SECTIONS 56701-56717 - California Statutes

FOOD AND AGRICULTURAL CODE

SECTION 56701-56717

56701. There is in the Department of Agriculture Fund the Farm
Products Trust Fund, which is hereby created.

56701.5. (a) No further claims shall be made against the products
fund subsequent to January 1, 1998, and no further assessment may be
collected for deposit in the fund after January 1, 1999.
(b) The department shall continue to administer the products fund
for the purpose of paying lawful charges accrued but not paid as of
December 31, 1997. Upon completion of the last of these claims, the
products fund shall cease to exist, and any funds remaining on
deposit shall be distributed on a pro rata basis to then existing
licensees.

56702. For the purposes of this chapter, "products fund" means the
Farm Products Trust Fund.

56702.5. "Farm products creditor" means either of the following:
(a) A person who produced and sold a farm product produced in this
state to a person licensed pursuant to Chapter 6 (commencing with
Section 55401) or Chapter 7 (commencing with Section 56101) who
failed to pay for the farm product.
(b) A person licensed pursuant to Chapter 7 (commencing with
Section 56101) who sold or handled a farm product produced in this
state to a person licensed pursuant to Chapter 6 (commencing with
Section 55401) or Chapter 7 (commencing with Section 56101) who
failed to pay for the farm product.

56703. In addition to the fees required under Article 16
(commencing with Section 55861) of Chapter 6 and Article 17
(commencing with Section 56571) of Chapter 7, each principal
applicant for a license, or for the renewal of a license, under
Chapter 6 (commencing with Section 55401) or Chapter 7 (commencing
with Section 56101) shall pay to the director an annual fee of one
hundred twenty-five dollars ($125) which shall be paid before the
director issues or renews any such license. If any person is found to
be operating a business without the license required by Chapter 6
(commencing with Section 55401) or Chapter 7 (commencing with Section
56101), that person shall pay to the director double the amount of
the annual fee. All the fees collected pursuant to this chapter shall
be deposited in the products fund. The director may establish a
lower annual fee if he or she finds it to be sufficient to defray the
costs in carrying out this chapter.
This chapter does not apply to any licensee who pays to the
seller, at the time of obtaining title, possession, or control, or at
the time of contracting for the title, possession, or control, of
any farm product, the full agreed purchase price of the farm product
in coin or currency, lawful money of the United States, or to any
licensee who purchases livestock and is bonded under the federal
Packers and Stockyards Act, 1921 (7 U.S.C. Sec. 181, et seq.).

56704. The money deposited in the products fund shall only be used
to pay for farm products grown or produced within this state which
have not been otherwise paid for. However, claims made against the
fund may include charges for services which by custom of the trade
are incidental to the sale and generally accepted as being included
in the purchase price. Any moneys remaining in the products fund
after all the claims have been settled, discharged, or paid in any
year shall be credited to the funds to be used in any other year, and
the director, in view of this, shall adjust the fees provided for
under Section 56703 in accordance with the provisions of that
section.

56704.5. Claims may only be made against the products fund by a
farm products creditor.

56705. If a person licensed under Chapter 6 (commencing with
Section 55401) or Chapter 7 (commencing with Section 56101) fails to
pay a farm products creditor for any farm product which is received
by the licensee, the director shall ascertain the names and addresses
of all farm products creditors together with the amounts which are
due and owing to them and each of them by the licensee and shall
request all of those farm products creditors to file a verified
statement of their respective claims with the director. The request
shall be addressed to each creditor at his or her last known address.
If by reason of the absence of records, or other circumstances which
make it impossible or unreasonable for the director to ascertain the
names and addresses of all of the farm products creditors, the
director, after exerting due diligence and making reasonable inquiry
to secure the information from all reasonable and available sources,
may make demand upon the products fund on the basis of information
then in his or her possession, and thereafter is not liable or
responsible for claims or the handling of claims which may
subsequently appear or be discovered.

56705.5. Only those claims filed pursuant to Section 56705 or as a
result of a verified complaint filed pursuant to Section 55751 or
56451 shall be accepted by the director as a proper claim upon the
products fund.

56706. If the farm products creditor fails, refuses, or neglects to
file in the office of the director his or her verified claim as
requested by the director under this chapter, within 60 days from the
date of the request, the director is relieved of further duty or
liability pursuant to this chapter on behalf of the farm products
creditor.

