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Tie Liability

Started by 4x4American, August 10, 2016, 06:01:00 PM

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4x4American

I had a tie buyer at the mill yesterday and he was saying that they end plate each tie and they put the mill that sawed it's name on it and that if theres an accident it's a huge liability.  Is this something I should be worried about?  They pay good and it's FOB mill, so that part is good, but...My name on a tie that extradinary amounts of $ is going over just gives me a bad taste in my mouth.  In my eyes, I'm selling them a raw material that they are further processing to make it a marketable rr tie.  Should I be held liable?  Wouldn't it make more sense if the guy who graded it was held liable?  They have a market for ties that didn't pass, so to me, I'd like to send my good, bad and ugly, and let them decide which ones will be ties and which ones they send for ikg or whatever its called. 

Eh?
Boy, back in my day..

Kbeitz

Include on your stamp that your tie is good for 1lb max per sq inch...
No way no how would I get into that... There just trying to push
the responsibility off on to the next person.
Collector and builder of many things.
Love machine shop work
and Wood work shop work
And now a saw mill work

4x4American

There's a thought...I can't control what is written on the plate but I can write on all the invoices that
Boy, back in my day..

esteadle

Never heard of this, but I would Run... now.
This is clearly an effort to move the liability to the small pockets (you).
The rail market is owned by billionaires who have lawyers.
When lawyers are involved, you could do every single thing right, and still lose.
Because they tie you up in court, and make you pay one of them to defend you.

Even if you think you can make money on it, and would be willing to accept it, think long term.
If Koppers and the rest of them start doing this to you, they have a way to do it to everyone.
If you refuse to cooperate, then they will move to the next supplier.
But if he also refuses, and so do the rest, then they can't get supply and will have to back off.
Best thing to do is follow your gut and not accept that. Stop it now, while it's getting started.
Otherwise, we will all end up targets of lawsuits for future rail accidents.

4x4American

I did a job over in shushan ny awhile back I had posted the pics of a train that passed right by.  There was a train hauling topsoil I believe on that thing all day and the track was hardly supported.  If they can run up and down that line without hardly any cross ties than I don't see how I could be held liable for my cross tie. maybe the engineer should take the heat instead.  It's a mad mad mad mad mad mad mad mad world
Boy, back in my day..

Tree Dan

That all sounds way too fishy to me.
They could put your name(Stamp) on someone elses tie.

I would  change your invoices with the discriptions of the ties.
Better still dont work for them.
Wood Mizer LT40HD, Kubota KX71, New Holland LS150, Case TR270
6400 John Deere/with loader,General 20" planer, Stihl 880, Stihl 361, Dolmar 460, Husqvarna 50  and a few shovels,
60" and 30" Log Rite cant hooks, 2 home built Tree Spades, Homemade log splitter

4x4American

Quote from: Tree Dan on August 10, 2016, 06:58:21 PM
That all sounds way too fishy to me.
They could put your name(Stamp) on someone elses tie.

I would  change your invoices with the discriptions of the ties.
Better still dont work for them.

Yea but I mean...a 7x9 tie is a 7x9 tie how could I describe them any better than that?  They get them, end trim them, plate them, and then do the treat.  And he was saying that by doing something they eliminate the tie from twisting
Boy, back in my day..

Tree Dan

Quote from: 4x4American on August 10, 2016, 07:08:13 PM
Quote from: Tree Dan on August 10, 2016, 06:58:21 PM
That all sounds way too fishy to me.
They could put your name(Stamp) on someone elses tie.

I would  change your invoices with the discriptions of the ties.
Better still dont work for them.

Yea but I mean...a 7x9 tie is a 7x9 tie how could I describe them any better than that?  They get them, end trim them, plate them, and then do the treat.  And he was saying that by doing something they eliminate the tie from twisting

I would call them "7x9 posts."
"Please note that these posts are not graded."
Imo there not RR Ties untill they are graded and compleated.
If they dont like it, dont work for them.
Like I said, its too fishy and they want to have a fall guy if something goes wrong.
Wood Mizer LT40HD, Kubota KX71, New Holland LS150, Case TR270
6400 John Deere/with loader,General 20" planer, Stihl 880, Stihl 361, Dolmar 460, Husqvarna 50  and a few shovels,
60" and 30" Log Rite cant hooks, 2 home built Tree Spades, Homemade log splitter

WV Sawmiller

   Sounds hokey to me. How can you be responsible when you are not selling a finished product. You have no control over the follow-on treatment the tie got after it left your yard. How about the adjacent ties? Were they up to spec? You have no control over that. Was your tie a replacement put in between others that were no longer up to code?

