CADDNAR

[CITE: Pike Lumber Co., Inc. v. Cruse Timber, et al., 10 CADDNAR 28 (2005)]

FINAL ADMINISTRATIVE JUDGMENT

1. Pike Lumber Company, Inc. has an administrative judgment against Perry Cruse, doing business as Cruse Timber and Real Estate, in the amount of $14,900.07.

2. Pike Lumber Company, Inc. has an administrative judgment against the Harry I. Burnett Credit Trust in the amount of $11,147.70. This amount is joint and several with the judgment awarded against Cruse Timber and Real Estate.

3. Pike Lumber Company, Inc. has an administrative judgment and is entitled to forfeiture of the bond, posted on behalf of Cruse Timber and Real Estate, against Ohio Casualty Insurance Company in the amount of $4,966.69.

4. The recovery to which Pike Lumber Company, Inc. is entitled under this administrative judgment, apart from costs or interest that may subsequently accrue, is in the total amount of $14,900.07.

5. 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.

A. Statement of the Case

1. Pike Lumber Company, Inc. ("Pike") initiated the proceeding when it filed a "Complaint to Seek Compensation" with the Natural Resources Commission (the "Commission") on October 23, 2003. In the complaint, Pike outlined a claim against Perry Cruse, doing business as Cruse Timber and Real Estate, ("Cruse") and against his surety, Ohio Casualty Insurance Company ("Ohio Casualty").

2. Pike'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. On Pike's motion and without objection, the Harry I. Burnett Credit Trust (the "Burnett Trust") was added as a party on April 19, 2004.

4. Cruse, the Burnett Trust, and Ohio Casualty are collectively the "Respondents".

5. The regulation by the Department of Natural Resources 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. Pike contended it was entitled to relief against the Respondents for approximately 55 trees (the "55 trees") cut and harvested in violation of the Timber Buyers Act. The 55 trees are more particularly described as 32 soft maples, ten sycamores, seven cottonwoods, three red oaks, two hard maples, and one walnut.

7. Cruse is registered as a "timber buyer" under the Timber Buyers Act. IC 25-36.5-1-2.

8. Every person registered as a timber buyer is required by IC 25-36.5-1-3 to post a

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bond or other appropriate surety to provide compensation to a timber grower if the timber buyer:

9. Under the Timber Buyers Act, Ohio Casualty is the surety for Cruse.

10. Personal service was made upon each of the Respondents. The Commission has jurisdiction over the subject matter and jurisdiction over the person of the parties.

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

12. Sylvia R. Wilcox was initially appointed administrative law judge for the Commission. When she left the Commission's employment, Stephen L. Lucas was substituted for her as administrative law judge. He presided over a hearing that was conducted in Indianapolis on July 13 and November 4, 2004. Pike and the Respondents filed timely post-hearing briefs on December 3, 2004, causing the proceeding to become ripe for disposition.

B. Ownership of the 55 Trees

13. The 55 trees were harvested during a six-month period ending in April 2003 from or near a parcel of land containing approximately 128 acres and located near the West Fork of the White River in Baker Township, Morgan County, Indiana. This parcel has is within the northeast quarter, part of the southeast quarter, and part of the southwest quarter of section 26, township 11 north, range 2 west.

14. As pertinent to this proceeding, the Burnett Trust owned bottomland to the edge of the West Fork of the White River that is northwest of land owned by Pike. Cruse contracted with the Burnett Trust to harvest the 55 trees from an area that is claimed both by Pike and by the Burnett Trust.

15. After learning of the harvest, Pike employed Michael E. Sheppard, an Indiana Registered Land Surveyor, with offices in Paragon, to survey the line separating the property owned by the Burnett Trust from the property owned by Pike.

16. Sheppard performed the survey in July 2003 and staked a northwesterly line of the Pike property from where the line starts in the White River to where it ends in the White River. The Burnett Trust owns the adjoining property to the northwest.

