CADDNAR

[CITE: Miller, Trustee v. Miller & Morin Logging, 10 CADDNAR 280 (2006)]

 

[VOLUME 10, PAGE 280]

 

Cause #: 04-201F

Caption: Daniel Ray Miller, Trustee for the Miller Family Real Estate Trust v. Doris G. Miller, Mark A. Morin Logging, Inc., Mark A. Morin, Individually, Western Surety Company, and Bloomfield State Bank, Guardian for Luther K. Miller
Administrative Law Judge: Lucas

Attorneys: Mills; Coffey; Smith; Givens (bank)

Date: July 19, 2006

 

[NOTE 1: ON DECEMBER 14, 2007, GREENE SUPERIOR COURT (28D01-0608-MI-335) ENTERED ORDER AFFIRMING THE ADMINISTRATIVE LAW JUDGE.]

[NOTE 2: THE DECISION IN Miller, Trustee v. Miller, et al., 10 CADDNAR 68 (2005), REFERENCED IN FOOTNOTE A, IS substantively unrelated to THIS INSTANT FINAL ORDER OF ADMINISTRATIVE SUMMARY JUDGMENT.]

 

FINAL ORDER OF ADMINISTRATIVE SUMMARY JUDGMENT

 

The material facts are not in dispute.  Summary judgment is granted in favor of Doris G. Miller; Mark A. Morin Logging, Inc.; Mark A. Morin, Individually; and, Western Surety Company against Daniel Ray Miller, Trustee for the Miller Family Real Estate Trust based upon lack of jurisdiction in the Commission to provide the Claimants with relief under IC 25-36.5-1.  Entry of summary judgment is specifically made without prejudice to all the parties to seek relief, in a civil court, based upon waste, contribution, indemnification or another legal theory other than the Timber Buyers Act.

 

 

FINDINGS OF FACT AND CONCLUSIONS OF LAW

 

1.      On June 8, 2005, Daniel Ray Miller, Trustee for the Miller Family Real Estate Trust, (“Miller Trustee) filed an Amended Complaint for Damages (the “Amended Complaint”) in which relief was sought through the Natural Resources Commission (the “Commission”) against Luther K. Miller, by Bloomfield State Bank, Guardian (“Luther Miller”); Doris G. Miller (“Doris Miller”); Mark A. Morin Logging, Inc. and Mark A. Morin (collectively, “Morin”); and, the Western Surety Company (“Western Surety”).

 

2.      The Amended Complaint was in furtherance of a proceeding that is governed by IC 4-21.5 (sometimes referred to as the “administrative orders and procedures act” or “AOPA”).  The Commission has adopted rules at 312 IAC 3-1 to assist with its implementation of AOPA.A

[VOL. 10, PAGE 281]

 

3.      The Amended Complaint alleged Luther Miller and Doris Miller entered a written contract in June 2004 in the amount of $8,000 for the sale to and harvest by Morin of standing timber located on real estate in the southwest quarter of the southeast quarter of the southeast quarter of the southwest quarter of Section Thirty-four (34), Township Seven (7) North, Range Three (3) West containing eighty (80) acres, more or less, all of which is located in Greene County, Indiana (the “real estate”).

 

4.      The Timber Buyers Act (IC 14-25-36.5-1) establishes at IC 25-36.5-1-3.2 a process for Commission review under AOPA where a timber grower files a complaint alleging a “timber buyer” or another person has wrongfully cut timber on the timber grower’s land.  A timber grower may seek compensation for damage actually resulting from the wrongful activities of a timber buyer or timber cutter, as well as three times stumpage value for any timber that is wrongfully cut or appropriated without payment.

 

5.      The Timber Buyers Act provides that a timber buyer must be registered with the Department of Natural Resources (the “DNR”) and provide security for the benefit of an aggrieved timber grower.  IC 25-36.5-1-2 and IC 25-36.5-1-3.

 

6.      As anticipated by but without specifically referencing the Timber Buyers Act, the Amended Complaint sought relief against Morin, the timber buyer, including triple stumpage value.  The Amended Complaint also sought relief against Morin’s surety, Western Surety, as well as against Luther Miller and Doris Miller.

 

7.      Generally, an Indiana state administrative agency has only those powers conferred on it by the Indiana General Assembly.  Powers not within the legislative grant may not be assumed by the agency nor implied to exist in its powers. Bell v. State Board of Tax Commissioners, 651 N.E.2d 816, 819 (Ind. Tax Ct. 1995). 

