1. The stumpage value is $440 of the trees taken unlawfully from John F. Gallien by Rodney Sloan, doing business as Rodney Sloan Logging, and by Tom Pendley. Gallien is entitled to three times stumpage value from Sloan and Pendley. Accordingly, Gallien has an administrative judgment against Sloan and Pendley in the total amount of $1,320. Sloan and Pendley are jointly and severally liable for the judgment.
2. John F. Gallien is entitled to an administrative judgment against Zurich North America in the amount of $440. Zurich North America has no liability to Gallien except to any extent Pendley and Sloan do not satisfy the $1,320 judgment against them. To the extent Zurich North America is required to satisfy the judgment, it may seek indemnification against Pendley as authorized by contract or statute.
3. This administrative judgment addresses all issues of damage and responsibility, and, after 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 AND CONCLUSIONS OF LAW1. John F. Gallien ("Gallien") initiated the proceeding when he filed correspondence with the Natural Resources Commisssion (the "Commission") on June 6, 2001 outlining a claim against Rodney Sloan, doing business as Rodney Sloan Logging ("Sloan"), and Thomas Pendley ("Pendley"). The Commission responded to the filing through its Division of Hearings on June 8, 2001 by seeking mailing addresses for service of the claim. Gallien provided the information in a letter filed on July 24, 2001.
2. At issue in Gallien's claim was a contention he was entitled to relief against Sloan and Pendley for timber cut and harvested in violation of IC 25-36.5-1. This statutory chapter provides for the regulation of timber buyers (the "Timber Buyers Act"). The trees were harvested in July 1999 from real estate owned by Gallien in the northwest quarter of section twelve, range eight north, township four west in Beech Creek Township, Greene County, Indiana (the "subject property").
3. Pendley is a "timber buyer" as the term is used under the Timber Buyers Act. IC 25-36.5-1-1 and IC 25-36.5-1-3.2(a)(1).
4. Pendley is registered as a timber buyer under the Timber Buyers Act. IC 25-36.5-1-2. Every person registered as a timber buyer is required by IC 25-36.5-1-3 to post a bond or other appropriate surety to provide compensation to a timber grower if the timber buyer: (a) fails to pay when due any amount due a timber grower for timber purchased; (b) fails to pay legally determined damages for timber wrongfully cut by a timber buyer or his agent; or, (c) commits any violation of the Timber Buyers Act. Zurich North America is the surety for Pendley.
5. Sloan is a "timber cutter" as the term is used under the Timber Buyers Act. IC 25-36.5-1-3.2(a)(2).
6. Gallien is a "timber grower" with respect to
[VOLUME 9, PAGE 41]trees that were standing on the subject property. IC 25-36.1-1-1.
7. Zurich North America was made a party in its capacity as surety for Pendley under the Timber Buyers Act.
8. Also applicable to the proceeding are IC 4-21.5 (sometimes referred to as the "Administrative Orders and Procedures Act" or "AOPA") and rules adopted by the Commission at 312 IAC 3-1 to assist in its administration of AOPA.
9. The Commission is the "ultimate authority" under AOPA for the Timber Buyers Act.
10. The Commission served a Notice of Prehearing Conference and Gallien's claim upon Sloan, Pendley, and Zurich North America in an entry made on October 3, 2001.
11. The Commission has jurisdiction over the subject matter and over the persons of the parties.
12. There is no dispute but that Sloan and Pendley cut six trees from the subject property without Gallien's consent. Included were four poplars, a hard maple, and a red oak.
13. The parties disagree fundamentally as to the amount of marketable timber within the trees. Both parties offered evidence supporting their respective positions, and the evidence provides some insight into valuation. All witnesses appeared to speak truthfully to the best of their knowledge and belief. Unfortunately, the evidence offered by both parties also has very serious limitations.
14. Gallien testified on his own behalf, primarily based upon measurements of cut logs performed by Robert F. Mullis. Gallien is articulate but has no professional forestry training nor did he testify to extensive practical experience in timber harvest or marketing. Mullis testified only very briefly. He acknowledged he was not a forestry professional and that his measurements were made in accordance with instructions by Gallien.
