CADDNAR

[CITE: Fischer v. Stodghill and Hartford Fire Insurance Company, 10 CADDNAR 147 (2005)]

FINAL ADMINISTRATIVE JUDGMENT:

1. L. Anita Fischer has an administrative judgment against Greg Stodghill in the amount of $20,572.39.

2. L. Anita Fischer has an administrative judgment and is entitled to forfeiture of the bond, posted on behalf of Ghost Hollow Timber and Veneer, Inc., against Hartford Fire Insurance Company in the amount of $20,000. This amount is joint and several with the judgment awarded against Greg Stodghill.

3. The recovery to which L. Anita Fischer is entitled under this administrative judgment, apart from costs or interest that may subsequently accrue, is in the total amount of $20,572.39.

4. 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.

I. FINDINGS OF FACT AND CONCLUSIONS OF LAW

A. Statement of the Case with Evidence

1. L. Anita Fischer Mills ("Fischer") initiated the proceeding when she filed a "Complaint for Damages" with the Natural Resources Commission (the "Commission") on October 16, 2003. In this proceeding, Fischer outlined a claim against Ghost Hollow Timber and Veneer, Inc., Greg Stodghill ("Stodghill"), and against a surety, Hartford Fire Insurance Company ("Hartford Insurance") for timber alleged to have been wrongfully harvested in May 2001.

2. Fischer's claim is governed procedurally by 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 with its implementation of AOPA.

3. At all pertinent times, Fischer was the sole owner of real estate at 660 Country Side Drive, Jasper. In 1997, she had purchased a warranty deed to the real estate from Lawrence and Bernice Humbert. The real estate contains approximately three acres and is located in the east half of the southeast quarter of section 5, township 2 south, range 4 west in Dubois County, Indiana (the "subject property").

4. Sylvia R. Wilcox was initially appointed administrative law judge for the Commission. After she left the Commission's employment, Stephen L. Lucas was substituted for her as administrative law judge on January 26, 2004.

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5. The regulation by the Department of Natural Resources (the "DNR") of timber buyers, and other persons associated with the enterprise of timber harvesting, is provided in IC 25-36.5 (the "Timber Buyers Act").

6. A "timber buyer" means the owner, tenant, or operator of land in Indiana who has an interest in, or is entitled to receive any part of the proceeds from, the sale of timber grown in this state and includes persons exercising lawful authority to sell timber for a timber grower. IC 25-36.5-1-1.

7. Fischer is a timber grower under the Timber Buyers Act for the subject property.

8. A "timber buyer" means a person engaged in the business of buying timber from timber growers for sawing into lumber, processing, or resale, but the term does not include a person who occasionally purchases timber for sawing or processing for his own use and not for resale. IC 25-36.5-1-1.

9. A person must not engage in the business of timber buying in Indiana unless the DNR has issued the person a certificate of registration. IC 25-36.5-1-2.

10. 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.

11. Effective March 30, 2000, Hartford Insurance posted a surety bond in the amount of $20,000 for Ghost Hollow Timber and Veneer, Inc. under the Timber Buyer's Act. Stipulated Exhibit I, Part 16.

12. At all pertinent times in 2001, Ghost Hollow Timber and Veneer, Inc. was registered as a "timber buyer" under the Timber Buyers Act. IC 25-36.5-1-2. Stipulated Exhibit I, Part 18.

13. An "agent" means an individual who represents a timber buyer in effecting or attempting to effect purchases of timber. IC 25-36.5-1-1.

14. From December 12, 2000, Stodghill had been registered as an agent for Ghost Hollow Timber and Veneer, Inc. under the Timber Buyers Act. Stipulated Exhibit I, Part 19.

15. Stodghill's wife and Jeff Steimel were the owners of Ghost Hollow Timber and Veneer, Inc. in 2001. Testimony and Stipulated Exhibit I, Part 35, Deposition of Greg Stodghill, page 11.

16. In his deposition, Stodghill reflected that his "wife didn't trust him to make business deals and still doesn't today." In addition to owning the shares in the corporation, she performed the tax work, the corporate work, dealt with other business paperwork, and sometimes did courthouse research pertaining to land ownership. Stodghill's self-confidence to address the documentary aspects of the business was similarly limited. "She dealt with the stuff that I couldn't." His wife did not, however, research the ownership of the subject

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property. Stipulated Exhibit I, Part 35, Deposition of Greg Stodghill, pages 58 and 59.

17. Stodghill has more than 20 years experience in field aspects of timber harvesting.

18. Stodghill was uninterested in the corporate aspects of the business, and he wanted to limit his participation to the fieldwork associated with timber harvesting. Id.

19. Stodghill testified during the spring and summer of 2001, he worked in Indiana as a timber buyer. He personally contacted then contracted with the timber cutter who conducted the timber harvest on the subject property. In the operations of the business, Stodghill personally determined and instructed others where harvested timber was to be sent and sold. His wife did not perform these functions.

20. The parties dispute many of the other relevant facts. In some instances, the testimony and the documents are difficult or impossible to reconcile. To prepare a complete agency record, the disputed facts and their sources are described. Beginning with Finding 77, the administrative law judge outlines the facts that are found to be supported by the preponderance of the evidence.