 

8.      The only powers conferred on the Commission pertinent to this proceeding are those of the Timber Buyers Act.

 

9.      The subject matter jurisdiction of the Commission is here founded solely upon the Timber Buyers Act. 

 

10.  Where jurisdiction is conferred by the Timber Buyers Act, the Commission may, in a proper case, also determine other related claims and cross-claims among the parties, including those derived from common law, based upon the “doctrine of primary jurisdiction”. 

 

11.  The doctrine of primary jurisdiction is an invention of the United States Supreme Court to address the problem that arises when the courts and an agency both have claims to jurisdiction in a case.  Under the doctrine, the judicial process may be suspended or await completion of the administrative process, and the agency may review matters ordinarily outside its subject matter jurisdiction, in order to develop a comprehensive record for ultimate judicial review.  The doctrine of primary jurisdiction is prudential rather than jurisdictional.  Austin Lakes Joint Venture v. Avon Util., 648 N.E.2d 641, 645 (Ind. 1995).

 

[VOL. 10, PAGE 282]

 

12.  If the Timber Buyers Act is inapplicable, the Commission has no basis for considering other claims for relief.  All other claims rest within the exclusive jurisdiction of the courts, and the doctrine of primary jurisdiction has no application.  A threshold determination, ripe for consideration upon summary judgment, may be whether a claimant states a claim upon which the Commission can grant relief under the Timber Buyers Act. 

 

13.  On January 13, 2006, Doris Miller filed her Motion for Summary Judgment with an appendix.  A Motion for Summary Judgment with an appendix, based on a theory similar that was similar to that of Doris Miller, was filed by Morin and Western Surety on February 17, 2006.  The theory is founded on the concept of a “timber grower” under the Timber Buyers Act and the relationship between the holder of a life estate and its remainderman.  Miller Trustee responded to these motions.  Doris Miller, Morin and Western Surety replied to the responses.

 

14.  Under AOPA, summary judgment is governed by IC 4-21.5-3-23.  As provided in 312 IAC 3-1-10, a Commission administrative law judge may apply the Trial Rules where not inconsistent with AOPA.  Reference may generally be made to Trial Rule 56 and to reported decisions based upon Trial Rule 56.  In those instances where Trial Rule 56 is inconsistent with IC 4-21.5-3-23, however, the latter would control. Kingdom Prairie Farm & Preserve v. Department of Natural Resources, 10 Caddnar 167 (2005).

 

15.  The purpose of summary judgment is to terminate litigation about which there is no genuine factual dispute and which may be determined as a matter of law.  Summary judgment should be granted if the designated evidentiary material shows that there is no genuine issue of material fact and the moving party is entitled to summary judgment as a matter of law. Orem v. Ivy Tech State College, 711 N.E.2d 864, 867 (Ind. Ct. App. 1999), rehearing denied.

 

16.  A party moving for summary judgment has the burden of showing there is no genuine issue of material fact. Marsym Development Corp. v. Winchester Econ. Devel. Comm'n, 447 N.E.2d 1187 (Ind. App. 1983).  A party or parties moving for summary judgment have the burden of proof with respect to summary judgment, regardless of whether it or they would have the burden in an evidentiary hearing. Regina Bieda v. B & R Development and DNR, 9 Caddnar 1 (2001). 

 

 

 

[VOL. 10, PAGE 283]

 

17.  Doris Miller, Morin and Western Surety have the burden of proof with respect to summary judgment in this proceeding.

 

18.  Following a settlement reached between Luther Miller and Miller Trustee, an Order of Dismissal was entered in this proceeding as between them on December 8, 2005.

 

19.  The settlement was memorialized in a written Settlement Agreement that provides in pertinent part as follows:

Settlement Agreement

This Settlement Agreement is between Daniel Ray Miller, Trustee for the Miller Family Real Estat Trust ([Miller] Trustee) and Luther K. Miller ([Luther]Miller), by Bloomfield State Bank, Conservator for Luther K. Miller (Conservator).