    I think I'd put on my invoice "Tie inspected by buyer and verified to meet customer specifications as to size and material listed in the contract".
Howard Green
WM LT35HDG25(2015) , 2011 4WD F150 Ford Lariat PU, Kawasaki 650 ATV, Stihl 440 Chainsaw, homemade logging arch (w/custom built rear log dolly), JD 750 w/4' wide Bushhog brand FEL

Dad always said "You can shear a sheep a bunch of times but you can only skin him once

4x4American

Good ideas.  Now what's this mean I have to go ask a lawyer what will hold up in court? 
Boy, back in my day..

WV Sawmiller

    Another thought might be to specify that you are just selling a hardwood beam/cant of a specified size and material for unspecified use then let the liability for end item application rest with the buyer. You don't know if he intends to put it under a railroad track or for landscaping timbers nor do you care what he uses it for.
Howard Green
WM LT35HDG25(2015) , 2011 4WD F150 Ford Lariat PU, Kawasaki 650 ATV, Stihl 440 Chainsaw, homemade logging arch (w/custom built rear log dolly), JD 750 w/4' wide Bushhog brand FEL

Dad always said "You can shear a sheep a bunch of times but you can only skin him once

4x4American

Another good point.  But don't ya think the judge would say, you knew dang well that you were selling to a major rr tie company
Boy, back in my day..

jmouton

i dont know,,, i think i would run,, way too many  frivolous lawsuits today ,  need alot of insurance to cover it,


                                                             jim
lt-40 wide ,,bobcat,sterling tandem flatbed log truck,10 ton trailer, stihl 075,041,029,066,and a 2017 f-350,oh and an edger

Ox

I like the post ideas.  Sell them posts.  It's not your fault if they decide to use a short post as a railroad tie, is it?  ;)
K.I.S.S. - Keep It Simple Stupid
Use it up, wear it out, make it do or do without
1989 GMC 3500 4x4 diesel dump and plow truck, 1964 Oliver 1600 Industrial with Parsons loader and backhoe, 1986 Zetor 5211, Cat's Claw sharpener, single tooth setter, homemade Linn Lumber 1900 style mill, old tools

Furu

Unless it was plated at time of acceptance and there was an adequate chain of documentation/custody to ensure that your ties were ID'ed separately from "John Smith's" ties it would be hard to prove in a court of law that plates they installed after grading, preserving etc was indeed a tie you supplied. Also any mishandling of the product by them while processing them would be a contributor to any failure.

HOWEVER 
The court cost that you would go through to get to that point would break you. 

As several have stated do not deal with them under these conditions as you will have major legal issues and costs even if you win in the long run.

Brad_S.

 Something doesn't seem right here. I am a railfan and I have never heard of a derailment or accident caused by a defective tie.
Broken or misaligned rails, defective equipment and human error? Yes. A single defective tie? Never.
"Life is what happens to you while you're busy making other plans." J. Lennon

paul case

They more than likely are tracking how good your ties grade before and after treating. I know of a few who have had tie buyers quit buying from them over grade of ties. Myself included.

If you don't like the attitude of a buyer on the start, you probably wont like him when he quits you or culls 3 ties in a bundle. Find A Different Buyer.

PC
life is too short to be too serious. (some idiot)
2013 LT40SHE25 and Riehl edger,  WM 94 LT40 hd E15. Cut my sawing ''teeth'' on an EZ Boardwalk
sawing oak.hickory,ERC,walnut and almost anything else that shows up.
Don't get phylosophical with me. you will loose me for sure.
pc

BigZ La

I would list them on the invoice as a 7x9 ungraded cant. If you want to be protected further than I would set up a separate corporation that buys and sells these ungraded cants and only invoice them to tie buyers. By doing this they could only come after the corp that sells the cants and not the sawyer.

WV Sawmiller

   OK, probably beating a dead horse again. If you are uncomfortable with the agreement cancel your contract and back away.

   If it were me I would not be so concerned. I am not a graduate engineer legally required or expected to know the load bearing capacity of a piece of wood nor was I required to perform any such tests on the wood I provided. Further, I do not have any control over how the wood was treated once it left my hands. Was it properly and promptly treated? Was it properly installed? What were the conditions of the section of the track where it was used? High and dry or in the middle of a swamp where it was wet most of the time? Were the trains that ran over the rails above all inspected to ensure the load and speeds were properly applied?