21. Stodghill was interrogated by Fischer's attorney during the hearing concerning his treatment of the surety bond posted by Hartford Insurance, under the Timber Buyer's Act, for Ghost Hollow Timber and Veneer, Inc.

22. Fischer's attorney asked, "Now the bond that was used for timber cutting, that was your bond, wasn't it?" Stodghill answered, "Yes, it would have been."[FOOTNOTE A]

23. Fischer's attorney continued, "In fact, when you let Ghost Hollow dissolve and go into bankruptcy, you took that bond with you, didn't you?" Stodghill answered, "No, I canceled that bond."

24. Fischer's attorney continued, "Mr. Stodghill, do you remember having your deposition taken by me?" Stodghill answered, "Yeah."

25. Fischer's attorney continued, "You came to my office in Evansville to do it, didn't you?" Stodghill answered, "Yes."

26. Fischer's attorney continued, "And I direct you and your counsel to page 45" with the question "beginning on line 18. 'Okay. So you had the same bond all the way along. You took the bond with you when you left Ghost Hollow Timber and Veneer, Inc. didn't you.' The answer beginning on line 21, 'Yeah.'"

27. Stodghill responded at hearing, "I had, maybe it was such that I had the name changed on the bond to the new company name, that I wasn't incorporated."

28. In his deposition, Stodghill acknowledged that in November 2001 he changed the name on the Timber Buyers Act bond from Ghost Hollow Timber and Veneer, Inc. to his individual name. "I just told them basically we had an evil partner [in the corporation]. My wife was in business with a guy that was going to create liability for us, and I was not going to have a bond with him out there doing

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business on it." Stipulated Exhibit I, Part 35, Deposition of Greg Stodghill, page 45.

29. Fischer's attorney later asked Stodghill if he was logging in his personal name in May 2001. Stodghill responded, "I don't remember when the corporation was formed. I don't know."

30. Fischer's attorney continued and directed attention to Stodghill's deposition at page 16, beginning at line 16. Stodghill was asked for whom he was working in May 2001. Stodghill answered in the deposition, "I was still logging, but I was just under my own personal name, just me." Fischer's attorney asked at hearing, "Are those your words at your deposition at my office on January 4, 2005?" Stodghill answered, "That's what it says." Stodghill also acknowledged that he reviewed and signed the deposition.

31. Hartford Insurance cancelled the bond to Stodghill (doing business as Ghost Hollow Timber Marketing & Management), effective January 20, 2004. Stipulated Exhibit I, Part 20 and Part 21.

32. Personal service was made upon Stodghill and upon Hartford Insurance. The Commission has jurisdiction over the subject matter and jurisdiction over the person of the parties.

33. The Commission is the "ultimate authority" for the Timber Buyers Act and for this proceeding under AOPA. IC 14-10-2-3.

34. The debts of Ghost Hollow Timber and Veneer, Inc. were discharged by the United States Bankruptcy Court in a Chapter 7 proceeding. The company no longer has a corporate existence with the Indiana Secretary of State. Fischer and Stodghill agreed that Ghost Hollow Timber and Veneer, Inc. should be dismissed as a party, and the administrative law judge ordered its dismissal, on November 9, 2004.

35. At the time of the purchase of the subject property, Lawrence Humbert suggested to Fischer that there were eleven trees on the subject property with marketable timber value.

36. In 2001, Fischer was married to Tom Mills ("Mills"). Previously, Fischer and Mills had entered a pre-nuptial agreement that stated the subject property was Fischer's sole and separate property.

37. Fischer testified that Mills investigated the potential value of the timber on the subject property, as well as expressing to her an interest in becoming a timber buyer.

38. Stodghill testified that he had several conversations, with both Mills and Fischer, concerning a possible timber sale from the subject property. He said they "practically begged" him to cut the timber. Stodghill stated he declined because the subject property was too small to warrant cutting, but he told them he would try and locate another timber buyer who would be interested.

39. In his deposition, Stodghill described how he would seek locations with suitable timber and landowners willing to sell their timber for harvesting. "...I mainly just started buying and contracting, going out and trying to find

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jobs, which is getting harder and harder, almost next to impossible anymore." He added, "Usually I had guys that would work as independent contractors--I guess you could call them contractors--that would go out and find and look and try to get jobs." Stipulated Exhibit I, Part 35, Deposition of Greg Stodghill, page 17. He would sometimes place ads in newspapers, but "[t]hat was kind of expensive" and not always productive. Another method was to use plat books, but he did not "have the time and patience to find them. A lot of them are pretty confusing." Id. at page 19.

40. Stodghill testified that he placed an advertisement in a local newspaper indicating an interest in contracting with a timber buyer. "One of the calls that I got on that ad was" from Mills. Mills told Stodghill that "he had several friends that had large tracts of timber... If I would come and cut his timber... [for Mills and Fischer] that he would get those other jobs for me."

41. Stodghill testified that at the time he harvested the timber from the subject property, Stodghill had "not yet" hired Mills.

42. Indeed, Stodghill testified that he and Mills later explored the possibility of timber harvests from the friends of Mills, but no harvests resulted, and Stodghill never hired Mills.