 

In exchange for the payment of Eight Thousand Dollars ($8,000.00) by [Luther] Miller to [Miller] Trustee, the parties agree as follows:

 

1. [Miller] Trustee shall dismiss with prejudice as to the Conservator Bloomfield State Bank and [Luther] Miller the Amended Complaint filed June 15, 2005 in the Division of Hearings, Natural Resources Commission, Administrative Cause Number 04204 F;

 

2. [Miller] Trustee shall seek no other compensation or damages from [Luther] Miller or the Conservator and, by the execution of this Settlement Agreement, releases the Conservator and [Luther] Miller from any and all liability with regard to the allegations of said Amended Complaint, however, [Miller] Trustee shall proceed to recover full compensation for all damages, including attorney fees and litigation expenses, from any remaining party in said litigation;

 

3. In the event [Miller] Trustee recovers damages in said litigation from any other party, [Miller] Trustee shall owe [Luther] Miller or the Conservator no funds or reimbursement of any kind.

 

4. The undersigned parties agree that the terms and conditions of the Miller Family Real Estate Trust commenced on December 23, 1996, and continue to the present.  In conjunction with said Trust, a copy of which is attached as Exhibit B to the Amended Complaint in the above referenced administrative proceeding, it is agreed that:

 

A. Luther Miller has a life estate as reflected in the Deer of Trust….

 

B. The five acres, more or less, currently used as Luther Miller’s homestead, including the home in which he and his wife, Doris Miller reside, shall be set aside for his use during his life.  [Miller] Trustee shall not take any action regarding said five acres, shall maintain it and pay any insurance, fee or cost associated with it, other than property tax, which [Miller] Trustee shall pay.  The parties waive a survey of said acreage, and agree that five acres is generally outlined by fence surrounding the home, garage and barn;

 

[VOL. 10, PAGE 284]

 

C. [Luther] Miller and [Miller] Trustee shall each be permitted to keep cattle on the remaining acreage used as pasture and maintained by [Miller] Trustee.  [Luther] Miller shall be entitled to no more than ten (10) cattle and [Miller] Trustee shall be entitled to no more than forty (40) cattle upon said Trust acreage, whether such cattle are full grown or calves.  In the event [Luther] Miller has less than ten cattle on the acreage, [Miller] Trustee shall be entitled to increase his heard by as many cattle as [Luther] Miller is absent.  For example, if [Luther] Miller has five cattle, [Miller] Trustee may have forty-five cattle.  [Luther] Miller shall give [Miller] Trustee seven days notice when ever he intends to add to his herd, assuming his herd is less than ten cattle, in order that [Miller] Trustee may reduce his heard by the amount [Luther] Miller shall add, should that be necessary.  [Miller] Trustee shall notify the Conservator when the size of the herd changes.

 

D. The frequency and duration of [Luther] Miller’s access to the remaining acreage shall not be limited, however.  [Luther] Miller shall be entitled to access said acreage for recreational purposes only;

 

E. [Miller] Trustee shall be responsible for all real estate taxes for the eighty acres of [Miller] Trust property;

 

F. [Miller] Trustee shall manage and maintain the remaining acreage and all cattle on said acreage, including any owned by [Luther] Miller.  [Miller] Trustee has all powers as provided in the Trust including placing the remaining acreage in the Department of Natural Resources program entitled Environmental Quality Incentive Program (EQIP) in which the DNR develops a maintenance program for the land and cattle, if [Miller] Trustee so elects;

 

G. Neither [Miller] Trustee, the Trust, or any beneficiary shall owe [Luther] Miller any compensation for rent or use of the acreage, nor shall [Luther] Miller owe [Miller] Trustee, the Trust or any beneficiary any compensation for maintenance of the acreage, [Luther] Miller’s maintenance of his life estate, or the care of [Luther] Miller’s cattle by the [Miller] Trustee.

 

5. When [Miller] Trustee is in receipt of $8,000.00 and the parties have executed this Agreement, counsel for [Miller] Trustee and the Conservator shall execute and file a Stipulation of Dismissal in the administrative proceeding before the Natural Resources Commission.

 

20.  Before entry of the Settlement Agreement, Luther Miller and Ruby Ellen Miller had, by a Deed of Trust, made a conveyance of the real estate to the Miller Trust of the real estate.  In all upper case letters that highlighted and distinguished the clause from other portions of the text, the Deed of Trust provided: “THE GRANTORS, LUTHER KEAN MILLER AND RUBY ELLEN MILLER, HEREBY RESERVE UNTO THEMSELVES A LIFE ESTATE IN AND TO SAID REAL ESTATE FOR THE TERM OF THEIR JOINT LIVES AND FOR THE TERM OF THE LIFE OF THE SURVIVOR OF THEM.”  Deed of Trust recorded with the Greene County Recorder in Deed Book 279, page 544, as Instrument Number 1029 February 25, 1997.  The Deed of Trust placed no restrictions on Luther Miller’s use of the real estate beyond those limitations that exist by operation of law.  Ruby Ellen Miller is now deceased.