    As I said before all you can certify is that when the wood left your yard it was inspected and met the requirements of the applicable purchase contract as to material type, size and grade. You never set up the specifications for use nor should or could you be held accountable it they were wrong or the wood was mishandled after it left your hands IMO. If I were on the jury you'd be a free man.
Howard Green
WM LT35HDG25(2015) , 2011 4WD F150 Ford Lariat PU, Kawasaki 650 ATV, Stihl 440 Chainsaw, homemade logging arch (w/custom built rear log dolly), JD 750 w/4' wide Bushhog brand FEL

Dad always said "You can shear a sheep a bunch of times but you can only skin him once

killamplanes

I think Paul case hit the nail on the head. Tie buyers watch u like a hawk if u r new or try sticking a couple bad ones in the center. On the other hand if u r a consist supply of ties they will really push the Grey area. I know first hand. The liability thing I wouldn't lose any sleep I now a ton of mills with deep pockets if they were liable of there ties they wouldn't make them nor me.  Next the land owner liable of the tree that made the 7x9. And here its pretty common to put ur account i believe are the numbers on a bundle of ties that way they will pick up a  pattern of bad ties in bundles from a paticular mill.
jd440 skidder, western star w/grapple,tk B-20 hyd, electric, stihl660,and 2X661. and other support Equipment, pallet manufacturing line

Peter Drouin

Up the price on them. That way you can buy good logs. If they're good or not. They want the best , pay the best.  :D :D :D :D :D
A&P saw Mill LLC.
45' of Wood Mizer, cutting since 1987.
License NH softwood grader.

terrifictimbersllc

Have a purchase agreement which includes:

"No warranty is expressed or intended by any product provided by Seller. Buyer agrees to hold Seller harmless for any and all liability whatsoever resulting from use of any product purchased from Seller."
DJ Hoover, Terrific Timbers LLC,  Mystic CT Woodmizer Million Board Foot Club member. 2019 LT70 Super Wide 55 Yanmar,  LogRite fetching arch, WM BMS250 sharpener/BMT250 setter.  2001 F350 7.3L PSD 6 spd manual ZF 4x4 Crew Cab Long Bed

timberjackrob

I am a conductor for Norfolk southern and see hundreds of ties each day and I have never seen a plate on a single one with anybodys name on it they do put a plate on the ends to keep them from splitting.i have worked a job where we would deliver cars to a sawmill/tie yard where they load green ties and none of them have any kind of id tags or plates.
208 timberjack, woodmizer lt28,case 455 trackloader with gearmatic winch,massey 4710, ford f250s ford f700

WH_Conley

I have sold ties to a traveling buyer that puts your check number on the bundle. He grades the bundle by looking at the outside of it. When they get to the treatment plant the bundle is open up and graded. The ties are tracked by check number and the buyer is given the grading report. That way he can tell if the bundles are being nested with bad ones. I have never seen individual ties marked.

I did get an engineer's drawing for a rail car chock from a little railroad that I thought was a bad design. Too steep, would scoot instead of chock. They wanted them branded with mill identification and oil treated. I didn't think oil and steel were a good combination and bowed out of bidding on the job.
Bill

red

Due Diligence, exactly what you are doing here.  Just because a "salesman" says something does not make it true.  If it were true its should be in writing somewhere.  Never believe a salesman and sometimes not even your own Lawyer ! ! ! 
Honor the Fallen Thank the Living

Ohio_Bill

I believe it's a fabricated story the Tie buyer is using to try to get the saw mills to not put any low quality ties in the bundle. Kind of like telling your kids if they lie there nose is going to grow .
Bill
USAF Veteran  C141 Loadmaster
LT 40 HDD42-RA   , Allis Chalmers I 500 Forklift , Allis Chalmers 840 Loader , International 4300 , Zetor 6245 Tractor – Loader ,Bob Cat 763 , Riehl Steel Edger

4x4American

Quote from: terrifictimbersllc on August 11, 2016, 07:32:32 AM
Have a purchase agreement which includes:

"No warranty is expressed or intended by any product provided by Seller. Buyer agrees to hold Seller harmless for any and all liability whatsoever resulting from use of any product purchased from Seller."

I'm having some sales receipts/invoices custom made with my head stamp and all that, I belive I'll have the girl doing it put this at the bottom in fine print.  That oughta be enough, no?
Boy, back in my day..

terrifictimbersllc

Quote from: 4x4American on August 12, 2016, 09:53:21 AM
Quote from: terrifictimbersllc on August 11, 2016, 07:32:32 AM
Have a purchase agreement which includes:

"No warranty is expressed or intended by any product provided by Seller. Buyer agrees to hold Seller harmless for any and all liability whatsoever resulting from use of any product purchased from Seller."

I'm having some sales receipts/invoices custom made with my head stamp and all that, I belive I'll have the girl doing it put this at the bottom in fine print.  That oughta be enough, no?
Could also have "Buyer acknowledges Seller is not a qualified lumber grader and does not purport to grade lumber for any purpose whatsoever."


