Law for Business 10th Edition by James Barnes,Terry Dworkin,Eric Richards

Exercise 6

Bess Harmon was the owner of a two-year-old stallion named Phantom's Recall that was stabled at Budd Dunn and Sons Stable, in Florence, Alabama. Steve Dunn was responsible for the general care (supplies and shoeing) of the animal and its training for and transport to various horse shows. Mrs. Harmon indicated to Dunn that she desired to sell the horse and instructed him to sell it for a purchase price of $25,000. Dunn began communicating with various parties, and Toby Scarborough agreed to purchase it.
On June 30, 1994, Dunn took Scarborough's check dated June 29, 1994, in the amount of $25,000 payable to Harmon to Harmon's home. Harmon was anxious to complete the transaction that afternoon as she and her family were about to depart for vacation. A "transfer of ownership" document, dated June 30, 1994, was signed by Mrs. Harmon, along with the stallion's certificate of registration. Dunn, however, instructed Mrs. Harmon to leave the space for the buyer's name blank because Scarborough had several businesses and Dunn was not sure which he preferred to designate as owner. Mrs. Harmon also paid Dunn his commission on the sale.
That evening Dunn saw Scarborough at a horse show in Lewisburg, Tennessee, and told him that he had given Scarborough's check to Mrs. Harmon. However, he did not deliver the papers to him at that time, forgetting to do so, and Scarborough did not ask for them. Dunn also saw Scarborough the next evening at another show but again did not deliver the papers. Scarborough knew that Dunn had the papers and that Phantom's Recall was stabled at Dunn's barn. At that time, Scarborough told Dunn that the horse would be transported to another stable July 5.
A veterinarian was called to treat the horse on June 26 because it was not eating well and had a cough and a fever. When she examined the horse the next day, it was doing much better. She next saw the horse on July 3, and because of its "extremely grave condition" she had it transported to the veterinary hospital, where it died the next day. The horse had acute colitis-x and was acutely endotoxic, a condition under which a horse can go from OK to dead in a very few hours.
Scarborough stopped payment on his check the next day. Mrs. Harmon returned home on July 9 to discover the horse had died and that Scarborough's bank had not honored the check. Harmon then brought suit against Scarborough to recover the purchase price of the horse. Did Scarborough have the risk of loss of the horse when it died before it had been physically delivered to him?