CADDNAR


[CITE: Trisler v. Minor and Hartman Logging, 12 CADDNAR 305 (2011)]

 

[VOLUME 12, PAGE 305]

 

Cause #: 09-081F

Caption: Trisler v. Minor and Hartman Logging

Administrative Law Judge: Jensen

Attorneys: Hanner (Trisler); McKay (Respondents)

Date: March 31, 2011

 

[See Editor’s note at end of this document regarding change in the decision’s original format.]

 

FINAL JUDGMENT

 

65.  The Claimants are entitled to an administrative judgment against the Respondents in the amount of $9,710.46, which represents three times the stumpage value of $3,236.82.

 

66.  This administrative judgment addresses all issues of damage and responsibility; after completion of the opportunity for judicial review under Indiana Code § 4-21.5, this judgment may be enforced in a civil proceeding as a judgment.

 


 

FINDINGS OF FACT AND CONCLUSIONS OF LAW

 

CASE SUMMARY AND BACKGROUND

 

1.      The instant proceeding was the subject of an administrative hearing conducted on November 10, 2010 relating to the “Complaint for Wrongful Removal of Timber and Issuance of Notice” (“Complaint”) filed by Claimants, John L. Trisler, II and Casandra L. Trisler (collectively “the Claimants”) on April 27, 2009.

 

2.      The instant proceeding was initiated under Indiana Code §§ 25-36.5, commonly referred to as the “Timber Buyers Statute” and 312 IAC 3-14.

  

3.      Procedurally, Indiana Code §§ 4-21.5-3 and 312 IAC 3 govern the instant proceeding.

 

4.      The Natural Resources Commission (“Commission”) is the “ultimate authority” as defined at Indiana Code § 4-21.5-1-15 for proceedings initiated under IC §§ 25-36.5 and 312 IAC 14.  312 IAC 14-1-2(d).

 

5.      In their Complaint the Claimants acknowledge that they entered into a “Timber Sale Contract for the sale of 146 trees…for the sum of $5,500.00” with the Respondents Darrell Minor (“Minor”) and Hartman Logging and Lumber (“Hartman Logging”)(Hereinafter, Minor and Hartman Logging will be referred to collectively as “the Respondents”)  However, the Claimants allege that the Respondents “harvested 292 trees total” instead of the agreed upon 146 trees.

 

6.      The Claimants represent within their Complaint that prior to the initiation of the instant proceeding the Respondents had attempted to compensate the Claimants through the tender of two checks; one in the amount of “$5,500.00 representing the original contract amount” and the other in the amount of “$845.82 purportedly for the additional trees harvested.”   At the time of filing their Complaint, the Claimants had not negotiated either check.  However during the pendency of this proceeding, with the understanding that acceptance and negotiation of the $5,500.00 check would not constitute a waiver of the Claimants’ Complaint relating to the additional 146 trees harvested outside the Timber Sale Contract (hereinafter “Contract”) , the Claimants accepted $5,500.00 as full compensation under the Contract.  The terms of the Contract have been fulfilled by both parties and that Contract is not at issue in this instant proceeding.  Testimony of John Trisler, Testimony of Darrell Minor.

 

7.      The continuing controversy relates solely to the additional 146 trees that were harvested by the Respondents from the Claimants’ property that were not the subject of the Contract entered into by the parties.  (hereinafter the trees harvested outside the Contract will be referred to as “the Additional Trees”)  With respect to the Additional Trees the Claimants have refused and continue to refuse acceptance of $845.82 as compensation. Instead, the Claimants seeks compensation for the “damage actually resulting from the wrongful cutting, acquisition and removal of said timber, plus damages equal to three (3) times the stumpage value of the timber wrongfully cut, acquired and removed…”

 

8.      Throughout the pendency of the instant proceeding the Claimants have been represented by counsel, James O. Hanner, and the Respondents have been represented by counsel, John R. McKay.

 

9.      The Commission possesses jurisdiction over the subject matter of this proceeding and over the parties.

 

FINDINGS OF FACT:

 

10.  The Claimants are the owners of approximately 36 acres situated in Putnam County, Indiana and commonly known as 7391 South State Road 243, Cloverdale, Indiana (hereinafter referred to as the “Claimants’ Property”), from which the Respondents harvested the Additional Trees as well as the 146 trees harvested under the Contract.  Complaint Exhibit A, Testimony of John Trisler.