It sounds unreasonable that someone else could stamp your ties or other lumber with your name. You could say you don't identify your lumber in any way and have no idea whether it was yours or someone else's.
DJ Hoover, Terrific Timbers LLC,  Mystic CT Woodmizer Million Board Foot Club member. 2019 LT70 Super Wide 55 Yanmar,  LogRite fetching arch, WM BMS250 sharpener/BMT250 setter.  2001 F350 7.3L PSD 6 spd manual ZF 4x4 Crew Cab Long Bed

paul case

life is too short to be too serious. (some idiot)
2013 LT40SHE25 and Riehl edger,  WM 94 LT40 hd E15. Cut my sawing ''teeth'' on an EZ Boardwalk
sawing oak.hickory,ERC,walnut and almost anything else that shows up.
Don't get phylosophical with me. you will loose me for sure.
pc

4x4American

Boy, back in my day..

4x4American

And good call Dennis I may add that depending on how much room I have
Boy, back in my day..

Carson-saws

Curious as to which "tie company" is telling you this.  Personally I know that the loads received are set to a particular "tolerance", as far as the different size goes.  Some will reject ties from a load which in turn are rendered "criteria rejects".  I can say I have never been told these things and once the load is received by the manufacturer the rest is up to them. 
Let the Forest be salvation long before it needs to be

4x4American

Boy, back in my day..

bluthum

First I would verify that isn't BS. If it's true I'd let that buyer go no matter the cost to me. No amount of disclaiming or other legal maneuvering would sure enough cover you vs. some high priced specialized lawyer.
I'm not in the sawmill biz but have 40 years of self employment  and have always found  legal fights best avoided. That's a foul business best avoided by the honest person.

Carson-saws

As far as ties go...I have not dealt with a Canadian tie company.  Seems to me the "export" cost and what ever different liabilities there may be are different from the good ole U.S.A.  Standard or any other type "lumber" only varied in the respective "trade" or dollar differences.  Personally I would agree with the idea of looking elsewhere to sell your ties.  The fact that you are already dubious about their claims are enough for most to tell them you are not interested in dealing with them at their terms.  UNLESS this company is willing and able to contractually remove you from any responsibility in ANY way shape or forum.  For what it is worth, in my opinion,  this market does sway up and down yet it is typically an option to be considered when the overall wood/lumber market is not active to keep your mill running and your pockets not empty.
Let the Forest be salvation long before it needs to be

4x4American

good stuff.  This company will send a truck right to my mill yard, plus their tie prices are dang good.  For certain species they're giving $31/tie.  I had the guy who I sell my pallet cants to over today, and he wants me to sell him pallet stringers all cut to length in the worst way.  He even offered to deliver his logs to my sawmill and have me dice em up and send em back to him.  So there's another potential, but there's not much meat on that bone.  RR Ties pay better.
Boy, back in my day..

Ron Wenrich

$31/tie Candadian?  There is a differential in the currency.  Current exchange rate would make it about $24 US. 

Our ties are graded by the tie company before they leave the yard.  The ones that are rejects are priced below pallet price.  We're not the ones doing the grading or selling to the railroad companies. 
Never under estimate the power of stupid people in large groups.

Carson-saws

Ron Wenrich...precisely....It is good they grade them in the yard...for me their trailer was left on site to be filled...after a mutual respect/trust....is gained the grade levels were simply a fact yet there was the occasional "rejection" at their end.  Typically like Mr. Wenrich said, you got nothing more than pallet stock or less than.   Again as mentioned be clear on the currency exchange rates.
Let the Forest be salvation long before it needs to be

YellowHammer

Quote from: 4x4American on August 12, 2016, 09:53:21 AM
Quote from: terrifictimbersllc on August 11, 2016, 07:32:32 AM
Have a purchase agreement which includes:

"No warranty is expressed or intended by any product provided by Seller. Buyer agrees to hold Seller harmless for any and all liability whatsoever resulting from use of any product purchased from Seller."

I'm having some sales receipts/invoices custom made with my head stamp and all that, I belive I'll have the girl doing it put this at the bottom in fine print.  That oughta be enough, no?

No. 

The buyer won't be suing, it's the insurance company or the lawyers of the injured party.  At any point if there is an accident where injuries or deaths are involved, everybody is going to be bagged and tagged in an insurance claim and probably a civil suit.  At no point can a disclaimer clear a business or person of negligence, nor will it prevent anyone, including a business, from being investigated and possibly sued.  Not saying you would be negligent, I'm sure you wouldn't, just saying the determination of such requires the due process of law, which is slow and expensive. 