17. Sheppard determined the property line was within the bottomland and along the north edge of a bayou, varying from roughly 100 feet to 350 feet northwest of the foot of a hill located on the property owned by Pike. Sheppard observed stumps from recently felled trees on Pike's side of the property line.

18. Sheppard testified that the deed for the property owned by Pike set forth a "very poor legal description", but he added that "what the legal description says is exactly what we laid out on the ground and calculated."[FOOTNOTE A].

19. Sheppard testified how the property line was determined. The description calls out the southeast corner of section 26, township 11 north, range 2 west. On the platted survey, he located the historically accepted stone that evidences the southeast corner and designated the stone as point "E".[FOOTNOTE B]. The description directs westerly along the section line for 60.40 chains (3,986.4 feet). In proceeding to the west, Sheppard located a stone historically recognized as being on the section line, and he designated the stone as point "F". The description did not reference point "F", but point "F" was used to help identify the bearing for the section line. Sheppard testified the distance in the description continued about 74.4 feet farther west than point "F", and he designated this calculated distance as point "G". He stated, "The eastside of the description calls out the section line,

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and it calls for a bearing of south one degree 30 minutes east." Sheppard also located a stone along the eastern side of section 26 that is historically recognized and designated the stone as point "D". The northern most point of the Pike property is located "well within" the White River. Sheppard indicated that he had no question as to the accuracy of the point and additionally observed, "the corner is in the river whether you use the record closing distance or what we measured back around." He explained, "We rotated that bearing to match the bearing of the record description, and then we calculated all the corners at just the exact same bearings and distances that the record description called for. When we came back to the section line, we held the record bearing and intersected it with the section line, and there was a difference in distance there." Sheppard said the discrepancy in the record versus the measured distance from the last call to the section line was 172.25 feet. The description calls for closing back to the point of beginning, and again there is a discrepancy in the record versus the measured distance of 117.7 feet. He acknowledged that the geometry of the description does not form a closed figure, but "the calls that the description makes are the calls that I held to lay out the boundary."

20. Sheppard also testified as to possible considerations that he determined not to apply to the survey. He stated he could not appropriately adjust the property boundary to conform to the foot of the hill because the greatest distance south the adjustment could be made was 117.7 feet, and this distance was well short of the hill in most areas. Sheppard suggested hypotheses in the "Surveyor's Report" portion of Claimant's Exhibit 5 (Supplemental) based upon the location of the bayou and the proximity of point "F" to point "G". He did not consult any parol evidence to determine the scrivener's intent, however, because neither the bayou nor point "F" was referenced in the description. He testified he could not properly locate the boundary based merely upon hypotheses. Although poorly written, the description was unambiguous, so he was required to locate the boundary based solely on the written description.

21. If Sheppard's survey correctly identified the northwest boundary of the Pike property, Pike has sustained its burden of going forward and burden of persuasion that Pike was the record owner of the 55 trees. The Respondents might yet prevail, however, if they effectively plead an affirmative defense and sustained their burden of going forward and burden of persuasion with respect to an affirmative defense.

22. The Respondents employed Eric S. Williams, whose offices are in Franklin, to critique the Sheppard survey of July 2003. Williams is an Indiana Registered Land Surveyor and an Indiana Registered Professional Engineer. He also reviewed other documents that might pertain to performance of the survey.

23. Williams testified he sought to determine the scrivener's intent. He found the description to be "very ambiguous" because "it doesn't mathematically close by 172 feet". Also, "the original scrivener's distances measured in the field by" Sheppard to the stone at point "F" is "741/2 feet in error." In the opinion of Williams, that rendered "the legal description in the deed very ambiguous." He testified proper surveying techniques require that "when the face of the deed is ambiguous, and it has been determined to be ambiguous and erroneous, you look towards extrinsic evidence which would be parol testimony." Also to be considered was "possession in the form of such things as fences, and remnants of fences, to clear up the ambiguity".

