This is honestly what I would do. I would contact the previous owner of the horse. I would tell him that if he signs over ownership to you you will forgive him for the money that he owes. I would calculate how much he owes you. Including all care and boarding cost. You said $40 per month and he paid you $100. But he was responsible for grain. Plus you've probably paid for farrier, worming and other things??? So that's probably more than $800 that he owes you. Show him the calculations you came up with. Tell him he's got 30 days to pay you the money or sign over ownership. I doubt he can come up with the money since you said that he is having financial difficulties. So he'll more than likely just sign the horse over to you and it will legally be yours. Otherwise you MIGHT have to sell this guy at auction, like someone else said, which means you'll have to run him through the sale and bid on him and you'll be out some cash. Talking to a lawyer might help. Because after so many days of abandoning your property with someone the property is no longer yours. But I'm not sure if that applies to animals. I know you can take him to court and more than likely they will reward the animal to you.
100% Anti-Slaughter and PROUD of it!