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I totally understand this, the Horse Market is in the dumps, registered foals are now selling for what un-registered foals sold for a few years ago. IMO, this farm is irresponsible, yes sometimes "things" happen, but as a stallion owner you have a responsibility to maintain and control that animal. I am a stallion owner, while he would love to breed my Appaloosa Mare, I can't allow that to happen. Even though both parents are registered, the rules of the registration of the mare, would not allow the foal to be registered. This is part of my responsibility as a Responsible Stallion Owner. I know the dates when each of my Mares is bred. It is my responsibility to maintain pastures, barns etc to prevent unwanted or unscheduled breedings.
If I bought an "Open" mare from someone, I would not think about getting a vet to ultrasound or palpate that mare, I would trust that the seller was responsible.
Now, in light of having another person contacting OP, I would have to assume, this is a possible "scam" , it is sad that there are unscrupulous people everywhere.
OP, I think you have every right to be upset and angry about this. You have lost precious time to breed your mare to the stallion of your choice. You have a foal , that at this moment is not worth much, whether or not you plan to sell it. I am surprised the Registry would not back you up on this, that really disappoints me, I am a member to 4 different registries, and because I pay my membership dues every year, I expect them to "go to bat" for me when I need it.
I am sorry you are having to deal with this. I would definitely look at taking them to court, I think you are well within your rights to expect papers for the foal.
BTW, I have a Breeding Stock Paint Mare, she is slated to go to a new home once her current foal is weaned. I asked the new owner if he wanted me to breed her to my QH stallion, it is pretty obvious that the resulting foal will be a breeding stock foal. New owner said, they did want her bred, this keeps them from losing a year on this mare having a foal, since it will be late in the year when they get her. I am more than willing to do that and we have worked out an amicable agreement for this. Not all stallion owners are idiots.