24. Williams said his opinion was that Sheppard should have given "more weight of evidence" to point "F" as the scrivener's intended corner, and Sheppard should not have extended the southern boundary of the description to point "G". He testified the discrepancy in measurement could be attributed to improved surveying technology used today as opposed to a 66-foot metal "chain" that was likely used in the original survey. The extreme topography between point "E"

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and point "F" may have been a contributing factor to the previous inaccuracy. Another possibility is that the original scrivener did not conduct a field survey but rather used the U.S.G.S. quadrangle map to calculate distances.

25. Williams testified that in determining intent he sought to apply technology with similar accuracy to what the original scrivener would have applied. He plotted the original traverse through the bottomlands that the original scrivener used then transposed the result onto a U.S.G.S. quadrangle map. Williams testified, "I noticed immediately that the shape of the traverse fits the shape of the toe of the slope of the hillside almost perfectly. It's too much to ignore." He determined to use point "F" rather than point "G" and to rotate the entire traverse three degrees clockwise "to make it match up with toe of slope of the ridge." Williams testified he believed this approach was "completely within the margin of error that the original scrivener obviously has shown in the ambiguous legal description."

26. Williams testified that "it should be noted, also, that the traverse on Mr. Sheppard's survey that he put down as literal on the ground never makes it to the east section line of section 26. It falls short by 172 feet, and he has chose to use the call to the section line." Sheppard then used the scrivener's bearings and extended the last bearing, which caused the northern point to fall in the White River. In contrast, Williams applied what he suggested was a guiding principle of surveying, that "distance prevails over direction." He "held that last distance" and rotated the entire traverse so it would terminate on the east section line. Williams testified he included the conclusion, that this approach matched the toe of slope "perfectly", as supportive extrinsic evidence.

27. If Williams is correct in his assessment of where the northwest boundary of the Pike property is properly located, the 55 trees were on land belonging to the Burnett Trust. Consequently, Pike would have no legal claim to the 55 trees and would not qualify as a "timber grower" under the Timber Buyers Act.

28. Pike employed Gary Robert Kent to critique the July 2003 survey by Sheppard and to assess the analysis by Eric Williams of Sheppard's survey. Kent is an Indiana Registered Land Surveyor with offices in Indianapolis and is also licensed in Michigan. His primary area of professional activity is in "mentoring and training" with regard to boundary determinations.

29. Kent is a member and past President of the Indiana Society of Professional Land Surveyors. He is a member of the Indiana State Board of Registration for Land Surveyors. He is a member of the Board of Directors of the National Society of Professional Surveyors. Kent is a member and past President of the American Congress on Survey and Mapping. He is a member of the Board of Directors of the Indiana Society of A.C.S.M. He is also a member of the American Land Title Association.

30. Kent is an educator in matters pertaining to the art and technology of surveying. He is instructor at Indiana University Purdue University, Indianapolis. He teaches courses in land survey systems, legal descriptions, boundary law, and property surveying. Among his professional awards is one from IUPUI for "Excellence in Teaching". Kent also teaches six or eight certified continuing education courses for Indiana Professional Land Surveyors. He has been a presenter for the Indiana Continuing Legal Education Foundation, including sessions for advanced real estate law. He also provides training nationwide directed to surveying and geographic information systems.

31. Kent has been a contributing author to a number of professional publications. These include "The Land Development Handbook", a chapter pertaining to surveying in the practice manual for the American Institute of Architects, and as a regular contributing author to "The American Surveyor".

32. Kent reviewed and studied the July 2003 survey by Michael Sheppard. He testified, "A lot of times boundaries lend themselves to more than one potential

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solution. There is not always a singular correct solution." In this situation, however, he would have approached the survey "basically the exactly same way" as did Sheppard. This conclusion is "a little unusual because often" Kent said he would often disagree with a surveyor's approach.

33. Kent indicated the two primary problems pertaining to the survey, of which he was aware, were that the description failed to close mathematically by a significant amount and the principles Sheppard applied were "called into question". He testified that the effect here was "irrelevant because the description, in fact, does close. The second-to-the-last course extends a distance to the section line.... The distance to the section line is significantly longer than what the description calls for, but the call to the section line is considered a call to a monument so that overrides the distance." There was another significant difference in the distance coming back south to the point of beginning, "but the call down the section line to the point of beginning overrides the distance." The stone depicted as point "E" is also a monument. There is "no net effect" of the failure of the description to close mathematically.

