I would not do so just yet. You are in a touchy situuation here.  The dog is known as a chattel under the law and a chattel entrusted to you for safe keeping creates a bailment situation and selling the chattel becomes  a "conversion" for which you may be liable under state law.  So the thing to do is to sue them for the money and then to request of the court to allow you to sell the dog to help satisfy the judgement.  If you have an agreement then it will be binding.  If it is written then it is better but oral agreements can also be held valid under the law.  Good luck.