43. Stodghill said Fischer telephoned him numerous times asking that he cut the timber, but he initially declined because the area to be harvested was "so small." Stodghill testified he eventually agreed to cut the timber because he "felt sorry" for Mills and Fischer.

44. Stodghill testified that he and Mills met at the subject property. Mills called Fischer, and she went over the contract terms with them by telephone. He said Fischer stated she was "all right" with them and authorized Mills to sign the contract. Mills then signed the contract.

45. Before cutting the timber, Stodghill "walked through" the subject property with Mills, but he did not prepare an inventory of trees that were going to be cut. Mills never showed Stodghill a power of attorney or other document to show that he was authorized to enter a contract on behalf of Fischer.

46. Fischer testified that in May 2001, she met Stodghill for the first time upon returning home from work. Stodghill and Mills were standing in her driveway discussing the possibility of Stodghill harvesting timber from the subject property and of Mills becoming an agent for Stodghill. Fischer testified she told Stodghill she was the sole owner of the subject property and handed him a copy of her warranty deed.

47. Fischer testified that Stodghill and Mills used the deed to determine real estate boundaries but that she and Stodghill never had a conversation about a timber sale.

48. Stodghill testified he never saw a copy of Fischer's deed for the subject property before the timber was cut.

49. In response to questions by Fischer's attorney at hearing, Stodghill testified he did not have a written contract with Fischer. "The contract was with her husband," Mills.

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50. Initially, Stodghill testified that he tendered a check made payable jointly to Fischer and Mills.

51. Upon further examination by Fischer's attorney, Stodghill identified check #2035, dated June 25, 2001, in which he tendered payment exclusively to Mills for timber harvested from the subject property. He testified, "It's made out to Tom [Mills], probably because his name was on the contract." The check was in the amount of $5,036.52. Stipulated Exhibit I, Part 4.

52. Fischer's attorney asked Stodghill what he did, before cutting the timber, to determine who was the owner of the subject property. Stodghill responded, "I had many conversations with Anita [Fischer]. The day I was at the house, I was on the phone to Anita [Fischer] prior to" Mills signing the written contract. He testified that Fischer told Mills and told Stodghill "to go forward with it." Stodghill said he relied upon the marriage of Fischer and Mills, and that they had the same surname, as indicating their joint ownership of the subject property. He did not check with the Dubois County Recorder or employ a title insurance company to determine ownership.

53. Later, Fischer's attorney asked Stodghill, "You've tried to lead us to believe today that you just trusted these people. You knew before cutting that timber that Anita [Fischer] was the sole owner, didn't you?" Stodghill answered. "No."

54. Fischer's attorney continued by asking Stodhill if he remembered having his deposition taken. Stodghill responded, "They were a married couple. Yes, I remember."

55. Fischer's attorney continued, "I point the court or the hearing officer and Mr. Feavel to page 32" of the deposition. He said Stodghill stated beginning at line 6, "'Well, Anita told me that she owned it, and I didn't see any reason to doubt her.'"

56. Stodghill's attorney returned to the same segment of the deposition in his examination of Stodghill at hearing. Beginning with the question at line 8 on page 32, he read the question from Fischer's attorney: "I understand you didn't doubt her." He states Stodghill's answer is "I didn't check it."

57. Stodghill's attorney continued reading with the question from Fischer's attorney at line 10: "You didn't check any records, did you?" Stodghill's answer in the deposition was "No". He continues reading a subsequent answer by Stodghill at line 14 of page 32 of the deposition. "But she also--both Tom [Mills] and Anita [Fischer] led me to believe that they owned it together."

58. In response to a question at hearing as to whom he believed owned the subject property, Stodghill answered, "I just assumed that it was both of them."

59. Fischer testified that Mills later informed her Stodghill had made an offer to purchase timber from the subject property and "had said that there was quite a lot of timber there and that it would be a select cutting, and our half should come out somewhere between $15,000 and $30,000." Fischer added, "And being a business person myself, I said I wanted to see it in writing."

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60. Fischer testified she was not provided with a written document. Instead, "I came home again, and the trucks were there," and Stodghill's timber cutters were "starting to cut. I went to Tom [Mills] and said I need to see this in writing."

61. Fischer testified that she stood in the presence of Mills while he used his cell phone to call Stodghill and request a copy of the written agreement for the purchase and sale of timber. She heard Stodghill tell Mills that Stodghill had mailed the agreement.

62. Fischer testified that on the next day, the timber cutters were present at the subject property. She again told Mills, "I need that contract." Mills again called Stodghill on his cell phone. Fischer said she heard Stodghill ask for her work "fax number" to provide a copy of the written agreement by facsimile mail. "The fax never came."

63. Fischer testified that on the third day, Mills telephoned Stodghill and again requested a copy of the written agreement. Stodghill responded that he would bring a copy, but he did not do so. "When I got home from work, the trees and all the men and everything was gone."

64. Stodghill denied in his testimony that these three conversations occurred. He said, "the day I signed that contract, I went home and made a copy of it and immediately put it in the mail. That's the last I ever heard of it." He testified he had no conversations with Mills during which Mills asked that Stodghill to mail a separate copy of the contract or to fax a copy to Fischer at her place of employment.