34. Kent testified the stone depicted as point "F" was irrelevant to the description at issue. He said a principle of boundary law is that for a monument to control a description the monument must be each of "three things". First, the monument must be called for in the description. Second, the monument must be identifiable. Third, the monument must be undisturbed. Because the stone at point "F" was not called for in the description, it does not constitute a controlling monument. The call in the description was for a distance of 60.40 chains (3,986.4 feet) and was not referenced to a monument. Stopping at the stone would have been "completely improper". As a result, the appropriate application of surveying principles requires the measurement to continue for 60.40 chains (3,986.4 feet) without regard for the stone at point "F".

35. Kent testified, "The weight of the authority with respect to descriptions is pretty clear in Indiana law.... [A]ccording to common law, a surveyor's task is to retrace the description, and what the primary thing we are trying to do is capture the intent of what that description is.... The rule of law from the weight of authority is that the intent of a document comes purely and simply from the document with...five exceptions. Only one of those exceptions has to do with the survey side of it, and that is the intent of the description comes from the description unless there is an extrinsic ambiguity. An extrinsic ambiguity is an ambiguity in the description that cannot be otherwise explained without extrinsic evidence, parol evidence, or...a variety of other things to explain what that description is trying to say.... If there is no extrinsic ambiguity, it is not allowed to have extrinsic evidence brought in." The description here did not have an extrinsic ambiguity, and there was no reference in the description to the toe of the slope, the bottom of the hill, or similar language. As a result, the proper application of surveying principles requires the application of bearings and distances without reference to the toe of the slope. "[T]he bearings and distances have to control because there are no words in that description to give direction otherwise...." Similarly, he testified there was no justification within the proper application of surveying principles for rotating three degrees.

36. Indiana law is consistent with Kent's interpretations concerning whether a description is ambiguous. The intention of the parties controls, but the question to be determined from a deed is "not what the parties meant to say but what they meant by what they did say." Porter v. Lucas, 131 Ind. App. 10, 169 N.E.2d 196, 201 (Ind. App., 1960). Even if there is an ambiguity, reference must properly be made to the "four corners" of the deed before resorting to parol evidence. Parol evidence cannot be applied if it contradicts the language in the description. Lippeatt v. Comet Coal and Clay Company, Inc., et al., 419 N.E.2d 1332 (1981 Ind. App.);

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Hauch v. Second National Bank of Richmond, 286 N.E.2d 852 (1972 Ind. App.). "...[W]here the description in a deed is not ambiguous, but is certain and complete, there is no occasion to resort to extrinsic evidence to ascertain the intent of the parties as to the land intended to be conveyed and, in the absence of an issued tendered directly attacking such description, making a correction or reformation thereof proper and material, resort to extraneous evidence is not proper." Ault v. Clark, 62 Ind. App. 55, 61, 112 N.E. 843 (Ind. App. 1916). Where there is no ambiguity in a deed, the intention of the parties must be determined from the language of the deed alone. Tazian v. Cline, 686 N.E.2d 95 (Ind. 1997).

37. Sheppard was correct in concluding that the description of Pike's property, although poorly written, was legally unambiguous. He correctly applied surveying principles to this conclusion. In critiquing the Sheppard survey, Williams erred in concluding the description was ambiguous.

38. Indiana law is consistent with Kent's interpretation of principles concerning priorities where there are conflicts in the description for a deed, as well as concerning the significance of controlling monuments. The order of priority from most to least controlling is as follows: (1) natural monuments; (2) artificial monuments; (3) courses; and (4) distances. Matanich v. American Oil Company, 216 N.E.2d 359 (1966 Ind. App.) and Lippeatt cited previously. In order for an object such as a stone to be a "controlling monument", the stone must be called for in the description. As provided by rule in Indiana, a "controlling monument" must be "called for in a record plat or land title description". As provided by rule, the purpose of a "controlling monument" is to govern "the location, dimensions, and configuration of the described tract." 865 IAC 1-12-2(b). A controlling monument referenced in a land description helps to establish the location of the line called for. A physical object is not a controlling monument unless the description references it for that purpose. 4 I.L.E. Boundaries §3 (2003 West Group).

