Legally you entered into a verbal contract which is just as binding as a written contract , so he does have the right to "pick of the litter" .
But that being said , he seemed to want a small/runt female and may not even want the male surviving puppy. Talk to him and find out if he will take a stud fee and let you keep the pup. Chances are he wont want the male and it wont be an issue. Oh , If you plan on doing it again I recommend a written contract that doesn't include Pick of the litter.
Good luck !