 

11.  Minor and his wife are the sole owners of Hartman Logging.  Minor has been in the timber business for 30 years.  Testimony of Minor.

 

12.  After Respondents completed the timber harvest, Trisler counted 316 stumps on his property, while Jerome Hudson (Hudson), the consulting forester hired by the Claimants to inventory and appraise the trees in April 2008 counted 292 stumps.    Ron J. Ellis (Ellis), who was retained by the Respondents to inventory the trees in April 2010, counted only 266 stumps.  Testimony of Trisler, Hudson & Ellis, Respondents’ Exhibit A, Claimants’ Exhibits 3, 8 & 9.

 

[VOLUME 12, PAGE 306]

 

13.  It is not disputed that the Respondents cut more than the 146 trees specified by the Contract.  Id. and Testimony of Minor.

 

14.  Two culvert pipes on the Claimants’ property were crushed and the replacement cost would be $500.00.  Testimony of Trisler.

    

15.  The foresters’ inventories were prepared by locating the remaining stumps and identifying the species of tree from an examination of each individual stump.  The Respondents did not seriously dispute the tree species inventory that was prepared by Hudson approximately five months after the Respondents’ harvest was completed.  In light of the fact that Ellis was not engaged to inventory the trees until over two years after the harvest, when new growth and deterioration of the stumps would reasonably make identification more difficult, it is reasonable to infer that Hudson’s inventory is more accurate than the inventory prepared by Ellis.

 

16.  Ellis did not appraise or estimate the board feet associated with any of the trees harvested from the Claimants’ property. Testimony of Ellis.

 

17.  The Respondents provided a tally of the trees harvested.  For the trees harvested under the Contract, the tally identifies the number, the board feet and the price received for each species of tree harvested, but for the Additional Trees the Respondents’ tally identifies only one Poplar, one Walnut and one Ash along with the board feed [sic., feet] and price received for these three trees and combines all the other Additional Trees into the categories of “pallet” or “pulp”.  For the “pallet” category the board feet is provided and for the “pulp” the timber is reported by the ton instead of by board feet.  Claimants’ Exhibit 4.

 

18.  There is no evidence by which to correlate tons to board feet.

 

19.  It is impossible, after-the-fact, to distinguish which exact trees were marked for harvest under the Contract from the Additional Trees that were harvested.  Only the Respondents, who had previously marked the trees to be harvested under the Contract, were in a position to identify by number, by size or by board feet the Additional Trees as they harvested them.

 

20.  A comparison of the Respondents tally of trees harvested under the Contract to Hudson’s inventory will allow the identification of the Additional Trees by species and number harvested.  This identification is not without limitations because in certain instances Hudson’s inventory includes fewer trees of a particular species than the tally prepared by the Respondents.  For example Hudson reports that he identified 19 Hickory stumps despite Respondents having included 25 Hickory trees on their tally.  However, the Respondents’ tally includes only six Red Oaks when Hudson reports identifying 12 Red Oak stumps.  A similar situation exists in that Hudson identified one additional Poplar, four additional Hard Maples, six additional Walnuts, and one additional Aspen had been harvested while one fewer Hackberry and JO and two fewer Ash and Beech were harvested.  Hudson’s report indicates that one Red Elm and one Sassafras were harvested and those species do not appear on Respondents’ tally.

 

21.  Notwithstanding the noted discrepancies between Hudson’s inventory and Respondents’ tally the evidence is clear that the majority of the Additional Trees were comprised of 83 Locust, 22 Cottonwood and 30 Sycamore along with one Poplar, one Ash and one Walnut.  This accounts for 138 of the 146 trees.  The most that can be determined about the remaining 6 trees is that they are of the species where there exist discrepancies between Respondents’ tally and Hudson’s inventory, which means they could be any combination of Poplar, Hard Maple, Hackberry, Walnut, Aspen, Ash, Beech or JO.