65. On cross-examination, Fischer testified that during the three-day period of the timber harvest, she spoke directly with Stodghill concerning a white oak tree that had been estimated to have a valuation of approximately $5,000. Fischer testified she believed the white oak was located on the subject property.

66. Stodghill testified he received a telephone call from his timber cutter alerting Stodghill to expect a telephone call from Fischer expressing the wish that a white oak tree be harvested. The timber cutter told Stodghill he believed the white oak was on a neighbor's property not the subject property. Additionally, the timber cutter told Stodghill he believed Fischer had an inflated opinion of the tree's worth.

67. Stodghill said he instructed the timber cutter not to cut the white oak tree if the cutter believed the tree was outside the property line of the subject property.

68. Stodghill testified Fischer did, in fact, telephone Stodghill shortly afterwards. She was "really mad that we wouldn't cut this tree."

69. The white oak tree was never harvested.

70. Stodghill testified that during the period of the timber harvest, Fischer never protested the presence of the timber cutters on the subject property "because she knew why we were there."

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71. On cross-examination, Fischer testified that she took no action to prevent the timber cutters from performing a harvest, and she did not seek to have the timber cutters removed from the subject property. Neither did she report to the DNR or other government officials that Stodghill or the timber cutters were on the subject property unlawfully or that they were performing an unauthorized harvest.

72. Fischer testified that neither Stodghill nor from Ghost Hollow Timber and Veneer, Inc. ever tendered payment, in her name, for the timber that was harvested.

73. On cross-examination, Fischer testified that Stodghill sent a $5,000 check to Mills at 660 Country Side Drive, Jasper shortly after completion of the timber harvest. The check was made payable exclusively to Mills, however, and did not name Fischer as a payee. The exact amount of the check was $5,036.52. Stipulated Exhibit I, Part 4.

74. On cross-examination, Fischer testified she spoke with Stodghill and informed him the check was an unacceptable payment. Acting on the advice of her former attorney, the check was not initially presented to the bank. She testified that the DNR recommended for her to accept the check as a partial payment, and she presented the check to the bank not later than August 2001. The bank informed her there were no funds to cover the check and that Stodghill had closed the account.

75. No subsequent payment was tendered to Mills, to Fischer, or jointly to Mills and Fischer for timber harvested from the subject property. Fischer has received no compensation for the timber harvest that took place on the subject property in May 2001.

76. Subsequent to conclusion of the timber harvest, Fischer and Mills were granted a dissolution of marriage. Included was a property disposition that was agreed by Fischer and Mills. The property disposition did not address the subject of any claims arising from the timber harvest.

77. As referenced in Finding 20, the parties dispute many of the facts. In some instances, the testimony and the documents are difficult or impossible to reconcile. Essential to rendering a final disposition is a determination of the weight to be given to the witnesses.

78. An evidentiary cornerstone of these Findings is that the credibility of Stodghill is seriously compromised.

79. Stodghill's responses to questions at the hearing were often non-responsive or evasive.

80. Stodghill's memory of events was myopic and self-serving.

81. As examples, Stodghill initially testified that payment for the harvest from the subject property was made jointly to Fischer and Mills. Only when his attention was directed to the check did he acknowledge that the payment was made exclusively to Mills. He initially testified that payment was tendered for all loads of logs hauled from the subject property. Only when his attention was directed to his own handwritten notes, which indicated a load was not included in the payment, did he acknowledge that his initial statement was inaccurate.

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82. Stodghill testified that the subject property was too small to be economically attractive, but he agreed to perform the timber harvest because he "felt sorry" for Fischer and Mills. At the same time, Stodghill acknowledged that he struggled to locate attractive parcels for timber harvests and that this struggle was becoming increasingly difficult. He testified he initially declined to harvest timber from the subject property. Stodghill later advertised for a timber buyer in a newspaper, and Mills responded to the advertisement. Mills told Stodghill that he had friends with good stands of timber and that he could assist Stodghill in contracting for their harvest. Stodghill then agreed to harvest timber from the subject property.

83. The finding is that Stodghill may have been lukewarm about harvesting the subject property, but he did not do so out of sympathy for Fischer and Mills. He did so because he hoped Mills would help him acquire his friends' timber. Although Mills did not become a "timber buyer" or "agent" for Stodghill, as those terms are used in the Timber Buyer's Act, theirs was an incipient business enterprise with Stodghill principal and Mills his agent. That Stodghill did not derive the benefits he sought from his relationship with Mills is of no import to his liability to Fischer.

B. Corporate or Individual Status of Timber Buyer

84. Ghost Hollow Timber and Veneer, Inc. was a viable corporate entity when the timber was harvested from the subject property in May 2001 and was then the legally designated "timber buyer" under the Timber Buyers Act.

85. Stodghill was largely uninterested in the corporate operations, however, and typically left the "paperwork" functions of the business to his wife.

86. Even so, Stodghill viewed himself as the "timber buyer" and made the decisions in the field.

87. Stodghill transferred the bond posted, under the Timber Buyers Act, by Hartford Insurance from the corporate name to his own name (Greg Stodghill, doing business as Ghost Hollow Timber Marketing & Management) when Ghost Hollow Timber and Veneer, Inc. declared bankruptcy in November 2001.

