The Nova L. Baird Trust is granted an administrative judgment under IC 25-36.5-1 against Speedy Howe Logging, Inc. in the amount of $5,394. The bonds of the Bloomfield State Band and the Indiana Lumbermens Mutual Insurance Company, posted with the Department on behalf of Speedy Howe Logging, Inc. and applicable to timber cut in the spring of 1992, are forfeited in favor of the Nova L. Baird Trust in an amount not to exceed $1,798. Speedy Howe Logging, Inc. shall receive credit to the extent payments are made to the Nova L. Baird Trust by Bloomfield State Bank or the Indiana Lumbermens Mutual Insurance Company. This administrative judgment addresses all issues of damage and responsibility and, after the completion of the opportunity for judicial review under IC 4-21.5, may be enforced in a civil proceeding as a judgment.
FINDINGS OF FACT
1. The department of natural resources (the "Department") is an "agency" as the term is defined in IC 4-21.5-1-3.
2. Adjudicatory proceedings of the Department are governed by IC 4-21.5 (sometimes referred to as the "Administrative Orders and Procedures Act" or the "AOPA").
3. The natural resources commission (the "Commission") is the "ultimate authority" (as defined in IC 4-21.5-1-15) for the Department.
4. The Commission governs any hearing for the Department which is conducted under the AOPA. IC 14-3-3-25. To assist in the administration of hearings under the AOPA, the Commission has adopted a rule as codified at 310 IAC 0.6-1.
5. On August 23, 1993, Kenneth Bays, Trustee for the Nova L. Baird Trust (the "Baird Trust"), filed with the Commission a complaint against Speedy Howe Logging, Inc. ("Howe Logging") for timber alleged to have been wrongfully cut from real estate owned by the Baird Trust.
6. The complaint commenced a proceeding before the Department which is governed by the AOPA; Stephen Lucas was appointed the Administrative Law Judge to conduct the proceeding.
7. The substantive law at issue is found primarily within IC 25-36.5-1, a statutory chapter which addresses the licensing of timber buyers and the administrative remedy for landowners aggrieved by a wrongful cutting of timber. In addition, the Commission has given final adoption to rules, to be codified at 310 IAC 23, which may be referenced as guidelines for the conduct of this proceeding.[FOOTNOTE 1]
8. Howe Logging is a timber buyer which is, and was at all times pertinent to this proceeding, licensed with the division of forestry of the Department pursuant to IC 25-36.5-1.
9. A timber buyer is required to maintain a bond with the Department made payable for the benefit of any landowner whose timber has been cut by the timber buyer, or an agent for the timber buyer, where the landowner is not paid for the timber. IC 25-36.5-1-3. See, also, 310 IAC 23-3-2.
10. Howe Logging has provided bond to the Department, as required under IC 25-36.5-1-3, through Bloomfield State Bank and Indiana Lumbermens Mutual Insurance Company.
11. Service of this proceeding has been made upon the Baird Trust, Howe Logging, Bloomfield State Bank, and the Indiana Lumbermens Mutual Insurance Company. Each of these persons is a party.
12. The Commission has jurisdiction over the subject matter of this proceeding and over the person of each of the parties.
13. Howe Logging entered an oral contract with Naomi Bays to cut timber located on real estate owned by her. The real estate owned by Naomi Bays is adjacent to the real estate owned by the Baird Trust which is at issue.
14. Pursuant to the oral contract with Naomi Bays, Howe Logging cut timber on her property in the spring of 1992. Howe Logging paid Naomi Bays for that timber.
15. In May or June of 1992, Howe Logging cut a fence which separated the Naomi Bays real estate from the Baird Trust real estate and entered upon the Baird Trust real estate. Howe Logging then cut 22 trees located on the Baird Trust real estate.
16. Howe Logging did not obtain permission from the Baird Trust to cut the fence or to enter upon the Baird Trust real estate. Although some inquiry was made by Howe Logging to Naomi Bays, the effort was insufficient to make a reasoned determination as to the boundaries of her property. Howe Logging acted without due regard for the
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property rights of the Baird Trust in cutting the fence, entering its real estate, and cutting 22 trees.[FOOTNOTE 2]
17. The Baird Trust has the burden of persuasion to show that it is entitled to compensation from Howe Logging (and from the bonds for Howe Logging through the Bloomfield State Bank or Indiana Lumbermens Mutual Insurance Company). IC 4-21.5-3-14 and IC 25-36.5-1.
18. John P. Stambaugh, a graduate forester from Purdue University, testified as to the value of the 22 trees on behalf of the Baird Trust. Stambaugh has performed two or three dozen valuations of timber prior to this valuation and is qualified by experience and training to render expert opinions as to timber valuations. In this instance, Stambaugh identified individual trees by species, measured the diameters of remaining stumps, and estimated the height of trees from the tops remaining at the site. He then determined the volume of lumber contained within the trees and calculated their value using commonly-accepted industry standards.