 

[VOL. 10, PAGE 285]

 

21.  By the Deed of Trust, Miller Trustee became the remainderman to the joint life estates of Luther Miller and Ruby Ellen Miller.  The Miller Trustee is now the remainderman to the life estate of Luther Miller.

 

22.  A determination of the motions for summary judgment requires a review of the common law pertaining to the holders of life estates, remaindermen, and their efforts to sell standing timber to third persons.  This common law bears upon who is a “timber grower” entitled to seek relief under the Timber Buyers Act.

 

23.  A “life estate” is a freehold interest in land limited in duration to the life of the recipient of the interest.  The “remainderman” is the holder of an interest in land that becomes effective immediately upon the termination of the life estate.  Long v. Horton, 126 Ind. App. 651, 133 N.E.2d 568 (Ind. App. 1956) and Black’s Law Dictionary, p 1293 (6th Ed., West Publishing Co., 1990).

 

24.  Decisions from the 18th century and the early 19th century considered the relationship between the holder of a life estate and the remaindermen with respect to timber harvests. 

 

25.  Most of these early decisions are directed to the responsibility of the holder of the life estate not to commit “waste” to the detriment of a remainderman.  A widow who received a life estate from her deceased husband was liable to the remaindermen for the value of trees cut and removed from the land.  Modlin et ux. v. Kennedy et al., 53 Ind. 267 (Ind. 1876).  A widow who received a life estate could use timber to repair buildings, fences, and similar improvements to the land, but she was liable to the remaindermen if she commited waste.  Miller v. Shields et al., 55 Ind. 71 (Ind. 1876).  The remaindermen could enjoin a life tenant from cutting and removing trees from the land, as constituting waste, if the activity would cause irreparable injury to the fee simple.  Robertson v. Meadors, 73 Ind. 43 (Ind. 1880).  The remaindermen could, by injunction, prohibit the life tenant from cutting and removing timber from their land.  Richmond Nat. Gas Co. v. Davenport, 37 Ind. App. 25, 76 N.E. 525 (Ind. App. 1905).

 

26.  One of the decisions reflected generally upon the common law rights of the life tenant found that a remainderman was without legal authority to enter upon the land and harvest trees during the life tenancy.  “At common law the life tenant, as compensation for the duty of keeping the premises in repair, had the right to cut timber for use upon the land, for the repair of buildings, for fuel, for house-bote, and for the erection of hedges and fences.  If the holder of the life estate exceeded the amount necessary for these purposes he was deemed guilty of waste and liable to the reversioner for damages.”  A remainderman could not enter land in possession of the life tenant for the purpose or removing timber because the action would be a trespass.  Brugh et al. v. Denman, 38 Ind. App. 486, 78 N.E. 349 (Ind. App. 1906).

 

[VOL. 10, PAGE 286]

 

27.  Doris Miller cites Klann, et al. v. Wright Timber & Veneer Co., Inc., et al., 9 Caddnar 76 (2002) for the proposition that the holder of a life estate is a “timber grower” under the Timber Buyers Act.  As a timber grower, the holder of a life estate may lawfully contract with a timber buyer for the sale and harvest of standing timber.  A remainderman has a remedy against the life tenant if the life tenant commits waste, but since a timber buyer may lawfully contract with a life tenant, the remainderman has no remedy under the Timber Buyers Act.  Morin and Western Surety Company join with this proposition.

 

28.  The Klann decision found no Indiana decision that applied the Timber Buyers Act in the context of a life tenancy and a remainderman, but it considered a reported decision from the state of Mississippi.  There the remaindermen sought relief under that state’s timber buyer statute against the timber buyer and the holder of the life estate.  The Court of Appeals of Mississippi determined relief was not available under its timber buyer’s statute in Twin States Land & Timber Co. v. Chapman, 750 So.2nd 567 (Miss. App. 1999): 

 

The first question before the Court in this appeal is whether a remainderman may recover statutory damages and penalties [under the Mississippi’s timber buyer statute] from the life tenant (or those acting under authority of the life tenant) for alleged wrongful harvesting of timber.  We determine that a remainderman may not maintain such an action, but that his sole remedy is the common law action of waste.

 

The statute in question…imposes liability on “any person [who] shall cut down…or take away any tree without the consent of the owner of such tree…”  The statute provides damages of double the value of the timber together with certain costs associated with reforestation of the land….

