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FORBIS v. REILLY

April 28, 1988

Donald L. Forbis, and Judith E. Forbis d/b/a Ansata Arabian Stud, Plaintiffs
v.
Barbara Reilly, Defendant



The opinion of the court was delivered by: WEBER

 This suit arises from several transactions in which plaintiffs sold to defendant 3 purebred Arabian horses. Plaintiffs sued for payment of balance due on 2 sales and defendant countersued with charges of fraud. Plaintiffs have filed a motion for summary judgment and defendant responded. The parties have submitted lengthy deposition transcripts, other evidentiary materials and briefs. After a review of the record we conclude that there is no disputed issue of fact on any of the three transactions and summary judgment in favor of plaintiffs on all issues is appropriate.

 FACTS

 We begin with a brief outline of the transactions between the parties. A more detailed description of each transaction is reserved for the discussion of each transaction below.

 As early as 1979, Mrs. Reilly purchased 2 Arabian horses. The horses were owned for enjoyment, not breeding and Mrs. Reilly describes her interest at that time as "passive". In the following years Mrs. Reilly purchased other horses, including several Arabians, and became interested in establishing a breeding farm for purebred Arabian horses.

 To this end, over a period of years, Mrs. Reilly attended various seminars on all aspects of the business, read books and trade publications, consulted several persons knowledgeable in the field, struck up a relationship with a consultant in the field and enlisted him to travel with her, hired a professional trainer, attended Arabian horse shows and auctions, and began visiting Arabian horse farms all over the country.

 In 1982 Mrs. Reilly began building her breeding stock in purebred Arabian horses of the Egyptian strain. Early in that year she attended an auction, unaccompanied, and purchased a broodmare. She also learned of another mare available at the farm of Judy Forbis.

 Mrs. Forbis and her husband own and operate a breeding farm in Arkansas known as Ansata which specializes in the Egyptian strain. Mrs. Forbis has spent 25 years in the business of breeding Arabian horses and she has published several books and numerous magazine articles on Arabian horses.

 In November, 1982, Mrs. Reilly visited Ansata and purchased Il Shirin, a broodmare in foal, for the sum of $ 30,000. The horse was owned by another breeder but boarded at Ansata. Mrs. Forbis acted as agent for the seller and signed the sales agreement in that capacity.

 In April 1983, Mrs. Reilly returned to Ansata to examine 2 colts owned by Mrs. Forbis. She wanted to buy a colt to develop as a breeding stallion. She chose to purchase Ansata Abu Halim from Mrs. Forbis for $ 150,000. Soon thereafter, on June 11, 1983, Mrs. Reilly purchased a broodmare, Ansata Nahema, from Mrs. Forbis for $ 157,000.

 Il Shirin lost the foal she was carrying at the time of sale and, despite repeated efforts to impregnate her, she never again bore a foal to term. As Ansata Abu Halim matured, certain defects appeared and another defect failed to abate, allegedly making the horse useless for breeding. Because of the dissatisfaction with these two horses, Mrs. Reilly stopped making payments on Ansata Abu Halim. She also ceased payments on Ansata Nahema, though she had no complaints about that horse.

 Plaintiffs sued to recover the balance due on the sales agreements for Ansata Abu Halim and Ansata Nahema. On plaintiffs' petition and after a hearing we permitted plaintiffs to repossess Ansata Nahema upon posting a $ 300,000 replevin bond. Mrs. Reilly has asserted a counterclaim, seeking to rescind the sale of Ansata Abu Halim, and to recover damages related to Ansata Abu Halim and Il Shirin. The gravamen of the counterclaim is that Mrs. Forbis made fraudulent misrepresentations which induced Mrs. Reilly to purchase Il Shirin and Ansata Abu Halim.

 DISCUSSION

 1) Il Shirin

 We begin chronologically with the first transaction between the parties, the subject of Count III of the Counterclaim. Mrs. Reilly alleges that Mrs. Forbis made fraudulent representations which induced Mrs. Reilly to purchase Il Shirin. Mrs. Reilly seeks to recover the $ 30,000 purchase price plus the costs of breeding, feeding and caring for the horse.

 Mrs. Forbis was not a party to this contract of sale. Il Shirin was owned by Count Federico Zichy-Thyssen and Mrs. Forbis acted solely as his agent pursuant to a written power of attorney. She signed the sales agreement in her capacity as agent. Mrs. Reilly concedes that at the time of the transaction she was aware of the owner's identity and the agency status of Mrs. Forbis.

