SECTIONS 62181-62202 - California Statutes

FOOD AND AGRICULTURAL CODE

SECTION 62181-62202

62181. The bonds provided for in this article are required for each
handler and apply to all purchases of milk by that handler. A
handler bonded under this article is not required to be separately
bonded under Section 61405.

62182. (a) Every handler that operates only one plant within the
state, before purchasing any market milk from a producer, shall
execute and deliver to the secretary a surety bond, executed by the
applicant as principal and by a surety company qualified and
authorized to do business in this state as surety. The minimum amount
of the bond shall be based upon the average daily quantity of market
milk purchased by the handler during any calendar month during a
calendar year.
The minimum amount of the bond shall be as follows:
(1) Five thousand dollars ($5,000) for any handler that purchases
an average daily quantity of less than 1,000 gallons.
(2) Ten thousand dollars ($10,000) for any handler that purchases
an average daily quantity of at least 1,000 gallons but less than
4,000 gallons.
(3) Fifteen thousand dollars ($15,000) for any handler that
purchases an average daily quantity of at least 4,000 gallons but
less than 8,000 gallons.
(4) Twenty thousand dollars ($20,000) for any handler that
purchases an average daily quantity of 8,000 gallons or more.
(b) Every handler that operates more than one plant within the
state, before purchasing any market milk from a producer, shall
execute and deliver to the secretary a surety bond, executed by the
applicant as principal and by a surety company qualified and
authorized to do business in this state as surety. The bond shall be
a single bond covering all plants within the state and shall be in an
amount determined by multiplying twenty thousand dollars ($20,000)
by the number of plants operated by the handler in the state.
(c) Any milk purchase agreement between a handler and a producer
may provide for additional surety bonds, guarantees, or other forms
of security in addition to the bonding requirements in this article.

62183. If any handler so increases his purchases of market milk
during the license year that such purchases exceed the amount for
which the handler is bonded, such handler shall forthwith post such
additional bond as may be required to comply with this article.

62184. The bonds required by Sections 62182 and 62183 shall be upon
a form approved by the director, and shall be conditioned upon the
payment in the manner that is required by this chapter, of all
amounts due to producers for market milk purchased by such licensee
or applicant during the license year. It shall be to the state in
favor of every producer of market milk.

62185. If a handler fails to pay any producer or producers for
market milk in the manner that is required by this chapter, the
director shall proceed forthwith to ascertain the names and addresses
of all the producers that the handler has failed to pay, together
with the amounts due and owing to them and each of them by such
handler, and shall request all such producers to file a verified
statement of their respective claims with the director. The producer
need only verify that he is owed an amount by the handler. The actual
amount in such case may be ascertained by the director.

62186. After determining the claims of such producers, the director
shall bring an action on the bond on behalf of such producers.
Any producer not satisfied with the amount of such producer's
claim as determined by the director, or with the ratio such producer'
s claim bears to all claims against the bond as determined by the
director, may intervene in such an action so that the correct amount
of his claim and the ratio it bears to all the claims may be
adjudicated.

62186.1. (a) The director may bring an action against a surety bond
company if the company fails to do any of the following:
(1) Acknowledge promptly and act reasonably upon receiving a bond
demand from the director.
(2) Promptly investigate and process claims.
(3) Make fair and equitable settlement of claims.
(4) Pay the bond amount to the director.
(b) The authority provided in subdivision (a) is in addition to
the authority provided for in subdivision (h) of Section 790.03 of
the Insurance Code.
(c) In addition to the bond proceeds, the surety bond company may
be ordered to pay interest at the prevailing prime rate on the
amounts owed from the date the claim was filed, all the department's
court costs, and reasonable attorney's fees.

62187. If a handler fails to pay any producer in the manner that is
required by this chapter, the director may require the filing of a
new or additional bond in an amount determined by the director that
will be sufficient to satisfy claims for the payment of producers
thereafter supplying market milk to the handler. The failure of a
handler to have filed a new bond within 10 days after notice from the
director constitutes grounds for the revocation or suspension of the
license of the handler.

62188. If recovery upon the bond is not sufficient to pay all of
the claims as finally determined and adjudged by the court, any such
amount recovered shall be divided pro rata among the
producer-creditors.

62189. The failure of any handler that purchases market milk from
producers to execute and deliver the bond as provided and required in
this article is a violation of this chapter. The failure of any such
handler to post any additional bond as may be required to comply
with any provision of this chapter is also a violation of this
chapter.

62190. Payments by a handler to a producer, for the purposes of any
action on a handler's bond or bonds for any year or years, shall be
credited first to interest and then to principal due, owing, and
unpaid. Amounts to be applied to principal shall be applied first to
the amount due for the most recent deliveries and then successively,
in descending order, to the amounts due to the next most recent
deliveries.