88. Stodghill even testified his best recollection was that he was operating the business in his personal capacity in the spring of 2001.

89. Under the best of circumstances, only a discerning of observer would have identified the line between Greg Stodghill, agent for Ghost Hollow Timber and Veneer, Inc., and Greg Stodghill, doing business as Ghost Hollow Timber Marketing & Management. These were not the best of circumstances. Stodghill did not take the corporate status seriously, and, significantly, did not manifest to Fischer that he did so.

90. There is no probative evidence that Stodghill made any distinction to Fischer in their business dealings, between himself as agent for Ghost Hollow Timber and Veneer, Inc., and himself as an individual.

91. Stodghill is individually responsible for acting as a timber buyer, under the Timber Buyers Act, with respect to the harvest of timber from the subject property in May 2001.

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C. Due Diligence by the Timber Buyer

92. A timber buyer must exercise due diligence in ascertaining that the person, with whom he contracts to purchase timber, is the owner of land on which timber is to be harvested. Beeman v. Pendley & Zurich N. Amer., 9 Caddnar 53, 56 (2002).

93. Fischer testified that she informed Stodghill she was the sole owner of the subject property, and, also, that she provided him with a copy of the warranty deed to assist with identifying its boundaries.

94. Stodghill refutes Fischer's testimony, but her testimony is more persuasive. The preponderance of evidence is Stodghill chose ignore the information provided by Fischer, and, instead, to seek to contract with and deliver compensation exclusively to Mills. In so doing, Stodghill did not exercise due diligence as a licensed timber buyer. He is liable under the Timber Buyer's Act for his failure to exercise due diligence.

95. Even if Fischer had not offered Stodghill documentation as to her sole ownership of the subject property, he still failed to exercise due diligence. Stodghill's testimony and his deposition indicate he either lacked the patience or capacity to address matters such as corporate management, taxation, and the identification of land ownership from plat maps. Typically, he relied upon his wife to perform these functions. If his wife's practices in ascertaining ownership and land boundaries are adequate, this approach is not inherently inappropriate. Yet, for the subject property, Stodghill did not even seek his wife's assistance in identifying ownership.

96. Instead, Stodghill testified he relied upon oral communications made to him by Fischer and Mills. By itself, reliance upon persons in possession of real estate as to ownership of the real estate is generally inadequate to show due diligence. A county recorder provides evidence of title not persons who happen to live on the land.

97. Yet, by his own testimony, Stodghill did not even act consistently with what he claims are the oral communications from Fischer and Mills. Stodghill claims Fischer and Mills told him they owned the subject property jointly. Stodghill treated the subject property as if it were owned solely by Mills. Stodghill drafted a written contract for the exclusive signature of Mills then tendered payment for timber harvested from the subject property solely to Mills.

98. Even if Stodghill's testimony were taken as persuasive, he did not exercise due diligence as a licensed timber buyer. He would be liable under the Timber Buyer's Act for his failure to exercise due diligence.

D. Valuation of the Timber

99. Stodghill testified that when he walked through the subject property he did not offer a value for the timber. He later testified that he estimated the value of their shares to both Fischer and Mills at $5,000, and they were both satisfied with this estimate.

100. Stodghill testified the that actual harvest "fell short, and just out of kindness I went ahead and honored it, and it was just an estimate. It wasn't

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even a written guarantee." The amount of the check was $5,036.52. Stipulated Exhibit I, Part 4.

101. Fischer testified that, if the timber tickets that were produced by Stodghill and admitted into evidence as Stipulated Exhibit I are totaled, the gross receipts for timber harvested from the subject property somewhat exceeded $15,000. "But not all the tickets are there...because he had his own personal yellow semi out there that took some loads." She testified these loads were in addition to those hauled by Ron Booker, an independent trucker with whom Stodghill contracted.

102. In response to questions by his attorney, Stodghill testified that, contrary to Fischer's testimony, there were no lost or missing loads from the timber harvest on the subject property.

103. On cross-examination, Stodghill was asked whether the check he wrote to Mills for $5,036.52 failed to include a load of timber delivered to the sawmill.

104. Stodghill answered, "I would assume that every check that we have that was divided out that there was payment made."

105. Stodghill was then shown the handwriting on Stipulated Exhibit I, Part 4, that stated, "I'm not sure how many loads are outstanding or if we even have any but your total is $5,036.52 as of now." Stodghill acknowledged that the handwriting was his own. Subsequently, on the same exhibit, Stodghill wrote, "I was correct when I told you I thought there was only 1 pole load out that I didn't have in yet."

106. Stodghill was then asked on cross-examination whether the referenced statements from Stipulated Exhibit I, Part 4, showed that not all timber was included in the check for $5,036.52. Stodghill responded, "That, I'll assume, is correct." After a recess to allow Stodghill an opportunity to identify a sawmill ticket that corresponded to the referenced load, he was unable to do so.

107. Gary U. Gretter testified as to the valuation of stumpage examined at the subject property.

108. Gretter is employed in the DNR's Division of Forestry as the Timber Buyer Licensing Forester. As such, he administers the Timber Buyer's Act including the conduct of timber appraisals.