39. Sheppard correctly applied these surveying principles in determining the boundaries of the Pike property. Because the stone at point "F" was not called for in the description, the stone was not a controlling monument. He correctly applied the controlling monuments, both natural and artificial, in the conduct of the survey. Williams erred in determining that direction would control over distance. More importantly, he erred in determining that the stone at point "F" was a controlling monument.

40. The only survey of the Pike property presented in evidence was the survey by Michael Sheppard. The facts and the law support the integrity and accuracy of this survey. The testimony of Eric Williams did not effectively discredit Sheppard's survey. The clear preponderance of the evidence supports the accuracy of his survey, and as particularly relevant here, with respect to the northwest boundary of Pike's property where it abuts property owned by the Burnett Trust.

41. Through application of the Sheppard survey, Pike sustained its burden of going forward and burden of persuasion that Pike was the record owner of the 55 trees. The Respondents might yet prevail, however, if they effectively plead an affirmative defense and sustained their burden of going forward and burden of persuasion with respect to an affirmative defense.

42. In the "Respondents' Post Trial Brief", they raised three alternative theories for ownership of the disputed land apart from what is properly delineated in a survey. They characterized the theories as being founded upon adverse possession, mutual mistake of fact, or estoppel.

43. With respect to adverse possession, the Respondents asserted, "While record title is the highest evidence of title, a deed is not title where one is not in possession of the real estate and record title may be defeated. Dowell v. Fleetwood, 420 N.E.2d 1356 (Ind. App. 1961). It is a well settled principle that a record title may be defeated by adverse possession through the operation of the Statute of Limitations

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where the possession has been actual, visible, notorious, exclusive, under a claim of ownership hostile to the owner of the record of title, and continuous for the full period of the statute. Connors v. Augustine, 407 N.E.2d 1186, 1188 (Ind. App. 1980) and Clark v. Aukerman, 654 N.E.2d 1183, 1185 (Ind. App. 1995)."

44. With respect to mutual mistake of fact, the Respondents asserted Harry I. Burnett and his successors in interest always understood the boundary between land now owned by Pike and land now owned by the Burnett Trust to be the foot of the hill. "Pike has not exercised dominion over the disputed area and, in fact, Pike's own agent placed No Trespassing signs along the foot of the hill in conformity with Burnett's understanding of the boundary."

45. With respect to estoppel, the Respondents asserted the "essential elements of estoppel are: 1) a representation or concealment of material facts, 2) made by one having knowledge of the fact, 3) made to one without knowledge of the facts or convenient means of ascertaining the true facts, 4) with intent that the other parties should act on such conduct, 5) upon which the other party is entitled to rely and which actually induces the other party to act in reliance thereon, to his detriment. ILE Estoppel & Waiver § 7, p. 348." Again, the Respondents placed emphasis upon the "no trespassing" signs. The asserted "The No Trespassing signs were materials facts, made by Pike, and posted with the intent that others rely upon the signs and not trespass on that property. Burnett and Cruse reasonably relied upon the signs in determining the boundary."

46. The three alternative theories raised in the "Respondents' Post-Trial Brief" have commonality. They were each directed to the exercise of dominion over land. Although the status of land from which trees are harvested is relevant, this proceeding does not ultimately determine land ownership. That can only be decided in a quiet title or other appropriate action in a civil court. Rather, the more direct consideration for the Commission is who is the owner of timber, or, in this instance, who is the owner of the 55 trees.

47. Within the context of this proceeding, the three alternative theories are affirmative defenses. An "affirmative defense" is a matter upon which the proponent bears the burden of proof and which admits essential elements of a complaint but asserts additional matter that would bar relief. Molargikv. West Enterprises, Inc., 605 N.E.2d 1197 (Ind. App. 1993). In effect, the Respondents asserted that although Pike may be the record owner of the land where the 55 trees are located, based upon adverse possession, mutual mistake, or estoppel, Pike is not entitled to compensation for the 55 trees.