 An agent who acts for a disclosed principal is generally not liable on the contract. E.g. Vernon D, Cox & Co., Inc. v. Giles, 267 Pa. Super. 411, 406 A.2d 1107, 1110 (1979), and cases cited therein. *fn1" However, an agent who fraudulently induces the other party to enter the contract may be personally liable for damages caused by that party's reliance on the fraud. See, Deaktor v. Fox Grocery Co., 332 F. Supp. 536 (W.D.Pa. 1971); National Cash Register Co. v. Modern Transfer Co., 34 Lehigh LJ 518, 526, (1972). Mrs. Reilly's counterclaim is not based on the contract, but on alleged fraudulent misrepresentations made by Mrs. Forbis which induced Mrs. Reilly to buy Il Shirin. We will examine the alleged misrepresentations to determine if they satisfy the prerequisites for such a claim.

 To prevail on a claim of fraudulent misrepresentation a party must establish that the statement was false when made, and that the declarant either knew it was false or acted in reckless disregard for the truth. Delahanty v. First Pennsylvania Bank, N.A., 318 Pa.Super 90, 464 A.2d 1243 (1983). Also, an innocent misrepresentation may be actionable when special circumstances impose on the declarant a duty to ascertain the truth. Shane v. Hoffmann, 227 Pa.Super. 176, 324 A.2d 532 (1974).

 We look then to the misrepresentations allegedly made by Mrs. Forbis. First of all, Mrs. Reilly alleges that Mrs. Forbis stated repeatedly that Il Shirin was very reasonably priced, much cheaper than most purebred Arabian mares. In her deposition, in the very next breath, Mrs. Reilly admits that from her own knowledge of prices in the industry, Il Shirin was cheaply priced (B. Reilly depo. at p. 29). In any event opinions of value or quality are ordinarily not actionable as fraud. Binns v. Copper Range Co. 335 Pa. 257, 6 A.2d 895 (1939); United States v. Goldberg, 158 F. Supp. 544 (E.D. Pa. 1958); Berkebile v. Brantly Helicopter Corp., 462 Pa. 83, 103, 337 A.2d 893 (1975).

 Of course Il Shirin is not worth $ 30,000 if she cannot breed and Mrs. Reilly claims that Mrs. Forbis indicated that Il Shirin was capable of producing a foal. To prevail, Mrs. Reilly must establish that this statement was false when made, i.e., that Il Shirin was infertile at the time of sale.

 It is undisputed that at the time of sale Il Shirin had recently produced a colt who was priced at $ 10,000, and that she was again in foal to an Ansata breeding stallion. Only after the sale did Il Shirin lose the foal she carried. As provided in the sales agreement Mrs. Forbis then bred Il Shirin to an Ansata stallion six times over the next 9 months, with only a nominal service charge to Mrs. Reilly. After efforts at Ansata failed, Mrs. Reilly brought Il Shirin to the Reilly farm for further efforts. Only after a year of breeding Il Shirin did Mrs. Reilly conclude that the mare was barren.

 It is clear on this record that Mrs. Reilly cannot establish that Il Shirin was infertile at the time of sale. To the contrary the horse had just produced one valuable foal and was carrying another. Even if we assume the mare was infertile, there is no evidence to indicate that Mrs. Forbis knew or should have known of this condition at the time of sale. Mrs. Reilly's counsel admits in the brief opposing summary judgment that:

 
In the Arabian horse business, and most probably likewise with the sale of any brood mare, the condition of infertility is not readily noticeable. It may take months of attempts to breed a horse before it becomes apparent that a horse cannot carry a fetus. Industry custom in the Arabian horse business dictates that only after a mare fails to conceive for an extended period of time will a more drastic step of the "uterine biopsy" be taken.

 (Defendant Reilly's brief, at pp. 22-23, footnote omitted). The uterine biopsy was conducted in late March 1983, four months after the sale and after repeated efforts to breed the mare. Even then the veterinarian did not indicate that Il Shirin was infertile. We conclude therefore that there is no evidence from which a factfinder could conclude that Il Shirin was infertile at time of sale or that Mrs. Forbis knew or should have known of the condition of infertility.

 We also note that Mr. Reilly testified that Mrs. Forbis told him that Il Shirin was "a good mare to start a breeding program with. " *fn2" In a warranty context, such a general statement of a horse's quality amounts to no more than puffing. See, Sessa v. Riegle, 427 F. Supp. 760 (E.D. Pa. 1977) (statement that horse is "sound" is mere puffing); Walker v. Kirk, 72 Pa. Super. 534 (1919); Wilkinson v. Stettler, 46 Pa. Super. 407 (1911); But see Norton v. Lindsay, 350 F.2d 46 (10th Cir. 1965). Nor is it a statement actionable as fraud. Berkebile, 462 Pa. at 103.

 Furthermore, placing this remark in context makes clear that it is no more than a reiteration of the other alleged misrepresentations discussed above. As Mr. Reilly tells it in his deposition:

 
A. I think [Mrs. Forbis] mentioned to me that it is not a high quality mare, in terms of her other mares, but she sells them for much higher prices, but it would be a good mare to start ...

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