Posted on February 26, 2009 by Jill R. Elsey

Trainer's Duty to Disclose Sales Price & Commissions in Horse Sales

A young assistant trainer recently approached me about an “opportunity” her boss, the head trainer presented to her. She would get to show a horse on a three week circuit if she paid for the horse to go to the show. The owners had already specified an amount of money they wanted from the sale of the horse. The boss told the assistant trainer that if she sold the horse for any amount over what the owner’s wanted, she would get to keep the extra money and receive a commission on the full sales price. The deal seemed great, but maybe a little too good to be true. The assistant trainer was not sure that the owners were privy to this arrangement and was confused as to whether this type of deal was ethical.

The answer is that if the owner is not privy to the amount the assistant trainer would ultimately receive, such practice is highly unethical and probably illegal. When it comes to horse sales, the trainer should always disclose all of the details of the sale to the person who has commissioned them to buy or sell the horse. For the protection of both parties, a written commission agreement should be signed so everyone is clear about the expectations for the transaction.

Under the common law of agency, agents have three fiduciary duties: obedience, care, and loyalty. If the trainer is acting as an agent for both the buyer and the seller, a conflict of interest exists. In Texas, trainers in horse sales transactions are considered to be similar to real estate agents who are selling property. If the trainer is working for the seller, he is trying to sell the horse to a good home, as quickly as he can, for the most money. If the trainer is working for the buyer, he is trying to buy the best horse he can for the client for the least amount of money. If one trainer is representing both parties, a conflict of interest exists and Texas law requires the agent to disclose the dual agency, because the parties should be made aware of the trainer’s position. Although Texas has not passed a statute to this effect in regards to horses, other states such as Kentucky and Florida have implemented such laws. See Ky. Rev. Stat. Ann. §230.357 and Fla. Stat. §535.16.
 

Trainers who do not disclose dual agency or who do not disclose the actual sales price of the horse could find themselves in violation of the Texas Deceptive Trade Practices Act. The DTPA, which can subject a defendant to treble damages, was created to protect consumers against false, misleading, and deceptive business and insurance practices, unconscionable actions and breaches of warranty.

Similarly, most equine organizations have a code of ethics which trainers can look to if they find themselves in a confusing situation. The AQHA, for example, requires trainers “to conduct all business affairs with integrity, sincerity and accuracy in an open and forth right manner, to act with integrity in financial dealings with clients, other professionals and the public, to fully disclose to customers the actual sales price and commissions involved in the sale or purchase of a horse, and to not charge or receive a monetary commission, or other remuneration constituting a commission from both the buyer and seller of a horse.” For the full code of ethics see AQHA Professional Horsemen- Code of Ethics.

The USHJA has created the Owner’s Committee Sales Integrity Program which is designed to promote full disclosure, documentation and education in horse sales. The USHJA advises trainers to publish their commission rate in your Rate Schedule (usually 10-15%), to be consistent with their practices regarding commissions, to always be honest and "act in the best interest of your customer," to use a full disclosure policy, and recommends that if a client’s horse is under valued, the best practice is for the trainer to buy the horse and re-sell it themselves. See USHJA 2007 Owners Resource Guide. This program was inspired by the Sales Integrity Program initiated by the Thoroughbred Owners and Breeder Association.

If you find yourself confused or doubting a situation, do some research and do not be afraid to ask your attorney, your breed registry, or another respected professional who is knowledgeable about horse sales whether or not the transaction is advisable, as proposed.
 
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Posted on October 7, 2008 by Alison Rowe

Do Horse Trainers Have a Lien on Horses they Train for Unpaid Training Fees?

In most states, trainers do not have a statutory lien for unpaid training fees and other training-related expenses such as show entry fees and hauling.  This means, unless a trainer has a written security agreement signed by the owner providing a lien on the horses in the event of nonpayment of training fees, the trainer cannot hold or sell the owner's horse when training fees remain unpaid.  You need to check your state's statutes, however, as there are exceptions. Oklahoma's stableman's lien statute, for example, does include a lien for training services.  You can find your state's lien statutes on Equine Law and Horsemanship Safety.