109. Gretter testified he has been a forester in Indiana since 1968. He worked with loggers from 1968 through 1974. From 1975 until 1996, he was a forester who specialized in the development of improved harvesting practices. In 1996, he became the Division of Forestry's Timber Buyer Licensing Forester.

110. Gretter testified that, as the Timber Buyer Licensing Forester, he does approximately 40 timber appraisals annually. A timber appraisal is based on the stumpage value of trees. Stumpage value is the value of a tree standing in the woods on a stump. "It is not the delivered-to-the-sawmill price." The valuation considers the size in board feet of marketable timber, tree species, and quality of timber. The value is based on the Price Report for Delivered Sawlogs and Veneer Logs by William Hoover, Ph.D., of Purdue University and upon local log markets.

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111. Gretter indicated he visited the subject property on February 12, 2002 in anticipation of performing an appraisal of timber cut and removed. He measured one American beech tree, 14 black oak trees, 22 hickory trees, four red maple trees, five red oak trees, one scarlet oak tree, two sugar maple trees, two sweetgum trees, 38 white oak trees, and ten yellow popular trees. He completed his valuation in April 2002 and estimated the 99 trees contained 40,962 board feet with a total stumpage value of $20,572.39. Testimony and Stipulated Exhibit I, Part 34.

112. Gretter was asked on cross-examination how he could determine from a stump how tall a tree was, what the quality was, how many branches it had, whether the tree was diseased, or how many board feet a tree contained. He testified that "What I term it as is a calculated estimate, and it's based on my experience."

113. On cross-examination, Gretter was also asked about the relationship of the stumpage value to the delivered price. He responded, "For example, you deliver a log to a sawmill, and the sawmill pays a particular price for that log. I subtract the cutting, the skidding, and the hauling from that price, and then that's the price that I assign as stumpage value." The price was then based on the Price Report for Delivered Sawlogs and Veneer Logs and also the local log markets. He testified the Price Report for Delivered Sawlogs and Veneer Logs was prepared annually by William Hoover, Ph.D., as an Indiana statewide average, and Gretter's practice would have been to use the report applicable to 2001.

114. Stodghill testified as to his opinions concerning Gretter's timber appraisal. He said he "wouldn't honestly have any idea" as to whether the numbers and species of trees described by Gretter were accurate. He said over the course of eight months, between the harvest and Gretter's appraisal, stumps "in just a matter of a short few weeks, in the heat of the summer, they turn black. They dry up and they start checkering. You can't distinguish anything from it."

115. Stodghill was asked whether he believed Gretter's affidavit was a reliable document. Stodghill testified, "I don't want to irritate anybody, but I think it's crazy." He said there was "no three acres in history, that I've ever heard of, producing that much money or timber." He added, "It's ridiculous." His opinion was "there is just no way it can be correct or even close."

116. Stodghill testified as to how to account for how many logs are taken to a sawmill following a harvest. "The sawmill has a ticket that gives you how many feet within each log, what species it was, and how much they paid per board foot for it." He said that, upon delivery, the sawmill pays by board foot for grade logs and by tonnage for upper cuts where the timber is too small for logs. He said there was no veneer quality timber from the subject property because white oak veneer is only available during the winter "when the sap's down."

117. Stodghill testified that in writing a check in payment of timber harvested from the subject property, he did "the divisions from log tickets in accordance to the split that is shown on the contract."

118. On cross-examination, Fischer was asked about the estimate attributed by Mills to Stodghill that her half of the timber should be worth $15,000 to $30,000, when Gary Gretter estimated the total value of the timber to have been $20,000. Fischer responded, "Unfortunately, I had already hired a dozer to come

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in and clean up my yard so there is also additional stumpage that Gary [Gretter] didn't get to see." No estimate was provided, however, as to how many stumps may have been buried and thus excluded from Gretter's estimate.

119. The methodologies applied by Gretter, including use of the Price Report for Delivered Sawlogs and Veneer Logs and also the local log markets, are consistent with methodologies previously approved by the Commission for determining stumpage values under the Timber Buyers Act. Pike Lumber v. Cruse Timber, et al., 10 Caddnar 28 (2005) and Gallien v. Sloan Logging, Pendley, and Zurich N. Am., 9 Caddnar 40 (2002) citing 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).

120. The duration of eight months, between the harvest at the subject property and the appraisal's commencement, is not found to be an unreasonable delay. Although the passage of time was viewed as limiting its reliability, the Commission has given credence to an appraisal performed even two and one-half years after the harvest. Gallien v. Sloan Logging, Pendley, and Zurich N. Am. cited previously.

121. The Timber Buyers Act provides that the DNR may under IC 4-21.5-3-8 commence a proceeding against a timber buyer if there is reason to believe that: (1) the timber buyer or timber cutter has acquired timber from a timber grower under a written contract for the sale of the timber without payment having been made to the timber grower as specified in the contract; or (2) if: (A) there is no written contract for the sale of the timber; or (B) there is a written contract for the sale of the timber but the contract does not set forth the purchase price for the timber. IC 25-36.5-1-3.2(b).

122. In addition to the DNR, a timber grower may initiate a Commission proceeding as described in the previous Finding. IC 25-36.5-1-3.2(b); IC 14-10-2-3; 312 IAC 14-6-1; and 312 IAC 3-1-3(a)(2).