62191. (a) Except as otherwise provided in Section 62193 or 62194,
the purchase of any market milk in excess of 1,000 gallons monthly
from any producer is an unlawful trade practice unless a written
contract, which complies with all of the requirements which are
prescribed by this section, has been entered into with the producer.
(b) The contract shall include all of the following:
(1) The amount of market milk which is to be purchased for any
period.
(2) The minimum quantity of the market milk which is to be paid
for as class 1, if any is to be purchased for this purpose. The
quantity shall be stated in pounds of market milk, pounds of market
milk fat, or gallons of market milk, unless the price which is to be
paid for the class 1 market milk is established separately for the
market milk fat and market skim milk, in which case the quantity may,
in the alternative, be stated in both pounds of market milk fat and
pounds of market skim milk separately. The minimum quantity of market
milk to be paid for as class 1 shall not be less than 70 percent of
the total quantity provided in the contract to be purchased at a milk
products plant, and not less than 60 percent of the total quantity
of market milk fat, or the total quantity of market skim milk
components, but not necessarily both, provided in the contract to be
purchased at a country plant, as defined by the director in
stabilization and marketing plans.
(3) The price to be paid for all market milk received.
(4) The date and method of payment for the market milk. Payment
shall be made for the amount of the market milk delivered during the
first 15 days of any calendar month not later than the first day of
the next following month and for the amount delivered during the
remainder of the month not later than the 15th day of the next
following month unless the milk is subject to a pooling plan as
authorized in Chapter 3 (commencing with Section 62700) and the
pooling plan provides for different dates and methods of payment, in
which case the date and method of payment for the milk shall be as
provided for in the pooling plan.
(5) The charges for transportation if hauled by the handler.
(6) A provision that market milk received within the total
quantity provided by the contract to be purchased for any period
shall not be paid for at less than the minimum price for market milk
used for class 2.
(c) The contract may contain other provisions that are not in
conflict with this chapter. A signed copy of the contract shall be
filed by the producer with the director within five days from the
date of its execution.
(d) Paragraphs (2) and (6) of subdivision (b) shall not be
applicable if an equalization pool, as provided pursuant to Chapter 3
(commencing with Section 62700), is in effect for the area in which
the purchase of the market milk occurs.

62192. The production of market milk in excess of amounts provided
to be purchased under contracts executed pursuant to Section 62191
shall be voluntary on the part of the producer and shall not be a
condition, oral or written, of execution or renewal of any of those
contracts.

62193. Section 62191 does not apply to the purchase of market milk
which is necessary to meet an unanticipated increase in demand or an
unanticipated shortage in the supply of a handler if both of the
following occur:
(a) The quantity of market milk purchased from any one producer
does not exceed 5,000 gallons in any one month. However, if the
producer is a cooperative association acting as a producer, the total
quantity purchased shall not exceed 30,000 gallons per month.
(b) A complete record of all of these purchases is kept by the
handler, and the price paid for the milk by the handler is not less
than the price which is established in the applicable stabilization
and marketing plan for the usage to which the milk is applied. For a
single transaction between a producer and handler, payment shall be
made for the amount of milk delivered during the first 15 days of any
calendar month not later than the first day of the next following
month and payment shall be made for the amount of milk delivered
during the remainder of the month not later than the 15th day of the
next following month, unless the milk is subject to a pooling plan as
authorized in Chapter 3 (commencing with Section 62700) and the
pooling plan provides for different dates and methods of payment, in
which case the date and method of payment for the milk shall be as
provided for in the pooling plan.

62194. Section 62191 does not apply to market milk purchased under
cash-on-delivery terms.

62195. The payment by a handler to any producer, including any
nonprofit cooperative association acting as a producer, or the
receipt from a handler by a producer, including any nonprofit
cooperative association acting as a producer, of a lesser price for
any market milk distributed to any person, including any agency of
federal, state, or local government, for less than the minimum prices
established by the director to be paid by handlers to producers for
market milk for the marketing area is an unlawful trade practice.

62196. The failure of any handler to pay for market milk delivered
to him or her at the time and in the manner specified in the contract
with the producer is an unlawful trade practice, except as provided
for in Section 62079.

62197. This article applies regardless of the form in which market
milk is received by the handler and regardless of the area of origin
of the market milk.

62198. Any contract between a producer and handler is voidable by
the producer for a 45-day period following the occurrence of either
of the following events:
(a) The handler has failed to pay the producer the full price
specified in the contract or has failed to comply with the terms
specified in paragraph (4) of subdivision (b) of Section 62191, and
the failure has not been corrected by the handler within one business
day after notification by the producer or director. The 45-day
period shall commence on the day after the payment was due.
(b) The handler has failed on three separate occasions within a
12-month period to pay the producer the full price specified in the
contract or has failed to comply with the terms specified in
paragraph (4) of subdivision (b) of Section 62191. The 45-day period
shall commence on the day after the third occurrence.

62199. If a notice has been issued by the director that the future
deliveries to the handler will not be covered under the Milk
Producers Security Trust Fund created pursuant to Chapter 2.5
(commencing with Section 62500), all contracts between producers and
the handler are voidable by the producers. Producers shall have the
option to void their contracts for a 45-day period from the date the
notice is issued or until the date the director establishes for
reinstatement of the handler's eligibility under the trust fund,
whichever is later.

62200. (a) Handlers shall pay producers either by check or cash.
Handlers electing to pay producers by cash shall, in all cases,
obtain a dated, signed receipt from each producer. The receipts shall
be made a part of the permanent records of the handler. Handlers
paying by check shall issue checks which are reduceable to cash by
the producer in no more than one business day.
(b) The giving of a promissory note is not payment within the
meaning of this chapter.

62201. (a) If a handler does not pay for market milk delivered to
him or her at the time and in the manner specified in the contract,
the handler shall pay the producer interest on the unpaid amount from
the time the payment was due until paid at the rate of 12 percent
per annum. This interest is in addition to any other penalties
provided in this chapter.
(b) If there is no contract for the delivery of milk to the
handler or the delivery was made as a single transaction between the
producer or handler, the handler shall pay the department interest on
the unpaid amount from the time the payment was due until paid at
the interest rate specified in subdivision (a). The interest is in
addition to any other penalties provided in this chapter.

62202. If a handler fails to pay for market milk delivered to him
or her at the time and in the manner specified in this chapter, the
director may assess a penalty for each payment date that producers
were not fully paid. Any penalty assessed shall be a minimum of one
hundred dollars ($100) for each payment date. If the amount not
properly paid is in excess of forty thousand dollars ($40,000), the
penalty assessed will be five thousand dollars ($5,000) or one-fourth
of 1 percent of the amount not properly paid for, whichever is less.