number: 66444,Nos. 66276,s. 66276
• Citation: 251 Kan. 88,833 P.2d 949
• Parties: , 19 UCC Rep.Serv.2d 90 Jerry D. VANIER, d/b/a Vanier, Appellee, v. William R. PONSOLDT, d/b/a Pegasus Ranch; Pegasus Ranch, Inc.; and Bethesda Farm, Inc., Appellants.
• Court: Kansas Supreme Court

Page 949

833 P.2d 949

251 Kan. 88, 19 UCC Rep.Serv.2d 90

Jerry D. VANIER, d/b/a Vanier, Appellee, v. William R. PONSOLDT, d/b/a Pegasus Ranch; Pegasus Ranch Inc.; and Bethesda Farm, Inc., Appellants.

Nos. 66276, 66444.

Supreme Court of Kansas.

May 22, 1992.

Syllabus by the Court

1. It is the duty of every contracting party to know the contents of a contract before signing it. Once signed, the parties are bound by the contract terms.

2. Parties to a contract may choose the jurisdiction in which all actions or proceedings arising from their transaction shall be heard. The forum selected by the parties must bear a reasonable relationship to the transaction and the forum-selection clause in the contract must not have been entered into under fraud or duress. By incorporating a forum-selection clause into their agreement, the parties waive any challenge to the exercise of personal jurisdiction by the forum based upon the reach of the long arm statute, or upon constitutional requirements of minimum contacts with the forum and fundamental fairness. In order for the selected forum to exercise personal jurisdiction in the case, the defendant must receive proper notice.

3. The Seventh Amendment to the United States Constitution is not applicable to the states.

4. The method of trial of a case whether by the court or a jury is governed by procedural law rather than substantive law.

5. Section Five of the Kansas Bill of Rights guarantees a right to jury trial as that right existed at common law. At common law, a party was not entitled to a jury trial as a matter of right in equity suits.

6. The general rule regarding the availability of a jury trial is that, in the absence of a statute or a rule of procedure dictating a contrary result, the assertion of a legal counterclaim by a defendant in an equitable action does not create a right to a jury trial.

7. At an auction without reserve, if an auctioneer knowingly receives a bid on the seller's behalf or a seller makes or procures such a bid, the buyer may at his or her option avoid the sale or take the goods at the price of the last good faith bid. The buyer, however, loses the right to these remedies if, after having knowledge of the facts, he or she ratifies the contract. Ratification is established by the buyer's acceptance of the benefits of the contract or by failure to promptly repudiate it.

8. Pursuant to K.S.A. 84-2-725(1), an action for breach of any contract for sale must be commenced within four years of the breach. The parties may by agreement reduce the period of limitation to not less than one year but may not extend it in their original agreement.

9. The reasonable value of an attorney's services cannot be determined by any fixed formula and the fixing of attorney fees should be done with a view of common-sense realism, that is, should represent an amount that public standards will approve for work done, time consumed, and skill required. A trial court may consider its own knowledge and experience when determining reasonable attorney fees.

Charles R. Hay, of Goodell, Stratton, Edmonds & Palmer, Topeka, and George W. Yarnevich, of Kennedy, Berkley, Yarnevich & Williamson, Chtd., Salina, argued the cause, and Robert Sweetapple, of Sweetapple, Broeker & Varkas, P.A., Boca Raton, Fla., was with them on the brief, for appellants.

Norman R. Kelly, of Norton, Wasserman, Jones & Kelly, Salina, argued the cause and was on the brief, for appellee.

HERD, Justice:

This is an action to foreclose a security agreement against which a counterclaim was asserted. Jerry D. Vanier, d/b/a Vanier, a resident of Kansas, sold an Arabian stallion to William R. Ponsoldt, d/b/a Pegasus Ranch, and Pegasus Ranch, Inc., Florida residents, at an auction in Kentucky. Vanier brought this action against Ponsoldt for failing to make payments according to the note and purchase agreement. Ponsoldt filed a counterclaim alleging fraud in the conduct of the auction, misrepresentations as to the horse's condition and qualities, and breach of warranty. The trial court found for Vanier on his action and the counterclaim. Ponsoldt appeals.

The facts out of which this dispute arose are extensive and are recited in detail for a proper analysis of the issues of law. The trial court made findings of fact which are not challenged and are supported by substantial competent evidence; thus, they will not be disturbed on appeal.

Vanier, of Salina, owned several Arabian horses, including a stallion called Lech Pasb, foaled March 23, 1984. Vanier had a longstanding business relationship with Lasma Arabians Limited (Lasma) which operated an auction and breeding facility, L'Esprit Sale Center, in LaGrange, Kentucky. Lasma also has a facility in Scottsdale, Arizona. Over the years, Vanier purchased and sold several million dollars worth of horses at various Lasma auctions.