19. Stambaugh included in his valuations the "potential" of two white oaks (Quercus alba) for veneer production. White oaks of veneer quality have a value which is markedly higher than those suitable for ordinary lumber production.
20. Stambuagh testified, however, that "only Speedy Howe knows if there was any veneer."
21. Speedy Howe testified that in resales made from logging both the Naomi Bays real estate and the Baird Trust real estate (resales which were not segregated), there were no veneer trees.
22. In addition, Kenneth Bays testified the site was previously logged in the late 1970s or very early 1980s. Although recent logging activities are not dispositive of the presence or absence of veneer-quality trees in 1992, those activities are probably suggestive of their absence.
23. The preponderance of the evidence does not support a finding that trees taken from the Baird Trust real estate included veneer white oak trees. The Baird Trust has not supported the burden of proof on this issue.[FOOTNOTE 3]
24. Stambaugh testified to a value of $1,672 for 6,890 board feet of lumber taken from the Baird Trust real estate. This valuation averages 24.3 cents a board foot and is supported by the preponderance of the evidence.
25. Stambaugh also attributed 518 board feet of lumber to potential veneer.
Although the preponderance of the evidence does not support valuation as veneer, the timber should be valued at 24.3 cents a board foot as ordinary lumber. This valuation is in the amount of $126.
26. The Baird Trust is entitled to a total valuation for timber located on its real estate of $1,798.
27. Pursuant to IC 26-36.5-1-3.2, the Baird Trust should receive three times the stumpage value of the timber wrongfully cut by Howe Logging. See, also, 310 IAC 23-6-2.
28. The Baird Trust is entitled to compensation from Howe Logging for timber wrongfully cut from the Baird Trust real estate in the total amount of $5,394.
29. The liability on a timber buyer's bond is limited to the value of any timber wrongfully cut or appropriated. IC 25-36.5-1-3.2(g).
30. Bloomfield State Bank and Indiana Lumbermens Mutual Insurance Company are liable to the Baird Trust in the amount of $1,798.
31. This disposition addresses all issues of damage and responsibility and, after the completion of the opportunity for judicial review, may be enforced in a civil proceeding as a judgment pursuant to IC 25-36.5-13.2(j).[FOOTNOTE 4]
FOOTNOTES
[1] Final adoption was given by the Commission to 310 IAC 23 in November 1993. The rules are currently being reviewed by the Indiana Attorney General in the ordinary course of rule promulgation.
[2] Testimony also indicated that Howe Logging failed to repair the fence after the logging operation was completed. A bull strayed from the Baird Trust real estate, and the fence was not repaired until Kenneth Bays telephoned Speedy Howe to complain. The evidence demonstrates that Howe Logging was reckless in its treatment of property boundaries and fencing.
[3] Howe Logging offered into evidence two written appraisals of the timber cut from the Baird Trust real estate. These were made by C.S. Bond Forest Management of Bedford, Indiana, and Jerome M. Hudson from Bloomfield, Indiana. Because neither Bond nor Hudson was present at hearing in person to testify, the written appraisals are "hearsay". No opportunity was afforded for their cross-examination or to view their veracity or persuasiveness as experts.
Although an administrative law judge cannot dictate to a party what evidence to offer at hearing, the parties were advised in this proceeding, particularly during the second preheating conference, as to the use of expert testimony for
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timber valuation. See "Report of Second Prehearing Conference and Notice of Hearing" entered on November 3, 1993. "The parties indicated that they may wish to present expert witnesses at hearing and to offer opinions as to the value of timber cut by Speedy Howe Logging, Inc. The Administrative Law Judge will review the testimony provided by these witnesses and provide findings and a nonfinal order based upon that testimony.
The AOPA provides in IC 4-21.5-3-26(a) that an administrative law judge may, however, admit hearsay over the objection of a party, but the "resulting order may not be based solely upon the hearsay evidence." The Baird Trust did timely object to introduction of the two written appraisals, and they were admitted only as qualified by this statutory subsection. While these two appraisals are not used as the sole basis for making any finding, they are supportive of direct testimony by Speedy Howe that veneer was not included within the timber cut from the Baird Trust real estate. See, particularly, the appraisal by Jerome Hudson. "The larger of the two white oaks measured was found to be double-hearted. Because of these factors and also by judging from the quality of the surrounding uncut trees; I determined that neither of these white oaks were of veneer quality." Even in the absence of these appraisals, though, the preponderance of the evidence would not have supported a finding that veneer white oaks were present.
[4] Howe Logging expressed interest in the early stages of the proceeding in seeking reimbursement against Naomi Bays for some portion of the complaint brought by the Baird Trust. The opportunity afforded by IC 25-36.5-1 for joinder of other proper persons was outlined during the first preheating conference. See, particularly, IC 25-36.5-1-3.2(e)(5). Howe Logging elected not to pursue Naomi Bays, however, and this option is now foreclosed.