So....I've had many such discussions with both my insurance companies as well as my lawyers.  Not about ties, but other wood products and lumber.  By no means am I a lawyer, but I know the conversation by heart....it goes pretty much like this...Do you work for money?  Then you are a business.  None of your personal insurance will cover you, including your personal umbrella coverage, if you have one.  So do you have business liability insurance?  Have you separated your business from your personal assets?  Do you have umbrella coverage for your business?  How much are you worth?  The amount you may be sued for will be either your net worth or the value of your insurance coverage, whichever is greater. 

YellowHammerisms:

Take steps to save steps.

If it won't roll, its not a log; it's still a tree.  Sawmills cut logs, not trees.

Kiln drying wood: When the cookies are burned, they're burned, and you can't fix them.

Sawing is fun for the first couple million boards.

Be smarter than the sawdust

SLawyer Dave

Generally, liability can flow through three different issues, Contractual Liability,  Negligence, and Intentional "bad acts".  So here, in the situation you have described, really the only issues you *should* have to worry about is making sure that the ties you sell, *don't have known defects*, that you as a "reasonable tie sawyer", should be aware of. 

If you know that a group of "ties" are "bad", (for whatever reason), and you sell them as "good", then that is at least negligent, and could potentially be fraud, (intentional).  So if the tie fails, and it causes damage, and they can prove that the tie was defective, and you knew or *should have known* that it was defective, then liability can attach. 

Due to the ties being made of a natural material, there is always going to be a range of "quality".  Some ties are going to last longer than others.  Again, I have never cut ties, so I can't speak to the "issues" that you probably see in the logs you saw, but I would suspect that if you saw a major crack through the log, (maybe damage from falling), or other obvious weakness or failing in a tie, then you would "pull" it out.  That is generally all you can be held to, "unless your contract also calls for you to "grade" or "certify" the ties.  Then a higher duty of care may apply.  However, generally, the company doing the final grading, treating, and supply of the finished tie is the one who has that duty.

Wood fails and breaks down.  That is a fact of life.  Other than being able to prove that you "intentional" or more likely "knowingly" supplied defective ties, I can't see how any liability could attach.  Also remember that the RRs are required to do periodic inspections, testing and maintenance to make sure that the ties, rails, and roadbed are in acceptable shape.  So that is another level of protection for you, because any "problems" should be identified prior to failing, and fixed.

It seems pretty clear to me that you had a guy trying to scare you, as I have never heard of such practices, and can't really imagine how such liability could be proven, let alone alleged.  I'm no expert in RRs or Ties, but I have worked a lot of construction.  Its no different than a mill supplying structural lumber.  Not every "board" is going to end up being of "usable quality".  Some warp, get cracked, of other problems show.  If the contractor chooses to use such boards in construction, the mill is not responsible, the contractor is. 

One of my pet history interests is North-State Lumber mills, (here in California).  The vast majority of these mills made Redwood RxR ties that were used throughout the world, (no other wood is better for ties, well at least before chemical treatment).  Hundreds of millions of ties were made, over more than 100 year history, and I have NEVER heard of a single case of liability being alleged, let alone proven about "defective ties" from a mill.

Hope that helps.  You can also talk to other tie buyers, sellers, sawyers, but I am pretty sure you will find this is all a bunch of malarkey.

Hope that helps,
Dave

P.S.  While I don't see how liability could really attach, I absolutely agree with those that say to have plenty of insurance.  No matter what business you are in, in this day and age, it is typically not the "judgment" that will bankrupt you, it is the cost of defending yourself.  That is why you need insurance to pay those defense costs.

WH_Conley

We have had a few cases where the DOT cops wrote people up for hauling ties on farm tags. Says they are a finished product. The local Koppers buyer says take it to court and explain that they are not a finished product. The company pays him on the clock to go with you. The ties are final inspected, plated, air dried for a year, inspected again, pressure treated and inspected again. He says no case he has testified has been found guilty. The company obviously knows wood fails at each stage over time or they would not have so many inspections. Ties wear out. I have been told that some lines see so much traffic that ties will only last 6-8 weeks. When they load out at the local yard each car has a list of the producers and number of ties they have on that car, might be 8-10 names on each. The ties are not marked and are mixed together. No way to track an individual tie.
Bill

timberjackrob

on our mainlines a tie inspector comes thru once a year and marks the ties that need replaced by visual inspection,then a tie gang comes thru and replaces the marked ties.the percentage of ties replaced each year is small compared to the total number ties they may replace one out of 15-20 ties. yard and spur tracks are not replaced nearly as often because of less traffic and lower speeds.
208 timberjack, woodmizer lt28,case 455 trackloader with gearmatic winch,massey 4710, ford f250s ford f700

ozarkgem

I don't see how one bad tie would cause a train derailment. I would think it would take quite a few all in a row to do that. They monitor that stuff pretty close.
Mighty Mite Band Mill, Case Backhoe, 763 Bobcat, Ford 3400 w/FEL , 1962 Ford 4000, Int dump truck, Clark forklift, lots of trailers. Stihl 046 Magnum, 029 Stihl. complete machine shop to keep everything going.

