Section 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 - distribution of bond proceeds - duties of depositors or receipt holders - injunction, hearing, notice - final inspection of warehouse - verbal or written bond binders effective, contents1. Before any person is granted a license pursuant to the provisions of this chapter, the person shall file a bond other than personal security with the director executed by the warehouseman as principal and by a corporate surety licensed to do business in this state as a surety. The bond shall be in favor of the state of Missouri for the benefit of all persons storing grain, their legal representatives, attorneys, or assigns, conditioned upon the faithful performance of his duties as a public warehouseman relating to the storage of grain. Notwithstanding any other provisions of this chapter, the bond provided shall only cover storage grain deposited with a warehouseman. Storage grain that has been priced, as provided in section 411.325, shall not be covered by the warehouse bond. Grain deemed storage grain pursuant to section 411.325 shall be covered.2. Neither the issuance of warehouse receipts by a warehouseman to himself for grain owned in whole or in part by him; the commingling of grain owned by the warehouseman with grain stored for others or any violation by a warehouseman of this chapter or of the regulations promulgated hereunder by the director is a defense in any action brought upon any bond, and all bonds shall so provide.3. The surety bond required by this section shall be effective on the date of issue, shall not be affected by the expiration of the license period, and shall continue in full force and effect until cancelled.4. The required bond shall be kept in force at all times while the operator is conducting a public grain warehouse. Failure to keep such bond in force is cause for revocation of the license, and the warehouseman is subject to the penalties provided in this chapter. No warehouseman may cancel an approved bond without the prior written approval of the director and his approval of a substitute bond.5. A warehouseman filing bonds required under this chapter, or regulations promulgated hereunder, shall utilize the same corporate surety for all bonds required for the operation of any one warehouse.6. In case any person shall make application for licenses for two or more separate public warehouses in this state, he may give a single bond covering all such applications, and the amount of the bond shall be the total of the amounts which would be required for the several applications if separate bonds were given; except, however, that in computing the amount of the single bond the warehouseman may add together the capacity of all warehouses to be covered thereby and use the aggregate capacity for the purpose of computing bond. When a warehouseman elects to provide a single bond for a number of warehouses, the total assets of all the warehouses shall be subject to liabilities of each individual warehouse.7. Upon written demand of the director for payment, the surety shall either pay over to the director the sum demanded up to the full face amount of the bond, or shall deposit the sum demanded in an interest-bearing escrow account at the highest rate of interest available. When a surety pays the director upon demand, the director shall either interplead the sum in court or hold an administrative hearing for the determination of the liability of the surety, and the validity of claims against the bond, and upon the conclusion thereof, the director shall distribute the bond proceeds accordingly. The determination of the director shall be final, subject to the surety's or a claimant's right to appeal to the circuit court pursuant to the provisions of chapter 536. Refusal or failure of the surety to pay the sum demanded to the director within ten days of receipt of the director's demand letter or the refusal or failure to deposit the sum demanded in an interest-bearing escrow account at the highest rate of interest available, shall be grounds for withdrawal of the surety's license and authorization to conduct business in this state and grounds for the court to penalize the surety for refusal to pay or to deposit, within the ten days of demand, in the amount of twenty-five percent of the full face amount of the bond, plus interest at the rate of nine percent, or at the rate that the director can establish he would have received had the money been paid or deposited by the surety, whichever rate of interest is higher. In the event that the surety pays as demanded and the director or court determines the surety is not liable, the director shall return to the surety the sum paid to the director plus all accumulated interest, or any pro rata part of the sum, plus interest, as applicable in the event of liability less than the sum demanded. In the event that the surety elects to deposit the demanded sum in an interest-bearing escrow account and the director holds an administrative hearing determining the liability of the surety and the validity of claims, and upon the exhaustion of appeals, if any, the surety immediately shall pay to the director for distribution to claimants the amount for which the surety has been determined to be liable plus accumulated interest on that amount.8. Every bond filed shall contain a provision that it may not be cancelled by the principal or surety company except upon ninety days prior notice in writing, by certified mail, to the director at his Jefferson City office. In the case of a surety giving notice of cancellation, a copy of such notice shall be mailed on the same day by certified mail to the principal. The cancellation does not affect the liability accrued or which may accrue under such bond before the expiration of the ninety days. The notice shall contain the termination date. In the event such procedures are not followed, the bond shall remain in full force and effect until properly cancelled.9. Whenever the director receives notice from a surety that it intends to cancel the bond of a warehouseman, the director shall automatically suspend the warehouseman's license if a new bond is not received by the director within thirty days of receipt of the notice of intent to cancel. The director shall cause an inspection of the licensed warehouse immediately at the end of such thirty-day period. If a new bond is not received within sixty days of receipt of the notice of intent to cancel, the director shall revoke the warehouse license. The director shall cause a further inspection of the warehouse at the end of this sixty-day period. Such inspection may include an attempt to notify all possible grain and grain-related claimants of the warehouseman by advertising in local media. When a license is so revoked, the director shall give notice of such revocation to each depositor or holder of an outstanding negotiable or nonnegotiable warehouse receipt of which the director has knowledge. The director shall further notify each depositor or receipt holder that grain must be sold or removed from the warehouse. Upon receipt of the notice, it shall be the legal duty of each depositor or receipt holder to sell, remove, or cause his grain to be removed. Such notice to each receipt holder or depositor shall be sent by ordinary mail to the last known address of each receipt holder or depositor.10. The director may petition the circuit court for a mandatory injunction ordering the receipt holder or depositor to so sell, remove or cause to be removed, his grain and the circuit courts are hereby empowered to enter such an order. A hearing shall 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 any practicable means effecting actual notice. Further, the circuit courts are empowered to enter any order, pertaining to the warehouseman, director, surety, or other interested persons, that is appropriate in the circumstances to effectuate such removal or sale consistent with the purpose of this chapter. The court may enforce any order entered pursuant to this section by its contempt powers or as otherwise provided by law.11. The director shall cause a final inspection of the licensed warehouse immediately after the end of the ninety-day period. The warehouseman shall pay a fee for each examination provided for in this section. The fee shall be computed in accordance with subsection 3 of section 411.271.12. Verbal or written surety bond binders issued by a surety on behalf of a grain warehouseman for original or replacement bonds are hereby recognized as legally effective in the state of Missouri as if the bond were fully executed when such binders meet the following conditions:(1) The warehouseman, or principal, has paid or has promised to pay the surety an agreed upon or tentatively agreed upon premium or other consideration;(2) The surety provides the department, either in writing, or verbally:(b) The amount of the bond;(c) The effective date of the bond;(d) Either verbal or written assurance that the person providing the preceding information has authority to commit the surety. Such binders may be cancelled only in the manner provided in subsection 8 of this section. The director may or may not accept such a binder depending on the particular circumstances involved and 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 4/22/1986