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Bovard v. American Horse Enterprises, Inc. | 247 Cal.Rptr. 340 (1988)

A nineteenth-century British judge famously described public policy as, quote, “a very unruly horse . . . once you get astride it, you never know where it will carry you,” unquote. The judge was urging courts to rein in their power to declare otherwise-valid contracts void as contrary to public policy. In Bovard versus American Horse Enterprises, the court mounted the unruly horse to consider whether to void a contract for the sale of a business.

In 1978, Robert Bovard contracted to sell American Horse Enterprises to James Ralph. When Ralph failed to pay as promised, Bovard sued Ralph and American Horse in California state court. The parties settled, and the court entered a judgment requiring Ralph and American Horse to pay Bovard over $194,000. However, Ralph later denied authorizing his lawyer to settle, and he moved to vacate the judgment.

Bovard filed a supplemental complaint alleging breach of the settlement agreement. At trial, Bovard testified that American Horse manufactured jewelry and drug paraphernalia, including joint holders and bongs for smoking marijuana. Following that testimony, the trial court excused the jury and heard arguments on whether the contract for the sale of American Horse was illegal and void. The court found that American Horse’s primary business was producing marijuana-smoking paraphernalia, and not jewelry. The court also found that Bovard had already recovered the production machinery from American Horse. The court explained that although manufacturing drug paraphernalia isn’t illegal, there’s a public policy against it implied in the law that criminalized marijuana use and possession. The court thus concluded that the contract to sell American Horse was void, and neither party was entitled to relief. Bovard appealed to the California Court of Appeal.

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