4x4American

Thanks everyone.

I have the sawmill insurance from Mai-Ins who used to be a sponsor...what would be a good way to seperate my personal assests from my business, making it an LLC?  Right now I'm just a DBA.  In NYS, sawmills are considered agriculture so does that mean a farm type insurance would work? 

In terms of having a bad tie,  I would be sending my bad ties too because they pay $10/ea. for them and they send them for landscape type use.  So that right there should be the graders decision.  I'm just sending them a bunch of wood, what they do with it is their call. 

I will have to check on that canadian currency thing.  Something I didn't think of.
Boy, back in my day..

dgdrls

https://en.wikipedia.org/wiki/Lac-M%C3%A9gantic_rail_disaster

this came to mind when I read this thread,
Uncertain of the "requirement" now however,
I suspect this is driving the conversation.

D

WV Sawmiller

Quote from: 4x4American on August 14, 2016, 06:58:23 AM
Thanks everyone.

I have the sawmill insurance from Mai-Ins who used to be a sponsor...what would be a good way to seperate my personal assests from my business, making it an LLC?  Right now I'm just a DBA.  In NYS, sawmills are considered agriculture so does that mean a farm type insurance would work? 

In terms of having a bad tie,  I would be sending my bad ties too because they pay $10/ea. for them and they send them for landscape type use.  So that right there should be the graders decision.  I'm just sending them a bunch of wood, what they do with it is their call. 

I will have to check on that canadian currency thing.  Something I didn't think of.


4X4,

   Early on when I first found this forum and while waiting for my mill and setting up my business I read a thread indicating that while the LLC set up yielded some protection for your personal assets but if you were the sawyer using the mill and creating the lumber/product you could still be held personally liable for defects. Based on that I went with the sole proprietor set up for my business as I would still be liable anyway. I just bought the best liability insurance I could find and afford to protect me under those circumstances.

    I'd still feel safe cutting ties as all I would be doing would be cutting to the customer size and material requirements and am not a graduate/certified engineer or architect certifying the product is safe for the intended use nor would I feel responsible for the poste sale treatments or application.
Howard Green
WM LT35HDG25(2015) , 2011 4WD F150 Ford Lariat PU, Kawasaki 650 ATV, Stihl 440 Chainsaw, homemade logging arch (w/custom built rear log dolly), JD 750 w/4' wide Bushhog brand FEL

Dad always said "You can shear a sheep a bunch of times but you can only skin him once

YellowHammer

General business coverage is a much broader, more encompassing coverage that protects you from many different things encountered in the normal operation of a business, including things such as loss due to fire or weather, not only to your sawmill, but all your equipment and buildings, including down time and money lost due to equipment breakdowns, credit or payment fraud, injury or claims when people are on site, and also claims against the products you produce.  For example, I had comprehensive farm insurance for coverage on my barn and other farm equipment, and if my sawmill or planer, or any other piece of our lumber business related equipment stored inside started a fire and burned things down, it would not have been covered.  Insurances are extremely specific for what they cover, and like oil and vinegar; they don't mix and do not cross over, even though I had my house insurance, my farm insurance, and my business insurance with the same major carrier.

One extremely important coverage to have is "Products Completed Operation Hazard" which provides liability coverage for bodily injury and property damage, occurring away from your premises, arising out of products sold or distributed by the named insured or out of operations performed for someone else after the operations have been completed.  Does your insurance specifically list this?

Separation of private assets from business assets is both physical and legal.  Most any kind of corporation, LLC, S Corp. etc will provide significant personal asset protection.  I won't necessarily protect you in the case of criminal acts or fraud, but there is a reason these exist.  Do people related to your business "customers" set foot on your private property?  If they get injured (say they trip over your sawmill is one classic example because you "neglected" to keep them away, I'm not referring to employees, I'm referring to customers, or people who cannot be reasonably expected to understand the risks of being around a sawmill operation) then they will be able to sue against your private assets, not just business assets, because if there is no separation, and there is a strong possibility that your business insurance wont cover it because it was on private property, and your private insurance wont cover it because the injury was caused by business equipment.  To prevent this, my business insurance company has required that I separately deed my business property from my personal property.  It provides a significant level of legal separation.

It is true that you can get insured to death, but it is also true that its a good idea to get protection of your asset and business.