15. Pendley offered a written evaluation and appraisal of timber by C. Sam Bond, doing business as C. S. Bond Forest Management. Bond is a professional forester who is experienced in both valuation and marketing. He did not, however, observe the harvested logs nor is there any evidence he sought or considered measurements taken by Mullis. Bond based his valuation upon a survey in January 2002, approximately 2 1/2 years after the harvest. His written report did not include documentation as to how his numerical calculations were performed.
16. Gallien testified that in determining the number of board feet in the trees, he used their diameters at breast height (d/b/h). He determined the first poplar to have a 73" d/b/h; the second poplar a 67" d/b/h; the third poplar an 80" d/b/h; the fourth poplar a 70" d/b/h; the hard maple a 60" d/b/h; and, the red oak a 66" d/b/h. [FOOTNOTE i]
17. Bond's written report reflects radically different tree diameters. Although he does not identify diameters at breast height, he does identify stumpage diameters-measurements that should exceed those of the diameters at breast height According to Bond, the first poplar has a stumpage diameter of 26" at a height of two inches; the second poplar has a stumpage diameter of 27" a height of three inches; the third poplar has a stumpage diameter of 28" at height of two inches; the fourth popular has a stumpage diameter of 27" at height of four inches; the hard maple has a diameter of 20" at a height of four inches; and the red oak has a diameter of 19" at a height of four inches.
18. With respect to the diameter of the six trees, the measurements by Bond are more persuasive. Those offered by Gallien would describe extraordinary trees not otherwise supported by the evidence. Just as importantly, the subsequent calculations of board feet made by Gallien are not consistent with his statements of diameters at breast height. While the calculations of board feet by Gallien differed significantly from those by Bond, their respective calculations were not so divergent as would have been expected based upon their determinations of the tree diameters.
19. Bond referenced a hole in
[VOLUME 9, PAGE 42]the fourth poplar, a flaw that may reasonably be expected to negatively impact the value of marketable timber.
20. On the other hand, Bond seemingly had little evidence upon which to determine his evaluation of the hard maple. His written report suggests he estimated both the length of the tree and the top diameter. How he made the calculations for the hard maple is impossible to determine from the written report, and he was unavailable to supplement the written record with testimony. No weight is given to Bond's calculations regarding the hard maple. For this tree, the calculations by Gallien are found to be supported by the preponderance of the evidence.
21. Also, measurements of log lengths by Mullis are found to be more persuasive than those offered by Bond. Mullis observed the logs first-hand, and with one exception, he was able to measure the lengths of the logs onsite. Bond performed his calculations dependent upon stumps and tree-top remnants inspected 2 1/2 years after the harvest.
22. Bond referenced the Doyle Log Rule in determining the number of board feet contained in the trees. While the methodology used by Gallien is somewhat more opaque, his testimony also is not at odds with utilization of the Doyle Log Rule. While not offering an absolute numerical equation for determining timber within standing trees or from the remnants of trees following a harvest, the Doyle Log Rule is established as a time-proven guidance document. The Commission has previously acknowledged and applied favorably the principles of the Doyle Log Rule. Hornaday v. Ammerman, et al. , 8 Caddnar 112 (1999) and Hagan, et al. v. Lewis, Cincinnati Insurance Co., Martin and US Fidelity & Guaranty Co., 7 Caddnar 146 (1996). The Doyle Log Rule should also be referenced and applied here.
23. Reference to the Doyle Log Rule suggests Bond performed calculations resulting in conservative numbers that, while within an appropriate range, would generally tend to favor the interests of a timber buyer over those of a timber grower.
24. With this background, the preponderance of evidence supports these volumes of marketable timber:
A. First Poplar.............330 board feet.
B. Second Poplar..........320 board feet.
C. Third Poplar............590 board feet.
D. Fourth Poplar..........380 board feet.
E. Hard Maple ............237 board feet.
F. Red Oak................360 board feet.
TOTAL................... .2,217 board feet.
25. The parties agree the cost of harvesting and delivery to a reasonably located sawmill relative to the site would be 14 cents a board foot. The total harvest and delivery cost for 2,217 board feet is approximately $310.
