276.431. Provisions and rules relating to bonds to apply to certificates of deposit--irrevocable letters of credit may be accepted, conditions, demand by director, procedure--failure by bank to pay, w

MISSOURI STATUTES AND CODES

276.431. Provisions and rules relating to bonds to apply to certificates of deposit--irrevocable letters of credit may be accepted, conditions, demand by director, procedure--failure by bank to pay, w

Provisions and rules relating to bonds to apply to certificates ofdeposit--irrevocable letters of credit may be accepted,conditions, demand by director, procedure--failure by bank topay, when, penalty--funds returned to bank, when.

276.431. 1. Sections 276.401 to 276.581 and all regulationspromulgated hereunder that apply to surety bonds shall also applyto certificates of deposit. Any certificate of deposit submittedin lieu of a surety bond required under sections 276.401 to276.581 shall be filed with the director as trustee for thebenefit of all persons selling grain to the grain dealer. Thecertificate of deposit will be kept in the custody of thedirector.

2. A grain dealer may, in lieu of the bond required underthis chapter, submit an irrevocable letter of credit, payable tothe director for the benefit of claimants, and issued by afederally or state chartered bank. The director may refuse toaccept a letter of credit in lieu of the bond required by thischapter if the director finds that the issuing bank is or maybecome insolvent, or for any other reason may be unable to honorthe terms of the letter of credit. The director may require anissuing bank to submit evidence of its financial condition, andthe director may seek the cooperation of the division of financein evaluating the financial condition of an issuing bank. Thedirector shall promulgate all necessary regulations pertaining tocertificates of deposit, and irrevocable letters of credit.

3. Upon written demand of the director for payment, the bankshall either pay over to the director the sum demanded, up to thefull face amount of the irrevocable letter of credit, or shalldeposit the sum demanded in an escrow account at the highest rateof interest available. When a bank pays the director upondemand, the director shall either interplead the sum in court orhold an administrative hearing for the determination of theliability of the bank and the validity of the claims against theirrevocable letter of credit, and upon the conclusion thereof,the director shall distribute the irrevocable letter of creditproceeds accordingly. The determination of the director shall befinal, subject to the licensee's or claimant's right to appeal tothe circuit court pursuant to the provisions of chapter 536,RSMo. Refusal or failure of the issuing bank to pay the sumdemanded to the director within three days of the bank's receiptof such written demand shall result in a penalty assessment often percent of the amount demanded, up to the full face amount ofthe irrevocable letter of credit, per week until the amountdemanded and the penalty are paid. When funds have beenreceived, and the director or court determines that the bank isnot liable for claims against the irrevocable letter of credit,the director shall return to the bank the sum paid to thedirector and all accumulated interest earned, minus any penaltiesdue or paid. In the event that the liability is less than thesum demanded, the director shall return the appropriate pro rataportion of the funds received, and interest earned as applicable.