Simpson v. Widger

311 N.J. Super. 379, 709 A.2d 1366 (App. Div. 1998)
  • Opinion Date: May 14, 1998

UCC; HORSES; FRAUD—When a buyer relies on its own pre-sale investigation, the tolling of a statute of limitations by reason of fraud will not apply because an essential element of fraud is reliance.

An attorney bought a horse from a professional riding instructor and horse trainer. At the time of the purchase, he, as buyer, had the benefit of extensive veterinary opinions and x-rays of the horse. The opinions and the x-rays showed that although the horse showed no symptoms, it suffered from a condition that might eventually cause lameness. With the examinations and opinions in mind, he approached the seller who told him “that the horse was a good horse, that the horse was a sound horse and that the horse was appropriate for me to buy, that I would not have a problem with the horse.” The buyer concluded that the substance of his conversation with the seller “was that this horse was a good horse and was worth the money.” The buyer then did further investigation, including determining that the current x-rays showed absolutely no deterioration from those taken two years earlier. With all of that information and having been advised that the potential for eventual lameness might deter future buyers notwithstanding that the condition might not progress or cause actual lameness, he bought the horse. For several years, the horse competed in many events, on occasion winning prize monies. However, five years after the purchase, the condition manifested itself to the point that the horse evidenced occasional lameness.

Once the lameness became apparent, the buyer sought compensation from the seller, claiming a breach of express warranty, in particular that the horse was not “sound” as warranted. Article 2 of the Uniform Commercial Code covers the sale of animals in commerce as part of the sales within its ambit. UCC Section 2-313 finds an express warranty by the seller to be “any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain… . It is not necessary to the creation of an express warranty that the seller use formal words such as ‘warrant’ or ‘guarantee’ or that he have a specific intention to make the warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller’s opinion or commendation of the goods does not create a warranty.”

To the extent that the seller affirmed the value of the horse, it is clear that no warranty was created under the Uniform Commercial Code, since the Code expressly excludes affirmation of value from the concept of express warranty. The words “good” or “appropriate for purchase” added nothing to what was clearly the essence of the seller’s representation, which was that the horse was sound. However, the concept of soundness in a horse is somewhat complex. In general, a sound horse is free from any abnormality in the form or function of any part. The single most important factor in determining the value of any horse is its degree of soundness. Even though this horse’s particular condition may not have bothered the horse very much, it is a condition that is generally regarded as a serious unsoundness. Examinations made of the horse at the time of sale clearly showed that it was not 100% free of abnormality; consequently, it certainly was not sound. Unfortunately for the buyer, an action on express warranty under the Uniform Commercial Code must be filed within four years of the sale. This action was not timely filed. However, the presence of fraud may toll the running of the statute. Unfortunately for the buyer, there was no suggestion of active concealment after a fraud was committed. Therefore, the period of limitation began “when plaintiff should have discovered the fraudulent scheme… .” The Court, for the purpose of its analysis, made the assumption that buyer had no reason to discover the alleged fraud before lameness was discovered in the horse. Nonetheless, where, as here, the buyer made an independent investigation and relied upon it, he is presumed to have been guided by it and is bound accordingly. Therefore, the Court would not give the buyer redress for fraud when he acted in reliance upon his own knowledge or judgment based upon an independent examination.