56707. Upon ascertaining all claims and statements against a
respondent licensee, the director shall pay, up to the amount
specified in Section 56708, from the products fund to claimants, in
accordance with the provisions of this chapter and all the following
terms and conditions:
(a) The claimants shall have filed a verified complaint with the
department.
(b) The amount due the claimants has been determined by an audit
or investigation by the department, and the amount of the
indebtedness has been fully substantiated by the claimant and
verified by the director.
(c) The amount due is not disputed by the licensee and is approved
by the department or, if the claim is disputed or not agreed to by
the parties, the claim shall be adjudicated by an administrative
hearing and a decision rendered pursuant to Section 55749 or 56447
specifying the amount due the creditors.

56708. The director may only pay up to 50 percent of any claim from
the products fund. In no case shall the total paid all the claimants
under this chapter exceed fifty thousand dollars ($50,000) against
any one licensee. However, if a person subsequently obtains a new
license under Chapter 6 (commencing with Section 55401) or Chapter 7
(commencing with Section 56101), claims may be made pursuant to
Section 56705 against the products fund due to acts of the licensee
made under his or her new license and those claims may be paid up to
fifty thousand dollars ($50,000).

56709. No payment shall be made from the products fund by the
director on any claim until he determines, to his satisfaction, that
all possible recoveries have been made under the provisions of
Article 12 (commencing with Section 55741) of Chapter 6 or Article 13
(commencing with Section 56441) of Chapter 7 of this division.

56710. This chapter does not preclude a claimant from bringing any
action against the licensee in any court having jurisdiction.

56711. A creditor's claim shall be paid under this chapter only if
the claim is based on a transaction with a processor, dealer, broker,
or commission merchant who was licensed pursuant to the provisions
of Chapter 6 (commencing with Section 55401) or Chapter 7 (commencing
with Section 56101) at the time of entering into the contract
involved or at the time of delivery of the farm products.
In any case where the director has notified the creditor before
delivery of the farm product that the license authorizing the
contract has been revoked or suspended, or the creditor has
independent knowledge thereof, and the creditor thereafter makes
delivery of the farm products to the former or suspended licensee,
the claim shall be disallowed.
In addition, the director may disallow any claim, in whole or in
part, upon a finding of lack of good faith in entering into the
contract, collusion to violate any provision of Chapter 6 (commencing
with Section 55401) or Chapter 7 (commencing with Section 56101), or
fraud against the products fund.
The provisions of this section shall not be construed to authorize
any person subject to this chapter to continue to perform any of the
functions of a licensee while the license is revoked or suspended or
to release the person whose license has been revoked or suspended
from any damages which may accrue to the other party to the contract,
or to others, as a result of the legal inability to perform because
of the license discipline.

56712. If a payment is made to any creditor from the products fund,
the director shall be subrogated to all of the creditor's rights of
recovery against any person or organization and the creditor shall
execute and deliver to the director such instruments and papers and
perform any other acts necessary to carry out the provisions of this
section.

56713. In the event any moneys are expended from the products fund
on behalf of any licensee, such licensee shall not be licensed in
this state for a period of four years from the date such payment is
made, so long as the licensee remains legally obligated to pay any
claim for farm products made pursuant to Chapter 6 (commencing with
Section 55401) or Chapter 7 (commencing with Section 56101), or
unless the amount of money expended on the licensee's behalf has been
repaid to the products fund and the balance, if any, due creditors
plus a penalty assessment of 7 percent per annum from the date such
moneys were expended from the products fund or due the creditor have
been paid. In case the licensee is a corporation, this section shall
apply with respect to any officer, member of the board of directors,
or any person employed by such corporation in a managerial position,
or any person who owns more than 25 percent of the stock of such
corporation.

56714. Any money in the products fund, which the director
determines is available for investment, may be invested or reinvested
by the State Treasurer in any of the securities which are described
in Article 1 (commencing with Section 16430), Chapter 3, Part 2,
Division 4, Title 2 of the Government Code, or placed in a bank as
provided in Chapter 4 (commencing with Section 16500), Part 2,
Division 4, Title 2 of the Government Code, and handled in the same
manner as money in the State Treasury.

56715. Any transactions with a licensee made after the licensee has
filed bankruptcy shall not be covered under this chapter until the
bankruptcy is resolved. A transaction includes, but is not limited
to, a contract which provides for multiple deliveries.

56716. Any transactions with a licensee made after a verified
complaint has been filed by a claimant due to default by the licensee
shall not be covered under this chapter on behalf of that claimant
until the complaint is resolved. A transaction includes, but is not
limited to, a contract which provides for multiple deliveries.

56717. This chapter shall remain in effect only until the date upon
which all of the funds remaining in the products fund have been
distributed pursuant to Section 56701.5, and as of that date is
repealed, unless a later enacted statute, which is enacted before
that date, deletes or extends that date.