411.275. Warehouseman's bond, requirements--defenses denied surety--cancellation, notice, effect--demand for payment by director, duties of director--refusal of surety to pay, penalty--distributio
Warehouseman's bond, requirements--defenses deniedsurety--cancellation, notice, effect--demand for payment bydirector, duties of director--refusal of surety to pay,penalty--distribution of bond proceeds--duties of depositors orreceipt holders--injunction, hearing, notice--final inspection ofwarehouse--verbal or written bond binders effective, contents.
411.275. 1. Before any person is granted a license pursuantto the provisions of this chapter, the person shall file a bondother than personal security with the director executed by thewarehouseman as principal and by a corporate surety licensed todo business in this state as a surety. The bond shall be infavor of the state of Missouri for the benefit of all personsstoring grain, their legal representatives, attorneys, orassigns, conditioned upon the faithful performance of his dutiesas a public warehouseman relating to the storage of grain.Notwithstanding any other provisions of this chapter, the bondprovided shall only cover storage grain deposited with awarehouseman. Storage grain that has been priced, as provided insection 411.325, shall not be covered by the warehouse bond.Grain deemed storage grain pursuant to section 411.325 shall becovered.
2. Neither the issuance of warehouse receipts by awarehouseman to himself for grain owned in whole or in part byhim; the commingling of grain owned by the warehouseman withgrain stored for others or any violation by a warehouseman ofthis chapter or of the regulations promulgated hereunder by thedirector is a defense in any action brought upon any bond, andall bonds shall so provide.
3. The surety bond required by this section shall beeffective on the date of issue, shall not be affected by theexpiration of the license period, and shall continue in fullforce and effect until canceled.
4. The required bond shall be kept in force at all timeswhile the operator is conducting a public grain warehouse.Failure to keep such bond in force is cause for revocation of thelicense, and the warehouseman is subject to the penaltiesprovided in this chapter. No warehouseman may cancel an approvedbond without the prior written approval of the director and hisapproval of a substitute bond.
5. A warehouseman filing bonds required under this chapter,or regulations promulgated hereunder, shall utilize the samecorporate surety for all bonds required for the operation of anyone warehouse.
6. In case any person shall make application for licensesfor two or more separate public warehouses in this state, he maygive a single bond covering all such applications, and the amountof the bond shall be the total of the amounts which would berequired for the several applications if separate bonds weregiven; except, however, that in computing the amount of thesingle bond the warehouseman may add together the capacity of allwarehouses to be covered thereby and use the aggregate capacityfor the purpose of computing bond. When a warehouseman elects toprovide a single bond for a number of warehouses, the totalassets of all the warehouses shall be subject to liabilities ofeach individual warehouse.
7. Upon written demand of the director for payment, thesurety shall either pay over to the director the sum demanded upto the full face amount of the bond, or shall deposit the sumdemanded in an interest-bearing escrow account at the highestrate of interest available. When a surety pays the director upondemand, the director shall either interplead the sum in court orhold an administrative hearing for the determination of theliability of the surety, and the validity of claims against thebond, and upon the conclusion thereof, the director shalldistribute the bond proceeds accordingly. The determination ofthe director shall be final, subject to the surety's or aclaimant's right to appeal to the circuit court pursuant to theprovisions of chapter 536, RSMo. Refusal or failure of thesurety to pay the sum demanded to the director within ten days ofreceipt of the director's demand letter or the refusal or failureto deposit the sum demanded in an interest-bearing escrow accountat the highest rate of interest available, shall be grounds forwithdrawal of the surety's license and authorization to conductbusiness in this state and grounds for the court to penalize thesurety for refusal to pay or to deposit, within the ten days ofdemand, in the amount of twenty-five percent of the full faceamount of the bond, plus interest at the rate of nine percent, orat the rate that the director can establish he would havereceived had the money been paid or deposited by the surety,whichever rate of interest is higher. In the event that thesurety pays as demanded and the director or court determines thesurety is not liable, the director shall return to the surety thesum paid to the director plus all accumulated interest, or anypro rata part of the sum, plus interest, as applicable in theevent of liability less than the sum demanded. In the event thatthe surety elects to deposit the demanded sum in aninterest-bearing escrow account and the director holds anadministrative hearing determining the liability of the suretyand the validity of claims, and upon the exhaustion of appeals,if any, the surety immediately shall pay to the director fordistribution to claimants the amount for which the surety hasbeen determined to be liable plus accumulated interest on thatamount.