 

22.  The highest paying market value for Locust is fuel wood, although Locust can also be used for other purposes including for posts.  Testimony of Hudson, Testimony of Ellis. Timber typically used for pallet material includes low quality small diameter logs and low grade upper logs from more valuable trees while pulp is usually comprised of low quality trees.  Hudson opined that the pulpwood was probably the Sycamore and Cottonwood.  Testimony of Hudson.  Id.

 

23.  Before Hudson surveyed the Claimants’ property for purposes of preparing his inventory and appraisal some of the tree tops had been moved.  Where the tree tops had not been moved the log length was estimated based upon the distance between the stump and the top.  For those trees for which the tops had been moved, the volume was estimated based upon the stand of the neighboring trees of the same species.  The quality of the harvested trees was based upon an examination of the stump, the tree top if possible, and the neighboring trees.  Ellis concurred with Hudson’s method of appraising the trees. Testimony of Hudson, Testimony of Ellis.  Ellis and Hudson agreed that appraising previously harvested timber is an estimation based upon the foresters knowledge, education and experience and the best evidence available in the woods where the harvest occurred.

 

24.  Overall, Hudson reports the per tree value of all the trees harvested from Claimants’ property as $38.35, which he characterized as “conservative.”  Testimony of Hudson.  Ellis agreed that Hudson’s method of appraising the timber represented a conservative approach but noted that Hudson used the highest value market for appraising the Locust.  Testimony of Ellis.

 

25.  Hudson’s per tree average value includes not only the  large number of low value trees harvested as the Additional Trees, but it also includes the higher value trees harvested under the Contract.  Determining the payment due to the Claimants for the Additional Trees based upon an average of all the trees harvested, when the evidence clearly reveals that the vast majority of the Additional Trees were low value Locust, Cottonwood and Sycamore would be inappropriate.

 

[VOLUME 12, PAGE 307]

 

26.  By dividing Hudson’s appraisal value of only the Locust, Cottonwood and Sycamore, or $3,970.00, by the number of trees of each of those species, or 179, a more appropriate per tree value is established for the Additional Trees.  That per tree average value for the Additional Trees is $22.17.

 

27.  Because Respondents’ tally does not account for the number of trees that were used to make pallet lumber or pulp, the only way to determine Respondents’ per tree average value for the Additional Trees is to divide the total reported monetary compensation associated with the Additional Trees, or $845.82, by the total number of Additional Trees harvested, or 146.  That calculation provides for a per tree average value of $5.79. 

       

28.  The largest part of the Claimants’ trees were processed through the Respondents’ sawmill and sold and the remaining small diameter logs were hauled for pulpwood.  Testimony of Minor. Respondents’ tally reflects that the trees harvested under the Contract brought only $5,351.10 and the Additional Trees brought $845.82.  Claimants’ Exhibit 4.  Respondents produced no receipt or record of any type reflecting sale prices for the pulp trees or the lumber processed from the Claimants’ timber or for any comparable lumber or pulp trees that would support their figures.

 

29.  To accept the compensation reflected on Respondents’ tally sheet as accurate would necessitate the conclusion that in addition to paying the expenses associated with employees, equipment and supplies, the Respondents lost $148.90 on the trees harvested under the Contract and made no profit on the Additional Trees.  This constitutes a huge financial loss when the Respondents would expect to profit approximately $2,000.00 on a contract of $5,500.00.  Testimony of Minor.  It is unreasonable to accept that Minor, a 30 year veteran timber buyer, could make such an egregious valuation error. 

  

30.  Trisler’s primary reason for contacting Minor was to “clear out some of the junk stuff to … to make the woods better, basically” and to allow some of the better trees to grow more vigorously.  Trisler, who acknowledged having no experience with forest management, conveyed to Minor the suggestions of Alan Royer, a Department of Natural Resources Forester Trisler consulted with respect to placing the property in the Classified Forest Program, and “listened to what he [Minor] thought needed cut” to clean up the woods and accomplish Trisler’s intended purpose. Testimony of Trisler.

