OP - I, too, feel for the other lady in this trade. Reminds me of the situation with my last horse. I traded a lady my VERY green broke gelding even up for her bombproof mare with the understanding that she was very experienced in training and could finish his training. A week after, she said he was running through fencing, bucking and was DANGEROUS to everything around him and had him put down, then began demanding her horse back. She even went so far as to tell me she was coming to get her with the sheriff (lies, btw). She threatened to sue. I spoke to a lawyer and he basically said she was crazy and that everything she was saying was a lie, that she had no ground to stand on to take my mare. Once the horse leaves your possession, you are straight up SOL. And to expect your horse back after you euth hers is just idiotic.
Sarcoids are NOT contageous. For the love of god, do not put that horse down. Obviously they are not bad enough to endanger her health or you would have seen them straight away. Just sell her or treat her.
One man's wrong lead is another man's counter canter.
"Adjust Your Pleasure"
2006 Medicine Hat Paint Gelding