1. The stumpage value of the trees belonging to the Adams Group which were taken illegally by timber cutter Virgil Beckman under the direction of landowner James David Meehan is found to be $4,974.78.
2. The stumpage value will be doubled so the Adams Group is granted an administrative judgment against Virgil Beckman and James David Meehan in the amount of $9,949.56.
3. The liability of Beckman's surety, Ohio Casualty Insurance Company, is limited to the stumpage value of $4,974.78 or the value of Beckman's surety bond, whichever is less.
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.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. Indiana Code (IC) 25-36.5 (the "Statute") and 312 Indiana Administrative Code (IAC) 14 (the "Rule") govern disputes regarding timber buyers regulated by the Department of Natural Resources (the "Department").
2. In accordance with IC 14-10-2-3, the Natural Resources Commission (the "Commission") is the ultimate authority for the Department under IC 4-21.5 (The Administrative Orders and Procedures Act (AOPA)).
3. This case was initiated by Rupert Darius Adams, Timothy Ivan Adams, Gregory Gene Adams, and Anthony Orlando Adams (the "Adams Group") filing a Complaint for Compensation for Wrongful Activities of Timber Cutter (Virgil Beckman) and an Adjoining Timber Grower (James David Meehan) with the Commission's Division of Hearings on May 12, 1998.
4. The Commission assigned Tim Rider as the administrative law judge (alj) to examine the Complaint.
5. In its Complaint the Adams Group charged that Beckman, while cutting trees for Meehan, had crossed a property line and cut trees belonging to the Adams Group.
6. The ALJ checked the records of the division of forestry, department of natural resources and ascertained that Beckman was licensed by State of Indiana and that his surety was the Ohio Casualty Insurance Company. The surety was joined as a party to this action.
7. During the course of this litigation a prehearing conference was conducted. At the prehearing conference it was ascertained that Beckman did cut the trees in question while cutting for Meehan but that the parties could not agree on who owned the trees nor on a stumpage value.
8. At hearing the only issues litigated were the ownership of the trees cut and their stumpage value of trees as well as the applicability of the treble damage provision of the Statute.
9. James David Meehan is the Trustee of the Meehan Trust, which, by a deed recorded in Deed Record 163, pages 759-760 in the office of the Recorder of Orange County, Indiana, is the owner of what can by shorthand be described as the southeast quarter of the northwest quarter of Section 6, Township 1 North, Range 2 West.
10. The Adams Group is
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the owner of real estate received by Warranty Deed recorded in Deed Record 153, pages 599-600 in the office of the Recorder of Orange County, Indiana, which may be described for shorthand purposes as the northeast quarter of the northwest quarter of Section 6, Township 1 North, Range 2 West.
11. That the deed description received by the Meehan Trust was based on a survey performed by Nelson Prall, Registered Land Surveyor, Registered Engineer and Attorney at Law and the deed received by The Adams Group was based on an aliquot description.
12. Meehan contracted with respondent Beckman on a one-half share for cutter and one-half share for grower for the cutting of timber on his quarter-quarter section. In causing the trees to be marked, Meehan used the Prall survey line as his north boundary line.
13. Meehan directed Beckman as to which trees to cut and has accepted responsibility for the designation of the trees.
14. The Adams Group was not satisfied with Meehan's interpretation of the common boundary between the property. Thereupon, by agreement, Meehan and The Adams Group engaged the services of Gordon W. Bell, Jr., Registered Land Survey, to survey the line.
15. Bell did survey the line, determined it to be south of the Prall survey line, and also south of an old fence remnant located in the area between the Bell survey line and the Prall survey line. Respondent's Exhibit A, presented at hearing, is the Plat of Survey, and it is helpful because it shows the location of the Prall survey line, the Bell survey line, and the fence remnants. Further, detail area "A" of the Plat of Survey, is where the trees cut by Beckman on behalf of Meehan are located. All are in the area of dispute between the Prall survey line and the Bell survey line. The Bell graphic indicates the location of 20 such trees in the disputed area. Other trees not in the disputed area were cut by Beckman. These other trees are not a subject of a controversy herein decided.
16. After suggesting (by testimony of Anthony Adams) or at least agreeing to the hiring of Bell to perform a survey to settle the dispute of where the property line should be between the Meehan and Adams Group, Meehan did not agree with the results.
17. At hearing Meehan introduced another expert, Jeff Souder, who is a registered land surveyor and the surveyor of Washington County, Indiana. Souder agreed with the Prall method of determining the property line and disagreed with Bell.
18. These experts testified as to how the last two quarters are to be divided in the northeast corner of a section. The Prall survey divides the last two quarters by calculating the distance between the SE corner or Meehan and the NE corner of Adams Group and dividing the total distance equally. Souder agrees with that method. Bell disagrees and maintains that all quarters are calculated equally to the last quarter (Adams Group) which receives any excess.