 

The Mississippi Supreme Court has said that an earlier version of the statute was highly penal in nature and, therefore, subject to strict construction in its application….  We are satisfied that the present version of the statute is also highly penal and, therefore, understand our obligation to strictly interpret the statute’s provisions….

 

. . . .

 

The life tenant, in the enjoyment of his tenancy, may harvest the timber under certain circumstances without the consent or cooperation of the remaindermen.  These circumstances include (a) when necessary to raise funds to pay the taxes on the property, (b) to provide timber for repair of fences and other improvements on the property, and (c) such harvesting as is indicated in the proper management and preservation of the property….  It is only when the life tenant has been found to be harvesting the timber solely as a commercial enterprise, thereby damaging the value of the remaindermen’s estate, that the life tenant may be enjoined from further cutting and also be made to respond in damages for the diminished value of the remainder interest under principles of common law waste.

 

[VOL. 10, PAGE 287]

 

Nevertheless, even in that circumstance, the life tenant’s liability does not arise based upon his lack of any ownership interest in the unsevered timber comprising a part of the land.  Rather, the liability arises because the life tenant has abused those ownership rights that arise under his tenancy to the detriment of the remainder estate…. [Citations omitted.  Emphasis supplied by the Court.]

 

29.  Klann at page 80 found persuasive the reasoning in Twin States Land & Timber Company, Inc. v. Chapman: 

 

In Indiana, a “timber grower” refers to the “owner, tenant, or operator of land who has an interest in, or is entitled to receive any part of the proceeds from, the sale of timber grown in this state.”  IC 25-36.5-1-1.  The holder of a life estate qualifies as a timber grower….  As with its counterpart in Mississippi, Indiana’s Timber Buyers Act provides for compensation that is penal in nature (three times stumpage value) and must be strictly construed.  If the life tenant has liability for unsevered timber, the liability is based upon abuse of ownership rights under the tenancy to the detriment of the remainder estate.  The liability does not arise based upon a lack of ownership interest by the holder of the life estate. The Timber Buyers Act does not confer authority in the Commission to provide relief to a remainderman against a timber buyer for the harm attributed to a sale by the life tenant….

 

30.  As provided in IC 4-21.5-3-32, an agency is required to index final orders and may rely upon indexed orders as precedent. Caddnar was adopted by the Commission in November 1988 as the index of agency decisions anticipated in AOPA.  Barbee Villa Condominium Owners Assoc. v. Shrock, 10 Caddnar 23 (2005).  Amendments made to AOPA in 1997 also direct the Commission to address agency precedents cited by the parties where a proceeding is governed by IC 25.  IC 4-21.5-3-27(c).  Application of these statutory directives supports consistency and predictability for the Commission’s administrative decisions under the Timber Buyers Act.

 

31.  The analyses and holding of Klann are equally persuasive here.  Whatever differences exist in the life estate in Klann relative to the instant action, Luther Miller clearly retained a life estate.  At common law, the holder of a life estate is not prohibited from use of standing timber so long as that use does not constitute waste.  A life tenant has the status of a “timber grower” within the intention and design of the Timber Buyers Act.  If a life tenant acts contrary to the tenancy, whether the terms of the tenancy are established by common law or by the document forming the tenancy (here, the Deed of Trust), the remedy is civil against the life tenant and not against a timber buyer or its surety under the Timber Buyers Act. 

 

[VOL. 10, PAGE 288]

 

32.  Indeed, the Miller Trustee has obtained redress against Luther Miller through execution of the Settlement Agreement.  To extend the Miller Trustee’s relief to Morin and Western Surety, through the punitive elements of the Timber Buyers Act, would extend the Timber Buyers Act beyond its intended purpose and would serve an unjust enrichment to the Miller Trustee.

 

33.  Summary judgment must properly be granted in favor of Doris Miller, Morin and Western Surety and against the Miller Trustee based upon lack of jurisdiction in the Commission to provide the Miller Trustee relief under the Timber Buyers Act.  Entry of summary judgment must properly be made without prejudice to all the parties to seek relief, in a civil court of competent jurisdiction, based upon waste, contribution, indemnification, or another legal theory other than the Timber Buyers Act.


A This proceeding was initiated when the Miller Trustee filed its initial “Complaint for Damages” on November 1, 2004.  The proceeding has an extended history predating the Amended Complaint, on administrative review as well as in two judicial reviews, much of which is described in Miller, Trustee v. Miller, et al. 10 Caddnar 68 (2005).