 

31.  Trisler and Minor walked the woods for approximately two to three hours, identifying property lines as well as identifying, measuring and marking the trees to be harvested.   Minor understood Trisler’s intentions with respect to the timber harvest but refused to include in the Contract  additional “junk Locust, Cottonwood, Sycamore…less valuable trees” growing in essentially three groves that Trisler requested be marked for cutting.  Instead according to Minor’s testimony he marked some of the bigger trees of those species and included them in the Contract and instructed Trisler to advise him when Respondents were on site if he “wanted to clear them open to get some good growth coming back” and that the Respondents would cut the additional trees as they cut the marked trees.  Minor offered no rationale for refusing to include the “junk Locust, Cottonwood, Sycamore…less valuable trees” in the Contract.  Testimony of Trisler, Testimony of Minor.

 

32.  It is understood that the Respondents could not commit equipment and manpower associated with a timber harvest for the purpose of removing solely trees of species and of sizes that were not financially worthwhile to the Respondents.  Therefore it is reasonable that the Respondents would harvest higher value trees along with lesser value trees.  It would also be reasonable for the Respondents to adjust the compensation to Trisler or negotiate for the ability to harvest additional quality species trees to offset the harvest of an increased number of lesser quality trees as Trisler requested.  What is unreasonable is that Minor, a thirty year veteran timber buyer, simply refused to include in the Contract the terms for cutting the “junk trees” that Trisler requested be marked for cutting.

 

33.  The refusal to include in the Contract the harvest of “junk” trees that Trisler specifically asked to be removed without doubt established the foundation upon which this dispute arose.

 

34.  It is expressly noted that the Contract is not at issue in this proceeding.  To the extent that certain findings discuss the Contract or the parties’ negotiation of the Contract, such discussion is relevant only to an understanding of the parties’ dealings with one another as well as their respective understanding and intentions regarding the Additional Trees.

 

35.  When Minor initially presented Trisler with the Contract specifying that Trisler would be paid $5,500.00 for 146 trees, Trisler expressed concern that the price was too low.  Minor explained to Trisler that only “26-28” of the marked trees were “good trees” and the rest was “junk” and after receiving that explanation Trisler executed the contract for the price Minor offered.  Testimony of Trisler, Testimony of Minor.

 

36.  Minor’s statement that only 26-28 of the trees marked for harvest under the Contract were “good” trees is not entirely consistent with the Respondents’ tally.  Respondents’ tally reflects that a total of 75 quality species trees (including 33 Poplar, 2 Hard Maple, 25 Hickory, 6 Red Oak, 7 Walnut, 1 Cherry and 1 White Oak) as compared to 71 lesser quality species trees (including 4 Hackberry, 16 Sycamore, 19 Cottonwood, 1 Aspen, 9 Ash, 9 Beech, 9 Locust and 1 JO) were harvested as part of the Contract.  Claimant’s Exhibit 4.  This calls into question the veracity of Minor with respect to his dealings with the Claimants.

 

[VOLUME 12, PAGE 308]

 

37.  It is not disputed that following commencement of the timber harvest called for by the Contract a conversation occurred between Trisler and Minor but their recollections of that conversation are sharply opposed.  Trisler testified that he requested Minor remove three (3) Locust trees from an area near where he planned to build a pole barn and Minor recalls the conversation to have been Trisler’s renewed request to remove all the Locust, Cottonwood and other lesser value trees from three groves within the woods.  Testimony of Minor, Testimony of Trisler.

 

38.  Despite an attempt to portray Minor’s testimony at the administrative hearing as inconsistent with his deposition testimony given on February 24, 2010 a review of the cited portion of the deposition, in context, reveals that Minor has consistently maintained that Trisler instructed him to cut all the “junk” trees to clean the woods up.  Claimants’ Exhibit 10, pgs. 21-22.

 

39.  The determination that the Additional Trees actually harvested by Respondents were primarily Sycamore, Cottonwood and Locust lends credibility to Minor’s belief that Trisler instructed the Respondents to remove these trees from the Claimants’ property.  Logically, if the Respondents had intentionally harvested trees from Claimants’ property without permission, they would not have cut excessive numbers of low quality, low value species when better quality, increased value species were available for the taking.

 

40.  Larry Roberts (Roberts), a neighbor to the Claimants’ property and a friend of Trisler’s, understood from conversations with Trisler that the intent for having timber harvested from the woods was to remove all the “junk” from the woods.  This understanding is consistent with Trisler’s pre-Contract conversation with Minor and is generally consistent with the harvest of the Additional Trees that Minor insists he completed on the instruction of Trisler. Testimony of Roberts.