Anyway, ask your insurance very pointed questions, read your policy page to page, and if its not written in black and white on your insurance policy, its not covered.   
YellowHammerisms:

Take steps to save steps.

If it won't roll, its not a log; it's still a tree.  Sawmills cut logs, not trees.

Kiln drying wood: When the cookies are burned, they're burned, and you can't fix them.

Sawing is fun for the first couple million boards.

Be smarter than the sawdust

Ron Wenrich

All lumber that we have sent on commercial orders were subject to their grade and approval.  If they fell below their specs, they adjusted the grade or rejected the lumber.  I never had lumber rejected for size.  My grade orders were within acceptable grade requirements.  If they ordered F1F & btr, there wasn't much 1 or 2 Com.  Ties and pallet stock were cut plump to make up for variances.  They also requested it.

If you can supply ties and lumber to spec or better, you won't have any problem getting business and retaining customers.  Repeat business is good.  If you want to push the grade and send whatever you think is good, then you'll be looking for business, especially during a downturn in the business cycle.  If I'm making ties, I don't want too many rejects; even if they're buying for landscape timbers.  They'll get rough on your grade.
Never under estimate the power of stupid people in large groups.

4x4American

Wow, great advice.  Much appreciated. Howard and Robert- I will be researching on the things you've mentioned here next week.

Ron-  Good to know.  One of the places buying my lumber, I asked them about the pith being in the boards, because in oak it will have those ray flecks in it in those pieces too.  He said to send it as long as it isnt split too badly, because the rustic flooring is a huge hit right now.  So I may be pushing it with some of the pieces I'm sending, but I'm hoping I'll get feedback.  I have found that on some logs, if the pith is not centered, I can make 3 boards that have an acceptable little bit of pith in it, instead of centering the pith perfect and then getting a cant from the center.  It's a new experiment I'm working on.  Will see how they liked it on my next grade report.
Boy, back in my day..

Percy

GOLDEN RULE : The guy with the gold, makes the rules.

4x4American

Or as you or Brucer call it, "Canukistan" lol
Boy, back in my day..

timberjackrob

Quote from: ozarkgem on August 14, 2016, 05:46:14 AM
I don't see how one bad tie would cause a train derailment. I would think it would take quite a few all in a row to do that. They monitor that stuff pretty close.
that is right ozarkgem most mainline derailments are the result of something mechanical or a problem with the rail such as a broken or spread rail due to excessive heat.there are some derailments on side tracks that are tie related but its usually because there aren't enough sound ties left and the rail will spread apart.
208 timberjack, woodmizer lt28,case 455 trackloader with gearmatic winch,massey 4710, ford f250s ford f700

SLawyer Dave

While I am not licensed to practice law outside California, many of the same rules and themes apply in almost all U.S. states.  Check with a local attorney to make sure, but here is the guideline on "liability protection" coming from different business entities.

First thing first.  There is a legal Maxim you need to understand. 
THE LAW WILL NOT ALLOW SOMEONE TO INSULATE THEMSELVES FROM THEIR OWN NEGLIGENCE

What this means, is that no matter what entity you may try to use for your business, if YOU are the one who allegedly screws up, hurts someone, (otherwise known as Negligent), then nothing will protect you or your property from that liability.  Business entities can help insulate your non-business property, from the negligence of OTHERS, including your employees, helpers, independent contractors, etc., but not your own negligence.

So that is why whenever I talk to someone about creating a business entity, the first issue I want to get straight, is "why they are looking into it".  There are great reasons to become an LLC or Corporation, but often times, (especially if you are a small or part-time one man operation), the costs and requirements of such entities will not economically support such an entity.  This is also why liability insurance is so crucial.  Since you really can't protect your property from all liability, you need to have insurance in place to protect you.

Sole Proprietorship:  the company is your alter-ego.  There is no legal difference between you and the business.  There is no liability protection nor any ability to protect assets generally.  Upside, you only have to do your normal personal tax return along with the schedules showing the profit and expenses of the business.

Partnership:  The company is the alter-ego of both or all partners.  You can all create full liability for each other.  So choose your partners very carefully.  Generally you are not required to do a full tax return for the partnership, rather you will do a Schedule K, to show the profit and losses, and track the income to the partners as this is a "pass-through" entity where the taxes are applied to the individual receiving the profits on their personal tax return.

