Wow, you are not over-exaggerating at all. I would be VERY upset. The owner needs to keep the dog on a leash with collar. VERY irresponsible on her part!!!

Poor Mikey. He wanted to be friends! Pick him up and give him a cuddle for me please.

I would talk to the neighbor. Next step would be call the authorities.

Do you live near a road at all??? I would never let my dog out like that without a collar/leash.