48. 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. Before the hearing on which the party intends to assert it, a party shall, to the extent possible, disclose any affirmative defense specified by law on which the party intends to rely. If a prehearing conference is held in the proceeding, a party notified of the conference shall disclose the party's affirmative defense in the conference."

49. The Commission provides by rule in 312 IAC 3-1-4(b), "A party wishing to assert an affirmative defense...shall do so, in writing, filed and served not later than the initial prehearing conference, unless otherwise ordered by the administrative law judge."

50. The initial prehearing conference was held on November 25, 2003. On January 12, 2004, Cruse and Ohio Casualty filed their "Response to Complaint to Seek Compensation", and the response contained admissions and general denials but did not identify an affirmative defense. On April 14, 2004, the "Response of Harry I. Burnett Credit Trust to Motion for Joinder" was filed. This response also contained general denials but similarly did not identify an affirmative defense.

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The Respondents have not subsequently sought leave from the administrative law judge to assert an affirmative defense, and leave has not been granted.

51. Failure in a civil proceeding to raise an affirmative defense in a timely fashion generally results in its waiver. Custer v. Plan Com'n of City of Garrett, 699 N.E.2d 793 (Ind. App. 1998) and Molargik cited previously. Similarly, the Commission has held the failure to timely raise an affirmative defense under AOPA results in its waiver. Green Consruction v. Department of Natural Resources, 6 Caddnar 151 (1992).

52. The Respondents did not here raise adverse possession, mutual mistake of fact, or estoppel in a timely fashion. These affirmative defenses were each waived.

53. Even if these affirmative defenses were not waived, the Respondents have the burden of proof as to each and have not sustained those burdens.

54. With respect to adverse possession, there is evidence to support the proposition that Harry I. Burnett and his successors exercised some dominion over the bottomland beneath the toe of the slope. Sporadically, as when cattle ranged within an electrified fence, this dominion may have been exclusive. More often, the dominion was not exclusive. One illustration is that Pike openly and actively pursued relief for a 1996 timber theft from the area by a third person. Neither was it "visible" with any sense of consistency. Most clearly fatal to the claim of adverse possession was the absence of a showing that the dominion was "continuous". The preponderance of the evidence is that the exercise of dominion by Burnett was obscure, non-exclusive, and sporadic. The Respondents have not sustained their burden of proof with respect to a claim for relief based on adverse possession.

55. With respect to mutual mistake of fact, the evidence may support a finding that Harry I. Burnett and his successors believed the toe of the slope was the boundary. The evidence does not support a finding that Pike and its predecessor in title had the same belief. The location of "no trespassing" signs is found to be without significant probative value. The testimony is disputed as to whether those signs were placed with actual or apparent authority of Pike. Even if they were, however, the placement of a "no trespassing" sign at one location does not constitute acquiescence in transfer of land title at another location. The Respondents have offered no authority for the proposition that placing a "no trespassing" sign a distance within a property boundary, rather than immediately along the property boundary, acts to the detriment of the landowner. If the Respondents relied upon "no trespassing" signs located on the land of another as the delineation of a property line, their reliance was unreasonable. The Respondents have not sustained their burden of proof with respect to a claim for relief based on mutual mistake of fact.

56. With respect to estoppel, the Respondents have not made an actionable claim. There is no probative evidence to support the proposition that Pike concealed or misrepresented material facts or that Pike intended others should act upon such concealed or misrepresented facts. Also, the Respondents had just as convenient a means of ascertaining the critical fact as did Pike. The dispute arose because of the harvest of 55 trees on lands claimed by Pike and claimed by the Burnett Trust. The property line was a critical fact. Pike employed an Indiana Registered Land Surveyor to retrace the property line. The Respondents had the same means to ascertain the property line. If the Respondents had consulted with Pike as to the location of the property line, and if Pike had mislead the Respondents as to the location, estoppel might have been a viable affirmative defense. The evidence is that the Respondents neither sought a survey nor consulted with Pike before conducting the timber harvest. The Respondents have no reasonable basis for claiming relief based upon estoppel.