19. So this case, from a surveyor's standpoint, boils down to acceptance of the Souder interpretation and the Prall survey which divides the Adams and Meehan respective quarter-quarters equally on the east boundary line, or acceptance of the Bell interpretation which limits Meehan to a 1,320 feet eastern boundary of his quarter-quarter section and gives Adams Group 1,430.56 feet for their eastern boundary of their quarter-quarter.
20. If the Prall and Souder explanation is accepted, none of the trees involved are on Adams Group real estate. If the Bell survey is accepted, then 20 trees on the Adams Group real estate and were incorrectly cut by Beckman at Meehan's direction (the Bell survey shows 20 stumps in the disputed area).
21. The fence remnants are of no help, because the eastern terminus of the fence remnant is approximately midway between the Prall line and the Bell line.
22. The ALJ found both experts (Bell and Souder) to be sincere in their arguments. However, due to the fact that Bell performed an extensive on-the-ground survey while the Souder's examination was theoretical and he spent very little time onsite; that Bell is far more experienced in matters such
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as this then Souder; and that Bell was more persuasive in his testimony regarding flaws in the Prall survey and theoretical application of generally accepted surveying principles then Souder (See Bell's report at Claimant's Exhibit 2), the ALJ finds that Bell's finding of the location of the property line is more likely to be correct than Prall's.
STUMPAGE VALUE OF TREES TAKEN WHICH BELONGED TO ADAMS GROUP AND BY WHAT FACTOR, IF ANY, SHOULD THE VALUE BE INCREASED
23. In previous timber cases heard by the Commission, valuation of timber has been made primarily using value of timber stand at the time of the cutting (See Hagan, et al. v. Lewis, Cincinnati Insuance Co., Martin and US Fidelity & Guaranty Co., 7 CADDNAR 146 (1996).
24. The timber stumpage was estimated on an exhibit introduced by stipulation (S1) prepared by a forester named Reed as $5,358.96. Reed's estimate was based on 21 stumps, rather than 20 as indicated on the Bell Plat of Survey.
25. Normally, a detailed estimate prepared by a licensed forester would be given great weight when determining a stumpage amount. However, the fact that Reed detailed 21 trees while the Bell Plat which was performed at the expense of both Adams Group and Meehan indicated that 20 trees were in the disputed area, casts some doubt upon Reed's estimate.
26. The cutter Bechman testified that he estimated the trees in question to be worth about $2,000. This estimate could be termed as self serving as Bechman is a respondent in this matter.
27. A witness named Jeffrey L. Wilkinson was unavailable at the time of hearing. However, both parties agreed to depose this witness and to file the deposition with the alj to be used as evidence. Wilkinson was deposed on March 12, 1999, and said deposition was filed with the alj on June 3, 1999.
28. Wilkinson is a buyer of veneer logs and is familiar with the area in question. He visited that area for the purpose of possibly buying timber. He specifically remembered that the valuable trees were north of the fence remnant and his description places those trees in the disputed area. He estimated the value of the trees to be about $4,000 but his estimate was not at all precise.
29. The only accurate estimate would be the one made by Reed but it details one tree to many. Accordingly, the best stumpage amount can be found by taking the Reed estimate of $5,358.96 and subtracting the most expensive tree from his estimate. The most expensive tree listed on stipulated exhibit 1 is a Black Oak valued at $384.18. Subtracting that value from total estimate gives a figure of $4,974.78.
30. The amount arrived at above of $4,974.78 is the best stumpage figure the ALJ can calculate based on the evidence presented at hearing and this figure is owed Adams Group for trees taken.
31. The other question to be addressed is whether or not the stumpage figure should be increased up to three times its value as requested by the Adams Group.
32. In Hagan, supra, the Commission examined the Statute in terms of how three times stumpage should be awarded.
33. The current version of the Statute (IC 25-36.5) was enacted into law by P.L. 220-1993 on July l, l993. At that time the Indiana Legislature made significant changes in the way timber claims are handled.
34. One change dealt with how treble damages are awarded. The old version mandated treble damages and, for the most part, Indiana Courts have agreed. The new version allows treble damages to be sought (sec 3.2(f)(2)). This language appears to give the Commission discretion in awarding more than stumpage but less then three times stumpage.
35. In addition, the new version of the Statute holds the surety liable only for the value of the timber wrongfully cut (See sec 3.2(g)).
36. When a sum greater than stumpage
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is awarded, courts have generally held the penalty to be civil in nature. The penalty 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 (1982), Ind. App., 434 N.E.2d 925.
37. Accordingly, the Commission can examine the care taken by the timber cutter and then determine an appropriate penalty, while keeping in mind the need for landowner protection.
38. In this case, Bechman cut the trees for which he had contracted with Meehan. Meehan indicated what trees were to be cut by using the Prall survey. Because he had a survey which later proved to be incorrect the degree of fault is reduced somewhat. However, there was evidence offered that the line was generally known to be in dispute (see James Harrison testimony and the Jeffrey L. Wilkinson deposition).
39. Accordingly, a fair award under this set of circumstances would
be two times stumpage. This would adequately penalize Meehan for marking for cutting the
trees of another and would fairly compensate the Adams Group by paying them twice as much as the trees were worth standing.