Brazier Forest Products, Inc., In re
| Citation | 106 Wn.2d 588,724 P.2d 970 |
| Decision Date | 04 September 1986 |
| Docket Number | A-L,No. 51847-5,51847-5 |
| Court | United States State Supreme Court of Washington |
| Parties | , 2 UCC Rep.Serv.2d 339 ., Brazier Forest Products of Oregon, Inc., Brazier Forest Industries, Inc., Debtors. BRAZIER FOREST INDUSTRIES, INC., et al., Plaintiffs, v. NORTHERN TRANSPORT, INC.; Reece Bros. Logging Co., Inc.; Triple E Logging, Inc.; David R. Randall, Jr. and Diane Randall; Swiss Skyline Logging; Corbett Logging, Inc.; Dan Lund dba Lund Trucking; Sidney W. Dow: Pollman Cutting, Inc.; Admundsen Logging; Arlanco, Inc.; Brewer Logging; Ken Buchanan Trucking; Kinnan & Son; Phil Miller Logging; Fred B. Moe Logging Co., Inc.; Montgomery Nordhougen; F.H. Nalley Logging; Jeffrey C. Newell dba Newell Machine & Repair; Richard Booton Logging, Inc.; Scott Huddleston; Robert Gordon; Ron Cabe Inc.; Clair A. Crossman and Assoc./Skagit Surveyors, Inc.; Russell Graves dba Graves Logging Company; Puget Sound Log Scaling & Grading Bureau; Joe Zumstein Logging; James H. Large Trucking, Inc.; R & L Excavation, Inc.; G. Jackson Cutting, Inc.; James Faucett and Jr. Montieth dba Faucett & Monteith; United Security Services, Inc.; Thomas Creek Lumber & Log Co.; Ray Schoppert; McDougal Bros., Inc.; Harvey Buche dba Harvey Buche Logging, Inc.; Pugh Ridge Logging, Inc.; Freres Lumber Co., Inc.; Huss Enterprises; John A. Moen & Sons; Duncan Braithwaite Trucking; Cut-og, Inc.; St. Paul Fire & Marine Insurance Co.; U.S. Forest Service; Earl Buche Trucking; Gary Dahlin and Barbara Dahlin dba Dahlin Trucking; Rainier National Bank; Alpine Trucking Co., Inc., a Washington corp.; Bob Blacker and Jane Doe Blacker, husband and wife; J.C. Bryson and Jane Doe Bryson, husband and wife; Cowlitz Loggers Assn., a Washington corp.; Mark Hyatt and Jane Doe Hyatt; Elmer Kroeze and Jane Doe Kroeze, husband and wife; McDonald & Son, Inc., a Washington corp.; Pat Sygitowicuz, husband and wife dba P & J Timber Cutting; Tip Top Services, Inc., a Washington corp.; Cliff Whorton and Jane Doe Whorton, husband and wife; Graves Logging Co., a partnership consisting of Graves Enterprises Corporation, an Oreg |
Bell & Ingram, P.S., William Ingram, Lorna Bigsby, Everett, Lesourd & Patton, Jeffrey Wishko, Seattle, for defendants Northern Transport, et al.
Ulin, Dann, Elston & Lambe, P.S.C., Richard Lambe, Seattle, for defendant St. Paul Fire & Marine Ins. Co.
Hatch & Leslie, Willard Hatch, Daniel Merkle, Claudia Backlund, Seattle, for defendant Rainier Nat. Bank.
The United States District Court for the Western District of Washington, upon the recommendation of the United States Bankruptcy Court, has certified the following questions of state law to this court:
1. Can entities (including corporations, partnerships, and sole proprietorships), other than individuals who actually perform physical labor, properly claim a logger's lien under RCW 60.24.020?
2. Since corporations, partnerships, and sole proprietorships may properly file liens for hauling/trucking services rendered in transporting cut timber, if these entities may not file liens for logging services other than transporting, would such entities' mixing of a lien claim for transporting services with lien claims for logging labor invalidate the entire lien?
