Harness: Verdict is the story in the AS-IS trial

A verdict came down in the state of Pennsylvania back in December that failed to get much play in the media but perhaps could have ramifications down the road. The major issue at play was the depth and reach of the “AS IS” clause during horse auctions.

At play in the case was whether Richard Young would have to pay for Eloquent Diva after successfully making the winning bid back in 2013 at the Standardbred Sale in Harrisburg. You see, the day after paying $67,000 for the filly, an edema was noticed by trainer Chris Ryder’s groom and ultimately after a visit to New Bolton Center, equine heart specialist Dr. Virginia Reef diagnosed a major VSD - signifying a large hole in the heart. The filly was deemed virtually untrainable and given a five to six year lifespan.

From the plaintiffs’ (Brian and Dr. David Legge) point of view, they had trained the filly and deemed her a promising prospect, so much so that they were the actual under bidders at auction. They believed there was no reason to undo the sale. Thus, the issue went to trial.

The plaintiffs based their position on “Paragraph A” under “Absence of Representations and Warranties” in the Standardbred Horse Sale’s catalog*. It states all horses are sold “as is” unless a male horse declared an entire colt is upon inspection a ridgling or cryptorchidic, in which case it could be returned to the seller. That is clearly visible in the Standardbred Horse Sale catalog in addition to the Lexington Sale catalog, although the latter stipulates consignors and bidders may make separate agreements that alleviates the sales company of responsibility in the event of a dispute.

The Standardbred Horse Sale catalog known as the “Black Book” does not contain the specific language about separate agreements and Young’s testimony was that the company declined to pursue him, believing that he had a bonafide reason for refusing to pay for the horse. Sales company president Paul E Spears verified that under questioning at the trial. After a short discussion, the jury agreed and ruled in favor of Mr. Young.

As a long-time consignor for Perretti Farms, I can certify that we did indeed relieve buyers of financial responsibility when a previously unforeseen defect such as an OCD in the stifle area was detected upon post-sale examination. We were not alone in this practice as many other major breeders acted accordingly and did indeed take sold horses back upon latent discovery of an unnoticed problem.

In that we in harness racing have entered into this era of multiple ownerships via partnerships, it stands to reason that partners, especially those with multiple trainers, will likely communicate with each other. Thus, any consignor failing to stand by his equine product may soon discover a dearth of potential customers.

Whereas thoroughbred auction sales have repositories in which radiographs of consigned yearlings can be examined by trainers and veterinarians, harness has yet to follow suit. However, many consignors can and do permit x-raying of individual horses, especially in instances where an OCD or chip is likely to exist. Usually these examinations take place in the consignment back areas in which the results remain confidential except to those who commissioned them.

Nowadays many consignors will remove OCDs or chips at the farm prior to sale should an examination determine their existence. This relieves a purchaser of his obligation to pay for what a latent examination discloses to be damaged goods and has become commonplace in the harness industry.

Mr. Young has been quite vocal about the trial on social media and many potential future yearling buyers have inquired as to the details of the trial. By now transcripts of testimony should be obtainable.

The parties I spoke with were reticent to be involved or be quoted on the topic, although all were unanimous in their belief it should not have gone to trial. Most did not know the precise wording of the as-is clause. One sales manager has yet to return a call, while another sales part owner grudgingly agreed that we might have to take a look at the wording.

The purpose here is not to comment on the merits of the case and/or the wording of the as-is clause, only to report that it happened and that it took a jury just 20 minutes to render a verdict in favor of Mr. Young. That short deliberation time leads one to wonder whether more examination of the as-is clause is necessary.

How this will ultimately play out is anybody’s guess, but a reasonable assumption is that the as-is clause wording will come under scrutiny from both sales company officials and consignors. As a former long-time consignor, I would be in favor of that.

The timing for an appeal has expired so the verdict stands AS-IS.

*(a) Terms of Sale. All horses are sold “as is” with all existing conditions and defects except that any equine sold in this sale which is catalogued as a colt and not otherwise announced by the time of sale, and is a gelding, ridgling, or cryptorchid shall be returnable to consignor with refund of the purchase price if Standardbred receives a written veterinary certificate to that effect within forty-eight hours after the start of the session in which the equine in question was sold. If consignor’s veterinarian disagrees with the finding in purchaser’s veterinary certificate, the referee procedure provided above in “CHALLENGES” shall apply. This shall be purchaser’s sole remedy in colt/ridgling/gelding/cryptorchid disputes. Purchasers acknowledge that the physical condition of horses is subject to change on a daily basis and, therefore, that time is of the essence. Failure to comply strictly with the notice and time requirements stated here will disallow purchaser’s ability to use this procedure. THERE ARE NO WARRANTIES, STATUTORY, EXPRESS OR IMPLIED, WITH RESPECT TO THE MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, CONDITION, QUALITY OR DURABILITY OF ANY HORSES PRESENTED FOR SALE.