123. Fischer initiated a proceeding against Ghost Hollow Timber and Veneer, Inc. and Stodghill as anticipated by the Timber Buyers Act.

124. Neither Ghost Hollow Timber and Veneer, Inc. nor Stodghill entered a written contract with Fischer for the purchase of timber from the subject property. The preponderance of the evidence is that Fischer did not examine or approve the written document entered between Stodghill and Mills before the timber was harvested. Mills was not authorized to act on behalf of Fischer for the purchase and sale of the timber. If there was a business relationship existing at the time of the sale, it was an incipient agency relationship between Stodghill and Mills. Mills sought to benefit as Stodgill's agent or timber buyer, and Stodghill sought to benefit by obtaining access to the timber of his friends.

125. The only persuasive valuation evidence for timber harvested from the subject property is the appraisal provided by Gretter and described in his affidavit and testimony. Despite Stodghill's characterization of the appraisal as "crazy" and "ridiculous", the amount of the valuation is not grossly at odds with the sawmill tickets that Stodghill has attributed to the harvest. Gretter is a professional who is experienced in the valuation of standing timber and who has no personal stake in the outcome of the proceeding. He counted stumps,

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determined species, and made a calculated estimate of their value. There is nothing in the record to indicate that Gretter performed the appraisal other than in accordance with the standard practices for appraisals of this type or other than as has previously been approved by the Commission in the administration of the Timber Buyers Act.

126. Stodghill offered no reasonable alternative upon which to evaluate the harvested timber. He did not mark trees in advance of the harvest nor did he otherwise inventory the numbers of trees or species present. Neither did he offer any accounting of the stumpage. The evidence is unrefuted that his tendered compensation is based upon an incomplete compilation of sawmill tickets. At least one load was not included in the valuation. Also, Stodghill contracted with an independent trucker to transport the timber from the subject property to the sawmill, but Fischer testified that Stodghill's truck removed additional timber from the subject property.

127. To the extent that Fischer's own estimate of timber harvested from the subject property exceeded the appraisal of Gretter, the estimate is unsupported by substantial evidence. In particular, no value can be attributed to trees that were harvested but where she determined it necessary to bulldoze and bury the stumps prior to Gretter's appraisal. Any value that might be attributed to these trees would be speculative.

128. The preponderance of the evidence is that the stumpage value of the timber harvested from the subject property is $20,572.39.

129. Fischer is entitled to an administrative judgment against Stodghill in the amount of $20,572.39.

E. Treble Stumpage Value

130. In her complaint, Fischer seeks relief under IC 25-36.5-1-3.2(f)(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."

131. 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).

132. 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." 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). 29.

133. 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.

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134. Since the statutory amendments of 1993, the Commission has exercised discretion to demand less than the full impact of the treble damages clause where doing so would work an injustice. Beeman v. Pendley & Zurich N. Amer., 9 Caddnar 53 (2002) and Pollack v. Coats, 8 Caddnar 124 (1999).

135. In this proceeding, the timber was harvested from the subject property with the advance knowledge of Fischer. Although there was no written contract between Fischer and Stodghill as to the terms of compensation, she had the ability to preclude the harvest. By her own testimony, she was experienced in the workings of the business world. Indeed, the dialogue that took place between Fischer and Stodghill, concerning the unharvested white oak tree, indicates she was a willing participant in the harvest, although not necessarily in its extent and terms of compensation.

136. To grant treble damages to Fischer under the circumstances of the timber harvest from the subject property would be a windfall to her and would result in an injustice to Stodghill.

137. Fischer is not entitled to receive treble damages for the timber harvested in May 2001 from the subject property.

F. Laches

138. AOPA anticipates that a party may assert an affirmative defense. IC 4-21.5-3-14(c) sets forth principles as to how an affirmative defense must be pleaded and that the proponent has the burden of proof. The person "asserting an affirmative defense specified by law has the burden of persuasion and the burden of going forward with the...affirmative defense."

139. In a "Motion to Dismiss" entered on April 26, 2005, the Respondents sought to bar Fischer's claim based upon laches.

140. The administrative law judge entered an "Order Denying Motion to Dismiss" on the basis the motion did not include adequate documentation upon which to determine the motion.

141. Laches is an equitable doctrine that may not be applied arbitrarily or in the absence of conformity of general principles of equity. There are three elements to the doctrine:
(1) Inexcusable delay in asserting a right.
(2) An implied waiver arising from knowing acquiescence in existing conditions.
(3) A change in circumstances that causes prejudice to the adverse party.

A mere lapse of time is insufficient. Unreasonable delay that causes prejudice or injury is necessary. Vanderbuilt v. Vanderbuilt, 679 N.E.2d 909 (Ind. App 1997).

142. The issue of laches is a question of fact to be resolved in the exercise of sound discretion from the facts and circumstances of each case. Ebersol v. Mishler, 775 N.E.2d 373 (Ind. App. 2002).

143. The Respondents asserted in their "Motion to Dismiss" that Fischer failed to disclose that she and her husband were paid in full but they failed to negotiate the check. This assertion is not supported by the evidence.

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144. No payment was tendered to Fischer. The check was payable exclusively to Mills, who was not the owner of the subject property.