Limited Liability Companies:  This is the "X" factor that changes from State to State.  There may still be states that don't even grant such status.  In California, if you have a license issued by the state of any kind, you CAN NOT be an LLC.  Typically, an LLC is designed to have most of the benefits of a Corporation, while not having all of the rituals and requirements.  Generally speaking, you need to have at least (2) entities that are members of an LLC., (note this may not require two living persons, but sometimes one live person and another LLC or Corporation).  Only the assets within the LLC would be subject to forfeiture from business litigation.  An LLC is a good choice if you are going to primarily work in one state.  Given the various rules in LLC's across different jurisdictions, it is generally not the best choice if you are going to do work  in a variety of states or overseas.  This is also "Generally" a pass-through entity for tax purposes, wherein a Schedule K is prepared showing the profits and losses, with the actual taxes applied to the individual members receiving profits on their personal tax returns.

Corporations:  Been around for a few hundred years.  Many different types.  Almost all jurisdictions require at least 2 living people to be involved as officers and stock holders.  Generally, small corporations, (less than 75 stock holders), can designate themselves as "Subchapter S" corporations, so that they become a "pass-through" tax entity, just like the LLC's.  If you don't make this tax election, then the Corporation will be required to so a full Corporate Tax Report, pay corporate taxes, and then potentially distribute "dividends" out to the stock holders.  Stock holders then pay taxes on the "dividends" they receive.

Modernly, one of the main reasons small businesses look to become an LLC or Corporation is for Tax savings.  If you are a sole proprietor, making $100k a year profit, then all of that profit is going to be taxed as "employment income".  If you are an LLC or Corporation, then you can pay yourself a reasonable wage based on the "business function you perform".  So lets say you are a sawyer, how much would you have to pay someone of your general ability to run your saw for you?  If that number were $50,000 per year.  Then under an LLC or Corporation, you could pay yourself that as wages, and then the other $50,000 as "owners income or dividends".  That is considered "passive income" and is not subject to many of the "employment taxes".  So you can potentially pocket an additional 7 to 10% of such owner's income.


terrifictimbersllc

Dave, can you address single member LLCs? thanks
DJ Hoover, Terrific Timbers LLC,  Mystic CT Woodmizer Million Board Foot Club member. 2019 LT70 Super Wide 55 Yanmar,  LogRite fetching arch, WM BMS250 sharpener/BMT250 setter.  2001 F350 7.3L PSD 6 spd manual ZF 4x4 Crew Cab Long Bed

Ohio_Bill

Thanks Dave for taking the time for the explanation
Bill
USAF Veteran  C141 Loadmaster
LT 40 HDD42-RA   , Allis Chalmers I 500 Forklift , Allis Chalmers 840 Loader , International 4300 , Zetor 6245 Tractor – Loader ,Bob Cat 763 , Riehl Steel Edger

4x4American

X2 thank you for writing that out, I appreciate it! and to everyone really who's contributed thanks again very much so appreciate it more than you might think!
Boy, back in my day..

WV Sawmiller

Dave,

   Thanks for the info. I think it was your reply on an earlier thread that helped me understand that becoming an LLC would not remove my liability as being the sawyer.

    That is what is so great about this forum - having experts who are willing to help like Jeff, Dave, Ron (Wood Doc), Marty, MM, and so many others who will chime in on a specific case where their experience helps the rest of us.
Howard Green
WM LT35HDG25(2015) , 2011 4WD F150 Ford Lariat PU, Kawasaki 650 ATV, Stihl 440 Chainsaw, homemade logging arch (w/custom built rear log dolly), JD 750 w/4' wide Bushhog brand FEL

Dad always said "You can shear a sheep a bunch of times but you can only skin him once

SLawyer Dave

Quote from: terrifictimbersllc on August 16, 2016, 05:04:26 AM
Dave, can you address single member LLCs? thanks

Not authoritatively.  I am aware that some jurisdictions allow such "single member LLCs", but my understanding is that you still have to have other "people" involved in running the LLC.  So you would have one "member", but then have to have at least one other entity involved in operating the LLC.  Some jurisdictions may have even removed this requirement.

As an attorney, single member LLC's scare me, because the "concept" behind LLC's and Corporations, is that you have a "group of people", creating a separate legal entity that is not run for the personal interest of just one person.  That is the "basis" for why liability protection and tax choices are given to such entities.  Again, under the law, LLC's and Corps are considered "legal entities", with many of the same rights as you have under our laws as a citizen, (because they are supposed to be separate and apart from any one officer, member or stockholder).  It must be run to benefit all of the stock holders or members. 

To defeat the liability protection of a Corp or LLC, you have to "pierce the corporate veil", meaning that you prove that the business was really run as the alter ego of the "one" person, that it was not run to benefit the other members/share holders, that it was not operated in compliance with the law, therefore the "liability protection" should not protect that person's other assets.  With a single member LLC, it seems to me you are creating a situation where you are much more likely to have such problems.  However, they are legal in a number of jurisdictions, so you should consult with a local attorney to get specific information and advice on whether a single member LLC can best fulfill your needs.

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