57. Sheppard's survey correctly identified the northwest boundary of the Pike property, Pike has sustained its burden of going forward and burden of persuasion that Pike was the record owner of the 55 trees.

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The Respondents did not effectively plead an affirmative defense with respect to adverse possession, mutual mistake of fact, or estoppel. Even if they had effectively plead one or more of these affirmative defenses, they have not sustained their burden of going forward and burden of persuasion with respect to any of them. Pike was the owner of the 55 trees.

C. Valuation of the Timber

58. Evan Patrick Walker, an employee of Pike, has a B.S. and M.S. from the University of Illinois. He is a certified forester whose experience includes 22 years as a district forester with the Department of Natural Resources.

59. Walker testified that Pike inventoried the 55 trees based upon standard forestry practices. The process was limited to a conservative interpretation of the property line resulting in the examination of an area "well within Pike's property". The stumps were measured "inside the bark with a folding ruler.... When the tree is cut down, it leaves an impact on the ground where the log hits." Walker said Pike "measured from where the impact on the ground was out to the tree top." The tree's top was identified and used to identify the length of the log. If the top had been moved, an adjustment was made to estimate the length "by experience". Pike measured the inside diameter of the stump and the inside diameter of the corresponding top. The merchantable length of the resulting logs was determined, then the Doyle Rule was used to estimate the volume. He testified this process is the accepted method in the industry for determining board feet. "In Indiana, trees are bought and sold by the Doyle Rule."

60. Walker testified that Pike identified the 55 trees that were taken, and two others that were left in the field. One was hollow and the other was "knocked over". A stump was found for each of one of 55 trees, and a conclusion was drawn as to the merchantable length. The logs had already been hauled off the site so Pike was required to estimate the size and condition of the logs. A written tally was prepared and admitted into evidence as Claimant's Exhibit 10.

61. Walker testified he obtained prices from the "2003 Indiana Forest Products Price Report and Trend Analysis" as prepared by William L. Hoover, Professor of Forestry at Purdue University and by Greg Preston, State Statistician at Indiana Agricultural Statistics Service. Claimant's Exhibit 7.

62. Walker testified he used the prices set forth in Claimant's Exhibit 7, and grades that he assigned to the logs from the 55 trees, to determine the value. He did not assign prime grade to any of the trees because no prime grade trees were believed to have remained following the 1996 timber theft. Based upon his experience, Walker assigned different grades to different logs. "Top logs were generally grade three and bottom logs would start at [grade] one if they would meet the diameter requirements." He applied the high-end prices from the lower grades and deducted hauling and logging costs. Taper and trim were also considered.

63. Applying all of these factors, Walker determined the value of the 55 trees was in the total amount of $4,966.69.

64. The methodologies applied by Walker, including application of the Doyle Rule, are consistent with methodologies previously approved by the Commission for determining stumpage values under the Timber Buyers Act. Gallien v. Sloan Logging, Pendley, and Zurick 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).

65. Cruse also provided a tally of logs delivered to a local sawmill that he testified were taken from the bottomlands in the vicinity of the Pike property. Cruse conducted logging activities in vicinity for several months, however, both from within the Pike

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property and elsewhere (notably well within the bottomlands of the Burnett Trust property). The Cruse tally did not contain all the tree species removed from the Pike property. His tally was not as persuasive for determining the value of the 55 trees as was Walker's tally, nor did Cruse's tally contain information that seriously rebutted the analyses used by Walker.

66. The preponderance of the evidence is that the value of the timber from the 55 trees was $4,966.69.

D. Unauthorized Timber Harvest and Financial Responsibility of Cruse

67. With respect to the 55 trees, Pike is a "timber grower" as the term is used under the Timber Buyers Act. IC 25-36.5-1-1 and IC 25-36.5-1-3.2(c).