 

41.  Roberts knew there was “a lot of junk in the bottom that they were going to use as pulpwood… in the bottom was a lot of Sycamore and a lot of trash trees.”  Id.

 

42.  Without a doubt either Trisler instructed the Respondents to clear out all the “junk” trees or Minor understood Trisler to have instructed him to clear out all the “junk” trees.    

 

CONCLUSIONS OF LAW:

 

43.  The Claimants are timber growers.  Indiana Code § 25-36.5-1-1.

 

44.  The Respondents are timber buyers.  Id.

 

45.  A proceeding may be initiated by the Department of Natural Resources or a timber grower under Indiana Code § 25-36.5-1-3.2 against a timber buyer or a timber cutter when the timber buyer or timber cutter acquires timber from the timber grower without a written contract and without making payment “to the timber grower equal to the value of the timber as determined under IC 26-1-2.”  Indiana Code § 25-36.5-1-3.2(a), (b)(2)(A) and (c).

 

 

46.  The first inquiry; whether the Respondents acquired the Additional Trees from the Claimants without benefit of a written contract must obviously be determined in the affirmative.  The second inquiry; whether the Respondents tendered payment to the Claimants “equal to the value of the timber as determined under IC 26-1-2”, is answered in the negative.

 

47.  Under the Uniform Commercial Code (UCC), “goods” includes “growing crops and other identified things attached to realty…” that for purposes of this proceeding would encompass the Additional Trees.  Henze v. Powers Logging & Timber, 12 CADDNAR 188, 190, (2009), citing Indiana Code § 26-1-105(1).

                                                                                                                                  

48.  With respect to a contract for timber, the following applies:

A contract for the sale apart from the land of growing crops or other things attached to realty and capable of severance without material harm thereto but not described in subsection (1) or of timber to be cut is a contract for the sale of goods within IC 26-1-2 whether the subject matter is to be severed by the buyer or by the seller even though it forms part of the realty at the time of contracting, and the parties can by identification effect a present sale before severance. 

Id., citing Indiana Code § 26-1-2-107(2).

 

49.  Indiana Code § 26-1-2-204 specifies the method by which a contract for the sale of goods shall be structured:

Sec. 204. (1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.

(2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.

(3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

Henze, supra.  However, except under specific situations inapplicable to the present proceeding,

A contract for the sale of goods for the price of five hundred dollars ($500.00) or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought. 

Indiana Code § 26-1-2-201(1), emphasis added.

 

[VOLUME 12, PAGE 309]

 

50.  There was no written contract between the Claimants and Respondents relating to the Additional Trees.  Even by the Respondent’s calculation, the price for the Additional Trees exceeded $500.00, thereby requiring a written contract for the Additional Trees. All the more, there is nothing in the record upon which to base a determination that the Respondents and the Claimants entered into a verbal contract.  The Additional Trees harvested by Respondents were not clearly identified before severance (See Indiana Code § 26-1-2-107(2)) and the Respondents and the Claimants had not determined the number of Additional Trees to be harvested or the compensation that the Claimants would receive for the Additional Trees rendering it impossible to infer that the Claimants and Respondents intended to enter into a verbal contract (See Indiana Code § 26-1-2-204).  Further evidence that no contract of any type exists between the Respondents and Claimants is Minor’s own acknowledgment that he refused to include the Additional Trees in the Contract when Trisler requested that he do so and Trisler’s adamant denial that he renewed that request at a later time.

 

51.  The fact that Minor believed he understood Trisler to request that the Additional Trees be harvested does not alter the conclusion that a written contract was necessary and not even a verbal contract existed.

 

52.  Assuming arguendo that Trisler had requested that Respondents harvest the Additional Trees, in light of the fact that there was no written contract and the compensation to the Claimants was not established with respect to the Additional Trees, the Respondents were required to tender payment for the trees at their value as determined by IC 26-1-2. IC 25-36.5-1-3.2(b)(2)(B).

