## Facts

- Horse owners consigned the racehorse “Red Carpet” to a public auction sponsored by Yonkers Raceway, which acted as the owners’ selling agent.
- Saul Finkelstein bought the horse under a warranty that it was sound.
- The day after the auction, the horse was found to have a leg fracture; Finkelstein demanded rescission and return of the purchase price, and the owners refused.
- The owners sued Yonkers Raceway and Finkelstein for the purchase price; Finkelstein counterclaimed for maintenance and care expenses; Yonkers Raceway counterclaimed for commission, attorneys’ fees, and expenses and asserted a cross-claim against Finkelstein.
- After a bench trial, the district court held (i) Finkelstein had accepted the horse and thus bore the burden to prove breach of warranty, (ii) he failed to prove the horse was unsound at the time of sale, and (iii) Yonkers Raceway breached its agency contract by delivering the horse before receiving payment and therefore was not entitled to commission or attorneys’ fees.
- The district court also ruled that Finkelstein was liable over to Yonkers Raceway to the extent Raceway was liable to the owners, and retained jurisdiction to address contribution after any payment.
- Yonkers Raceway and Finkelstein appealed.

## Issues

1. Whether Finkelstein’s conduct constituted acceptance of the horse under New York U.C.C., placing on him the burden to prove breach of the warranty of soundness.
2. Whether the evidence compelled a finding that the horse was unsound at the time of sale.
3. Whether Yonkers Raceway’s delivery of the horse before receiving payment breached its obligations to the consignors, barring its commission and attorneys’ fees.
4. Whether the liability-over cross-claim disposition and retention of jurisdiction for contribution were proper.

## Decision

- The judgment was affirmed.
- The court upheld the finding that Finkelstein accepted the horse and therefore bore the burden of proving breach of warranty.
- The court upheld the finding that Finkelstein did not prove, by a preponderance of credible evidence, that the horse was unsound at the time of sale; the finding was not clearly erroneous.
- The court affirmed that Yonkers Raceway breached its contract with the consignors by delivering the horse prior to payment and therefore could not recover its commission or attorneys’ fees.
- The court affirmed the liability-over ruling making Finkelstein responsible to Yonkers Raceway to the extent Raceway was liable to the consignors, and approved retaining jurisdiction to address later contribution.

## Legal Principles

- Under New York U.C.C. principles, a buyer who accepts goods bears the burden to prove nonconformity (including breach of warranty) existing at the time of sale.
- In a bench trial, appellate review of factual findings—especially credibility and weight-of-evidence determinations—is limited; findings are disturbed only if clearly erroneous.
- An auctioneer acting as the seller’s agent who delivers goods to the buyer before securing payment may breach its agency/contract duties and forfeit contractual compensation such as a commission, absent a basis for shifting attorneys’ fees.

## Conclusion

The Second Circuit held that the buyer’s acceptance shifted to him the burden to prove breach of the warranty of soundness, and the trial court’s finding that he failed to prove unsoundness at the time of sale stood under clear-error review; the court also held the auctioneer’s premature delivery without payment breached its obligations to the consignors, barring recovery of commission and attorneys’ fees, while allowing liability-over against the buyer for any sums the auctioneer owed the sellers.


Miron v. Yonkers Raceway, Inc., 400 F.2d 112 (2d Cir. 1968)