68. As a "timber buyer", Cruse entered two contracts with the Burnett Trust to harvest trees on Morgan County land the Burnett Trust represented to Cruse as being owned by the Burnett Trust.

69. Cruse harvested trees pursuant to the contracts during a six-month period that ended in April 2003. This harvest included logging of the 55 trees. No harvest was performed in the locale during the period other than the harvest by Cruse.

70. Cruse did not contract with Pike to harvest the 55 trees nor did Pike otherwise acquiesce in the harvest by Cruse. Cruse has not compensated Pike for harvest of the 55 trees.

71. Pike 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."

72. 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).

73. Before conducting the timber harvest, Cruse did not cause a survey to be performed of the property line between the property owned by Pike and the property owned by the Burnett Trust. Neither did Cruse consult with Pike as to Pike's perspectives concerning the location of the property line. Cruse did not perform due diligence in ascertaining the location of the property line.

74. Pike is entitled to recover from Cruse three times the stumpage value of the 55 trees.

75. The 55 trees have a stumpage value of $4,966.69. Three times that value is in the amount of $14,900.07. Pike is entitled to recover from Cruse the amount of $14,900.07.

E. Financial Responsibility of Burnett Trust

76. In addition to the responsibility of the timber buyer, a "landowner" is among the class of persons who may be liable for a wrongful timber harvest. IC 25-36.5-1-3.2(e)(4).

77. The Burnett Trust is a "landowner" under the Timber Buyers Act and is the owner of land adjacent to the Pike property.

78. The Burnett Trust misrepresented to Cruse the location of the property line with Pike. As a result of the misrepresentation, Cruse was induced to harvest timber from the Pike property. As a party to two contracts with Cruse for the purchase and sale of timber, the Burnett Trust was compensated for the harvest of timber represented by the Burnett Trust as being its own but actually belonging to Pike.

79. This timber consisted of the 55 trees less two hard maple trees and three red oak trees taken from the hillside of the Pike property but beyond the line represented to Cruse as belonging to the Burnett Trust. The total stumpage value of the two hard maple trees and three red oak trees was in the amount of $1,250.79.

80. The value of the 50 trees taken from property owned by Pike but claimed by the Burnett Trust.

81. The 50 trees have a stumpage value of $3,715.90. Three times that value is in the amount of $11,147.70. Pike is entitled to recover from the Burnett Trust the amount of $11,147.70.

82. The liability to Pike of the Burnett Trust and of Cruse

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for the amount of $11,147.70 is joint and several.

F. Financial Responsibility of the Surety, Ohio Casualty

83. As the surety for Cruse under the Timber Buyers Act, Ohio Casualty is liable to Pike for the stumpage value of timber wrongfully cut and appropriated.

84. IC 25-36.5-1-3.2(g) limits any judgment against the Ohio Casualty to the value of timber wrongfully cut or appropriated.

85. The 55 trees have a stumpage value of $4,966.69.

86. Ohio Casualty is liable to Pike in the amount of $4,966.69.

G. Litigation Expenses

87. Pike seeks relief for expenses directly or indirectly incurred in preparation for this proceeding. These may be generally categorized as "litigation expenses".

88. Pike offered testimony that its litigation expenses included attorney fees in the amount of $396, survey fees in the amount of $1,770, and other administrative costs in the amount of $2,372.22.

89. 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).

90. 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).

91. The Indiana General Assembly has conferred power upon the Department of Natural Resources 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.

92. The Indiana General Assembly has not authorized the Commission to award litigation expenses under the Timber Buyers Act. The Commission lacks the legal authority to award litigation expenses under the Timber Buyers Act. Booker and Booker v. Mason and Shorter, 10 Caddnar 1 (2005).

93. Pike is not awarded its litigation expenses.

FOOTNOTES

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 the quotations as paraphrasing of witness testimony.

B. References to letters depicting points are to those set forth in Michael E. Sheppard's plat and report for his July 2003 survey and admitted into evidence as Claimant's Exhibit 5 (Supplemental).