8. Every bond filed shall contain a provision that it maynot be canceled by the principal or surety company except uponninety days prior notice in writing, by certified mail, to thedirector at his Jefferson City office. In the case of a suretygiving notice of cancellation, a copy of such notice shall bemailed on the same day by certified mail to the principal. Thecancellation does not affect the liability accrued or which mayaccrue under such bond before the expiration of the ninety days.The notice shall contain the termination date. In the event suchprocedures are not followed, the bond shall remain in full forceand effect until properly canceled.
9. Whenever the director receives notice from a surety thatit intends to cancel the bond of a warehouseman, the directorshall automatically suspend the warehouseman's license if a newbond is not received by the director within thirty days ofreceipt of the notice of intent to cancel. The director shallcause an inspection of the licensed warehouse immediately at theend of such thirty-day period. If a new bond is not receivedwithin sixty days of receipt of the notice of intent to cancel,the director shall revoke the warehouse license. The directorshall cause a further inspection of the warehouse at the end ofthis sixty-day period. Such inspection may include an attempt tonotify all possible grain and grain-related claimants of thewarehouseman by advertising in local media. When a license is sorevoked, the director shall give notice of such revocation toeach depositor or holder of an outstanding negotiable ornonnegotiable warehouse receipt of which the director hasknowledge. The director shall further notify each depositor orreceipt holder that grain must be sold or removed from thewarehouse. Upon receipt of the notice, it shall be the legalduty of each depositor or receipt holder to sell, remove, orcause his grain to be removed. Such notice to each receiptholder or depositor shall be sent by ordinary mail to the lastknown address of each receipt holder or depositor.
10. The director may petition the circuit court for amandatory injunction ordering the receipt holder or depositor toso sell, remove or cause to be removed, his grain and the circuitcourts are hereby empowered to enter such an order. A hearingshall be held within ten days of the filing of any such petition.Notice of hearing to depositors, receipt holders, warehouseman,surety, all interested persons, and the director shall be by anypracticable means effecting actual notice. Further, the circuitcourts are empowered to enter any order, pertaining to thewarehouseman, director, surety, or other interested persons, thatis appropriate in the circumstances to effectuate such removal orsale consistent with the purpose of this chapter. The court mayenforce any order entered pursuant to this section by itscontempt powers or as otherwise provided by law.
11. The director shall cause a final inspection of thelicensed warehouse immediately after the end of the ninety-dayperiod. The warehouseman shall pay a fee for each examinationprovided for in this section. The fee shall be computed inaccordance with subsection 3 of section 411.271.
12. Verbal or written surety bond binders issued by a suretyon behalf of a grain warehouseman for original or replacementbonds are hereby recognized as legally effective in the state ofMissouri as if the bond were fully executed when such bindersmeet the following conditions:
(1) The warehouseman, or principal, has paid or has promisedto pay the surety an agreed upon or tentatively agreed uponpremium or other consideration;
(2) The surety provides the department, either in writing,or verbally:
(a) A bond number;
(b) The amount of the bond;
(c) The effective date of the bond;
(d) Either verbal or written assurance that the personproviding the preceding information has authority to commit thesurety.Such binders may be canceled only in the manner provided insubsection 8 of this section. The director may or may not acceptsuch a binder depending on the particular circumstances involvedand consistent with the orderly administration of this chapter.
(L. 1965 p. 606, A.L. 1977 S.B. 75, A.L. 1980 S.B. 601, A.L. 1986 H.B. 1578)Effective 4-22-86