26. Bond's professional expertise and experience lend credibility to his determinations as to the delivered value of the timber, both relative to value per board feet and gradation of the tree species. Gallien did not provide a foundation for either his valuations or the gradation of species. Gallien has the burden of persuasion with respect to these factors. The preponderance of the evidence supports use of timber values and in the same ratios as provided by Bond.
27. There are estimated to be 1,620 board feet of poplar. Half or 810 board feet should be valued as
[VOLUME 9, PAGE 43]upper grade poplar logs at 40 cents per board foot for the amount of $324. Half or 810 board feet should be valued as lower grade poplar logs at 23 cents per board foot for the amount of $186.
28. There are estimated to be 237 board feet of hard maple. Fifty-four percent or 128 feet should be valued as upper grade hard maple logs at 65 cents per board foot for the amount of $83. Forty-six percent or 109 feet should be valued as lower grade hard maple logs at 23 cents per board foot for the amount of $25.
29. There are estimated to be 360 board feet of red oak. Fifty-two percent or 187 feet should be valued as upper grade red oak at 50 cents a board foot for the amount of $94. Forty-eight percent or 172 feet should be valued as lower grade red oak at 23 cents a board foot for the amount of $38.
30. The total for the logs delivered to the sawmill would be $750. The logging and hauling costs of $310 are deducted from the $750.
31. The standing value of the six trees is approximately $440.
32. Gallien seeks relief against Sloan and Pendley under IC 25-36.5-1-3.2(2) for "Damages equal to three (3) times the stumpage value of any timber that is wrongfully cut or appropriated without payment." This remedy is sometimes referred to as the "treble damages clause."
33. Before 1993, the treble damages clause provided a timber buyer or timber cutter who "cut any timber which he has not previously purchased shall, in lieu of the normal penalties" pay the timber grower "three (3) times the stumpage value of the timber."
34. The purpose of the treble damages clause is "to insure that timber buyers will exercise care in cutting of timber and to protect landowners from careless felling of their timber." Wright v. Reuss, 434 N.E.2d 925, 22 (Ind. App. 1982).
35. The treble damages clause does not allow a timber buyer or a timber grower the defense of mistake of fact as to ownership of real estate where timber is located. Neither is a timber grower required to show the person who wrongfully cut timber acted with malicious intent. Beeman v. Marling, 646 N.E.2d 382 (Ind. App. 1995).
36. Amendments made to the Timber Buyers Act in 1993 made a number of fundamental changes. Among these was to replace the mandatory structure for treble stumpage damages with a new arrangement by which a timber grower may seek treble damages through an adjudicatory proceeding before the Commission. Since 1993, the Commission has found it has discretion to demand less than the full impact of the treble damages clause where doing so would work an injustice. Hornaday v. Ammerman cited previously and Pollock v. Coats, 8 Caddnar 124 (1999). Commission discretion may most appropriately be applied where the timber buyer or timber cutter acts with all due diligence, but because of misdirection or connivance of another, is caused to err.
37. Here Gallien played no role in the wrongful cutting by Sloan and his employees (who were acting on behalf of Pendley). Pendley obtained a survey to identify property lines, but there is no evidence the survey was done incorrectly. Rather, testimony suggests Sloan's employees misunderstood the significance of flags placed during the survey. They crossed the survey line and cut the six trees. The employees' intent was not malicious, but a showing of bad intent is not an element for application of the treble damages clause.
38. Gallien is entitled to three times the stumpage value of $440 against Pendley and against Sloan. The amount of Gallien's administrative judgment against the timber buyer and the timber cutter should be in the amount $1,320. The liability of Pendley and Sloan to Gallien is joint and severable.
39. Gallien is also entitled to an administrative judgment against Zurich North America. The amount of his judgment against Zurich North America is limited by IC 25-36.5-1-3.2(g) to $440. Zurich North America has no liability to Gallien
[VOLUME 9, PAGE 44]except to any extent Pendley and Sloan do not satisfy the $1,320 judgment against them. Also, to the extent Zurich North America is required to satisfy the judgment, it may seek indemnification against Pendley as authorized by contract or statute.
FOOTNOTEi. One possibility is the measurement which Gallien testified were diameters at breast height were actually circumferences at breast height. He may have later converted the circumferences to diameters and made calculations of board feet based upon d/b/h. To reach this conclusion as a finding of fact would, however, be highly speculative.