3. What is the relative priority of logger liens, stumpage liens and a security interest arising under the Uniform First, we hold that legally cognizable entities, including corporations, partnerships and sole proprietorships, are entitled to claim logger's liens under RCW 60.24.020. Second, because of our holding on the initial issue, we need not resolve the question of mixing valid and invalid lien claims. Third, we hold that logger's liens are prior to stumpage liens and both of these types of liens are prior to a security interest arising under the Uniform Commercial Code.
Commercial Code in inventory (consisting of cut timber, logs and wood products) and receivables?
Brazier Forest Products, Inc. and Brazier Forest Industries are lumber manufacturers. The normal course of Brazier's business is to obtain rights to cut timber on tracts of land and then to contract with others to perform various functions necessary to produce and deliver cut logs from standing timber. The functions include road building, road and site maintenance, "cutting" (severing), "bucking" (cutting into lengths), "yarding" (moving the fallen and bucked trees to a central loading point in the woods), "loading" (placing onto trucks), and "trucking" (delivering the logs to processing sites). Either along the delivery route or at the mill site, the cut logs are "scaled" (measured). Brazier does not maintain its own employees to perform these functions and subcontracts the entire logging process to others. Some of the subcontractors perform single logging functions, while others perform multiple functions or the entire logging operation at a given site. A number of parties in this case have claimed liens involving these functions pursuant to RCW 60.24.020.
In all cases relevant to this proceeding, the United States Forest Service owned the land on which Brazier acquired timber cutting rights and on which the operations giving rise to the logger's lien claims were performed. Brazier was to pay the United States Forest Service an amount fixed by contract for the timber. Pursuant to the contracts between the Forest Service and Brazier, title did not pass to Brazier The logger's lien claimants operate their businesses in a variety of ways. Of the approximately 50 Washington logger's lien claimants, 20 are corporations and the remainder are individual proprietorships or partnerships. The corporations acted either through employees or subcontractors in performing services for Brazier. The sole proprietorships and partnerships typically performed the contracts with a mix of the personal labor of the proprietors or partners and the labor of hired persons and subcontractors. In some instances, the individual proprietors or partners performed all the labor.
until the logs were scaled and paid for. The contracts allowed the posting of a payment bond to qualify as payment. St. Paul Fire and Marine Insurance Company provided such a bond with Brazier as the principal and the United States Forest Service as obligee
In all instances Brazier was to pay the logger's lien claimants for labor and services performed in an amount fixed by contract. Normally, payment was to be made on one of the following bases: for cutting, yarding and loading, at a specified rate per 1,000 board feet net, as scaled; for trucking, either at Washington Utility and Transportation Commission rates as of the time of the haul or at rates independently negotiated before the haul.
Some of the cut logs obtained by Brazier were delivered, pursuant to contract, to third party mills. The remaining logs were delivered to Brazier's own mills for processing into lumber or other wood products. The third party mills were to pay Brazier on the basis of the number of 1,000 board feet contracted for and delivered. These mills still owe Brazier a significant amount of money as a result of prebankruptcy sales of logs and wood products. Proceeds from postbankruptcy sales of logs and wood products are currently held in a blocked account.
In the summer of 1984, Brazier defaulted in the payment of many of its logging subcontractors. A substantial number of the subcontractors (the logger's lien claimants) filed lien claims pursuant to RCW 60.24 in various Washington In the summer of 1984 Brazier also defaulted in payments due to the Forest Service under its timber sales contracts. St. Paul has paid the Forest Service in full pursuant to the terms of its bond and has a subrogation right to the Forest Service's stumpage lien claims.
counties. In the majority of these lien claims, the claimant is identified as a corporation, partnership or sole proprietorship, and the amount claimed is the alleged unpaid portion of the contract price. Many of the lien claims are totaled, without segregation or allocation of the amount due as to each type of logging service performed
Rainier National Bank provided financing for the majority of Brazier's operations, including the purchase, maintenance, manufacturing and disposition of lumber, logs and other wood products. As of the date of Brazier's petitions in bankruptcy, the outstanding balance owed to Rainier Bank was approximately $33 million.
Before any of the lien claims were recorded, Brazier executed certain security interests in favor of Rainier Bank under Article 9 of the Uniform Commercial Code. RCW 62A.9. Security agreements covering inventory and proceeds, and corresponding financial statements, described covered collateral as follows: "All inventory consisting of cut timber, logs, lumber and sundry wood products...
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