 

53.  Proof of market price under the UCC for purposes of a contract with open price terms is based upon “a reasonable price at the time for delivery”, Indiana Code § 26-1-22-305, and for purposes of damages on actions for anticipatory repudiation “the price of such goods prevailing” at or near the time the repudiation is discovered.  Indiana Code § 26-1-22-723.  “The fair market value is the price at which a willing seller and willing buyer will trade.”  Beeman v. Pendley & Zurich N. Amer., 9 CADDNAR 53, 54, (2002) citing Bottoms v. B. & M. Coal Corp., 405 N.E.2d 82, (Ind. 1980). 

 

54.  Hudson’s appraisal was prepared approximately 5 months after the Respondents’ timber harvest on Claimants’ property concluded.

 

55.  Despite Respondents protest that Hudson’s appraisal resulted in an inflated valuation, Respondents’ offered no independent appraisal to refute Hudson’s determinations.  Ellis, Respondents’ own witness, concurred with Hudson’s methodologies and agreed that the method by which Hudson affixed a value to the timber was conservative.  Hudson’s methods are widely accepted within the timber industry for determining stumpage value.

 

56.  The Respondents’ valuation of the Additional Trees, at the average of $5.79 per tree, is artificially deflated.  The Respondents’ tender of payment to Claimants in the amount of $845.82 does not constitute an offer of compensation as determined by IC 26-1-2.

  

57.  The Claimants are entitled to “payment which most closely represents the value of the trees ‘standing on their property’ because that is the state the trees were in” when harvested by Respondents.  Pollock v. Coats, 8 CADDNAR 124, 125, (1999).  The Respondents cannot expect to have harvested Claimants’ trees and then offer “what [they] got at the mill by arguing that once cut the trees were undervalued because of some imperfection. Stumpage is the value standing (or lying) in the woods.”  Id.

 

58.  The stumpage value of the Additional Trees is $3,236.82.

 

59.  A timber grower may seek

(1) Damages in compensation for damage actually resulting from the wrongful activities of the timber buyer or timber cutter.

(2) Damages equal to three (3) times the stumpage value of any timber that is wrongfully cut or appropriated without payment.

Indiana Code § 25-36.5-1-3.2(f).

 

60.  The imposition of treble damages is “‘to insure that timber buyers will exercise care in cutting of timber and to protect landowners from careless felling of their timber.’ Accordingly, the Commission can examine the care taken by the timber cutter and then determine an appropriate penalty, while keeping in mind the need for landowner protection.” The Adams Group v. Beckman, Meehan, and Ohio Casualty Ins. Co., 8 CADDNAR 134, 137, (1999) citing Wright V. Reuss, (1982), Ind. App., 434 N.E.2d 925. 

 

61.  Respondents were provided multiple opportunities to avoid the entire situation that resulted in this proceeding.  First, Minor refused to include within the Contract the harvest of the Additional Trees as requested by Trisler when the two men walked the property and marked the trees to be harvested.  Second, Minor could have assured a clear understanding of Trisler’s instruction by entering into a secondary or supplemental contract or at minimum clearly identifying and agreeing upon a price for the Additional Trees before harvesting them.  Minor, who is very knowledgeable regarding the timber industry and timber contracts was in a far superior position to have avoided this entire situation than was Trisler, who clearly possessed no knowledge of the timber industry or practices associated therewith.

 

62.  Under the circumstances that Minor’s actions were willful and completely outside normal timber practices, an award of three times the stumpage value of the Additional Trees is appropriate.

 

63.  A culvert was destroyed as a result of the Respondents’ timber harvest on the Claimants’ property.  There is no evidence in the record to suggest that the damage to the culvert occurred in association with Respondents’ “wrongful activities” and it is reasonable that damage to a culvert would have occurred as a result of Respondents’ timber harvest activities under the Contract.

 

64.  Claimants’ have failed to prove that Respondents’ are liable for damages associated with the damaged culvert.

 

[EDITOR’S NOTE: The original format of the Administrative Law Judge’s Findings of Fact, Conclusions of Law, and Final Judgment has been modified to correspond with CADDNAR format.  The Final Judgment, Paragraphs 65 and 66, has been relocated to the “Final Order” section at the beginning of this document.]