What if My State Has a Stableman's or Agister's Lien Statute but No Trainer's Lien?  Currently, every state except Rhode Island has a stableman's or agister's lien statute.  These statutes provide those who board, pasture, or stable the horses of another with a lien on the horse if charges related to the care of the horse are not paid.  Charges related to the "care" typically include the monhtly board rate, supplements, wormer, vaccinations, farrier, and veterinary services paid or advanced by the boarding facility on behalf of the owner.  The stableman's lien statutes do not create a lien for unpaid training fees unless training fees are included in the language of the statute.  See Carney v. Wallen, 665 N.W.2d 439 (Iowa Ct. App. 2003)(holding that a trainer who provided training and did not also provide board could not obtain a stableman’s lien because training services do not pertain to actions or services performed in the course of acting as a stable keeper).

What if a Trainer Both Boards and Trains a Horse?  In most states, a trainer who both boards and trains a horse has a lien on the horse for unpaid charges related to the care, but not the training fees or other training charges unrelated to the care (i.e. entry fees, hauling).  See Davis v. Sewell, 696 S.W.2d 247, 248 (Tex. App.—Texarkana 1985, no writ)(holding that a person hired to both train and board horses had a lien arising from unpaid charges for the care).  This means that if an owner is current on his board and care charges, a trainer must allow an owner to pick up his horse and cannot sell the horse to satisfy the unpaid training fees.  If an owner is delinquent in both board and training, the trainer can hold the horse until board is paid, and sell the horse to satisfy the board bill but not the training bill.

What if a Trainer Has Been Boarding and Training a Horse, but There is No Boarding Agreement?  Absent a contractual provision concerning remuneration, a stableman is entitled to the reasonable value of his services. O’Neal v. Knippa, 19 S.W. 1020 (Tex. 1892); Crenshaw v. Bishop, 143 S.W. 284 (Tex. Civ. App.—Fort Worth 1911). Thus, the amount of the lien in such circumstances would be the reasonable value of the boarding services in the area or county where they were provided.  This will also depend on whether the service provided was stall board, pasture board, full care, etc.
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Posted on March 14, 2008 by Alison Rowe

Race Horse Trainers "Guilty Until Proven Innocent"

"Absolute insurer rules" and "trainer liability rules," common in horse racing and other equine sports, presume that trainers are responsible when their horses test positive for illegal substances.  In effect, the rules make trainers guilty unless proven innocent.

The effect of this presumption is to shift the burden of proof from the governing body to the trainer, who must prove innocence by showing  that he or she did not negligently administer a prohibited substance to the horse or did not negligently allow someone else to interfere with the horse.  These rules can result in the imposition of a penalty against the trainer and/or the horse's owner without actual proof of guilt.

Courts have uniformly upheld the absolute insurer rules, despite the fact that they appear to violate the due process of law.

The New York Court of Appeals (the court of last resort in New York), held that "...the trainer responsibility rule is a practical and effective means of promoting these State interests--both in deterring violations and in exercising sanctions.  The imposition of strict responsibility compels trainers to exercise a high degree of vigilance in guarding their horses and to report any illicit use of drugs, medications or other restricted substances by other individuals having access to their horses.  Additionally, the rebuttable presumption of responsibility facilitates the very difficult enforcement of the restrictions on the use of drugs and other substances in horse racing.  Indeed, it would be virtually impossible to regulate the administering of drugs to race horses if the trainers, the individuals primarily responsible for the care and condition of their horses, could not be held accountable for the illicit drugging of their horses or for the failure either to safeguard their horses against such drugging or to identify the person actually at fault.  It is not surprising, therefore, that trainer responsibility rules have been upheld almost without exception, in other jurisdictions."  Casse v. New York State Racing and Wagering Authority, 517 N.E.2d 1309, 1312 (N.Y. 1987).  See also Allen v. Kentucky Horse Racing Authority, 136 S.W.3d 54 (KY App 2004); Fogt v. Ohio State Racing Commission, 210 N.E.2d 730 (Ohio Ct. App. 1965); Sandstrom v. California Horse Racing Board, 189 P. 2d 17 (Cal. 1948).

For detailed discussion of the application of agencies and organizations in the horse industry, see The Complete Equine Legal & Business Handbook by Milton C. Toby.
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