145. The amount of payment was disputed, and as determined in these Findings, was legally inadequate.

146. Within about two months of tender of the payment, Mills did deliver the check for payment by the bank, but Stodghill had already closed the account.

147. Fischer may have been able to assert a right to the check, but Stodghill encumbered her right by naming Mills as the sole payee. Stodghill was himself at least partly at fault for any delay by Fischer in exercising her right.

148. The Respondents have shown nothing in the conduct of Fischer to demonstrate an implied waiver between June when the check was tendered and August when the bank denied payment.

149. The Respondents have failed to sustain their burden of proof with respect to the defense of laches.

G. Financial Responsibility of the Surety, Hartford Insurance

150. At the time of the timber harvest in May 2001, Hartford Insurance provided the surety, as required under the Timber Buyers Act, on behalf of Ghost Hollow Timber and Veneer, Inc. The security was in the amount of $20,000.

151. A security is payable upon demand "for the use and benefit of the people of Indiana and for the use and benefit of any timber grower" who is entitled to compensation under the Timber Buyers Act. Compensation is for the stumpage value of timber wrongfully cut, or for which proper compensation has not been paid, in an amount not to exceed the amount of the security. IC 25-36.5-1-3 and IC 25-36.5-1-3.2.

152. The subsequent petition for and discharge in bankruptcy of Ghost Hollow Timber and Veneer, Inc. is irrelevant to the responsibility of Hartford Insurance as described in the previous Finding. The security was not an asset of the bankrupt. The security was an asset of the State of Indiana serving in a fiduciary capacity for a "timber grower" who is entitled to compensation under the Timber Buyers Act.

153. As the surety for Ghost Hollow Timber and Veneer, Inc. under the Timber Buyers Act, Hartford Insurance is liable to Fischer for the stumpage value of timber harvested and appropriated, without compensation, from the subject property in an amount not to exceed $20,000.

154. Fischer is entitled to an administrative judgment for bond forfeiture against Hartford Insurance in the amount of $20,000.

H. Litigation Expenses and Pre-Judgment Interest

155. Fischer seeks relief for reimbursement for attorney fees expended in an effort to collect an administrative judgment for the value of timber harvested from the subject property.

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156. Fischer also seeks interest on the value of the timber from the date of harvest.

157. Fischer has paid something in excess of $11,000 in attorney fees in an effort to collect an administrative judgment from Stodghill.

158. Indiana does not ordinarily allow for the recovery of litigation expenses as damages. "Expenses of litigation and attorney fees may not be included in damages unless they are provided for by some prior contract or statutue." Bituminous, Inc. v. Culligan Fyrprotexion, Inc., 437 N.E.2d 1360, (Ind. App. 1982).

159. Generally, awards of attorney fees in Indiana "are governed by the American Rule, under which each party bears its own costs. However, exceptions to the American Rule exist where certain fee-shifting statutes give a court or agency discretion to order one party to pay another party's reasonable attorney fees." Indiana Department of Natural Resources v. Hoosier Environmental Council, Inc., 831 N.E.2d 804 (Ind. App. 2005). Citations omitted.

160. A state administrative agency has only the powers conferred on it by the Indiana General Assembly. Powers not within the agency's legislative grant of authority may not be assumed by the agency nor implied to exist in its powers. Bell v. State Board of Tax Commissioners, 615 N.E.2d 816, 819 (Ind. Tax Ct. 1995), citing Fort Wayne Education Association, Inc. v. Aldrich, 527 N.E.2d 201, 216 (Ind. Ct. App. 1988). The Department of Natural Resources and the Commission, on administrative review, have only the powers granted to them specifically by the Indiana General Assembly. Pratt v. Indianapolis Water Co. and DNR, 9 Caddnar 17 (2001).

161. The Indiana General Assembly has conferred power upon the DNR and upon the Commission to award litigation expenses in some instances. Under proper circumstances, the Commission may award litigation expenses in its administration of statutes pertaining to surface coal mining, oil and gas production, entomology, and the possession of wild animals. These statutory authorities are coordinated and implemented, by rule, at 312 IAC 3-1-13.

162. The Indiana General Assembly has not authorized the Commission to award litigation expenses under the Timber Buyers Act. The Commission lacks the legal authority under the Timber Buyers Act to grant attorney fees. Pike Lumber Co., Inc. v. Cruse Timber, et al., 10 Caddnar 28 (2005) and Booker and Booker v. Mason and Shorter, 10 Caddnar 1 (2005).

163. Similarly, Fischer cites no authority for entitlement to interest on the value of the timber from the date of harvest. IC 34-51-4 that pertains to pre-judgment interest does not appear to apply. No basis has been established upon which the Commission may properly award Fischer interest on the value of her timber from the date of harvest.

164. Fischer is not awarded attorney fees. Neither is she awarded interest on the value of the timber.

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FOOTNOTE:

A. The court reporter has not been requested to prepare a transcript of testimony at hearing. If a witness is shown as being quoted in these findings, the statement is as nearly verbatim as could be determined by the administrative law judge. If a transcript is subsequently prepared that indicates different wording, the transcript shall be considered the official record and a quotation as paraphrasing of witness testimony.