276.426. Surety bond required--conditions--lack of, considered violation--cancellation procedure, effect--items covered by bond, not covered--distribution of bond proceeds by director, procedure, appe

MISSOURI STATUTES AND CODES

276.426. Surety bond required--conditions--lack of, considered violation--cancellation procedure, effect--items covered by bond, not covered--distribution of bond proceeds by director, procedure, appe

Surety bond required--conditions--lack of, consideredviolation--cancellation procedure, effect--items covered by bond,not covered--distribution of bond proceeds by director,procedure, appeal--surety, failure to pay, penalty--binderseffective, conditions, cancellation.

276.426. 1. Every person licensed as a grain dealer shall have filedwith the director a surety bond executed and signed by the grain dealer asprincipal and issued by a responsible corporate surety licensed to executesurety bonds in the state of Missouri. It is a violation of sections276.401 to 276.582 for any person to engage in the business of being agrain dealer without a sufficient surety bond on file with the department,on a form prescribed and furnished by the director.

2. Such bond shall be in favor of the state of Missouri, except asauthorized by section 276.581, with the director as trustee for the benefitof all persons selling grain to the grain dealer, and their legalrepresentatives, attorneys or assigns, and shall be conditioned upon thefollowing:

(1) The dealer as a buyer paying to the seller the agreed-uponpurchase price of the grain purchased from the seller where title to saidgrain transferred from the seller to the buyer within the state ofMissouri;

(2) The grain dealer's faithful performance of his duties as alicensed grain dealer and his compliance with sections 276.401 to 276.582and regulations promulgated hereunder. This section applies to purchasesmade from the effective date of the bond until the bond is canceled, exceptas otherwise provided in sections 276.401 to 276.582;

(3) The bond required by this section shall cover the agreed-uponminimum price of any valid minimum price contract;

(4) The bond required by this section shall not cover payment for anypromissory note accepted by the seller of grain. To be considered apromissory note, the note must contain the signature of both seller andbuyer, date the note was executed, dollar amount of the note, payment termsand interest rate.

3. A surety bond required or allowed by sections 276.401 to 276.582shall be effective on the date of issue, shall not be affected by theexpiration of the license period, and shall continue in full force andeffect until canceled. The continuous nature of a bond, however, shall inno event be construed to allow the liability of the surety under a bond toaccumulate for each successive license period during which the bond is inforce, but shall be limited in the aggregate to the amount stated on thebond or as changed, from time to time, by appropriate endorsement or rider.

4. The required bond shall be kept in force at all times while thedealer is conducting business as a licensed grain dealer. Failure to keepsuch bond in force is cause for revocation of the license, and the dealeris subject to the penalties provided in this chapter. No dealer may cancelan approved bond without the prior written approval of the director and thedirector's approval of a substitute bond.

5. A grain dealer filing bonds required under sections 276.401 to276.582, or regulations promulgated thereunder who is also licensed underchapter 411, RSMo, shall utilize the same corporate surety for all bondsrequired to be licensed under chapter 411, RSMo, and as a grain dealer.

6. Upon written demand of the director for payment, the surety shalleither pay over to the director the sum demanded up to the full face amountof the bond, or shall deposit the sum demanded in an interest-bearingescrow account at the highest rate of interest available. When a suretypays the director upon demand, the director shall either interplead the sumin court or hold an administrative hearing for the determination of theliability of the surety, and the validity of claims against the bond, andupon the conclusion thereof, the director shall distribute the bondproceeds accordingly. The determination of the director shall be final,subject to the surety's or a claimant's right to appeal to the circuitcourt pursuant to the provisions of chapter 536, RSMo. Refusal or failureof the surety to pay the sum demanded to the director within ten days ofreceipt of the director's demand letter or the refusal or failure todeposit the sum demanded in an interest-bearing escrow account at thehighest rate of interest available, shall be grounds for withdrawal of thesurety's license and authorization to conduct business in this state, andgrounds for the court to penalize the surety, for refusal to pay or todeposit within the ten days of demand, in the amount of twenty-five percentof the full face amount of the bond, plus interest at the rate of ninepercent, or at the rate that the director can establish he would havereceived had the money been paid or deposited by the surety, whichever rateof interest is higher. In the event that the surety pays as demanded andthe director or court determines the surety is not liable, the directorshall return to the surety the sum paid to the director plus allaccumulated interest, or any pro rata part of the sum, plus interest, asapplicable in the event of liability less than the sum demanded. In theevent that the surety elects to deposit the demanded sum in aninterest-bearing escrow account and the director holds an administrativehearing determining the liability of the surety and the validity of claims,and upon the exhaustion of appeals, if any, the surety immediately shallpay to the director for distribution to claimants the amount for which thesurety has been determined to be liable plus accumulated interest on thatamount.

7. Every bond filed shall contain a provision that it may not becanceled by the principal or surety company except upon ninety days' priornotice in writing, by certified mail, to the director at his Jefferson Cityoffice. In the case of a surety giving notice of cancellation, a copy ofsuch notice shall be mailed, by certified mail, on the same day to theprincipal. The cancellation does not affect the liability accrued or whichmay accrue under such bond before the expiration of the ninety days. Thenotice shall contain the termination date. In the event such noticeprocedures are not followed, the bond shall remain in full force and effectuntil properly canceled.

8. Whenever the director receives notice from a surety that itintends to cancel the bond of a dealer, the director shall automaticallysuspend the dealer's license if a new bond is not received by the directorwithin thirty days of receipt of the notice of intent to cancel. If a newbond is not received within sixty days of receipt of the notice of intentto cancel, the director shall revoke the dealer's license. The directormay cause an inspection of the grain dealer at the end of this sixty-dayperiod. Such inspection may include an attempt to identify all possiblegrain sellers and related claimants of the dealer by advertising for samein local news media.

9. Verbal or written surety bond binders issued by a surety on behalfof a grain dealer for original or replacement bonds are hereby recognizedas legally effective in the state of Missouri as if the bond were fullyexecuted when such binders meet the following conditions:

(1) The dealer or principal has paid, or has promised to pay, thesurety an agreed upon or tentatively agreed upon premium or otherconsideration;

(2) The surety provides the department, either in writing orverbally:

(a) A bond number;

(b) The amount of the bond;

(d) Either verbal or written assurance that the person providing thepreceding information has authority to commit the surety. Such binders maybe canceled only in the manner provided in subsection 8 of this section.The director may or may not accept such a binder depending on theparticular circumstances involved and consistent with the orderlyadministration of this chapter.