In the spring of 1985, Eugene E. LaCroix, an employee of Lasma, approached Vanier about placing his Arabian horses in an auction to be conducted in late summer at LaGrange. LaCroix particularly wanted Lech in the sale because he was an outstanding yearling stallion with good Polish Arabian bloodlines, a much desired ancestry. Vanier decided to put Lech in the Star Stallion Auction and transported Lech to LaGrange in May 1985. It was Lasma's practice that once a stallion was entered in an auction he was thereafter in the care of Lasma, whose employees were responsible for his care and preparing him for the auction.

In early 1985, Ponsoldt purchased 250 acres near Okeechobee, Florida, and began investigating the possibility of establishing an Arabian horse operation as a family business. Prior to this time Ponsoldt had been a real estate broker and had various business interests including meat packing, medical products, valves, water treatment, and heating and air conditioning. Ponsoldt is an experienced and knowledgeable businessman acquainted with complicated financial and business transactions.

Ponsoldt let it be known he intended to invest $5 million in Arabian horses. Thereafter, he was besieged with attention from Arabian horse owners. Armand Hammer, the late Occidental Petroleum mogul, flew Ponsoldt around in his jet and he was courted for his business by Alec Courtelis, who turned out to be an associate of LaCroix. In July 1985, Ponsoldt visited the Lasma facility in Kentucky. Ponsoldt was introduced to LaCroix, whom Ponsoldt also told he was considering investing up to $5 million in Arabian horses. LaCroix told Ponsoldt Lasma could provide important services. He advised Ponsoldt to buy Arabians at auction rather than by private treaty. LaCroix invited Ponsoldt to attend his seminar and mock auction preceding the August sales. He also told Ponsoldt he wanted to give him bidding advice as to what horses to buy and that he wanted to make certain Ponsoldt had the best advice and would buy from Lasma. Ponsoldt and his wife attended a mock auction held August 29, 1985, and were informed there would be no reserve bidding at that weekend's auctions. LaCroix further gave Ponsoldt written bidding recommendations regarding the horses he should buy and recommended price ranges he should pay.

Prior to Lech being sent to Kentucky in May 1985, veterinarian Stan O'Neil performed an insurance examination and did not note any swelling or lameness in Lech's hocks. Once the horse arrived in Kentucky, Dr. Patrick Moloney performed pre-sale veterinarian examinations on Lech and he also found no swelling in Lech's hocks or lameness. On August 27, 1985, William Hemminger, a veterinarian hired by Lasma, prepared a pre-sale examination and report indicating Lech was in good health except he showed a "[s]mall amount of joint effusion both hocks." Dr. Hemminger testified the effusion "wasn't grossly obvious like a bog spavin" and he did not recommend treatment or see the horse again after the examination.

On August 28, 1985, another veterinarian hired by Lasma saw Lech. This was the fourth veterinarian to examine Lech between May and the date of sale. Dr. Roger Magnusson noted Lech's left hock was abnormally filled with fluid. Dr. Magnusson diagnosed a chronic bog spavin i.e. "not acute or mild." That day, Dr. Magnusson tranquilized Lech and drained the excessive sinovial fluid from the horse's left hock. The veterinarian then injected the hock with a corticosteroid. For the next three days Dr. Magnusson administered Butazolidine into the horse's jugular vein. This procedure was to prevent any rebound effusion of Lech's hock. Dr. Magnusson believed Lech responded well to his treatment and further believed the condition he was treating was more cosmetic than functional and that the horse was not lame. Dr. Magnusson testified osteochondrosis (OCD) lesions are the leading cause of what is often diagnosed as bog spavin. Dr. Magnusson initially billed Lasma for his services but was advised to send his invoice to Vanier, who later paid for the services.

It is essential to know something about OCD, a medical condition which afflicts horses, to fully understand this case. OCD indicates a dissecting flap or the loosening of a piece of bony cartilage inside a horse's hock. The hocks are the joints midway up the horse's hind legs. OCD primarily affects young horses, weanlings, and yearlings. Swelling in the hock is a common symptom of OCD; this swelling is often referred to as "bog spavin." In contrast to OCD being caused by a loosening of cartilage or a bone chip, bog spavin is generally caused by degenerative arthritis. OCD is treatable and the success rate is very high. The plaintiff in this case concedes a bog spavin or OCD affects the value of an Arabian showhorse and its chances of success in the show ring.

Lech was sold at the Star Stallion Auction on August 31, 1985. The pre-auction catalog for the Star Stallion Auction stated: "These are the best five colts and stallions available in the country today." LaCroix advised Ponsoldt that...